-----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, L97h34DBIJOdnaVjz/yZ92ZSh15ybeR1XP8+pVUWowDzNLgg5wq93fuRO0LTu5Lz 2htKT4xkHIyVQJkhKtEXRQ== 0001000096-01-000202.txt : 20010409 0001000096-01-000202.hdr.sgml : 20010409 ACCESSION NUMBER: 0001000096-01-000202 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 134 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010402 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: 10KSB SEC ACT: SEC FILE NUMBER: 001-09327 FILM NUMBER: 1590509 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 10KSB 1 0001.txt FORM 10-KSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (Mark One) {X} Annual Report pursuant to Section 13 or 15(d of the Securities Exchange Act of 1934 (Fee Required) for the fiscal year ended December 31, 2000 { } Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) Pollution Research and Control Corp. --------------------------------------------------------- (Name of Small Business Issuer as Specified in its Charter) California 95-2746949 ---------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 506 Paula Avenue, Glendale, California 91201 - -------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Small Business Issuer's telephone number, including area code (818) 247-7601 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value -------------------------- (Title of Class) Check whether the Small Business Issuer (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Small Business Issuer was required to file such reports), and (2) has been subject to such filing requirements of the past 90 days. Yes X No __ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-KSB or any amendment to this Form 10-KSB {X}. Small Business Issuer's revenues for its most recent fiscal year: $3,637,000. The aggregate market value of the voting stock held by non-affiliates of the Small Business Issuer, computed by reference to the average bid and asked prices of such stock on March 28, 2001 was $4,500,000. Exhibit Index is located at Page E-1 DOCUMENTS INCORPORATED BY REFERENCE: Certain exhibits to this Annual Report as set forth in the Exhibit Index located at page E-1. POLLUTION RESEARCH AND CONTROL CORP. Form 10-KSB For the Fiscal Year Ended December 31, 2000 TABLE OF CONTENTS Part I Page ---- Item 1. Description of Business 4 General 4 History of the Company 4 The Air Pollution Industry 5 Instrument Market 6 Control Market 7 Governmental Approval 7 Governmental Regulation and Enforcement 8 Company Products 8 Marketing and Sales; Backlog 10 Foreign Sales 11 Manufacturing and Purchasing 11 Research and Development 12 Employees 12 Competition 12 Intellectual Property 13 Item 2. Description of Properties 13 Item 3. Legal Proceedings 13 Item 4. Submission of Matters to a Vote of Security Holders 14 Part II. Item 5. Market for Common Equity and Related Stockholder Matters 15 Item 6. Management's Discussion and Analysis or Plan of Operation 15 Liquidity and Capital Resources 17 Seasonality 18 Item 7. Financial Statements 18 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 18 2 TABLE OF CONTENTS (continued) Part III Page ---- Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act 19 Directors, Executive Officers and Key Employees 19 Family Relationships 19 Business Experience 20 Section 16(a) Beneficial Ownership Reporting Compliance 21 Item 10. Executive Compensation 21 Executive Compensation 21 Compensation of Directors 22 Employment Agreements 22 Item 11. Security Ownership of Certain Beneficial Owners and Management 23 Item 12. Certain Relationships and Related Transactions 24 Item 13. Exhibits and Reports on Form 8-KA (a) Exhibits 24 (b) Reports on Form 8-KA 24 3 Item 1. Description of Business General Pollution Research's core business for over twenty years has been primarily the design, manufacture and marketing of automated continuous monitoring instruments used to detect and measure various types of air pollution, such as "acid rain," "ozone depletion" and "smog episodes," through our wholly-owned subsidiary, Dasibi Environmental Corp. Our products are generally used to measure air pollution levels in geographic areas which range in size from small industrial sites to entire states or countries. We also supply computer-controlled calibration systems that verify the accuracy of our instruments, data loggers to collect and manage pollutant information and our final reporting software for remote centralized applications, which is classified as "core business related." Currently, our primary market focus for the core business is The People's Republic of China. See "History of Pollution Research and Control Corp. and Recent Developments." History of Pollution Research and Control Corp. and Recent Developments Pollution Research was organized as a California corporation on December 24, 1971, under the name of "A.E. Gosselin Engineering, Inc." as a wholly-owned subsidiary of "Pollution Research and Control Corp." ("PRCC"), a California corporation co-founded in 1966 by Albert E. Gosselin, Jr., the president and chief executive officer, and his wife, Barbara Gosselin, an executive officer and director. Mr. and Mrs. Gosselin founded the business to design, manufacture and market air pollution monitoring equipment for ambient air (i.e., the surrounding air) as distinguished from the customer stack source monitoring systems then being designed, manufactured and sold by PRCC. The name of the business was changed to "Dasibi Environmental Corp." on March 22, 1973. The subsidiary business, our company, was operated as a wholly-owned subsidiary of PRCC until its initial public offering of securities in May 1985. In 1984, PRCC discontinued its research and development activities and assigned them to our business. From 1984 through May 1985, PRCC acted primarily as a holding company for our business and Applied Conservation Technology, Inc. ("ACT"), then another wholly-owned subsidiary of PRCC engaged in the business of providing environmental impact reports to electric utilities. ACT was purchased by its management from PRCC in November 1986. Gary Dudley, a director and former Vice President of the Company and a former executive officer and director of PRCC, has been the President and a principal shareholder of ACT, a diversified environmental consulting firm now located in Westminster, California, since November 1986. (See Item 9. "Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act - Directors, Executive Officers and Key Employees.") Our business then changed its name to "Pollution Research and Control Corp.," the name of its former parent, PRCC, in November 1989. In January 1990, Pollution Research acquired all of the issued and outstanding shares of Common Stock of an inactive California corporation, organized by Mr. and Mrs. Gosselin as co-founders under the name of "Baral Engineering, Inc." in July 1976, which changed its name to "Dasibi Environmental Corp." in January 1990. All of Pollution Research business operations were transferred to Dasibi subsequent to the acquisition so that Pollution Research has been and is, essentially a holding company with all environmental business and assets under Dasibi control as a wholly owned subsidiary. Pollution Research also owns an inactive wholly owned subsidiary "Dasibi China". Also in 1990, we changed our fiscal year from June 30 to December 31. 4 In January, 1998, Pollution Research began a reorganization program. Our management believed that we could secure long-term contractual business in The People's Republic of China ("China") sufficient to allow expansion of Dasibi's business independent of competitive price pressures which have been experienced since 1994 (see "Instrument Market" under this Item 1). In June 1998, we signed a $5.1 million dollar contract with China to supply air monitoring equipment and software in integrated systems to monitor, report, and predict for local regions the air pollutant levels in an eleven city network designated as Phase I and related to a China monitoring plan for over 600 cities. The effective starting date was coincident with our arrangement of U.S. Bank and Export-Import (Ex-Im) guarantee for financing which occurred in June 1999. In March, 1999 we signed a letter of intent in Beijing, China with The State Environmental Protection Agency for Phase II , an additional 20 to 25 cities including expansion of the network of the eleven cities of Phase I. In April 2000, we signed a contract valued at approximately $13.6 million for Phase II encompassing 30 cities additional to Phase I and some expansion of the Phase I network. As of the date of this report, no firm starting date is indicated, only a probability for the third quarter of 2001. Since we have chosen to focus primarily on the China market, it is vital that a continuous flow of business be obtained. To date, this has not been the case and a need for a high level of staffing continuously has led to recent losses. Loss of the Phase II contract would have a material adverse effect on us. In September 2000, we entered into a joint venture air pollution monitoring instrument manufacturing relationship with the Dongyu Shenyang Group. We own a 42.5% interest in the venture and it is known as Dasibi-Dongyu in China. With the signing of a joint venture, we have accomplished our strategic goals for a general air pollution leadership position in China begun in 1994. The goals are a significant achievement and have been costly for an under capitalized company to attain, against larger well-financed competitors; some heavily subsidized by foreign governments. Phase I and Phase II have established us as a "designated vendor" for direct, non-competitive negotiation, the initial company goal, and the joint venture has linked us to a well-financed partner for future business, the second company goal. Management believes no competitor has achieved either goal. The Air Pollution Industry Air pollution consists of certain gases or particles, generally the products of combustion or other industrial processes, which are or may be hazardous to human health. Pollutants include carbon monoxide, ozone, oxides of sulfur and nitrogen, hydrogen sulfide and particles. Small amounts of these pollutants, such as a few parts per million or parts per billion, may be harmful. The instruments produced and sold by us, the "core business", detect and measure these pollutants and are also utilized in calibrating other pollution measurement equipment. Any systems or processes such as our "flue gas purification system" patent employ chemical and mechanical means to remove these same pollutants from combustion exhaust gases. (See "Research and Development" under this Item 1. "Description of Business"). 5 Industrial entities require equipment to detect the presence and measure the level of pollutants in order to comply with governmental regulations and government regulatory agencies require equipment to enforce governmental standards. Currently, international priority has been given to control (and therefore to monitor) such gaseous pollutants as sulfur dioxide, oxides of nitrogen, carbon monoxide, ozone and particulates (suspended dust). Although manual sampling of both gases and particulates is still performed routinely, improvements in the reliability and accuracy of automated, continuous monitoring equipment that are manufactured and sold by us, have made manual sampling less desirable and automated monitoring increasingly common. In basic, continuous monitoring instruments, ambient air is taken into a manifold, whose function is to direct a fast-moving stream of ambient air to the monitor. The instrument may use a filter to remove particulates or scrubbers to remove gasses that might interfere with accurate measurement of the pollutant. The pollutant is then introduced into a measurement cell environment where it undergoes a chemical or physical reaction, whose output can be converted to an electrical signal that, in turn, can be read locally or transmitted to some remote monitoring plant or computer. Measurement cells can be based in many different methods for the detection of the pollutants of interest. Thus, an instrument designer may have many different methods available by which a pollutant may be identified and measured. Some methods used for measurement of pollutants by us are flame photometry (wherein concentrations of gaseous elements are measured by burning them and optically observing the color and intensity of the flame generated thereby), infrared absorption (wherein concentrations of infrared absorbing gases are measured by detecting changes in intensity of a radiation beam closed cell), chemiluminescence (wherein a chemical generates a light or a wave length measurable by a photo multiplier tube), ultraviolet spectroscopy (wherein the pollutants' decrease in ultraviolet light intensity is converted by a photoelectric detector to an electric signal) and beta ray attenuation (wherein a radioactive source's beta ray emanation is reduced in direct proportion to the mass of a particle). Instrument Market The air pollution monitoring equipment market includes two markets: (i) source instrumentation for monitoring the source's pollutant emissions as they are discharged into the air and (ii) ambient air for instrumentation for monitoring ambient air pollution. The two markets are quite different in that source instrumentation is generally not subject to rigid governmental-imposed guidelines because of the difficult analyses involved, while ambient air instruments are subject to rigid governmental guidelines because the pollutants are easier to define and measure. Since 1994, the ambient market worldwide except for China, India, and the Philippines has approached saturation with extremely competitive bid situations which have significantly impacted gross profit margins. Since 1994, we have focused a majority of our world-wide marketing budget and effort on China, for cost-efficient effect to improve gross profit margin. Since 1998, we have directed our entire marketing effort to China. 6 Generally, we sell our instruments for use in systems for the measurement of ambient air pollution. In a system, air pollution monitoring instruments are united with additional equipment to provide a comprehensive measurement unit. In an ambient air instrumentation system, the monitoring instrument is combined with a manifold intake, a calibrator and data transmitters. The system samples the ambient air, measure the pollutants and transmits the data. We design and manufacture all instruments used in a system, including the data tabulation and transmission devices. Control Market The air pollution control market makes only minimal use of measurement instrumentation. This market is concerned with "purification" of exhaust gases emanating from combustion-related or even chemical-only processes. The "purification" process consists of using various types of equipment that may or may not involve catalysts and/or reagents to cause reactions and/or mechanical removal of a high percentage of selected air pollutants. The highest percentage obtainable will relate, at any given time, to the state-of-the-art of the technology involved and the economics of implementing the technology. The market is old, in essence dating to the beginnings of the industry when soot collectors were first installed on combustion chambers. However, the market size is embryonic since technology has not materially advanced and implementation remains costly so as not to allow any generally accepted control of source pollutants. We filed a patent application in April 1994 for a "flue gas purification system," which issued in 1996, and a second patent issued on the system in March, 1999, however, the commercial viability of a market for this invention is not assured. (See "Research and Development" and "Intellectual Property" under this Item 1. "Description of Business.") Governmental Approval While we presently focus on Chinese activities, it is important to note that United States governmental activity in air pollution monitoring and control has been a recognized leadership authority role in nearly every country in the world. In fact, in air monitoring instrumentation, nearly every country specifies that a stamp be affixed to the instrument or pollution monitor stating "U.S.E.P.A. (U.S. Environmental Protection Agency) Approved." Therefore approval and policies of the EPA effect approval policies throughout the world. The Environmental Protection Agency (the "EPA") administers the federal Clean Air Act, as amended by the Clean Air Act Amendments of 1990, and approves ambient air pollution monitoring equipment meeting certain requirements as either reference or equivalent methods for measuring pollutants. The EPA established the reference method as the basic method for measuring a pollutant. An equivalent method measures the same pollutant utilizing a different technique that achieves results identical to those of the referenced method. As a practical matter, before a monitoring instrument can be sold in the United States, it must receive EPA-approval as either a "reference" or "equivalent" method. These approvals are given only after rigorous and expensive testing by the applicant and the submission to, and approval by, the EPA of the results of the testing. The testing and approval process generally requires between 12 and 18 months. Following approval, the EPA typically acquires and tests a production model of the device. If the model being tested does not meet the standards established by the approval process, the approval may be withdrawn. 7 Each of our models of ozone monitors and our sulfur dioxide and oxides of nitrogen monitors have been approved as an equivalent method by the EPA. Additionally, our carbon monoxide instrument has been approved as equivalent methods by the EPA. We are currently testing a particulate analyzer (beta ray attenuation) for approval as an equivalent method by the EPA. We have never had, or been threatened with, a recall as the result of subsequent testing by the EPA of a production model of any of its instruments. We believe that, as the performance of air monitoring equipment improves and monitoring technology becomes available in the market, government regulatory agencies tend to adopt regulations requiring the use of such technology. We have never been required to modify or discontinue any of our products as a result of improved technology. However, there can be no assurance that future technological improvements will not mandate changes in, or cause the obsolescence of our products. Governmental Regulation and Enforcement Similar to the "Governmental Approval" setion, U.S. legislation is also closely followed throughout the world. Any acceleration of concern, as well as deceleration, has a direct implication to the degree of concern in overseas agencies. Legislation requiring more precise air pollution monitoring and enforcement is increasing as the sophistication of the technology improves and as concern for the environment, particularly the depletion of the ozone layer, becomes more acute. The Clean Air Act and the Clean Air Act Amendments of 1990 (the "1990 Amendments"), require increased control of industrial air pollution and represent an increasing threat of shut-down for U.S. industrial concerns that fail to obtain necessary permits and engage in other conduct violative of the legislation. Because increased control requires increased management and monitoring of air pollutants by government and industry, we expect, but cannot assure, an increasing market for our products. Our management believes that governmental enforcement policy also has a significant effect on the demand for our products. A relaxation during 1982 in the federal enforcement of governmental standards resulted in a decrease in demand for our products. Since then, the worldwide trend toward increasingly stringent environmental standards for industrial air pollution together with stricter governmental enforcement of environmental regulations, is expected by management to cause continued expansion of segments of the analytical instruments market and a continued increase in demand for our products. In essence, we furnish a product that the customer does not want to buy voluntarily. In previous years, price difference was not significant to the selection process. Since 1994, sizeable discounts have become significant to the purchasers. Company Products In 1972, our personnel developed, and in 1974 initially marketed, the first ultraviolet ozone monitor, of which eight models are currently marketed by us, including high concentration, manual, remote and microprocessor-controlled versions. We will continue to seek to develop new versions of our basic model of ozone monitor, but do not expect any change in the basic principle upon which the instrument operates. Since 1974 our company has been generally considered the leader in ozone measurement technology in the world. 8 Under patent granted in 1972, our 1003-AH Ozone Monitor was the only accepted monitor for ozone measurement by every agency in the world until expiration of the patent period or patent coverage. We, ourselves, circumvented patent coverage by introduction and initial marketing of a micro-processor controlled version of the 1003-AH designated as the 1008-AH. Because of these initial actions, a Dasibi ozone analyzer is found in a high majority of monitoring agencies world-wide. Our personnel developed microprocessor-controlled carbon monoxide, sulfur dioxide and oxides of nitrogen monitors in 1981, 1986 and 1987, respectively. Calibration equipment, that is utilized to independently verify the measurements made by other monitoring equipment, was first manufactured and sold by us in 1976 and known as the "Auditor," was followed by a manually-operated, portable model that performs similar functions. In 1990, both of these models were superseded by our Model 5008 state-of-the-art, programmable calibration equipment. We completed development, in 1991, of a Model 7001 beta-gauge to measure sub-micronic particulates, and a Model 8001 data-logger to gather and transmit measured air pollutant information. In February 1994, we acquired the technology and inventory of the Byron Hydrocarbon Analyzer line that resulted in a completion of the ability to offer a System 1000. This analyzer is a micro-processor controlled, gas chromatograph type methane, non-methane analyzer designated as Model 302. All instruments plus proprietary reporting and predictive software comprise a System 1000 that can serve as a stand-alone satellite in a regional monitoring network. (See "Research and Development") Reporting software, i.e., the accumulation and tabulation of collected pollutant and meteorological data, is an integral part of a System 1000. Predictive software is not necessarily an integral part of a System 1000 since it can take several forms for the end-user requirements. Predictive software has no forecasting capability, i.e., allowing the end-user to determine tomorrow's "real time" air pollutant levels. Rather, predictive software applies to "past'"results and how they would change with alterations to generators of pollutant sources, such as factories, traffic, etc. If maps of pollution levels for the "end of today" are required then the predictive software is integral to a System 1000. Physically, a System 1000 is a "bank" of rack mounted instruments enclosed in its own 6' x 6' x 2' deep cabinet. The cabinet is normally installed in a temperature controlled environment with sampling inlet tubes to the ambient "outside" surroundings according to U.S.E.P.A. guidelines for "outside" considerations. Essentially no installation is required for the completely wired and internally connected System 1000 cabinet. However, installation, if necessary, and start-up are normally performed by the customer's own technicians since in this type of business, the end-user normally employs high caliber technicians. If this is not the case, we have training facilities and the ability to provide training courses for such personnel. 9 We offer a two-year warranty on all of our instruments, with the exception of certain components, such as lamps, that have short lives. With respect to such components, we pass on to the customer the warranty (usually one year) which it receives from the manufacturer. Our warranty provides for repair or replacement of defective products. During each of the last five fiscal years, we have been required to honor our warranty with respect to less than 0.3% of total instruments sales during each year. Marketing and Sales; Backlog Instruments The marketing and sales activities of company include advertising by mail and in trade journals (primarily Pollution Equipment News and Air Pollution Control Association Journal) and attendance and exhibition at worldwide air pollution conferences. Our personnel attend the annual conference of the Air Pollution Control Association as well as worldwide conferences. Our core business instruments have been sold to customers world-wide, including industrial manufacturers; federal, state, city, local and foreign governmental agencies; major industrial companies; and educational and research institutions in over 30 countries. Sales made in the United States are handled directly by our sales staff. Nearly all of our foreign sales are made to distributors who, in turn, resell to the end users. We sell to these distributors at a discount from the listed price. Management believes that, normally, the loss of a distributor who may account for a large percentage of sales would have little impact on net revenues as the end users of our products could be transferred to new distributors. An exception in foreign sales is China. Here, our distributor serves a dual role with primary emphasis on a role as a representative, when we sell direct to the government. The recent China contract is a direct sale. Further, it is expected that a loss of this distributor or representative would have a materially adverse impact on our revenues (See "Foreign Sales"). Historically, foreign sales represented approximately 50% of the Dasibi subsidiary sales, or the core business. Currently foreign sales account for approximately 85% of the core business. In 2000, one customer, China, accounted for 34% of the sale of our products. Our core business sales in the export market are evenly distributed among all of our products. Export sales are billed and paid in United States dollars only. In 2001, it is expected that one customer, China, may account for as much as 90% of sales of our products. Our core business instruments have been sold during the past 10 years to over 500 customers in the U.S. and over 30 foreign countries and have been made up of a small percentage (3% to 5%) of industrial manufacturers of Fortune 500 size, and the remaining percentage in state, city, local, federal, foreign governmental agencies, and educational and research institutions. The technological life of our largest selling instrument to nearly all of the referenced customers - the 1003-AH Ozone Monitor, is over thirty years and it is still ordered currently. Since 1994, a competitive price pressure by large instrument manufacturers has resulted in continually declining sales with a corresponding loss in the total number of customers each year. Therefore while the percentages indicated above are fairly stable, we have reorganized to focus our marketing and sales efforts to a single, but largest market in the world. We now have a "base" core business of customers in the U.S. and around the world which is relatively small but requires only minimum marketing effort, and a potentially large China business that can be pursued efficiently. 10 Historically, none of our business has been subject to the re-negotiation of profits, and no government orders have ever been terminated. The indicated core business backlog at December 31, 2000 was approximately $200,000, which amount we consider immaterial. However, we have a contract from China for approximately $13.6 million dollars. We believe that the project can be commenced by July 2001. Commencement of the project before the end of July in the year 2001 is a material condition to our profitability status for the year 2001. Foreign Sales The following table sets forth certain information regarding our foreign sales for the last two fiscal years: Year Ended December 31, ------------ 2000 1999 ---- ---- (In thousands) Aggregate sales to unaffiliated foreign customers: Europe and The United Kingdom $ 341 $ 358 Asia and Pacific Rim $ 1,438 $ 5,200 Latin America & Other $ 157 $ 173 During the fiscal year ended December 31, 1999 one customer, China, accounted for more than 65% of net sales. During fiscal 2000, China accounted for more than 34% of net sales. Historically, backlog has not been significant to our operations because orders usually require delivery in 45 to 60 days. As of December 31, 2000, the Company had approximately $200,000 in "firm" orders that required delivery in 90 days or less, a backlog that we do not consider significant. Manufacturing and Purchasing We manufacture many components and subsystems for use in our products, including critical optical components and analog and digital circuitry. Other components, including packaging materials, integrated circuits, microprocessors and minicomputers, are purchased from unaffiliated third parties. Most of the raw materials and supplies purchased by us are either available from a number of different suppliers or alternative sources could be developed without a materially adverse effect on our business. However, the availability and quality of certain key instrument components, such as printed circuit board designs and lamps, are controlled by a limited number of vendors. A vendor's inability to supply these components to us in a timely fashion, or to our satisfaction, could affect our ability to deliver instruments on time. 11 Research and Development Historically, we have been actively engaged in research and development in order to produce new products. However, the competitive price pressures experienced by us since early 1994 have sharply limited the new product development to areas of software as opposed to hardware. Developed over the past three years, DECS (Dasibi Environmental Central Software) is a Windows-based, network control and reporting program for multi systems of pollutant analyzers and ancillaries. Similar programs exist but management believes none are under single manufacturer design and control. Within the same constraints, we are developing a variety of predictive pollutant modeling programs. Because of competitive pressure budget restraints, we have been limiting flue gas purification system development work. Employees As of March 28, 2001, we have 50 full-time employees, of whom 5 were engaged in administration, 7 in engineering, 31 in manufacturing, 2 in sales and marketing, and 5 as technicians in China. None of our employees are represented by a labor union. We have never had a strike or lockout and consider our employee relations to be good. Competition - Instruments We are the smallest competitor in the ambient air pollution instrumentation market. Therefore, we are subject to the effects of better-financed competitors and their research and development efforts, and price discounting. We compete on the basis of technical advantages in our products and our reputation among customers as a quality provider of products and services. To a lesser extent, we compete on the basis of price. To participate in this business, designation as "EPA approved" is required and since an end-user's data is acceptable when obtained by any instrument with that designation, there is no technical possibility of a significant, dominating, competitive advantage. Although we are not aware of any other company that competes with us in all of our product lines and software capabilities combined, all of our competitors have resources substantially greater than us. There are also smaller companies that specialize in a limited number of the types of products manufactured by us. Our primary competitors in the domestic market are Thermo Instrument Systems, Inc. and Advanced Pollution Instruments. In the foreign market, our primary competitors are Thermo Instrument Systems, Monitor Labs, Environnement S.A of France and Horiba Instruments. 12 Intellectual Property Although we have obtained patents for our ozone monitor and various techniques in instrument design, it has generally been our policy to proceed without patent protection since it is management's belief that the disclosure requirements of the federal patent laws provide competitors with easy access to the secrets of rapidly changing technology. The instrument patents obtained by us, all of which have expired, are not deemed by management to be significant to our business operations or potential success. We have no federal or state registered trademarks and no franchises or concessions. We do have common law rights to the trademark "Dasibi." We do not claim any proprietary position for our products other than the value of "technique" in assembly and operation that is a corollary factor of design and experience of assembly that we have historically performed "in-house". For our software, however, in-house development allows the use of source code to inhibit infringement of the tie-in communicative factors in transmittal and processing of data - in this sense, the software is considered proprietary. Additionally, the "in-house" software accesses "public domain" EPA software to perform possible end-user requirements. Albert E. Gosselin, Jr., our co-founder and chief executive officer, has, for the past several years, devoted personal research time to developing an innovative, cost conscious system for purifying exhaust gases. His efforts resulted in the filing of a patent application for the system on behalf of the company in April 1994, subsequently granted in September 1996, and a second grant in March 1999. Both patents were assigned to the company for $1.00. Item 2. Description of Properties In July 1994, Pollution Research moved its administrative, instrument manufacturing and employee facilities to 39,070 square feet, increased to 45,000 square feet in 1997, at 506 Paula Avenue, Glendale, California. We lease the space from an unaffiliated third party for a term of ten years commencing July 1, 1994, at a base rent of $24,223 per month plus operating costs and taxes, with a provision for increases in the base rent related to increases in the consumer price index to the present rent of $32,000 per month. We utilize most of the existing office and manufacturing space and believe that such space is more than adequate for our needs for the foreseeable future. Item 3. Legal Proceedings New Era Capital, Inc. vs Pollution Research and Control Corp. - ------------------------------------------------------------- Case No. E0028408 In November, 1999, Barry Soltani, a Director of the Company, filed a lawsuit against Pollution Research alleging that certain monies were owed to him by us. In December of 1999, we filed a cross-complaint against Mr. Soltani. In December of 2000, this lawsuit was settled out of court. In settling this matter, neither party admitted liability or acknowledged the validity of any claims. 13 Soltani, Etemad, Pic Computers etal vs Pollution Research and Control Corp. - --------------------------------------------------------------------------- Case No. BC227020 In March, 2000, the above plaintiffs filed a lawsuit against us alleging breach of contract and fraud surrounding both the purchase and return of real property in the form of a training facility or business property in Macau, China and certain service contracts between us and the plaintiffs. We have answered the complaint and have asserted a number of defenses, and we are aggressively defending our interest in this matter. We have filed a cross complaint against the plaintiffs alleging that Mr. Soltani had breached his fiduciary duties as a director and are seeking a judicial ruling that the real property transaction was properly rescinded by us. We are currently aggressively defending our interest in this matter, discovery is nearing completion and settlement discussions have commenced. Trial is set for June, 2001. Taylor, Taylor & Dreifus vs Pollution Research and Control Corp. - ---------------------------------------------------------------- No. 99-1100-CA01 Circuit Court Escambia, Florida In June, 1999, a lawsuit was filed against us by Taylor, Taylor, & Dreifus, a Florida general partnership alleging default by our company under a promissory note and failing to make lease payments, all relating to a former subsidiary bankruptcy of 1998. The amount of claim is estimated at $300,000. We are vigorously defending the litigation and have filed a counterclaim against the partnership alleging that the note and lease payments are not due because of fraudulent representations made at the time of acquisition of the former subsidiary business. No discovery has taken place through the date of this report. Item 4. Submission of Matters to a Vote of Security Holders Not Applicable. 14 PART II Item 5. Market for Common Equity and Related Stockholder Matters Our company's common stock is traded over-the-counter in the NASDAQ System as NASDAQ Small Cap securities under the symbol "PRCC." Set forth below are the high and low closing bid quotations in the over-the-counter market for the common stock as reported by the relevant market makers for fiscal years 2000 and 1999. Quotations represent inter-dealer quotations, without adjustment for retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions. Fiscal 2000 Fiscal 1999 Quarter Ended High Bid Low Bid High Bid Low Bid - ------------- -------- ------- -------- ------- Common Stock: March 31 $ 4.22 $ 1.25 $ 2.00 $ .88 June 30 3.63 1.53 2.38 1.06 September 30 2.44 1.66 3.87 1.81 December 31 2.19 .78 2.91 1.56 As of March 28, 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. A one for four reverse split of our common stock was approved by shareholders during 1998 and all values pertaining to our stock have been adjusted in this report. As of March 28, 2001, there are 5,816,752 shares of common stock outstanding, 1,334,606 warrants and 622,625 options. Item 6. Management's Discussion and Analysis or Plan of Operation 2000 - ---- We have been in a transitional operation phase since early 1998. Recent years have indicated that our "base" core business is in the range of $2.6 million in revenues. During 1998, we demonstrated a self-sustaining break-even operation at this revenue with a total staff of 20 personnel. To handle the large China orders which are, at present, unpredictable, a total staff of 50 minimum is indicated. Therefore, until a "steady-state" flow of revenue from China is reached a monthly operating loss situation is expected for portions of each year. "Ramping-up" is not feasible in the employment market for technical personnel as has existed during the past thirty months in the United States. Management believes that acceptance of a staggered profit-loss monthly operation is necessary to properly service the very large China market. In 1999, we reported that seven of the twelve months could be considered as accepted high fixed expense months in this transition effort. Each month in 2000 and in the current year has also been an accepted, high fixed expense month with minimal China activity. 15 The procedure of accepting operating losses as described above has had a continuing adverse impact on our working capital. To offset this, we have had to obtain loans to furnish operating funds. Since April 2000 we have initiated several unsuccessful capital restructuring efforts. The Phase II China contract requires this restructuring. Management believes that with the effective date of the Phase II China contract expected in 2001, new working capital financing will be available from U.S. Export-Import Bank. Inability to obtain preliminary financing for the Phase II Contract could have a material adverse effect on our company's operations. Financing when needed, even in the form of state or federal guaranteed loans involves lending institutions' extremely high management fees. Non-guaranteed loans demand extremely high interest rates. Finally, equity placements require significant discounts and incentives. The combination of accepted high fixed expense months described above and the aforementioned high expenses associated with access to capital tend to lower operational performance of any year that may have minimum China market activity. Pro-forma for specific China performance have been and will continue to be used as a guide for maintaining acceptable gross profit margins. Net revenues in 2000 were $3,636,622 compared to $7,314,975 in 1999, a 50% decrease. The decrease was entirely due to a decrease in China business. The revenues for the "base" core business were essentially the same as the year before. Gross margin was 35% of consolidated net revenues in 2000 compared to 30% of the consolidated net revenues of 1999, which is the expected range for a ratio of China to non-China business, of less than 3:1. Selling, general and administrative expenses decreased from a consolidated $2,952,652 in 1999 to $2,672,268 in 2000 due to less travel and start-up costs associated with the decrease in China business. Research and development expense decreased from $70,830 in 1999 to $53,465 in 2000 due to completion of software development projects. Interest expense decreased from $570,008 in 1999 to $371,736 in 2000, primarily, due to the decrease in the magnitude of loans required in 2000 from that required in the Phase I China project. Approximately $760,000, or 41% of the net loss was attributable to financing costs during the year 2000. 16 At December 31, 2000 we had an approximate net operating loss carry-forward of $8.2 million. The approximate $2.6 million net operating loss for 2000 resulted in a $728,000 benefit from income taxes and was applied as a 2000 deferred tax asset and a decrease to operating loss. The net loss of $1,856,018 in 2000 was a result of the aforementioned operating loss reduced by a $728,000 tax credit compared to a net income of $892,304 in 1999 primarily affected by an accumulated tax credit of $2,659,000 which offset an operating loss of $1,766,696. Liquidity and Capital Resources We have historically financed operations through bank borrowings and the issuance of common stock in both public and private securities offerings. Since our financial statements have deteriorated because of the above-described policy of knowingly incurring losses in order to develop the China market, financial institutions have been unwilling to lend to us and the cost of obtaining working capital from investors has been relatively expensive. From January 2000 through the date of this report, we have raised a total of $1,790,000 in capital. Of this amount, the sum of $865,000 represents the outstanding principal balance of convertible debentures convertible into an aggregate of approximately 1,000,000 shares of common stock. The issuance of 1,000,000 shares upon the prospective conversion of all of these debentures would have a significant dilutive effect on our existing shareholders. A total of an additional 651,400 shares of common stock are issuable upon the exercise of warrants and options granted as incentives to the holders of the convertible debentures. The sum of $650,000 out of the balance of $925,000 of financing, represents the outstanding principal balance of a loan. We issued options exercisable to purchase 100,000 shares of common stock as incentives to the note holder. On June 28, 2000, we issued options exercisable to purchase an aggregate of 840,816 shares of common stock to employees of Dasibi under the Dasibi Environmental Corp. Employees' Stock Option Plan. We issued, on June 29, 2000, said 840,816 shares of common stock to these employees in consideration for promissory notes payable to Pollution Research totaling $1,680,000 in principal amount. On January 4, 2001, we entered into an agreement with Silverline Partners, Inc., Cork, Ireland, to provide consulting services to locate and form alliances with well-financed, European companies with synergistic technologies. We issued 700,000 restricted shares of common stock to Silverline Partners under the agreement. The holders of our outstanding debentures have agreed not to exercise their rights under the anti-dilution provisions of the debentures as a result of the issuance of the shares to Silverline Partners. Working capital at December 31, 2000 was $1,087,756. Management believes that equity financing and major modification of our capital structure is required. 17 During fiscal 1999 and 2000 and through the date of this report, we have received debt financing upon various terms, as follows: A. Three, one-year loans from unaffiliated individuals evidenced by promissory notes with an aggregate face amount of $300,000, maturing June 1, 2001. with interest ranging from 11% to 12% per annum. These loans were initially made in 1999 and restructured in 2000. B. One subordinated convertible debenture with a face amount of $500,000, due June 2002, with interest at the rate of 12% per annum, convertible at a conversion price of the lesser of $2.15 or 80% of the market price on the date of conversion. The initial March 2000 due date of the debenture was previously extended to December 2000. The initial interest rate was 12% per annum. C. One convertible debenture with a face amount of $300,000, due June 2001, with interest at the rate of 12% per annum, convertible at a conversion price of the lesser of $2.25 or 80% of the market price on the date of conversion. The initial due date of the debenture was June 1, 2000. As of the date of this report, a total of 119,108 shares of common stock have been issued upon conversion of the debenture at conversion prices in a range from $1.20 to $2.25, and the outstanding principal balance is $50,000. D. One convertible debenture with a face amount of $500,000, due June 2002, with interest at the rate of 12% per annum, convertible at a conversion price of the lesser of $2.00 or 85% of the market price on the date of conversion. The initial due date of the debenture was March 31, 2001. E. One loan to Dasibi China, Inc., a wholly-owned subsidiary of Pollution Research, evidenced by a promissory note with a face amount of $75,000, maturing on the extended due date of June 2002, with interest at the rate of 10% per annum. F. One loan evidenced by a promissory note with a face amount of $200,000, maturing on the extended due date of June 2002, with interest at the rate of 18% per annum. G. Eight convertible debentures with a total face amount of $365,000, due July 17, 2001, with interest at the rate of 9% per annum, convertible at a conversion price of the lesser of $2.34 or 80% of the market price on the date of conversion. Management believes that all of the above debt instruments can be satisfied or restructured, if necessary, prior to their respective due dates. Seasonality We do not believe that our business is seasonal. Item 7. Financial Statements Our financial statements and related notes are set forth at pages F-1 through F-22. 18 INDEX ----- Page ---- Independent Auditors' Report F-2 Consolidated Balance Sheet F-3 Consolidated Statements of Operations F-5 Consolidated Statements of Stockholders' Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 F-1 AJ. ROBBINS, PC CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 3033 EAST 1ST AVENUE SUITE 201 DENVER, COLORADO 80206 INDEPENDENT AUDITORS' REPORT Board of Directors Pollution Research and Control Corp. Glendale, California We have audited the accompanying consolidated balance sheet of Pollution Research and Control Corp. and Subsidiaries as of December 31, 2000, and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended December 31, 2000 and 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pollution Research and Control Corp. and Subsidiaries as of December 31, 2000, and the consolidated results of their operations and their cash flows for the years ended December 31, 2000 and 1999 in conformity with generally accepted accounting principles. AJ. ROBBINS, PC CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS Denver, Colorado February 9, 2001 F-2 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET DECEMBER 31, 2000 ----------------- ASSETS ------ CURRENT ASSETS: Cash $ 172,306 Accounts receivable, trade, less allowance for doubtful accounts of $35,504 226,420 Inventories 2,220,836 Other current assets 365,585 ---------- Total Current Assets 2,985,147 ---------- PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net 77,379 INVESTMENT IN JOINT VENTURE 600,000 ACCOUNTS RECEIVABLE, related party 203,937 OTHER ASSETS 23,509 DEFERRED TAX ASSET, net 3,387,000 ---------- $7,276,972 ========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-3 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Continued) DECEMBER 31, 2000 ----------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable, trade $ 278,498 Accrued liabilities 155,782 Accrued settlement 45,000 Notes payable and convertible debt 1,365,000 Accrued interest expense 53,111 ------------ Total Current Liabilities 1,897,391 LONG-TERM DEBT 1,275,000 DEFERRED RENT 29,068 ------------ Total Liabilities 3,201,459 ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, 20,000,000 shares authorized: Series A, $.01 par value, -0- shares issued and outstanding -- Series B, $.01 par value, -0- shares issued and outstanding -- Common stock, no par value, 30,000,000 shares authorized, 5,116,752 issued and outstanding 10,269,076 Additional paid-in capital 2,216,505 Employee stock plan receivable (1,667,400) Accumulated (deficit) (6,742,668) ------------ Total Stockholders' Equity 4,075,513 ------------ $ 7,276,972 ============ SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-4
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- 2000 1999 ----------- ----------- NET REVENUES $ 3,636,622 $ 7,314,975 COST OF GOODS SOLD 2,363,340 5,142,575 ----------- ----------- GROSS PROFIT 1,273,282 2,172,400 ----------- ----------- OPERATING EXPENSES: Selling, general and administrative 2,672,268 2,952,652 Research and development 53,465 70,830 ----------- ----------- Total Operating Expenses 2,725,733 3,023,482 ----------- ----------- (LOSS) FROM OPERATIONS (1,452,451) (851,082) ----------- ----------- OTHER INCOME (EXPENSE): Other income -- 13,500 Interest income 261 -- Interest expense (371,736) (570,008) Amortization of loan fees (760,092) (359,106) ----------- ----------- Net Other Income (Expense) (1,131,567)) (915,614) ----------- ----------- (LOSS) FROM OPERATIONS, BEFORE INCOME TAXES (BENEFIT) (2,584,018) (1,766,696) ----------- ----------- (BENEFIT) FROM INCOME TAXES (728,000) (2,659,000) ----------- ----------- NET INCOME (LOSS) $(1,856,018) $ 892,304 =========== =========== NET INCOME (LOSS) PER SHARE - BASIC $ (.41) $ .26 =========== =========== WEIGHTED AVERAGE SHARES, BASIC 4,540,847 3,438,418 =========== =========== NET INCOME (LOSS) PER SHARE - DILUTED $ (.41) $ .21 =========== =========== WEIGHTED AVERAGE SHARES, DILUTED 4,540,847 4,168,924 =========== =========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-5 POLLUTION RESEARCH AND CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999 AND 2000 ---------------------------------------------- Series A Common Stock Preferred Stock ------------------------ ----------------------- Shares Amount Shares Amount --------- ----------- --------- --------- Balances, December 31, 1998 (See Note 20) 2,368,439 $ 6,704,195 220,000 $ 2,200 Sale of common stock, net of offering costs of $74,875 848,331 731,375 -- -- Conversion of preferred stock 670,000 6,700 (220,000) (2,200) Recission of purchase of Technical Service Center (450,000) (4,500) -- -- Issuance of common stock in partial settlement of debt 100,000 175,000 -- -- Value of beneficial conversion feature of convertible debentures (See Note 20) -- -- -- -- Conversion of convertible debt into common stock 85,775 150,000 -- -- Common stock issued for services 50,000 78,150 -- -- Stock based compensation for loan fees -- -- -- -- Net income for the year -- -- -- -- ----------- ----------- ----------- ----------- Balances, December 31, 1999 3,672,545 7,840,920 -- -- Exercise of warrants and options 429,207 404,406 -- -- Fair market value of warrants issued in connection with exercise of warrants -- -- -- -- Additional proceeds from the sale of common stock in partial settlement of debt -- -- -- -- Conversion of convertible debt 50,000 100,000 -- -- Value of beneficial conversion feature of convertible debentures -- -- -- -- Common stock issued for loan fees 100,000 187,500 -- -- Stock based compensation for loan fees -- -- -- -- Common stock issued for services 25,000 56,250 -- -- Issuance of stock under Employee Stock Plan 840,000 1,680,000 -- -- Collections on note due from sale of stock -- -- -- -- Net (loss) for the year -- -- -- -- ----------- ----------- ----------- ----------- Balances, December 31, 2000 5,116,752 $10,269,076 -- $ -- =========== =========== =========== =========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6 POLLUTION RESEARCH AND CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999 AND 2000 (Continued) ---------------------------------------------------------- Series B Preferred Stock Note Due Additional Total -------------------------- From Sale Paid-In Accumulated Stockholders' Shares Amount Of Stock Capital Deficit Equity --------- --------- ---------- ------------ ------------ ------------- Balances, December 31, 1988 (See (Note 20) 450,000 $ 4,500 $ -- $ 1,121,331 $(5,778,954) $ 2,053,272 Sale of common stock, net of offering costs of $74,875 -- -- -- -- -- 731,375 Conversion of preferred stock (450,000) (4,500) -- -- -- -- Recission of purchase of Technical Service Center -- -- -- (595,500) -- (600,000) Issuance of common stock in partial settlement of debt -- -- -- -- -- 175,000 Value of beneficial conversion feature of convertible debentures (See Note 20) -- -- -- 233,333 -- 233,333 Conversion of convertible debt into common stock -- -- -- -- -- 150,000 Common stock issued for services -- -- -- -- -- 78,150 Stock based compensation for loan fees -- -- -- 374,836 -- 374,836 Net income for the year -- -- -- -- 892,304 892,304 ----------- ----------- ----------- ----------- ----------- ----------- Balances, December 31, 1999 -- -- -- 1,134,000 (4,886,650) 4,088,270 Exercise of warrants and options -- -- -- (1,113,703) -- (709,297) Fair market value of warrants issued in connection with exercise of warrants -- -- -- 1,113,703 -- 1,113,703 Additional proceeds from the sale of common stock in partial settlement of debt -- -- -- 98,948 -- 98,948 Conversion of convertible debt -- -- -- -- -- 100,000 Value of beneficial conversion feature of convertible debentures -- -- -- 179,250 -- 179,250 Common stock issued for loan fees -- -- -- -- -- 187,500 Stock based compensation for loan fees -- -- -- 804,307 -- 804,307 Common stock issued for services -- -- -- -- -- 56,250 Issuance of stock under Employee Stock Plan -- -- (1,680,000) -- -- -- Collections on note due from sale of stock -- -- 12,600 -- -- 12,600 Net (loss) for the year -- -- -- -- (1,856,018) (1,856,018) ----------- ----------- ----------- ----------- ----------- ----------- Balances, December 31, 2000 -- $ -- $(1,667,400) $ 2,216,505 $(6,742,668) $ 4,075,513 =========== =========== =========== =========== =========== =========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6 (Continued) POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- 2000 1999 ------------ ----------- CASH FLOWS FROM (TO) OPERATING ACTIVITIES: Reconciliation of net income (loss) to net cash flows provided by (used in) operating activities: Net income (loss) $(1,856,018) $ 892,304 Depreciation and amortization 25,772 23,150 Deferred rent (14,534) (14,532) Deferred income taxes (728,000) (2,659,000) Beneficial conversion feature of convertible debt 179,250 233,333 Stock issued for services 56,250 78,150 Stock-based compensation expense for loan fees 522,593 309,106 Stock issued for loan fees 187,500 -- Changes in operating assets and liabilities: Accounts receivable, trade, net 875,270 (883,821) Accounts receivable, related party 75,001 (51,010) Inventories (833,125) 239,444 Due from factor -- 55,164 Prepaid expenses 40,000 (40,000) Other current assets -- (9,051) Accounts payable, trade 60,753 (38,947) Accrued liabilities (29,617) 199,397 ----------- ----------- Net Cash Flows (Used in) Operating Activities (1,438,905) (1,666,313) ----------- ----------- CASH FLOWS FROM (TO) INVESTING ACTIVITIES: Additions to property, equipment and leasehold improvements -- (14,807) Investment in joint venture (600,000) -- Payments received from employee stock purchase plan 12,600 -- ----------- ----------- Net Cash Flows (Used in) Investing Activities (587,400) (14,807) ----------- ----------- CASH FLOWS FROM (TO) FINANCING ACTIVITIES: Proceeds from issuance of common stock 404,405 806,250 Payment of offering costs -- (74,875) Advances on notes payable 925,000 1,583,251 Payments on notes payable (210,000) (1,283,251) Advances on convertible debt 865,000 800,000 ----------- ----------- Net Cash Flows Provided by Financing Activities 1,984,405 1,831,375 ----------- ----------- INCREASE (DECREASE) IN CASH (41,900) 150,255 CASH, beginning of year 214,206 63,951 ----------- ----------- CASH, end of year $ 172,306 $ 214,206 =========== =========== Supplemental Cash Flow Information: See Note 15 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 1 - BUSINESS ACTIVITY Pollution Research and Control Corp., a California corporation, primarily designs, manufactures and markets air pollution monitoring instruments, through its wholly-owned subsidiary Dasibi Environmental Corporation ("Dasibi"). The Company's wholly owned subsidiary Nutek, Inc. ("Nutek") is inactive. The Company's wholly owned subsidiary Logan Medical Devices, Inc. ("Logan") was renamed Dasibi China, Inc. ("Dasibi China") and is currently inactive, but seeking business opportunities in The Peoples Republic of China. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation - ------------- The consolidated financial statements include the accounts of Pollution Research and Control Corp. and its wholly-owned subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Investment in Joint Venture - --------------------------- The Company accounts for its investment in the joint venture under the equity method. (See Note 4) Revenue Recognition - ------------------- Revenue is recognized upon shipment of products. Title of goods is transferred when the products are shipped from the Company's warehouse. Inventories - ----------- Inventories are stated at the lower of cost (first-in first-out) basis or market. Advertising Expenses - -------------------- The Company expenses advertising costs as incurred. During the years ended December 31, 2000 and 1999, the Company did not have significant advertising costs. Property, Equipment and Leasehold Improvements and Depreciation - ---------------------------------------------------------------- Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation is provided for on the straight-line method over the estimated useful lives of the assets, generally five to ten years. Amortization of leasehold improvements is over the shorter of the life of the lease or five years. Total depreciation expense was $25,772 and $23,150 for the years ended December 31, 2000 and 1999, respectively. F-8 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Stock-Based Compensation - ------------------------ The Company accounts for stock based compensation in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). This standard requires the Company to adopt the "fair value" method with respect to stock-based compensation of consultants and other non-employees. The Company did not change its method of accounting with respect to employee stock options; the Company continues to account for these under the "intrinsic value" method, and to furnish the proforma disclosures required by SFAS 123. See Note 11 for additional information with respect to stock-based compensation. Earnings per Share - ------------------ In 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 128, "Earnings Per Share". Statement 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, to conform to Statement 128 requirements. Cash Equivalents - ---------------- For purposes of reporting cash flows, the Company considers all short term, interest bearing deposits with original maturities of three months or less to be cash equivalents. Fair Value of Financial Instruments - ----------------------------------- The carrying amounts of cash, accounts receivable, accounts payable, accrued expenses, notes payable and convertible debt approximate fair value because of the short maturity of these items. Impairment Of Long-Lived Assets - ------------------------------- The Company evaluates its long-lived assets by measuring the carrying amounts of assets against the estimated undiscounted future cash flows associated with them. At the time the carrying value of such assets exceeds the fair value of such assets, impairment is recognized. To date, no adjustments to the carrying value of the assets has been made. Research and Software Development Costs - --------------------------------------- The Company has developed software to control its monitoring equipment available for sale, which are sold on a package basis. The software development costs were expensed as research and development costs as incurred. Revenues from software sold were insignificant during the years ended December 31, 2000 and 1999. Research and development expense was $53,465 and $70,830 for the years ended December 31, 2000 and 1999, respectively. F-9 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes - ------------ Deferred income taxes are recorded to reflect the tax consequences in future years of temporary differences between the tax basis of the assets and liabilities and their financial statement amounts at the end of each reporting period. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the current period and the change during the period in deferred tax assets and liabilities. The deferred tax assets and liabilities have been netted to reflect the tax impact of temporary differences. At December 31, 2000 no valuation allowance has been established for the deferred tax asset as management believes that it is more likely than not that a tax benefit will be realized. Use of Estimates in the Preparation of Financial Statements - ----------------------------------------------------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassification - ---------------- Certain amounts reported in the Company's financial statements for the year ended December 31, 1999 have been reclassified to conform to the current year presentation. Recently Issued Accounting Pronouncements - ----------------------------------------- In 1999 the FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The adoption by the Company of Statement 133 did not impact the Company's financial statements. The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, Revenue Recognition in Financial Statements, in December 1999. The SAB summarizes certain of the SEC staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. In June 2000, the SEC issued SAB 101B, which delays the implementation date of SAB 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. The Company does not believe that adoption of this SAB will have a material impact on its financial statements. F-10 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 3 - INVENTORIES Inventories at December 31, 2000 consisted of the following: Raw materials $ 920,952 Work in process 468,912 Finished goods 830,972 ---------- Total $2,220,836 ========== Inventories at December 31, 2000 include capitalized labor and overhead of $683,479. NOTE 4 - JOINT VENTURE In December 2000, the Company entered into a Joint Venture Contract with Shenyang Dongyu Group Co. Ltd. The intent of the joint venture is to manufacture and sell air pollution monitoring equipment and to provide technical consultation and support as well as after-sale services. The business will operate in Shenyang City, China. The term of the Joint Venture is 10 years. Operations commenced in 2001. The Company contributed $600,000 in cash and transferred internally developed technology for its current generation product line to the Joint Venture for a 42.5% joint venture interest. The Company is required to contribute an additional $200,000 cash and additional technology during the first year of operations of the Joint Venture. The Company's rights include electing two directors to the Board of Directors out of a total of six directors. NOTE 5 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Property, equipment and leasehold improvements at December 31, 2000 consisted of the following: Machinery and equipment $ 84,787 Furniture and fixtures 31,298 Leasehold improvements 194,196 -------- 310,281 Less accumulated depreciation and amortization 232,902 -------- $ 77,379 ======== F-11 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 6 - DEFERRED RENT Upon execution of a 10 year lease for its present facility in Glendale, California commencing July 1, 1994, the Company was granted 6 months "free" rent. As required by generally accepted accounting principles, rent expense is being recognized by amortizing the total minimum rentals payable under the lease over the terms of the lease on a straight-line basis. The deferred rent shown on the balance sheet as of December 31, 2000 represents the excess of the total amount charged to rent expense over the amounts actually due and payable under the lease as of such date, of which $23,012 has been classified as current and $29,068 as long term, respectively. NOTE 7 - ACCRUED SETTLEMENTS Nutek Under a settlement reached in 1998 and finalized in June 1999, the Company entered into a compromise settlement agreement with the previous major secured lender of Nutek to repay $468,000 through the issuance of 100,000 shares of the Company's common stock (market value of $1.75 per share on the date of issuance) and payment on February 1, 2000 of the remaining balance due, including interest accruing from the settlement date at 12% per annum. The shares were placed in escrow to be sold to reduce the balance owed under the settlement agreement. In addition, the Company issued warrants to purchase 20,000 shares of the Company's common stock at $.75 per share as an inducement to enter into the settlement agreement. The warrants were valued based upon the fair value method using the Black-Scholes model and were recorded as loan fees expense. The Company did not make its required payment in February 2000 and in March 2000 entered into an amendment to the compromise settlement agreement and agreed to place $200,000 in escrow for the remaining balance owed which was paid out during the year ended December 31, 2000 in full settlement of the obligation. Other Settlement During 1999 a director of the Company filed a lawsuit alleging that certain monies were due to him for prior salary by the Company. The Company filed a cross-complaint in December 1999. During December 2000, the Company reached a settlement and was required to pay $107,750, of which $45,000 remains outstanding as of December 31, 2000 payable in three equal monthly installments. F-12
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 8 - NOTES PAYABLE, CONVERTIBLE DEBT AND LONG-TERM DEBT Notes payable consisted of the following at December 31, 2000: Notes payable to individuals; interest at 11% per annum; principal and interest due June 2001; unsecured; effective rate of interest, which includes values ascribed to stock compensation granted and other loan fees is 29.9% $ 200,000 Notes payable to individuals; interest at 12% per annum; principal and interest due June 2001; unsecured; effective rate of interest, which includes values ascribed to stock compensation granted and other loan fees is 25.7% 100,000 Notes payable; interest at 18% per annum; principal and interest due June 2002; unsecured; effective rate of interest, which includes values ascribed to stock compensation granted and other loan fees is 43.2% 200,000 Notes payable; interest at 12% per annum; principal and interest due February 2001; unsecured; due date verbally extended; effective rate of interest, which includes values ascribed to stock compensation granted and other loan fees is 25.7% 650,000 Notes payable interest at 10% per annum; principal and interest due June 2002; unsecured; effective rate of interest, which includes values ascribed to stock compensation granted and other loan fees is 10% 75,000 ---------- 1,225,000 ---------- Convertible debt consisted of the following at December 31, 2000: Convertible debenture; interest at 12% per annum due monthly; principal due June 2002; convertible at the lesser of 80% of the market price of the common stock on the date of conversion or 115% of the market price of the common stock on May 28, 1999; effective rate of interest, which includes values ascribed to stock compensation granted and other loan fees is 17% $ 500,000 Convertible debenture; interest at 12% per annum due monthly; principal due June 2001; convertible at the lesser of 80% of the market price of the common stock on the date of conversion or $2.25; effective rate of interest, which includes values ascribed to stock compensation granted and other loan fees is 38.6% 50,000 Convertible debenture; interest at 12% per annum due monthly; principal due June 2002; convertible at the lesser of 85% of the market price of the common stock on the date of conversion or $2.00; effective rate of interest, which includes values ascribed to stock based compensation granted, beneficial conversion feature and loan fees is 150.9% Convertible debenture; interest at 9% per annum due monthly; principal due July 2001; 500,000 convertible at the lesser of 80% of the market price of the common stock on the date of conversion or $2.34; effective rate of interest, which includes values ascribed to stock based compensation granted, beneficial conversion feature and loan fees is 159.2% 365,000 ---------- 1,415,000 $2,640,000 ========== Principal payments on the debt are as follows: Year ending December 31, 2001 $1,365,000 Year ending December 31, 2002 1,275,000 ---------- $2,640,000 ==========
F-13 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 8 - NOTES PAYABLE AND CONVERTIBLE DEBT (Continued) During 1999 and 2000, the Company sold convertible debentures, which included beneficial conversion features at rates less than market value. The convertible debentures are convertible to common stock at rates ranging from 80% to 85% of the trading price of the common stock on the date of conversion or prices ranging from $2.00 to $2.34, whichever is less. The Company recognized additional interest costs related to the beneficial conversion features of $179,250 and $233,333 during the years ended December 31, 2000 and 1999, respectively. NOTE 9 - INCOME TAXES The components of deferred tax assets and (liabilities) is as follows:
2000 ----------------- Total deferred tax assets $ 3,387,000 Total deferred tax (liabilities) - ----------------- Net deferred tax asset $ 3,387,000 ================= The provision (benefit) for income taxes consists of the following: 2000 1999 ----------------- ----------------- Current $ - $ - Deferred (728,000) (2,659,000) ----------------- ----------------- $ (728,000) $ (2,659,000) ================= ================= The income tax provision (benefit) for the years ended December 31, 2000 and 1999 differs from the computed expected provision (benefit) at the federal statutory rate for the following reasons: 2000 1999 ----------------- ----------------- Computed expected income tax provision (benefit) $ (842,000) $ (537,000) Non-deductible meals and entertainment 6,000 15,000 Temporary differences for items deductible from (includible in) taxable income in future years: 1,000 -- Depreciation 20,000 1,000 Inventory valuation allowance 1,000 (14,000) Bad debt allowance -- 10,000 Other 1,000 -- State income taxes, net of federal income tax effect -- (59,000) Net operating loss carryforward increased 618,000 474,000 Stock-based expenses 195,000 110,000 Decrease in valuation allowance (728,000) (2,659,000) ----------------- ----------------- Income tax provision (benefit) $ (728,000) $ (2,659,000) ================= ================= F-14 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 9 - INCOME TAXES (Continued) The components of the deferred tax assets and (liabilities) as of December 31, 2000 were as follows: Deferred tax assets: Temporary differences: Allowance for doubtful accounts $ 14,000 Inventory valuation allowance 38,000 Accrued expenses 15,000 Loss on previous joint venture investment with Logan 66,000 Tax depreciation in excess of book depreciation (4,000) Net operating loss carryforward 3,258,000 ----------------- Net long-term deferred tax asset $ 3,387,000 ================= The components of the deferred tax (expense) benefit were as follows for the years ended December 31, 2000 and 1999: 2000 1999 ----------------- ----------------- Allowance for doubtful accounts $ 1,000 $ 11,000 Inventory valuation allowance 23,000 (16,000) Accrued expenses -- 1,000 Depreciation (1,000) (1,000) Increase in net operating loss carryforward 705,000 474,000 Change in valuation allowance -- 2,190,000 ----------------- ----------------- $ 728,000 $ 2,659,000 ================= =================
As of December 31, 2000 the Company has net operating loss carryforwards available to offset future taxable income of approximately $8,171,000 expiring in 2008 through 2020. NOTE 10 - STOCKHOLDERS' EQUITY Issuance of Common Stock - ------------------------ In February 1999 the Company sold 288,331 shares of common stock in a private placement, receiving net proceeds of $199,375, after paying issuance costs of $16,875. In May 1999 the Company sold 300,000 shares of common stock in a private placement, receiving net proceeds of $229,500, after paying issuance costs of $25,000. In September 1999 the Company sold 260,000 shares of common stock in a private placement, receiving net proceeds of $302,750, after paying issuance costs of $33,000. F-15 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 10 - STOCKHOLDERS' EQUITY (Continued) In February 2000 the Company issued 100,000 shares of common stock valued at $187,000 and 300,000 warrants valued at $338,400 as a loan fee in connection with the issuance of a debenture. In March and September 2000, convertible debenture holders converted a total of $100,000 to 50,000 shares of common stock. In March 2000, warrants and options were exercised for $404,406 and the Company issued 429,207 shares of common stock. As an incentive to exercise, the Company granted the warrant and option holders additional warrants to purchase 429,207 shares of the Company's common stock, with exercise prices ranging from $3.10 to $4.00, expiring in 2003. The additional warrants have been valued at $1,113,703 which was recorded as a reduction of the net proceeds generated from the exercise of the warrants and options. Preferred Stock - --------------- The Company is authorized to issue up to 5,000,000 shares of preferred stock, $.01 par value per share in series to be designated by the Board of Directors. On May 8, 1998, the Company issued 220,000 shares of Series A Preferred Stock for a purchase price of $.50 per share, resulting in proceeds to the Company of $110,000. These shares were converted into 220,000 shares of common stock in March 1999. The Series A Preferred Stock have voting rights but no dividend rights. Technical Service Center - ------------------------ During June 1998 the Company purchased a technical service facility in Macau, including two property units comprised of a modern office facility and a technical laboratory in exchange for 450,000 shares of its Class B Preferred Stock valued at $600,000. The facility was to be used to perform the training and technical servicing of the China Contract. During 1999 the Class B Preferred Stock was converted to common stock. The Company was advised by the China State Environmental Protection Agency (SEPA) that training must be done on the mainland of China. In October 1999 the Company rescinded the purchase of the Technical Service Center and retired the 450,000 shares of common stock, which had been placed in escrow pending the completion of the purchase. The Company does not believe it will have any settlement costs related to the rescission of the acquisition of the Technical Service Center. Consulting Agreement - -------------------- In July 1999 the Company issued 50,000 shares of common stock under a consulting agreement valued at the market value of the common stock on the date of services. F-16 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 10 - STOCKHOLDERS' EQUITY (Continued) Warrants - -------- In connection with the sale of common stock and debt financing during the year ended December 31, 1999, the Company granted warrants to purchase 363,331 shares of common stock at $.75 per share, 130,000 shares of common stock at $1.50 per share, 63,000 shares of common stock at $2.25 per share and 75,000 shares of common stock at $2.40 per share, 100,000 shares of common stock at $2.25 per share and 200,000 shares of common stock at $4.50 per share, and 131,400 shares of common stock at $2.2875 per share. Warrants issued with the debt financing were valued using the fair market value method using the Black-Scholes model totaling $374,836. Employee Stock Option Plan - -------------------------- On June 29, 2000 the Company adopted the Employees' Stock Option Plan (the Plan) which provides for the granting of options to officers, directors, employees and consultants. 1,500,000 shares of common stock are reserved under the plan for the granting of options. The Plan is in effect until June 29, 2010, unless extended by the Company's stockholders. The options are exercisable to purchase stock for a period of ten years from the date of grant. Incentive Stock Options granted pursuant to this Plan may not have an option price that is less than the fair market value of the stock on the date the option is granted. Incentive stock options granted to significant stockholders shall have an option price of not less than 110% of the fair market value of the stock on the date of the grant. The Company granted options to employees to purchase 840,000 shares of the Company's common stock exercisable at $2.00 per share on June 29, 2000. (See Notes 11 and 16). The options were immediately exercised. F-17 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 10 - STOCKHOLDERS' EQUITY (Continued) The following table summarizes the activity of options and warrants for the two years ended December 31, 2000:
Weighted Average Number of Exercise Exercise Options Warrants Price Amount ------- -------- ----- ------ Outstanding, December 31, 1998 837,500 302,709 $ 3.47 $ 3,958,595 Granted 117,000 651,331 1.20 922,000 Expired (58,000) (302,709) 4.51 (1,627,000) ----------- ----------- ----------- Outstanding, December 31, 1999 896,500 651,331 2.03 3,253,595 Exercised (871,875) (397,332) 1.64 (2,084,405) Granted 1,003,000 980,607 2.79 5,526,903 Expired (410,000) -- 3.43 (1,405,000) ----------- ----------- ----------- Outstanding, December 31, 2000 617,625 1,234,606 $ 2.86 $ 5,291,093 =========== =========== ===========
NOTE 11 - STOCK-BASED COMPENSATION The Company accounts for stock based compensation in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation". The standard requires the Company to adopt the "fair value" method with respect to stock-based compensation of consultants and other non-employees, which resulted in charges to operations of $522,593 and $309,106 during the years ended December 31, 2000 and 1999, respectively. The Company also had stock-based compensation which was recorded as capitalized loan fees of $347,444 and $65,730 during the years ended December 31, 2000 and December 31, 1999, respectively. The Company did not adopt the fair value method with respect to employee stock options; the Company continues to account for these under the "intrinsic value" method. Had the Company adopted the fair value method with respect to options issued to employees as well, an additional $48,000 would have been charged to income in 1999; proforma net income would have been $844,304 and net income per share would have been $.25 on the basic basis and $.20 on the diluted basis. In estimating the above expense, the Company used the Modified Black-Scholes European pricing model. The average risk-free interest rate used was 4.9% and 5.1%, volatility was estimated at 96%, the expected life was less than three years. F-18 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 11 - STOCK-BASED COMPENSATION (Continued) 840,000 employee options were granted during the year ended December 31, 2000. The options were immediately exercised, and, therefore, had no value. Had the Company adopted the fair value method with respect to options issued to employees as well, there would be no additional charges to operations in 2000. NOTE 12 - EARNINGS PER SHARE
For the Year Ended December 31, 2000 -------------------------------------------------- Per Income Shares Share (Numerator) (Denominator) Amount ----------- ------------- ------ Basic EPS (Loss) available to common stockholders $(1,856,018) 4,540,847 $ (.41) Effect of Dilutive Securities Convertible debt, options and warrants -- -- -- ----------- ----------- ------- Diluted EPS Income available to common stockholders $(1,856,018) 4,540,847 $ (.41) including assumed conversions =========== =========== ======= For the Year Ended December 31, 1999 -------------------------------------------------- Per Income Shares Share (Numerator) (Denominator) Amount ----------- ------------- ------ Basic EPS Income available to common stockholders $ 892,304 3,438,418 $ .26 Effect of Dilutive Securities Convertible debt, options and warrants (36,525) 730,506 (.05) --------- --------- ------- Diluted EPS Income available to common stockholders $ 855,779 4,168,924 $ .21 including assumed conversions ========= ========== =======
F-19 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 13 - COMMITMENTS AND CONTINGENCIES Operating Leases - ---------------- The Company leases its facilities under long-term non-cancelable operating leases. The lease terms provide for increases in future minimum rental payments based on the Consumer Price Index, and an option to purchase during the lease term. Future minimum lease commitments as of December 31, 2000 are as follows: Year Ended Total ---------- ----- December 31, Commitments 2001 $ 291,000 2002 291,000 2003 291,000 2004 145,000 --------------- Total $ 1,018,000 =============== Total rentals under all operating leases charged against income amounted to $424,785 and $407,107 for the years ended December 31, 2000 and 1999, respectively. Employment Agreements - ---------------------- The Company is obligated to make certain minimum salary payments to the Chief Executive Officer and other employee/directors. All contracts expire in 2003, as follows: Year Ended December 31, Total ------------ ----- 2001 $ 345,000 2002 345,000 2003 230,000 -------------- Total $ 920,000 ============== Litigation - ---------- The Company is a party to a number of lawsuits arising in the normal course of business. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company's operations, cash flows or financial position. NOTE 14 - RELATED PARTY TRANSACTIONS The Company advanced $203,937 to the former stockholders of Logan. The receivable is secured by equipment and is non-interest bearing. F-20 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION No cash was paid for income taxes during the years ended December 31, 2000 or 1999. Cash paid for interest was $174,880 and $151,878 during the years ended December 31, 2000 and 1999, respectively. During 2000 $100,000 of convertible debt was converted to 50,000 shares of the Company's common stock. During 1999 the Company rescinded the purchase of the Tech center valued at $600,000 and 450,000 shares of the Company's common stock were cancelled. During 1999 $150,000 of convertible debt was converted to 85,775 shares of the Company's common stock. NOTE 16 - EMPLOYEE STOCK PLAN RECEIVABLE In June 2000 the Company issued 840,000 shares of common stock under the Company's Employee Stock Plan at $2.00 per share in exchange for a non-interest bearing note of $1,680,000. The note is to be repaid through the employee payroll deductions. The Company received $12,600 towards the repayment of this loan during 2000. NOTE 17 - CONCENTRATION OF CREDIT RISK Concentrations of credit risk with respect to trade receivables exist due to large balances with a few customers. At December 31, 2000, the accounts receivable balance from one significant customer was $23,968, or 9% of the total accounts receivable balance. Ongoing credit evaluations of customers' financial conditions are performed and generally no collateral is required. The Company maintains reserves for potential credit losses, and such losses in the aggregate have not exceeded management's expectations. Customers are located throughout the world. The Company maintains all cash in bank accounts, which at times may exceed federally insured limits. NOTE 18 - FOREIGN SALES The following table sets forth certain information regarding the Company's foreign sales for the last two fiscal years:
Year Ended December 31, ----------------------- 2000 1999 ------------- ------------ Aggregate sales to unaffiliated foreign customers: Europe and The United Kingdom $ 341,000 $ 358,000 Asia and Pacific Rim $ 1,438,000 $ 5,200,000 Latin America and Other $ 157,000 $ 173,000
F-21 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999 ---------------------------------------------- NOTE 18 - FOREIGN SALES (Continued) During the years ended December 31, 2000 and 1999 one customer in China accounted for 40% and 71% of net sales. NOTE 19 - SUBSEQUENT EVENTS On January 4, 2001, the Company entered into an agreement with Silverline Partners, Inc., to provide consulting services to locate and form alliances with well-financed, European companies with synergistic technologies. The Company issued 700,000 restricted shares of common stock to Silverline Partners under the agreement. NOTE 20 - PRIOR PERIOD ADJUSTMENTS During the year ended December 31, 2000, a change was made to the accumulated deficit and additional paid in capital of the Company to correct and include the effects of beneficial conversion features of the Company's Series A Preferred Stock and convertible debentures sold during 1998 and 1999 respectively, causing no change to total stockholders' equity. The Company recorded the beneficial conversion feature as a deemed dividend with respect to the Series A Preferred Stock of $192,500 as an increase to additional paid in capital and an increase to the accumulated deficit effective for the year ended December 31, 1998. The Company recorded the beneficial conversion feature as interest expense for the convertible debentures sold in 1999, as an increase to interest expense and an increase to additional paid in capital of $233,333 for the year ended December 31, 1999. F-22 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures Not applicable. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Directors, Executive Officers and Key Employees Set forth below are the names, ages, positions and business experience of the directors, executive officers and key employees of Pollution Research and Dasibi Environmental Corp. Name Age Position(s) with Pollution Research and Dasibi ---- --- ---------------- ----------------------------- Albert E. Gosselin, Jr. 68 President, Chief Executive Officer and Chairman of the Board of Directors of Pollution Research; President of Dasibi Donald R. Ford 73 Chief Financial Officer and Director Cynthia L. Gosselin 39 Operations Manager of Dasibi Marcia A. Smith 62 Secretary and Director of Pollution Research; Manager of Administration of Dasibi Gary L. Dudley 61 Director, Chairman & CEO of Dasibi Craig E. Gosselin 41 Director, Director of Dasibi All directors hold office until the next annual meeting of our shareholders and until their successors have been elected and qualify. Officers serve at the pleasure of the board of directors. Family Relationships Albert E. Gosselin, Jr., is the parent of Craig E. and Cynthia L. Gosselin, both of whom are adults. All of the foregoing are presently serving as executive officers and/or directors of the Company. Except as set forth in this report, no family relationship exists between or among any director or executive officer. 19 Business Experience Albert E. Gosselin, Jr., has served as the President, Chief Executive Officer and Chairman of the Board of Directors of Pollution Research and Control Corp. (formerly "Dasibi Environmental Corp." and "A.E. Gosselin Engineering, Inc.") and Dasibi (formerly "Baral Engineering, Inc."), corporations which he co-founded with Barbara L. Gosselin, since the organization of those corporations in December 1971 and July 1976, respectively. Barbara L. Gosselin resigned as a director on August 12, 1999 after being elected at the annual shareholders meeting. He also served as the President, Chief Executive Officer and Chairman of the Board of Directors of the company's former parent corporation, a corporation also named "Pollution Research and Control Corp., which he co-founded with Mrs. Gosselin under the name of "A.E. Gosselin Engineering Co.," from its inception date in 1966 through the date of its spin-off in October 1986. Mr. Gosselin also served as the President, Chief Executive Officer and Chairman of the Board of Directors of Applied Conservation Technology, Inc. ("ACT"), a former wholly-owned subsidiary of Pollution Research and Control Corp. engaged in the business of providing environmental impact reports to electric utilities, together with our company, from 1980 through the date of the purchase of ACT by its management from PRCC in November 1986. ACT is presently a diversified environmental consulting firm owned and managed by Gary L. Dudley, a Company director, and other members of management. Mr. Gosselin received a Bachelor of Science in mechanical engineering from Loyola University, Los Angeles, California, in 1954. He has been a registered mechanical engineer in the State of California since 1959. Donald R. Ford served as a director of Pollution Research in the 1970's and has served as a director and corporate officer of several private companies since 1975. After leaving Price Waterhouse (now Price Waterhouse Coopers) in 1957, he practiced primarily as a financial and business consultant to domestic and international companies. He received a B.S. in Marketing from the University of California, Berkeley in 1952. For the past five years, Mr. Ford has primarily been an income tax advisor. Cynthia L. Gosselin served as the Chief Financial Officer of Pollution Research and Control Corp. and Dasibi from May 1990 to January 1998, when she resigned those positions and became operations manager of Dasibi and Pollution Research. Additionally, she has acted as Dasibi's purchasing agent since May 1990. She was employed by Dasibi in various capacities, including production manager, from 1983 through April 1990. Ms. Gosselin received a B.S. degree in business from the University of California at Long Beach in 1982. Marcia A. Smith has served as a director of Pollution Research and Dasibi since May 1990. She has been employed as the manager of administration and in various other capacitities with Dasibi since 1979. Gary L. Dudley has served as a director of Pollution Research and Control Corp. during the periods since June 1991 and from 1980 through January 1991, and he served as Pollution Research's Vice President from 1979 through November 1986. Mr. Dudley also served as an executive officer and a director of PRCC, our former parent corporation, from 1984 through the date of the spin-off of PRCC in October 1986. Mr. Dudley has been the President and a principal shareholder of ACT, now located in Westminster, California, a diversified environmental consulting firm formerly wholly-owned, together with the Company, by PRCC, since the purchase of ACT by its management from PRCC in November 1986. He served as ACT's Vice President from 1980 through 1986. From 1962 through 1978, Mr. Dudley was employed in various engineering-related positions by Southern California Edison Company, TRW Systems, McDonnell Douglas Corporation and North American Rockwell Corporation. He received a Bachelor of Science degree in engineering from California State University at Los Angeles in 1962 and a Masters degree in mechanical engineering from the University of Southern California in 1966. Mr. Dudley is a registered mechanical engineer and a registered environmental assessor in the State of California and a member of the Association of Environmental Professionals. 20 Craig E. Gosselin has served as a director of Pollution Research and Dasibi since October 1989. Mr. Gosselin is an attorney who has been licensed to practice law in the State of California since 1984. He has served as the Vice President and General Counsel of Vans, Inc., a publicly-held designer, distributor and retailer of footwear, snowboard boots, apparel and related accessories located in Santa Fe Springs, California, since July 1992. He received a Bachelor of Business Administration degree from Loyola Marymount University in 1981 and a Juris Doctor from Southwestern University School of Law in 1984. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file with the Securities and Exchange Commission initial reports of ownership, and reports of changes in ownership, of common stock and other equity securities of Pollution Research. Executive officers, directors and greater than ten percent shareholders are required by Commission regulations to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on a review of the copies of such reports furnished to us, and representations that no other reports were required during the fiscal year ended December 31, 2000, our executive officers, directors and greater than ten per cent beneficial owners of our common stock, complied with all Section 16(a) filing requirements applicable to them. Item 10. Executive Compensation Executive Compensation The following table sets forth the total cash and non-cash compensation paid by Pollution Research for the fiscal years ended December 31, 1998, 1999 and 2000 to the president and chief executive officer, who was the only executive officer of Pollution Research whose aggregate cash compensation exceeded $100,000 for the 2000 fiscal year. 21
SUMMARY COMPENSATION TABLE Annual Compensation ------------------- Long Term Other Compensation Awards Name Annual Securities Underlying & Principal Position Year Salary Bonus Compensation Options/SARs(#) - -------------------- ---- ------- ----- ------------ --------------------- Albert E. Gosselin, Jr. 2000 $220,000 -0- -0- -0- President, Chief 1999 $210,000 * -0- -0- -0- Executive Officer & 1998 $202,223 -0- -0- -0- Chairman of the Board
* Does not include $97,866 of accrued salary from 1996. We do not provide officers or employees with pension, stock appreciation rights, long-term incentive or other plans. Compensation of Directors Directors do not receive compensation pursuant to any standard arrangement for their services as directors. Employment Agreements We have employment agreements with Albert E. Gosselin, Jr., the President, Chief Executive Officer and Chairman of the Board of Directors of the Company, Cynthia L. Gosselin, and Marcia Smith. Mr. Gosselin's employment agreement was first approved by the board of directors on July 30, 1987, and has since been extended through August 31, 2003. The Agreement, as extended, provides for the payment to Mr. Gosselin of a base salary of $200,000, $210,000, $220,000, $230,000, $240,000 and $250,000 during the one-year periods ending August 31, 1998, 1999, 2000, 2001, 2002, and 2003 respectively. We are further obligated to permit Mr. Gosselin to participate in our employee's incentive stock option plan and group medical plan and any other health, life insurance, group medical, disability income insurance and/or stock option plan adopted by us. Further, Mr. Gosselin's salary continues in the event of his disability and for two years after his death. He is also entitled to a lump sum severance payment equivalent to 2.99 times his current salary in the event of his termination as president or chief executive officer within eighteen months after a "change of control" of our company, including, among other events, certain types of mergers and other business combinations, material changes in the composition of the board of directors or the beneficial ownership of the common stock, the sale of substantially all of our assets or securities and the material downsizing or dissolution of our company. If such an event occurs during fiscal 2001, Mr. Gosselin would be entitled to receive $657,800 as a severance payment. 22 Item 11. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information as of March 28, 2001, regarding the ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent of its outstanding shares of common stock, each of the named executive officers, each director, and all executive officers and directors as a group. Except as otherwise indicated, each of the shareholders has sole voting and investment power with respect to the shares of common stock beneficially owned.
Name and Address of Beneficial Owner (1) Amount Beneficially Owned Percent of Class (2) - ---------------------------------------- ------------------------- -------------------- Ronald Patterson 748,030 (3) 12.9% Silverline Partners, Ltd. 700,000 12.0% Britannica Associates Limited 300,000 (4) 5.2% Barbara L. Gosselin Revocable Trust. 293,055 (5) 5.0% Albert E. Gosselin, Jr. 247,410 (6) 4.3% Marcia A. Smith 135,600 (7) 2.3% Gary L. Dudley 41,950 (8) * Craig E. Gosselin 16,250 (9) * All executive officers and directors as a group (five persons) 441,210 7.6% * Less than one percent (1) The address of Mr. Ronald Patterson is 1243 Fairway Point Row, San Diego, CA 92128. The address of Silverline Partners is 27 Wellington Road, Cork, Ireland. The address of Brittanica Assoc. is 3rd Floor, Omar Lodge Building, Road Town, Tortola BVI. The addresses of the balance of the individuals named above is 506 Paula Avenue, Glendale, CA 91201. (2) Assumes the exercise of outstanding options and warrants specific to the referenced party, the denominator of which is made up of the number of outstanding shares of common stock plus the number of shares of common stock issuable upon the exercise of those specific warrants and options.
23 (3) Includes 187,858 shares of common stock issuable upon the exercise of an option owned of record by Ronald Patterson and exercisable within 60 days. (4) Includes 200,000 shares of common stock issuable upon the exercise of options owned of record by Brittanica Associates and exercisable within 60 days. (5) Includes 87,248 shares of common stock issuable upon the exercise of an option owned of record by Barbara L. Gosselin Revocable Trust. (6) Includes 73,250 shares of common stock issuable upon the exercise of options owned of record by Albert E. Gosselin, Jr., exercisable within 60 days. Does not include a total of 160,860 shares of common stock owned of record collectively by Craig. E. and Cynthia L. Gosselin and Jennifer Jauregui, the adult children of Albert E. and Barbara Gosselin, Jr., as to which Mr. Gosselin disclaims any beneficial interest. Mrs. Gosselin holds shares of common stock in a revocable trust of Barbara L. Gosselin to which Mr. Gosselin disclaims any beneficial interest for estate planning purposes. (7) Includes 28,750 shares of common stock issuable upon the exercise of options owned of record by Marcia Smith and exercisable within 60 days. (8) Includes 27,500 shares of common stock issuable upon the exercise of options owned of record by Gary L. Dudley which are exercisable within 60 days. (9) Craig E. Gosselin is the adult son of Albert E. and Barbara L. Gosselin, Jr., who disclaim any beneficial ownership of his shares, and includes 15,000 shares of common stock issuable upon the exercise of options owned of record and exercisable within 60 days. Item 12. Certain Relationships and Related Transactions None. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits The exhibits listed in the Exhibit Index located at Pages E-1 through E-48 are filed pursuant to Item 13(a) of this Report. (b) Reports on Form 8-K None. 24 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 30, 2001 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin ----------------------------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board of Directors In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 30, 2001 /s/ Albert E. Gosselin ----------------------------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) Date: March 30, 2001 /s/ Donald R. Ford ----------------------------------------------- Donald R. Ford, Chief Financial Officer (Principal Financial and Accounting Officer) Date: March 30, 2001 /s/ Gary L. Dudley ----------------------------------------------- Gary L. Dudley, Director Date: March 30, 2001 /s/ Marcia A. Smith ----------------------------------------------- Marcia A. Smith, Director Date: March 30, 2001 /s/ Craig E. Gosselin ----------------------------------------------- Craig E. Gosselin, Director 25 EXHIBIT INDEX Item Number Description - ------ ----------- 3.1 Articles of Incorporation of A. E. Gosselin Engineering, Inc. (now "Pollution Research and Control Corp.") (Incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation (now "Pollution Research and Control Corp.") 3.2 Certificate of Amendment of Articles of Incorporation of A. E. Gosselin Engineering, Inc. (now "Pollution Research and Control Corp.") (Incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation (now "Pollution Research and Control Corp.") 3.3 Certificate of Amendment of Articles of Incorporation of Dasibi Environmental Corp. (now "Pollution Research and Control Corp.")(Incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation (now "Pollution Research and Control Corp.") 3.4 By-laws of A.E. Gosselin Engineering, Inc. (now "Pollution Research and Control Corp." (Incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation (now "Pollution Research and Control Corp.") 4.1 Form of Warrant Agreement (Incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp. dated January 17, 1989) 4.2 Form of Unit Purchase Warrant. (Incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp. dated January 17, 1989) E-1 4.3 Form of Stock Purchase Warrant. (Incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp. dated January 17, 1989) 10.1 Warrant to Purchase 7,500 shares of Common Stock issued to Frost & Company P.S. on February 10, 1987. (Incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp. dated January 17, 1989) 10.2 Employment Agreement, dated July 31, 1987, between Pollution Research and Control Corp. and ALbert E. Gosselin, Jr. (Incorporated herein by reference to Exhibit 10.3 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp. dated January 17, 1989) 10.3 Employees' Incentive Stock Option Plan. (Incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp. dated January 17, 1989) 10.4 Employment Agreement, as amended, dated August 19, 1989, between Pollution Research and Control Corp. and Albert E. Gosselin, Jr. (Incorporated herein by reference to Exhibit 10-28 to the Annual Report on Form 10-K for the fiscal year ended June 30, 1989) 10.5 Lease, dated July 1, 1989 between Pollution Research and Control Corp. and Shahik Mardeross-ASL. (Incorporated herein by reference to Exhibit 10-30 to the Annual Report on Form 10-K for the fiscal year ended June 30, 1989) 10.6 Stock Option Agreement, dated May 28, 1991, between Pollution Research and Control Corp. and Lee Sion. (Incorporated herein by reference to Exhibit 10.14 to the Transition Report on Form 10-K for the transition period ended June 30, 1991) 10.7 Stock Option Agreement, dated May 28, 1991, between Pollution Research and Control Corp. and Albert E. Gosselin, Jr.. (Incorporated herein by reference to Exhibit 10.15 to the Transition Report on Form 10-K for the transition period ended June 30, 1991) E-2 10.8 Stock Option Agreement, dated May 28, 1991, between Pollution Research and Control Corp. and Gary Dudley. (Incorporated herein by reference to Exhibit 10.13 to the Transition Report on Form 10-K for the transition period ended June 30, 1991) 10.9 Agreement, dated November 1, 1991, between Pollution Research and Control Corp. and KVB, Inc. (Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1991) 10.10 Purchase Agreement, dated as of December 2, 1991, between Pollution Research and Control Corp. and CSC Industries, Inc. and affiliated companies Pension Plans Trust. (Incorporated herein by reference to Exhibit 10.7 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.11 Warrant, dated as of December 2, 1991, issued to CSC Industries, Inc. and affiliated companies Pension Plans Trust. (Incorporated herein by reference to Exhibit 10.8 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.12 Purchase Agreement, dated as of December 9, 1991, between Pollution Research and Control Corp. and Richard M. Molinsky. (Incorporated herein by reference to Exhibit 10.9 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.13 Warrant, dated as of December 9, 1991, issued to Richard M. Molinsky. (Incorporated herein by reference to Exhibit 10.10 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.14 Purchase Agreement, dated as of December 11, 1991, between Pollution Research and Control Corp. and Global Environment Fund. (Incorporated herein by reference to Exhibit 10.11 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.15 Warrant, dated as of December 11, 1991, issued to Global Environment Fund. (Incorporated herein by reference to Exhibit 10.7 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) E-3 10.16 Purchase Agreement, dated as of December 13, 1991, between Pollution Research and Control Corp. and Robert A. Tantleff. (Incorporated herein by reference to Exhibit 10.13 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.17 Warrant, dated as of December 2, 1991, issued to Robert A. Tantleff. (Incorporated herein by reference to Exhibit 10.14 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.18 Purchase Agreement, dated as of December 16, 1991, between Pollution Research and Control Corp. and Stanley Baker. (Incorporated herein by reference to Exhibit 10.15 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.19 Warrant, dated as of December 16, 1991, issued to Stanley Baker. (Incorporated herein by reference to Exhibit 10.15 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.20 Purchase Agreement, dated as of December 16, 1991, between Pollution Research and Control Corp. and Bruce Lynch. (Incorporated herein by reference to Exhibit 10.17 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.21 Warrant, dated as of December 16, 1991, issued to Bruce Lynch. (Incorporated herein by reference to Exhibit 10.18 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.22 Purchase Agreement, dated as of December 16, 1991, between Pollution Research and Control Corp. and John Kilmartin (Incorporated herein by reference to Exhibit 10.19 to the Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) E-4 10.23 Warrant, dated as of December 16, 1991, issued to John Kilmartin. (Incorporated herein by reference to Exhibit 10.20 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.24 Consulting Agreement, dated January 3, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.24 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992. 10.25 Option Agreement, dated January 3, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.25 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) 10.26 Option Agreement, dated March 11, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.26 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) 10.27 Agreement, dated March 5, 1992, between Pollution Research and Control Corp. and Lee Sion. (Incorporated herein by reference to Exhibit 10.27 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1991.) 10.28 Option Agreement, dated June 22, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.28 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) 10.29 Option Agreement, dated June 22, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.29 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) 10.30 Lease Agreement, dated June 1, 1992, between Dasibi Environmental Group and Bernard C. Mills, Jr. (Incorporated herein by reference to Exhibit 10.30 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.31 Lease Agreement, dated January 6, 1994 , 1992, between Dasibi Environmental Group and the Prudential Insurance Company of America. (Incorporated herein by reference to Exhibit 10.31 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) E-5 10.32 Agreement, and Bill of Sale, dated February 18, 1994, between Pollution Research and Control Corp. and General Monitors, Inc. (Incorporated herein by reference to Exhibit 10.32 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.33 Stipulation of Settlement, dated February 1994, between Pollution Research and Control Corp. and Diversified Research Partners Limited Partnership. (Incorporated herein by reference to Exhibit 10.33 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.34 Requirements Contract dated March 10, 1994, between Pollution Research and Control Corp. and Logan Research, Ltd. (Incorporated herein by reference to Exhibit 10.34 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.35 Lease Agreement dated April 15, 1994, between Dasibi Environmental Corp. and Summit Park Associates. (Incorporated herein by reference to Exhibit 10.35 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.36 Amended Employment Agreement, effective August 31, 1993, between Pollution Research and Control Corp. and Albert E. Gosselin, Jr. (Incorporated herein by reference to Exhibit 10.36 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.37 Employment Agreement, dated July 20, 1994, between Pollution Research and Control Corp. and Cynthia L. Gosselin. (Incorporated herein by reference to Exhibit 10.37 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.38 Final Judgment of Permanent Injunction and Other Relief as to Pollution Research and Control Corp. dated July 7, 1994 in Case Number 1.94CV01425, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.38 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) E-6 10.39 Final Judgment of Permanent Injunction and Other Relief as to Pollution Research and Control Corp. dated July 13, 1994 in Case Number 1.94CV01425, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.39 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.40 Consent of Albert E. Gosselin dated June 7, 1994, in Case Number 1.94CV0125, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.40 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.41 Final Judgment of Permanent Injunction and Other Relief as to Cynthia Gosselin dated July 13, 1994 in Case Number 1.94CV01425, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.41 to the Annual Report on Form 10KSB for the fiscal year ended December 31, 1994.) 10.42 Consent of Cynthia L Gosselin dated June 7, 1994, in Case Number 1.94CV0125, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.41 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.43 Warrant to purchase 40,000 shares of Common Stock of Pollution Research and Control Corp. dated January 22, 1990, issued to Marty Williams. (Incorporated herein by reference to Exhibit 4.9 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.44 Amendment toWarrant to purchase shares of Common Stock of Pollution Research and Control Corp. dated January 22, 1990, issued to Marty Williams. (Incorporated herein by reference to Exhibit 4.9 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) E-7 10.45 Warrant to purchase 202,500 shares of Common Stock of Pollution Research and Control Corp. dated December 2, 1991, issued to CSC Industries, Inc. and affiliated companies. (Incorporated herein by reference to Exhibit 4.11 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.46 Amendment Warrant to purchase Common Stock of Pollution Research and Control Corp.of CSC Industries, Inc. and affiliated companies Pension Plans Trust, dated effective June 6, 1994.. (Incorporated herein by reference to Exhibit 4.12 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.47 Warrant to purchase 67,500 shares of Common Stock of Pollution Research and Control Corp. dated December 8, 1991, issued to Richard M. Molinsky. (Incorporated herein by reference to Exhibit 4.13 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.48 Amendment Warrant to purchase Common Stock of Pollution Research and Control Corp.of Richard M. Molinsky, dated effective June 6, 1994.. (Incorporated herein by reference to Exhibit 4.14 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.49 Warrant to purchase 135,000 shares of Common Stock of Pollution Research and Control Corp. dated December 11, 1991, issued to Kingsley & Co. (formerly Global Environment Fund). (Incorporated herein by reference to Exhibit 4.15 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.50 Amendment Warrant to purchase Common Stock of Pollution Research and Control Corp.of Kingsley & Co. (formerly Global Environment Fund), dated effective June 6, 1994.. (Incorporated herein by reference to Exhibit 4.16 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.51 Warrant to purchase 67,500 shares of Common Stock of Pollution Research and Control Corp. dated December 13, 1991, issued to A. Robert Tantleff.. (Incorporated herein by reference to Exhibit 4.17 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) E-8 10.52 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of A. Robert Tantleff, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.18 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.53 Warrant to purchase 101,250 shares of Common Stock of Pollution Research and Control Corp. dated December 16, 1991, issued to Stanley Becker. (Incorporated herein by reference to Exhibit 4.19 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.54 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of Stanley Becker, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.20 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.55 Warrant to purchase 27,000 shares of Common Stock of Pollution Research and Control Corp. dated December 16, 1991, issued to John Kilmartin. (Incorporated herein by reference to Exhibit 4.21 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.56 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of John Kilmartin, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.22 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.57 Warrant to purchase 74,250 shares of Common Stock of Pollution Research and Control Corp. dated December 16, 1991, issued to Bruce Lynch. (Incorporated herein by reference to Exhibit 4.23 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.58 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of Bruce Lynch, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.24 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) E-9 10.59 Warrant to purchase 25,000 shares of Common Stock of Pollution Research and Control Corp.of Michael Young dated May 24, 1991. (Incorporated herein by reference to Exhibit 4.25 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.60 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of Michael Young, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.26 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.61 Warrant to purchase 12,000 shares of Common Stock of Pollution Research and Control Corp. dated December 16, 1991, issued to Kennedy Capital Management. (Incorporated herein by reference to Exhibit 4.27 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.62 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of Kennedy Capital Management, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.28 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.63 Pollution Research and Control Corp. Common Stock Purchase Warrant for the purchase of 60,000 shares of the Equity Group Inc. dated August 31, 1993. (Incorporated herein by reference to Exhibit 4.29 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.64 Warrant to purchase 7,500 shares of Common Stock of Pollution Research and Control Corp. dated November 8, 1993, issued to Stanley Becker. (Incorporated herein by reference to Exhibit 4.30 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.65 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of Stanley Becker, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.31 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) E-10 10.66 Warrant to Purchase 5,500 Shares of Common Stock of Pollution Research and Control Corp. of Bruce Lynch dated November 8, 1993. (Incorporated herein by reference to Exhibit 4.32 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.67 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Bruce Lynch, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.33 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.68 Warrant to purchase 7,500 shares of Common Stock of Pollution Research and Control Corp. dated November 8, 1993 , issued to Robert Tantleff. (Incorporated herein by reference to Exhibit 4.34 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.69 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of Robert Tantleff , dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.35 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.70 Warrant to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. of Edward G. Lowell dated November 8, 1995. (Incorporated herein by reference to Exhibit 4.36 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.71 Option to Purchase 25,500 Shares of Common Stock of Pollution Research and Control Corp. of Randy Foy dated July 4, 1994. (Incorporated herein by reference to Exhibit 4.37 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.72 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of Frost and Company P.S, dated effective February 9, 1992. (Incorporated herein by reference to Exhibit 4.38 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) E-11 10.73 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp.of Kial, Ltd., dated effective January 9, 1992. (Incorporated herein by reference to Exhibit 4.39 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 10.74 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. of Albert E. Gosselin, Jr., dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.40 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.75 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Cindy Gosselin, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.41 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.76 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Barbara L. Gosselin, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.42 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.77 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Gary Dudley, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.43 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.78 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Marcia Smith, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.44 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) E-12 10.79 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Craig E. Gosselin, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.45 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.80 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Keith Gosselin, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.46 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.81 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. of Mike Chu, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.47 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.82 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. of Kimberly Chu, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.48 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.83 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. of Tolly Smith, dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.49 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.84 Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. of , dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.50 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) 10.85 Option to Purchase 200,000 Shares of Common Stock of Pollution Research and Control Corp. of J. Paul Consulting Group , dated as of July 18, 1995 (Incorporated herein by reference to Exhibit 4.51 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated January 17, 1996.) E-13 10.86 Agreement dated June 11, 1996, among Logan Medical Devices, Inc. party of the first part, Ronald Bruce Logan-Sinclair and Howard George Vinvent Cooke, parties of the second part, and Pollurion Research and Control Corp., party of the third part. (Incorporated herein by reference to Exhibit 10.86 to the Annual Report on Form 10K for the fiscal year ended December 31, 1996.) 10.87 Employment Agreement dated June 11, 1996, between Logan Medical Devices, Inc. and Logan Research Ltd., on the one hand, and Ronald Bruce Logan-Sinclair, on the other hand. (Incorporated herein by reference to Exhibit 10.87 to the Annual Report on Form 10K for the fiscal year ended December 31, 1996.) 10.88 Guarantee dated effective June 11, 1996, by Logan Medical Devices, Inc. in favor of Namulas Pension Trustees Limited. (Incorporated herein by reference to Exhibit 10.87 to the Annual Report on Form 10K for the fiscal year ended December 31, 1996.) 10.89 Loan and Security Agreement dated June 28, 1996, between Logan Medical Devices, Inc. on the one hand, and Ronald Bruce Logan-Sinclair and Howard George Vincent Cooke, on the other hand. (Incorporated herein by reference to Exhibit 10.89 to the Annual Report on Form 10K for the fiscal year ended December 31, 1996.) 10.90 Nine Per Cent Debenture due June 28, 2006, in the face amount of $285,714.29 bearing interest quarterly commencing June 30, 1998. (Incorporated herein by reference to Exhibit 10.90 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.91 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Phil Huss dated as of April 1, 1996 between Pollution Research and Control Corp. and Phil Huss. (Incorporated herein by reference to Exhibit 4.11 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.92 Consulting Agreement dated as of May 30, 1996, between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. (Incorporated herein by reference to Exhibit 4.12 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) E-14 10.93 Non-Qualified Stock Option Agreement dated as of May 30, 1996, between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. (Incorporated herein by reference to Exhibit 4.13 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.94 Non-Qualified Stock Option Agreement dated as of May 30, 1996, between Pollution Research and Control Corp. and Robert B. Prag.. (Incorporated herein by reference to Exhibit 4.14 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.95 Amendment to Non-Qualified Stock Option Agreement dated July 31, 1996, between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. (Incorporated herein by reference to Exhibit 4.15 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.96 Amendment to Non-Qualified Stock Option Agreement dated July 31, 1996, between Pollution Research and Control Corp. and Robert Prag. (Incorporated herein by reference to Exhibit 4.16 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.97 Amendment to Consulting Agreement dated as of May 30, 1996, between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. dated July 31, 1996 (Incorporated herein by reference to Exhibit 4.17 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.98 Second Amendment to Consulting Agreement dated as of May 30, 1996, between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. dated August 28, 1996 (Incorporated herein by reference to Exhibit 4.18 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) E-15 10.99 Option to Purchase 55,000Shares of Common Stock of Pollution Research and Control Corp. issued to Aubrey Hornsby. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Aubreu Hornsby. (Incorporated herein by reference to Exhibit 10.99 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.100 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Ernestine Taylor. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Ernestine Taylor. (Incorporated herein by reference to Exhibit 10.100 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.101 Option to Purchase 30,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Debbie Kendrick. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Debbie Kendrick. (Incorporated herein by reference to Exhibit 10.101 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.102 Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Roland Fink. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Roland Fink. (Incorporated herein by reference to Exhibit 10.102 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.103 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Charles Conner. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Charles Conner. (Incorporated herein by reference to Exhibit 10.103 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.104 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Patricia Cudd. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Patricia Cudd. (Incorporated herein by reference to Exhibit 10.104 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) E-16 10.105 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Jeffrey Harkey. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Jeffrey Harkey. (Incorporated herein by reference to Exhibit 10.105 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.106 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to James Bowers. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and James Bowers. (Incorporated herein by reference to Exhibit 10.106 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.107 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Michael Jones. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Michael Jones . (Incorporated herein by reference to Exhibit 10.107 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.108 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Charles McQuaig. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Charles McQuaig. (Incorporated herein by reference to Exhibit 10.108 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.109 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Daniel Patanjo. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Daniel Patanjo. (Incorporated herein by reference to Exhibit 10.109 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.110 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Karen Perry. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Karen Perry. (Incorporated herein by reference to Exhibit 10.110 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) E-17 10.111 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Ricky Sonnier. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Ricky Sonnier. (Incorporated herein by reference to Exhibit 10.111 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.112 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Victor Valerio. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Victor Valerio. (Incorporated herein by reference to Exhibit 10.112 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.113 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Spencer Abrams. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Spencer Abrams. (Incorporated herein by reference to Exhibit 10.113 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.114 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Dan Busby. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Dan Busby. (Incorporated herein by reference to Exhibit 10.114 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.115 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Frank Getautas. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Frank Getautas. (Incorporated herein by reference to Exhibit 10.115 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.116 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Mitzi Narramore. Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Mitzi Narramore. (Incorporated herein by reference to Exhibit 10.116 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) E-18 10.117 Option to Purchase 300,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Ron Logan-Sinclair. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Ron Logan-Sinclair. (Incorporated herein by reference to Exhibit 10.117 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.118 Option to Purchase 123,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Albert E. Gosselin. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Albert E. Gosselin. (Incorporated herein by reference to Exhibit 10.118 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.119 Option to Purchase 120,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Albert E. Gosselin. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Albert E. Gosselin. (Incorporated herein by reference to Exhibit 4.19 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.120 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Gary L. Dudley. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Gary L. Dudley. (Incorporated herein by reference to Exhibit 4.20 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.121 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Gary L. Dudley. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Gary L. Dudley. (Incorporated herein by reference to Exhibit 10.121 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.122 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Craig E. Gosselin. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Craig E. Gosselin. (Incorporated herein by reference to Exhibit 4.21 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) E-19 10.123 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Craig E. Gosselin. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Craig E. Gosselin. (Incorporated herein by reference to Exhibit 10.123 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.124 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Cynthia L. Gosselin. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Cynthia L. Gosselin. (Incorporated herein by reference to Exhibit 4.22 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.125 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Cynthia L. Gosselin. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Cynthia L. Gosselin. (Incorporated herein by reference to Exhibit 10.125 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.126 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Marcia Smith. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Marcia Smith. (Incorporated herein by reference to Exhibit 4.23 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.127 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Marcia Smith. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Marcia Smith. (Incorporated herein by reference to Exhibit 10.127 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.128 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Margaret Jones. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Margaret Jones. (Incorporated herein by reference to Exhibit 4.24 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) E-20 10.129 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Margaret Jones. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Margaret Jones. (Incorporated herein by reference to Exhibit 10.129 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.130 Option to Purchase 37,500 Shares of Common Stock of Pollution Research and Control Corp. issued to Lee Sion. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Lee Sion. (Incorporated herein by reference to Exhibit 10.130 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.131 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Patricia Cudd. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Patricia Cudd. (Incorporated herein by reference to Exhibit 10.131 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.132 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Roland Fink. Option Agreement, dated as of June 1, 1996 between Pollution Research and Control Corp. and Roland Fink. (Incorporated herein by reference to Exhibit 10.132 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.133 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and John Ann Hotchkiss; Warrant to Purchase 291,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to John Ann Hotchkiss. (Incorporated herein by reference to Exhibits 4.25 and 4.26 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.134 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and David Firestone; Warrant to Purchase 166,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to David Firestone. E-21 (Incorporated herein by reference to Exhibits 4.27 and 4.28 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.135 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Irawan Onggara; Warrant to Purchase 166,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Irawan Onggara. (Incorporated herein by reference to Exhibits 4.29. and 4.30 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.136 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and John M. Liviakis; Warrant to Purchase 66,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to John M. Liviakis. (Incorporated herein by reference to Exhibits 4.31 and 4.32 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.137 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Robert S. London; Warrant to Purchase 66,667Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Robert S. London. (Incorporated herein by reference to Exhibits 4.33 and 4.34 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.138 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Robert B. Prag; Warrant to Purchase 66,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Robert B. Prag. (Incorporated herein by reference to Exhibits 4.35and 4.36 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.139 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Shawn Cady; Warrant to Purchase 41,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Shawn Cady. (Incorporated herein by reference to Exhibits 4.37 and 4.38 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) E-22 10.140 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Donald Carstens; Warrant to Purchase 41,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Donald Carstens. (Incorporated herein by reference to Exhibits 4.39 and 4.40 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.141 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Ling Nen Chuan; Warrant to Purchase 41,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Ling Nen Chuan. (Incorporated herein by reference to Exhibits 4.41 and 4.42 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.142 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Sanibel Capital Corporation; Warrant to Purchase 41,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Sanibel Capital Corporation. (Incorporated herein by reference to Exhibits 4.43 and 4.44 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.143 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Donna Sizemore; Warrant to Purchase 8,333 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Donna Sizemore. (Incorporated herein by reference to Exhibits 4.45 and 4.46 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.144 Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Randy Foy; Option Agreement, dated as of July 1, 1996, between Pollution Research and Control Corp. and Randy Foy. (Incorporated herein by reference to Exhibit 4.47 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 16, 1996.) 10.145 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Paul Richardson. Option Agreement, dated as of August 6, 1996 between Pollution Research E-23 and Control Corp. and Paul Richardson. (Incorporated herein by reference to Exhibit 10.145 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996. 10.146 Purchase Agreement, dated as of September 20, 1996, between Pollution Research and Control Corp. and Neil C. Sullivan; Warrant to Purchase 300,000 Shares of Common Stock of Pollution Research and Control Corp. dated September 20, 1996, issued to Neil C. Sullivan. (Incorporated herein by reference to Exhibits 4.48 and 4.49 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.147 Consulting Agreement dated November 19, 1996 between Pollution Research and Control Corp. and Fenway Advisory Group. (Incorporated herein by reference to Exhibit 10.147 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.148 Option to Purchase 400,000 Shares of Pollution Research and Control Corp. issued to Fenway Advisory Group; Option Agreement dated as of November 22, 1996 between Pollution Research and Control Corp. and Fenway Advisory Group. (Incorporated herein by reference to Exhibit 10.148 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.149 Option to Purchase 40,000 Shares of Pollution Research and Control Corp. issued to Barry Soltani; Option Agreement dated as of March 3, 1997. (Incorporated herein by reference to Exhibit 10.149 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) 10.150 Option to Purchase 50,000 Shares of Pollution Research and Control Corp. issued to Jorel Management; Option Agreement dated as of April 30, 1997. (Incorporated herein by reference to Exhibit 10.150 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) 10.151 Employment Agreement, dated June 9, 1997, between Pollution Research and Control Corp. and Marcia Smith. (Incorporated herein by reference to Exhibit 10.151 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) E-24 10.152 Amended Employment Agreement dated February 9, 1998 between Pollution Research and Control Corp. and Cindy Gosselin. (Incorporated herein by reference to Exhibit 10.152 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) 10.153 Letter Agreement dated 3-10-98 to annul the acquisition of Logan Research Limited (LRL) by Logan Medical Devices (LMD). (Incorporated herein by reference to Exhibit 10.153 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) 10.154 Purchase Agreement dated May 8, 1998 between Pollution Research and Control Corp. and Albert E. Gosselin, Jr. to purchase 400,000 Shares of Preferred Convertible Stock. (Incorporated herein by reference to Exhibit 10.154 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.155 Purchase Agreement dated May 8, 1998 between Pollution Research and Control Corp. and Patricia Cudd to purchase 400,000 Shares of Preferred Convertible Stock. (Incorporated herein by reference to Exhibit 10.155 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.156 Purchase Agreement dated May 8, 1998 between Pollution Research and Control Corp. and Gary L. Dudley to purchase 80,000 Shares of Preferred Convertible Stock. (Incorporated herein by reference to Exhibit 10.156 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.157 Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and William T. Richey to purchase 20,000 Shares of Common Stock (Incorporated herein by reference to Exhibit 10.157 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.158 Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Ronald E. Patterson to purchase 23,190 Shares of Common Stock (Incorporated herein by reference to Exhibit 10.158 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.159 Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Ronald E. Patterson to purchase 68,810 Shares of Common Stock (Incorporated herein by reference to Exhibit 10.159 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) E-25 10.160 Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Mayer Zarchi to purchase 20,000 Shares of Common Stock (Incorporated herein by reference to Exhibit 10.160 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.161 Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Fred Zalokar to purchase 23,000 Shares of Common Stock (Incorporated herein by reference to Exhibit 10.161 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.162 Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Frank T. Anaya to purchase 9,174 Shares of Common Stock (Incorporated herein by reference to Exhibit 10.162 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.163 Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Donald A. Carstens to purchase 9,082 Shares of Common Stock (Incorporated herein by reference to Exhibit 10.163 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.164 Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Alan L. Talesnick to purchase 18,000 Shares of Common Stock (Incorporated herein by reference to Exhibit 10.164 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.165 Option to Purchase 23,125 Shares of Pollution Research and Control Corp. issued to Phoenix Alliance, Inc. Option Agreement dated June 19, 1998. (Incorporated herein by reference to Exhibit 10.165 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.166 Agreement to purchase a technician service center in Macau from PIC Computers, Ltd. Agreement dated as of June 24, 1998 between Pollution Research and Control Corp. and PIC Computers, Ltd. (Incorporated herein by reference to Exhibit 10.166 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) E-26 10.167 Option to purchase 13,750 Shares of Common Stock issued to Marcia Smith. Option Agreement dated as of December 14, 1998 between Pollution Research and Control Corp. and Marcia Smith. (Incorporated herein by reference to Exhibit 10.167 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.168 Option to purchase 12,500 Shares of Common Stock issued to Cindy Gosselin. Option Agreement dated as of December 14, 1998 between Pollution Research and Control Corp. and Cindy Gosselin. (Incorporated herein by reference to Exhibit 10.168 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.169 Promissory Note dated as of January 27, 1999 between Pollution Research and Control Corp. and Mark S. Rose.(Incorporated herein by reference to Exhibit 10.169 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.170 Option to purchase 48,000 Shares of Common Stock issued to Mark S. Rose. Option Agreement dated as of January 27, 1999 between Pollution Research and Control Corp. and Mark S. Rose. (Incorporated herein by reference to Exhibit 10.170 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.171 Finder's Agreement dated January 27, 1999 between Pollution Research and Control Corp. and Rosemary Althaus. (Incorporated herein by reference to Exhibit 10.171 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.172 Option to purchase 5,000 Shares of Common Stock issued to Rosemary Althaus. Option Agreement dated as of January 27, 1999 between Pollution Research and Control Corp. and Rosemary Althaus. (Incorporated herein by reference to Exhibit 10.172 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.173 Purchase Agreement to purchase 25,000 units consisting of 25,000 Shares of Common Stock and 25,000 Warrants to purchase Common Stock dated as of February 25, 1999 between Pollution Research and Control Corp. and William T. Richey.(Incorporated herein by reference to Exhibit 10.173 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) E-27 10.174 Purchase Agreement to purchase 133,333 units consisting of 133,333 Shares of Common Stock and 133,333 Warrants to purchase Common Stock dated as of February 25, 1999 between Pollution Research and Control Corp. and Ronald E. Patterson .(Incorporated herein by reference to Exhibit 10.174 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.175 Purchase Agreement to purchase 66,666 units consisting of 66,666 Shares of Common Stock and 66,666 Warrants to purchase Common Stock dated as of February 25, 1999 between Pollution Research and Control Corp. and Phillip Huss. (Incorporated herein by reference to Exhibit 10.175 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.176 Option to purchase 25,000 Shares of Common Stock issued to Anthony Reneau. Option Agreement dated as of February 25, 1999 between Pollution Research and Control Corp. and Anthony Reneau. (Incorporated herein by reference to Exhibit 10.176 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.177 Purchase Agreement to purchase 14,000 units consisting of 14,000 Shares of Common Stock and 14,000 Warrants to purchase Common Stock dated as of February 25, 1999 between Pollution Research and Control Corp. and Alan L. Talesnick. (Incorporated herein by reference to Exhibit 10.177 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998.) 10.178 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 33,333 units consisting of 33,333 shares of Common Stock and 33,333 warrants to purchase Common Stock, dated as of February 25, 1999, between Pollution Research and Control Corp. and Maria Molinsky. (Incorporated herein by reference to Exhibit 4.11 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.179 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 9,333 units consisting of 9,333 shares of Common Stock and 9,333 warrants to purchase Common Stock, dated as of February 25, 1999, between Pollution Research and Control Corp. and Jennifer S. Jauregui. (Incorporated herein by reference to Exhibit 4.14 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) E-28 10.180 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 6,666 units consisting of 6,666 shares of Common Stock and 6,666 warrants to purchase Common Stock, dated as of February 25, 1999, between Pollution Research and Control Corp. and Cynthia L. Gosselin. (Incorporated herein by reference to Exhibit 4.15 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.181 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 133,333 units consisting of 133,333 shares of Common Stock and 133,333 warrants to purchase Common Stock, dated as of May 19, 1999, between Pollution Research and Control Corp. and The Investor Resource Services, Inc. (Incorporated herein by reference to Exhibit 4.16 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.182 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 66,667 units consisting of 66,667 shares of Common Stock and 66.667 warrants to purchase Common Stock, dated as of May 19, 1999, between Pollution Research and Control Corp. and Trautman Wasserman & Company, Inc. (Incorporated herein by reference to Exhibit 4.17 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.183 18% Subordinated Convertible Debenture Due December 1, 1999, between Pollution Research and Control Corp. and The Venezuela Recovery Fund, N.V. (Incorporated herein by reference to Exhibit 4.18 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.184 Financial Consulting and Services Agreement dated May 20, 1999, between Pollution Research and Control Corp. and Premiere Equities, Inc. (Incorporated herein by reference to Exhibit 4.19 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.185 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 100,000 Shares of Common Stock dated May 27, 1999, between Pollution Research and Control Corp. and E-29 Blagoja Samakoski. (Incorporated herein by reference to Exhibit 4.20 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.186 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 80,000 Shares of Common Stock dated July 16, 1999, between Pollution Research and Control Corp. and Ronald E. Patterson. (Incorporated herein by reference to Exhibit 4.21 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.187 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 30,000 Shares of Common Stock dated July 16, 1999, between Pollution Research and Control Corp. and Phillip T. Huss. (Incorporated herein by reference to Exhibit 4.22 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.188 Lock-up Agreement, dated August 12, 1999, between Pollution Research and Control Corp. and Mr. Albert E. Gosselin, Jr. (Incorporated herein by reference to Exhibit 4.23 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.189 Compromise, Settlement and Release Agreement dated August 12, 1999 between Pollution Research and Control Corp. and Fidelity Funding. (Incorporated herein by reference to Exhibit 4.24 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.190 Escrow Agreement dated August 12, 1999, among Pollution Research and Control Corp., Fidelity Funding, Inc., and American Escrow Company. (Incorporated herein by reference to Exhibit 4.25 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.191 12% Subordinated Convertible Debenture Due June 1, 2000. dated September 1, 1999, between Pollution Research and Control Corp. and Spiga Limited. (Incorporated herein by reference to Exhibit 4.26 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) E-30 10.192 12% Subordinated Convertible Debenture Due June 1, 2000. dated September 1, 1999, between Pollution Research and Control Corp. and Spiga Limited. (Incorporated herein by reference to Exhibit 4.27 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.193 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 50,000 Shares of Common Stock dated September 13, 1999, between Pollution Research and Control Corp. and Maria Molinsky. (Incorporated herein by reference to Exhibit 4.28 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.194 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 50,000 Shares of Common Stock dated September 13, 1999, between Pollution Research and Control Corp. and Lee Sion. (Incorporated herein by reference to Exhibit 4.29 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.195 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 50,000 Shares of Common Stock dated September 13, 1999, between Pollution Research and Control Corp. and Steven Sion. (Incorporated herein by reference to Exhibit 4.30 to the Registration Statement on Form S-1, File #333-87965 of Pollution Research and Control Corp. dated September 28, 1999.) 10.196 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-K for the fiscal year ended December 31, 1999.) 10.197 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. (Incorporated herein by reference to Exhibit 10.197 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.198 Warrant to purchase 23,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Spiga Limited; Warrant Agreement dated as of September 1, 1999 between Pollution E-31 Research and Control Corp. and Spiga Limited. (Incorporated herein by reference to Exhibit 10.198 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.199 Warrant to purchase 18,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital; Warrant Agreement dated as of September 1, 1999 between Pollution Research and Control Corp. and Spiga Limited. (Incorporated herein by reference to Exhibit 10.199 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.200 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-K for the fiscal year ended December 31, 1999.) 10.201 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-K for the fiscal year ended December 31, 1999.) 10.202 Warrant to purchase 20,475 Shares of Common Stock of Pollution Research and Control Corp. issued to Phillip T. Huss; Warrant Agreement dated as of July 16, 1999 between Pollution Research and Control Corp. and Phillip T. Huss. (Incorporated herein by reference to Exhibit 10.202 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.203 Warrant to purchase 54,525 Shares of Common Stock of Pollution Research and Control Corp. issued to Ronald E. Patterson; Warrant Agreement dated as of July 16, 1999 between Pollution Research and Control Corp. and Ronald E. Patterson. (Incorporated herein by reference to Exhibit 10.203 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.204 Warrant to purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Fidelity Funding; Warrant Agreement dated as of August 12, 1999 between Pollution Research E-32 and Control Corp. and Ronald E. Patterson. (Incorporated herein by reference to Exhibit 10.204 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.205 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-K for the fiscal year ended December 31, 1999.) 10.206 Warrant to purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Lee Sion; Warrant Agreement dated as of September 13, 1999 between Pollution Research and Control Corp. and Lee Sion. (Incorporated herein by reference to Exhibit 10.206 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.207 Warrant to purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Steven Sion; Warrant Agreement dated as of September 13, 1999 between Pollution Research and Control Corp. and Steven Sion. (Incorporated herein by reference to Exhibit 10.207 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.208 Registration Rights Agreement, dated June 1, 1999, between Pollution Research and Control Corp. and Venezuela Recovery Fund. (Incorporated herein by reference to Exhibit 10.208 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.209 Registration Rights Agreement, dated September 1, 1999, between Pollution Research and Control Corp. and Spiga Limited. (Incorporated herein by reference to Exhibit 10.209 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.210 12% Subordinated Convertible Debenture due February 23, 2001, dated February 16, 2000, between Pollution Research and Control Corp. and Britannica Associates Limited (Incorporated herein by reference to Exhibit 4.1 of the Post-Effective Amendment No. 1 to Form S-3 Registration Statement #333-87965.) 10.211 Warrant to purchase 200,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Britannica Associates Limited; Warrant Agreement dated as of February 23, 2000 between E-33 Pollution Research and Control Corp. and Britannica Associates Limited. (Incorporated herein by reference to Exhibit 10.211 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.212 Warrant to purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Britannica Associates Limited; Warrant Agreement dated as of February 23, 2000 between Pollution Research and Control Corp. and Britannica Associates Limited. (Incorporated herein by reference to Exhibit 10.212 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.213 Warrant to purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital; Warrant Agreement dated as of February 23, 2000 between Pollution Research and Control Corp. and Astor Capital. (Incorporated herein by reference to Exhibit 10.213 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.214 Registration Rights Agreement, dated February 23, 2000, between Pollution Research and Control Corp. and Britannica Associates. (Incorporated herein by reference to Exhibit 10.214 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.215 Promissory Note due March 21, 2000 dated as of January 21, 2000 between Pollution Research and Control Corp. and Britannica Associates, Ltd. (Incorporated herein by reference to Exhibit 10.215 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.216 Amendment to Compromise and Settlement Agreement between Fidelity Funding, Inc. and Pollution Research and Control Corp. dated March 24, 2000. (Incorporated herein by reference to Exhibit 10.216 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.217 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-K for the fiscal year ended December 31, 1999.) E-34 10.218 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-K for the fiscal year ended December 31, 1999.) 10.219 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-K for the fiscal year ended December 31, 1999.) 10.220 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-K for the fiscal year ended December 31, 1999.) 10.221 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-K for the fiscal year ended December 31, 1999.) 10.222 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-K for the fiscal year ended December 31, 1999.) 10.223 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-K for the fiscal year ended December 31, 1999.) E-35 10.224 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 Phillip T. Huss. (Incorporated herein by reference to Exhibit 10.224 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999.) 10.225 Option to Purchase 24,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Mark Rose; Option Agreement, dated as of May 27, 2000, between Pollution Research and Control Corp. and Mark Rose. (Incorporated herein by reference to Exhibit 4.39 to the Registration Statement on Form S-3 (Registration No. 333-48554) of Pollution Research and Control Corp. dated November 9, 2000.) 10.226 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. (Incorporated herein by reference to Exhibit 4.40 to the Registration Statement on Form S-3 (Registration No. 333-48554) of Pollution Research and Control Corp. dated November 9, 2000.) 10.227 Warrant to purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital; Warrant Agreement dated as of June 6, 2000 between Pollution Research and Control Corp. and Astor Capital. (Incorporated herein by reference to Exhibit 4.41 to the Registration Statement on Form S-3 (Registration No. 333-48554) of Pollution Research and Control Corp. dated November 9, 2000.) 10.228 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. (Incorporated herein by reference to Exhibit 4.42 to the Registration Statement on Form S-3 (Registration No. 333-48554) of Pollution Research and Control Corp. dated November 9, 2000.) 10.229 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. (Incorporated herein by reference to Exhibit 4.43 to the Registration Statement on Form S-3 (Registration No. 333-48554) of Pollution Research and Control Corp. dated November 9, 2000.) E-36 10.230 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. (Incorporated herein by reference to Exhibit 4.44 to the Registration Statement on Form S-3 (Registration No. 333-48554) of Pollution Research and Control Corp. dated November 9, 2000.) 10.231 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. (Incorporated herein by reference to Exhibit 4.45 to the Registration Statement on Form S-3 (Registration No. 333-48554) of Pollution Research and Control Corp. dated November 9, 2000.) 10.232 Investor Relations Agreement Made by and between Pollution Research and Control Corp. and East West Network Group dated October 20, 2000. (Incorporated herein by reference to Exhibit 4.46 to the Registration Statement on Form S-3 (Registration No. 333-48554) of Pollution Research and Control Corp. dated November 9, 2000.) 10.233 Stock Purchase Warrant to Purchase 60,000 Shares of Common Stock of Pollution Research and Control Corp., issued to IIG Equities Opportunities Fund Ltd. (Incorporated herein by reference to Exhibit 4.47 to the Registration Statement on Form S-3 (Registration No. 333-55276) dated February 2, 2001.) 10.234 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. (Incorporated herein by reference to Exhibit 4.48 to the Registration Statement on Form S-3 (Registration No. 333-55276) dated February 2, 2001.) 10.235 Consulting Agreement dated January 4, 2001, between Pollution Research and Control Corp. and Silverline Partners, Inc. (Incorporated herein by reference to Exhibit 4.49 to the Registration Statement on Form S-3 (Registration No. 333-55276) dated February 2, 2001.) E-37 10.236 $500,000 Face Amount 12% Subordinated Convertible Debenture due February 22, 2001, granted to Brittanica Associates Limited. (Incorporated herein by reference to Exhibit 4.50 to the Registration Statement on Form S-3 (Registration No. 333-55276) dated February 2, 2001.) 10.237* Promissory Note between Pollution Research and Control Corp. and Delta Capital dated June 7, 2000. 10.238* Employees Stock Option Plan dated June 29, 2000. 10.239* Stock Purchase Warrant to Purchase 21,900 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital; Stock Purchase Warrant dated as of June 17, 2000 between Pollution Research and Control Corp. and Astor Capital. 10.240* Stock Purchase Warrant to Purchase 6,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Chris Briggs; Stock Purchase Warrant dated as of June 17, 2000 between Pollution Research and Control Corp. and Chris Briggs. 10.241* Stock Purchase Warrant to Purchase 15,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Joseph Chazanow; Stock Purchase Warrant dated as of June 17, 2000 between Pollution Research and Control Corp. and Christopher Chazanow 10.242* Stock Purchase Warrant to Purchase 4,500 Shares of Common Stock of Pollution Research and Control Corp. issued to Christopher Mehringer; Stock Purchase Warrant dated as of June 17, 2000 between Pollution Research and Control Corp. and Christopher Mehringer. 10.243* Stock Purchase Warrant to Purchase 1,500 Shares of Common Stock of Pollution Research and Control Corp. issued to Cristobal Garcia; Stock Purchase Warrant dated as of June 17, 2000 between Pollution Research and Control Corp. and Cristobal Garcia. 10.244* Stock Purchase Warrant to Purchase 9,000 Shares of Common Stock of Pollution Research and Control Corp. issued to George T. Heisel, Jr; Stock Purchase Warrant dated as of June 17, 2000 between Pollution Research and Control Corp. and George T. Heisel, Jr. E-38 10.245* Stock Purchase Warrant to Purchase 6,000 Shares of Common Stock of Pollution Research and Control Corp. issued to JRT Holdings; Stock Purchase Warrant dated as of June 17, 2000 between Pollution Research and Control Corp. and JRT Holdings. 10.246* Stock Purchase Warrant to Purchase 7,500 Shares of Common Stock of Pollution Research and Control Corp. issued to Robert Del Guercio; Stock Purchase Warrant dated as of June 17, 2000 between Pollution Research and Control Corp. and Robert Del Guercio. 10.247* Stock Option Agreement to Purchase 4,480 Shares of Common Stock of Pollution Research and Control Corp. issued to Imelda Facundo dated as of June 29, 2000. 10.248* Promissory Note dated June 29, 2000 from Imelda Facundo to Pollution Research and Control Corp. 10.249* Stock Pledge Agreement dated June 29, 2000 between Imelda Facundo and Pollution Research and Control Corp. 10.250* Stock Option Agreement to Purchase 6,428 Shares of Common Stock of Pollution Research and Control Corp. issued to Luz Rendon dated as of June 29, 2000. 10.251* Promissory Note dated June 29, 2000 from Luz Rendon to Pollution Research and Control Corp. 10.252* Stock Pledge Agreement dated June 29, 2000 between Luz Rendon and Pollution Research and Control Corp. 10.253* Stock Option Agreement to Purchase 22,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Roger Jordan dated as of June 29, 2000. 10.254* Promissory Note dated June 29, 2000 from Roger Jordan to Pollution Research and Control Corp. 10.255* Stock Pledge Agreement dated June 29, 2000 between Roger Jordan and Pollution Research and Control Corp. 10.256* Stock Option Agreement to Purchase 6,428 Shares of Common Stock of Pollution Research and Control Corp. issued to Carlos Pineda dated as of June 29, 2000. E-39 10.257* Promissory Note dated June 29, 2000 from Carlos Pineda to Pollution Research and Control Corp. 10.258* Stock Pledge Agreement dated June 29, 2000 between Carlos Pineda and Pollution Research and Control Corp. 10.259* Stock Option Agreement to Purchase 6,428 Shares of Common Stock of Pollution Research and Control Corp. issued to Ilija Sakota dated as of June 29, 2000. 10.260* Promissory Note dated June 29, 2000 from Ilija Sakota to Pollution Research and Control Corp. 10.261* Stock Pledge Agreement dated June 29, 2000 between Ilija Sakota and Pollution Research and Control Corp. 10.262* Stock Option Agreement to Purchase 7,347 Shares of Common Stock of Pollution Research and Control Corp. issued to Robert Basa dated as of June 29, 2000. 10.263* Promissory Note dated June 29, 2000 from Robert Basa to Pollution Research and Control Corp. 10.264* Stock Pledge Agreement dated June 29, 2000 between Robert Basa and Pollution Research and Control Corp. 10.265* Stock Option Agreement to Purchase 10,142 Shares of Common Stock of Pollution Research and Control Corp. issued to Jennifer Jauregui dated as of June 29, 2000. 10.266* Promissory Note dated June 29, 2000 from Jennifer Jauregui to Pollution Research and Control Corp. 10.267* Stock Pledge Agreement dated June 29, 2000 between Jennifer Jauregui and Pollution Research and Control Corp. 10.268* Stock Option Agreement to Purchase 5,600 Shares of Common Stock of Pollution Research and Control Corp. issued to Aramis Markarovanes dated as of June 29, 2000. 10.269* Promissory Note dated June 29, 2000 from Aramis Markarovanes to Pollution Research and Control Corp. E-40 10.270* Stock Pledge Agreement dated June 29, 2000 between Aramis Markarovanes and Pollution Research and Control Corp. 10.271* Stock Option Agreement to Purchase 9,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Minda Basa dated as of June 29, 2000. 10.272* Promissory Note dated June 29, 2000 from Minda Basa to Pollution Research and Control Corp. 10.273* Stock Pledge Agreement dated June 29, 2000 between Minda Basa and Pollution Research and Control Corp. 10.274* Stock Option Agreement to Purchase 32,144 Shares of Common Stock of Pollution Research and Control Corp. issued to Vincente Tio dated as of June 29, 2000. 10.275* Promissory Note dated June 29, 2000 from Vincente Tio to Pollution Research and Control Corp. 10.276* Stock Pledge Agreement dated June 29, 2000 between Vincente Tio and Pollution Research and Control Corp. 10.277* Stock Option Agreement to Purchase 4,592 Shares of Common Stock of Pollution Research and Control Corp. issued to Ken Luong dated as of June 29, 2000. 10.278* Promissory Note dated June 29, 2000 from Ken Luong to Pollution Research and Control Corp. 10.279* Stock Pledge Agreement dated June 29, 2000 between Ken Luong and Pollution Research and Control Corp. 10.280* Stock Option Agreement to Purchase 4,592 Shares of Common Stock of Pollution Research and Control Corp. issued to Eliud Martinez dated as of June 29, 2000. 10.281* Promissory Note dated June 29, 2000 from Eliud Martinez to Pollution Research and Control Corp. 10.282* Stock Pledge Agreement dated June 29, 2000 between Eliud Martinez and Pollution Research and Control Corp. E-41 10.283* Stock Option Agreement to Purchase 4,592 Shares of Common Stock of Pollution Research and Control Corp. issued to Joe Martin dated as of June 29, 2000. 10.284* Promissory Note dated June 29, 2000 from Joe Martin to Pollution Research and Control Corp. 10.285* Stock Pledge Agreement dated June 29, 2000 between Joe Martin and Pollution Research and Control Corp. 10.286* Stock Option Agreement to Purchase 4,592 Shares of Common Stock of Pollution Research and Control Corp. issued to Thuan Chau dated as of June 29, 2000. 10.287* Promissory Note dated June 29, 2000 from Thuan Chau to Pollution Research and Control Corp. 10.288* Stock Pledge Agreement dated June 29, 2000 between Thuan Chau and Pollution Research and Control Corp. 10.289* Stock Option Agreement to Purchase 4,592 Shares of Common Stock of Pollution Research and Control Corp. issued to Joey Baris dated as of June 29, 2000. 10.290* Promissory Note dated June 29, 2000 from Joey Baris to Pollution Research and Control Corp. 10.291* Stock Pledge Agreement dated June 29, 2000 between Joey Baris and Pollution Research and Control Corp. 10.292* Stock Option Agreement to Purchase 5,510 Shares of Common Stock of Pollution Research and Control Corp. issued to Joe Macias dated as of June 29, 2000. 10.293* Promissory Note dated June 29, 2000 from Joe Macias to Pollution Research and Control Corp. 10.294* Stock Pledge Agreement dated June 29, 2000 between Joe Macias and Pollution Research and Control Corp. 10.295* Stock Option Agreement to Purchase 5,510 Shares of Common Stock of Pollution Research and Control Corp. issued to Jose Argueta dated as of June 29, 2000. E-42 10.296* Promissory Note dated June 29, 2000 from Jose Argueta to Pollution Research and Control Corp. 10.297* Stock Pledge Agreement dated June 29, 2000 between Jose Argueta and Pollution Research and Control Corp. 10.298* Stock Option Agreement to Purchase 6,423 Shares of Common Stock of Pollution Research and Control Corp. issued to Jimmy Luu dated as of June 29, 2000. 10.299* Promissory Note dated June 29, 2000 from Jimmy Luu to Pollution Research and Control Corp. 10.300* Stock Pledge Agreement dated June 29, 2000 between Jimmy Luu and Pollution Research and Control Corp. 10.301* Stock Option Agreement to Purchase 3,673 Shares of Common Stock of Pollution Research and Control Corp. issued to Anthony Graber dated as of June 29, 2000. 10.302* Promissory Note dated June 29, 2000 from Anthony Graber to Pollution Research and Control Corp. 10.303* Stock Pledge Agreement dated June 29, 2000 between Anthony Graber and Pollution Research and Control Corp. 10.304* Stock Option Agreement to Purchase 3,673 Shares of Common Stock of Pollution Research and Control Corp. issued to Hovannes Nalbandyan dated as of June 29, 2000. 10.305* Promissory Note dated June 29, 2000 from Hovannes Nalbandyan to Pollution Research and Control Corp. 10.306* Stock Pledge Agreement dated June 29, 2000 between Hovannes Nalbandyan and Pollution Research and Control Corp. 10.307* Stock Option Agreement to Purchase 7,806 Shares of Common Stock of Pollution Research and Control Corp. issued to Dennis Molina dated as of June 29, 2000. 10.308* Promissory Note dated June 29, 2000 from Dennus Molina to Pollution Research and Control Corp. E-43 10.309* Stock Pledge Agreement dated June 29, 2000 between Dennis Molina and Pollution Research and Control Corp. 10.310* Stock Option Agreement to Purchase 4,224 Shares of Common Stock of Pollution Research and Control Corp. issued to Veronica Boone dated as of June 29, 2000. 10.311* Promissory Note dated June 29, 2000 from Veronica Boone to Pollution Research and Control Corp. 10.312* Stock Pledge Agreement dated June 29, 2000 between Veronica Boone and Pollution Research and Control Corp. 10.313* Stock Option Agreement to Purchase 4,592 Shares of Common Stock of Pollution Research and Control Corp. issued to Lucy Marquez dated as of June 29, 2000. 10.314* Promissory Note dated June 29, 2000 from Lucy Marquez to Pollution Research and Control Corp. 10.315* Stock Pledge Agreement dated June 29, 2000 between Lucy Marquez and Pollution Research and Control Corp. 10.316* Stock Option Agreement to Purchase 10,102 Shares of Common Stock of Pollution Research and Control Corp. issued to Eric Lai dated as of June 29, 2000. 10.317* Promissory Note dated June 29, 2000 from Eric Lai to Pollution Research and Control Corp. 10.318* Stock Pledge Agreement dated June 29, 2000 between Eric Lai and Pollution Research and Control Corp. 10.319* Option Agreement to Purchase 5,051 Shares of Common Stock of Pollution Research and Control Corp. issued to Rich Tobin dated as of June 29, 2000. 10.320* Promissory Note dated June 29, 2000 from Rich Tobin to Pollution Research and Control Corp. 10.321* Stock Pledge Agreement dated June 29, 2000 between Rich Tobin and Pollution Research and Control Corp. E-44 10.322* Stock Option Agreement to Purchase 174,160 Shares of Common Stock of Pollution Research and Control Corp. issued to Albert E. Gosselin dated as of June 29, 2000. 10.323* Promissory Note dated June 29, 2000 from Albert E. Gosselin to Pollution Research and Control Corp. 10.324* Stock Pledge Agreement dated June 29, 2000 between Albert E. Gosselin and Pollution Research and Control Corp. 10.325* Stock Option Agreement to Purchase 98,528 Shares of Common Stock of Pollution Research and Control Corp. issued to Cindy Gosselin dated as of June 29, 2000. 10.326* Promissory Note dated June 29, 2000 from Cindy Gosselin to Pollution Research and Control Corp. 10.327* Stock Pledge Agreement dated June 29, 2000 between Cindy Gosselin and Pollution Research and Control Corp. 10.328* Stock Option Agreement to Purchase 105,280 Shares of Common Stock of Pollution Research and Control Corp. issued to Marcia Smith dated as of June 29, 2000. 10.329* Promissory Note dated June 29, 2000 from Marcia Smith to Pollution Research and Control Corp. 10.330* Stock Pledge Agreement dated June 29, 2000 between Marcia Smith and Pollution Research and Control Corp. 10.331* Stock Option Agreement to Purchase 24,640 Shares of Common Stock of Pollution Research and Control Corp. issued to Robert Klein dated as of June 29, 2000. 10.332* Promissory Note dated June 29, 2000 from Robert Klein to Pollution Research and Control Corp. 10.333* Stock Pledge Agreement dated June 29, 2000 between Robert Klein and Pollution Research and Control Corp. 10.334* Stock Option Agreement to Purchase 22,900 Shares of Common Stock of Pollution Research and Control Corp. issued to Prisciliano Flores dated as of June 29, 2000. E-45 10.335* Promissory Note dated June 29, 2000 from Prisciliano Flores to Pollution Research and Control Corp. 10.336* Stock Pledge Agreement dated June 29, 2000 between Prisciliano Flores and Pollution Research and Control Corp. 10.337* Stock Option Agreement to Purchase 87,248 Shares of Common Stock of Pollution Research and Control Corp. issued to Barbara L. Gosselin dated as of June 29, 2000. 10.338* Promissory Note dated June 29, 2000 from Barbara L. Gosselin to Pollution Research and Control Corp. 10.339* Stock Pledge Agreement dated June 29, 2000 between Barbara L. Gosselin and Pollution Research and Control Corp. 10.340* Stock Option Agreement to Purchase 50,512 Shares of Common Stock of Pollution Research and Control Corp. issued to Anthony Reneau dated as of June 29, 2000. 10.341* Promissory Note dated June 29, 2000 from Anthony Reneau to Pollution Research and Control Corp. 10.342* Stock Pledge Agreement dated June 29, 2000 between Anthony Reneau and Pollution Research and Control Corp. 10.343* Stock Option Agreement to Purchase 55,105 Shares of Common Stock of Pollution Research and Control Corp. issued to Paz Laroya dated as of June 29, 2000. 10.344* Promissory Note dated June 29, 2000 from Paz Laroya to Pollution Research and Control Corp. 10.345* Stock Pledge Agreement dated June 29, 2000 between Paz Laroya and Pollution Research and Control Corp. 10.346* Stock Option Agreement to Purchase 13,776 Shares of Common Stock of Pollution Research and Control Corp. issued to Fernando Galang dated as of June 29, 2000. E-46 10.347* Promissory Note dated June 29, 2000 from Fernando Galang to Pollution Research and Control Corp. 10.348* Stock Pledge Agreement dated June 29, 2000 between Fernando Galang and Pollution Research and Control Corp. 10.349* Stock Option Agreement to Purchase 6,428 Shares of Common Stock of Pollution Research and Control Corp. issued to Domingo Diaz dated as of June 29, 2000. 10.350* Promissory Note dated June 29, 2000 from Domingo Diaz to Pollution Research and Control Corp. 10.351* Stock Pledge Agreement dated June 29, 2000 between Domingo Diaz and Pollution Research and Control Corp. 10.352* Stock Option Agreement to Purchase 11,902 Shares of Common Stock of Pollution Research and Control Corp. issued to Mike Hamden dated as of June 29, 2000. 10.353* Promissory Note dated June 29, 2000 from Mike Hamdan to Pollution Research and Control Corp. 10.354* Stock Pledge Agreement dated June 29, 2000 between Mike Hamdan and Pollution Research and Control Corp. 10.355* Promissory Note dated February 23, 2001 from Pollution Research and Control Corp. to Steven Sion at 12% interest per annum, due March 23, 2001. 10.356* Consulting Agreement between Pollution Research and Control Corp. and Silverline Partners, Inc. dated January 4, 2001. 10.357* Promissory Note dated December 22, 2000 from Pollution Research and Control Corp. to Steven Sion @ 12% interest per annum. 10.358* Memorandum of Understanding and Consulting Agreement between Pollution Research and Control Corp. and Steven Sion dated February 2, 2001. 10.359* 9% Convertible Debenture Due July 17, 2001 between Pollution Research and Control Corp. and IIG Equities. E-47 10.360* 9% Convertible Debenture Due July 17, 2001 between Pollution Research and Control Corp. and Chris Briggs. 10.361* 9% Convertible Debenture Due July 17, 2001 between Pollution Research and Control Corp. and JRT Holdings. 10.362* 9% Convertible Debenture Due July 17, 2001 between Pollution Research and Control Corp. and Cristobal Garcia. 10.363* 9% Convertible Debenture Due July 17, 2001 between Pollution Research and Control Corp. and George T. Heisel, Jr. 10.364* 9% Convertible Debenture Due July 17, 2001 between Pollution Research and Control Corp. and Christopher Mehringer. 10.365* 9% Convertible Debenture Due July 17, 2001 between Pollution Research and Control Corp. and Robert Del Guercio. 10.366* 9% Convertible Debenture Due July 17, 2001 between Pollution Research and Control Corp. and Joseph Chazanow. 10.367* Agreement dated March 20, 2001, between Pollution Research and Control Corp. and Astor Capital. 10.368* Joint Venture Contract between Shenyang Dongyu Group Co. Ltd. and Dasibi Environmental Corp. dated September 6, 2000. 21* List of Subsidiaries. *Filed Herewith EX-10.237 2 0002.txt PROMISSORY NOTE Exhibit 10.237 EXHIBIT 10.237 PROMISSORY NOTE Glendale, California $200,000 June 7, 2000 FOR VALUE RECEIVED, the undersigned, Pollution Research and Control Corp., a California corporation (hereinafter referred to as the "Maker"), with its address at 506 Paula Avenue, Glendale, California 91201, agrees and promises to pay to the order of Delta Capital Partners, a corporation (hereinafter referred to as the "Holder"), at 9300 Wilshire Boulevard, Suite 308, Beverly Hills, Ca 90212, or such other place as the Holder may designate in writing, in coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, the principal sum of two hundred thousand dollars ($200,000), together with interest thereon at the rate of eighteen per cent ("18% ") per annum, from the date hereof until maturity, as hereinafter provided. The principal balance of this Promissory Note (hereinafter referred to as the "Note"), together with all interest then accrued and unpaid, shall be due and payable on the first to occur of the following dates: (i) June 28, 2000, or (ii) the date upon whichMaker receives financing in the amount of at least $300,000. As an incentive to the Holder to make the loan to the Maker described in this Note, the Maker shall grant to the Holder, contemporaneously with the execution of this Note, an option of even date herewith, a copy of which is attached hereto and incorporated herein by this reference, exercisable to purchase 15,000 restricted shares of Common Stock of the Company at an exercise price of $2.25 per share on or prior to 5:00 p.m. Los Angeles time, on June 6, 2003. The Maker may prepay any part or all of this Note at any time without penalty. Each payment or pre-payment made by the Maker hereunder shall be applied first to the payment or pre-payment of accrued and unpaid interest, if any, due on the unpaid principal balance of this Note and the remainder of each payment or pre-payment made by the Maker shall be applied to the reduction of the unpaid principal balance hereof. If default is made in the payment of this Note, as and when the same is or becomes due, the Holder may, after notice and failure to cure as hereinafter provided, without additional notice or demand, declare the entire unpaid principal balance hereof and accrued and unpaid interest, if any, at once due and payable. Except as otherwise specifically set out herein, the Maker waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of acceleration of the indebtedness due hereunder, bringing of suit and diligence in taking any action to collect amounts called for hereunder, and agrees that the time of payments hereof may be extended without notice at any time and from time-to-time, and for periods of time for a term or terms in excess of the original term without notice or consideration to, or consent from the Maker, without same constituting a waiver of the Holder's rights under this Note. 1 If payment hereunder is not made when due or in the event of default in any other covenant, condition or promise under this Note, the Holder may at his electionate this Note. Form and after the date of such default, the principal sum and all interest then accrued shall bear interest at the rate of twenty percent (20%) per annum until paid. If the entire outstanding principal balance becomes due, the Maker agrees to pay the Holder's reasonable costs (including reasonable attorney's fees and court costs) in collecting on this Note, including the reasonable costs of obtaining and enforcing a judgment for any balance due on this Note. This Note has been executed in the City identified in the heading and delivered to the Holder at the address stated herein. It is to be performed, in whole or in part, in the State of California, and the laws of such state shall govern the validity, construction, enforcement and interpretation of this Note. Jurisdiction and venue for any action hereunder shall be in the County of the City identified in the heading. The Maker represents that it is duly authorized and empowered to enter into, deliver, perform and be fully bound by all of the terms, provisions and conditions of this Note. The Maker also represents that the making and delivery of this Note, and the performance of any agreement or instrument made in connection herewith, does not conflict with or violate any other agreement to which the Maker is a party. No provision of this Note shall require the payment or permit the collection of interest in excess of the maximum permitted by law, and in the event of any such excess, neither the Maker nor its successors or assigns shall be obligated to pay any such excess to the extent that it is more than the amount permitted by law. If an excess amount is received, charged, collected or applied as interest, it shall automatically be made so as to reduce the rate to that permitted by law and any excess interest then received, charged or collected shall be applied to reduce the amount of any collateral to which the Holder is entitled. In the event that any word, phrase, clause, sentence or other provision hereof shall violate any applicable statute, ordinance or rule of law in any jurisdiction in which it is used, such provision shall be ineffective to the extent of such violation without invalidating any other provision hereof. IN WITNESS HEREOF, this Note is executed on the date and year above written. POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin -------------------------------- Albert E. Gosselin, Jr., President 2 EX-10.238 3 0003.txt EMPLOYEES' STOCK OPTION PLAN Exhibit 10.238 DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN TABLE OF CONTENTS 1 Purpose. 1 2 Definitions.........................................................1 2.1 Accrued Installment.................................................1 2.2 Affiliate 1 2.3 Board. 1 2.4 Code. ..........................................................1 2.5 Company. 1 2.6 Common Stock. .....................................................1 2.7 Compensation Committee..............................................1 2.8 Disabled or Disability. ...........................................1 2.9 Eligible Recipient..................................................1 2.10 Fair Market Value. ................................................2 2.11 Family Member.......................................................2 2.12 Incentive Stock Option. ...........................................2 2.13 Nonqualified Stock Option. ........................................2 2.14 Optionee. .........................................................2 2.15 Option Price. .....................................................2 2.16 Participant.........................................................2 2.17 Plan. ..........................................................2 2.18 Plan Administrator. ...............................................3 2.19 Restricted Stock....................................................3 2.20 Stock Option. .....................................................3 3. Stock Options Under the Plan. ......................................3 4. Effective Date of Plan. ............................................3 5. Term of Plan........................................................3 6. Administration......................................................3 7. Eligibility. ......................................................4 8. Shares Subject to the Plan..........................................5 8.1 Available Shares. .................................................5 8.2 Capital Structure Adjustments. ....................................5 9. Terms and Conditions of Stock Options. .............................5 9.1 Number of Shares Subject to Stock Option. ........................5 9.2 Stock Option Price. ...............................................6 9.3 Notice and Payment. ...............................................6 9.4 Non-Transferability of Options......................................7 9.5 Exercise of Stock Option. ..........................................7 i 9.6 Term of Stock Option. .............................................8 9.7 Limit on Incentive Stock Options. .................................9 9.8 No Fractional Shares. .............................................9 9.9 Exercisability in the Event of Death. .............................9 9.10 Modification, Extension, and Renewal of Stock Options...............9 9.11 Loans ......................................................... 9 9.12 Cash Payments......................................................10 10. Restricted Stock...................................................10 10.1 General 10 10.2 Awards and Certificates............................................11 10.3 Restrictions and Conditions........................................11 11. Termination or Amendment of the Plan. ...........................11 11.1 Amendment to Plan. ...............................................12 11.2 Effect of Termination of Plan on Outstanding Stock Options or Restricted Stock. ................................................12 11.3 Stockholder Approval for Amendment to Plan. .......................12 12. Indemnification. ..................................................12 13. Withholding. .....................................................12 13.1 Irrevocable Election. ............................................13 13.2 Approval by Plan Administrator. ...................................13 13.3 Timing of Election. ..............................................13 13.4 Timing of Delivery. ..............................................13 13.5 Terms in Agreement. ...............................................13 14. General Provisions. ...............................................13 14.1 Transfer of Common Stock. ........................................13 14.2 Reservation of Shares of Common Stock. ...........................13 14.3 Restrictions on Issuance of Shares. ..............................13 14.4 Notices. .........................................................14 14.5 Representations and Warranties. ..................................14 14.6 No Enlargement of Employee Rights. ...............................14 14.7 Restrictions on Issuance of Shares. ..............................15 14.8 Legends on Stock Certificates. ...................................15 14.9 Remedies. ........................................................15 14.10 Invalid Provisions. ..............................................16 14.11 Applicable Law. ...................................................16 14.12 Successors and Assigns. ..........................................16 14.13 Rights as a Stockholder or Employee................................16 ii DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Purpose. The purpose of this Dasibi Environmental Corp. (the "Company") Employees' Stock Option Plan (the "Plan") is to further the growth and development of the Company by providing an incentive to directors, officers, employees and consultants of the Company who are in a position to contribute materially to the prosperity of the Company and to participate in the long-term growth of the Company by receiving the opportunity to acquire shares of the Common Stock of the parent company Pollution Research and Control Corp. ("PRCC") and to provide for additional compensation based on appreciation in the PRCC's shares. The Plan provides a means to increase such persons' interests in the Company's welfare, to encourage them to continue their services to the Company or its subsidiaries, and to attract individuals of outstanding ability to enter the employment of the Company or its subsidiaries. 2. Definitions. The following definitions are applicable to the Plan: 2.1 Accrued Installment. Any exercisable portion of a Stock Option granted under the Plan. 2.2 Affiliate. Any subsidiary corporation of the Company, as such term is defined in Sections 424(e) and (f), respectively, of the Code. 2.3 Board. The Board of Directors of the Company. 2.4 Code. The Internal Revenue Code of 1986, as amended from time to time. 2.5 Company. Pollution Research and Control Corp., a California corporation. 2.6 Common Stock. The shares of the no par value common stock of PRCC. 2.7 Compensation Committee. A Committee selected by the Board that shall administer the Plan pursuant to the terms hereof. 2.8 Disabled or Disability. A Participant shall be deemed to be Disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than thirty (30) consecutive days. The determination of whether an individual is Disabled or has a Disability shall be determined under procedures established by the Plan Administrator. 2.9 Eligible Recipient. Shall have the meaning assigned to it in Section 7 hereof. 1 2.10 Fair Market Value. For purposes of the Plan, the Fair Market Value of any share of Common Stock of the Company at any date shall be determined based on the following: (a) if the Common Stock is listed on an established stock exchange or exchanges or reported by NASDAQ, the last reported sale price per share on the last trading day immediately preceding such date on the principal exchange on which it is traded, or if no sale was made on such day on such principal exchange, at the closing reported bid price on such day on such exchange, or (b) if the Common Stock is not then listed on an exchange, the last reported sale price per share on the last trading day immediately preceding such date reported by NASDAQ, or if sales are not reported by NASDAQ or no sale was made on such date, the average of the closing bid and asked price per share for the Common Stock in the over-the-counter market as quoted by NASDAQ on the day prior to such date, or (c) if the Common Stock is not publicly traded at the time and a Stock Option or Restricted Stock award is granted under the Plan, Fair Market Value shall be deemed to be the fair value of the Common Stock as determined by the Plan Administrator after taking into consideration all factors that it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm's-length. 2.11 Family Member. For purposes of the Plan, Family Member means a Participant's spouse, stepchildren, in-laws, ancestors and lineal ascendants and descendants. In addition, a Family Member shall be deemed to include a corporation, partnership, limited liability company, or trust whose only stockholders, partners, members or beneficiaries are the specified person and/or the specified person's spouse, stepchildren, in-laws, ancestors and lineal ascendants and/or descendants. 2.12 Incentive Stock Option. Any Stock Option intended to be and designated as an "incentive stock option" within the meaning of Section 422 of the Code. 2.13 Nonqualified Stock Option. Any Stock Option that is not an Incentive Stock Option. 2.14 Optionee. The recipient of a Stock Option. 2.15 Option Price. The exercise or purchase price for any Stock Option awarded under the Plan. 2.16 Participant. Any Eligible Recipient selected by the Plan Administrator, pursuant to the Plan Administrator's authority in Section 7 herein, or by the Board, to receive grants of Stock Options, Restricted Stock awards or any combination of the foregoing. 2.17 Plan. The Dasibi Environmental Corp. Employees' Stock Option Plan, as amended from time to time. 2 2.18 Plan Administrator. The President of the Company, as designated pursuant to Section 6 hereof, who is authorized to administer, construe and interpret the terms of the Plan. 2.19 Restricted Stock. Any award granted pursuant to Section 10 hereof of shares of Common Stock subject to certain restrictions. 2.20 Stock Option. Any option to purchase shares of Common Stock pursuant to Section 9. 3. Stock Options Under the Plan. Two types of Stock Options (referred to herein as "Stock Options" without distinction between such two types) may be granted under the Plan: Stock Options intended to qualify as Incentive Stock Options and Nonqualified Stock Options. 4. Effective Date of Plan. The Plan shall be adopted and become effective on the date of execution specified below (the "Effective Date"). 5. Term of Plan. Unless sooner terminated by the Board in its sole discretion, the Plan will expire and no Stock Options or Restricted Stock awards may be granted hereunder on and after ten (10) years from the Effective Date (the "Plan Termination Date"). 6. Administration. The Plan shall be administered by the Plan Administrator, the President of the Company, who shall be under review by the Compensation Committee. The Compensation Committee shall consist of not fewer than two (2) members of the Board, all of whom shall be persons who, in the opinion of counsel to the Company, are outside directors and "non-employee directors" within the meaning of Rule 16b-3(b)(3)(i) promulgated pursuant to the Securities Exchange Act of 1934, as amended. From time to time, the Board may increase or decrease (to not less than two members) the size of the Compensation Committee, and add additional members to, or remove members from, the Compensation Committee. The Compensation Committee shall act pursuant to a majority vote or the unanimous written consent of its members and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board upon request of the Board. Subject to the provisions of the Plan and the direction of the Board, the Compensation Committee may establish and follow such rules and regulations for the conduct of its business as it may deem advisable. No member of the Compensation Committee shall be liable for any action or determination undertaken or made in good faith with respect to the Plan or any agreement executed pursuant to the Plan. Subject to the provisions of the Plan, the Plan Administrator shall have the sole authority and discretion: (a) to select those Eligible Recipients who shall be Participants; 3 (b) to determine whether and to what extent Stock Options, Restricted Stock or a combination of the foregoing are to be granted hereunder to Participants; (c) to determine the number of shares of Common Stock to be covered by each such award granted hereunder; (d) to determine the number of shares of Common Stock to be granted pursuant to discretionary awards of Stock Options or Restricted Stock, in addition to the formulaic grants described in Section 6.1(c), to any Eligible Recipient whose performance merits it, based on factors including, without limitation, the Eligible Recipient's tenure with the Company, responsibility level, performance, potential and cash compensation level. (e) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder (including, but not limited to the restrictions applicable to Restricted Stock awards and the conditions under which restrictions applicable to such Restricted Stock shall lapse); (f) to determine the terms and conditions, not inconsistent with the terms of the Plan, that shall govern all written instruments evidencing the Stock Options, Restricted Stock or any combination of the foregoing granted hereunder to Participants; and (g) to reduce the exercise price of any Stock Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Stock Option has declined since the date such Stock Option was granted. The Plan Administrator shall have the authority, in his sole discretion, to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as he shall from time to time deem advisable; to interpret the terms and provisions of the Plan and any award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. All decisions made by the Plan Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Company and the Participants. 7. Eligibility. Any of the following individuals shall be eligible to receive Stock Options or Restricted Stock awards under the Plan (each, an "Eligible Recipient"): (i) any employee or officer; (ii) any member of the Board of Directors of the Company or an Affiliate; and (iii) any consultant of the Company or an Affiliate; provided, however, that no person who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its parent or subsidiary corporations shall be 4 eligible to receive an Incentive Stock Option under the Plan unless at the time such Stock Option is granted the Option Price (determined in the manner provided in Section 9.2 hereof) is at least 110% of the Fair Market Value of the shares subject to the Stock Option and such Stock Option by its terms is not exercisable after the expiration of five (5) years from the date such Stock Option is granted. Any Participant may receive more than one Stock Option or Restricted Stock award under the Plan. 8. Shares Subject to the Plan. 8.1 Available Shares. The shares reserved and available for issuance under the Plan shall be shares of the Company's authorized but unissued, or reacquired, Common Stock. Subject to adjustment as provided in Section 8.2 hereof, the aggregate number of shares that may be issued under the Plan shall not exceed One Million Five Hundred Thousand (1,500,000) shares of Common Stock. In the event that (i) the grant of any Stock Option under the Plan for any reason expires, is terminated or surrendered without being exercised in full or is exercised or surrendered without the distribution of shares or (ii) any shares of Common Stock subject to any Restricted Stock award granted hereunder are forfeited, such shares of Common Stock allocable to the unexercised portion of the Stock Option or the Restricted Stock award shall again be available for issuance in connection with future awards under the Plan. If any shares of Common Stock have been pledged as collateral for indebtedness incurred by a Participant in connection with the exercise of a Stock Option and such shares are returned to the Company in satisfaction of such indebtedness, such shares shall again be available for issuance in connection with future awards under the Plan. In the event any portion of a Stock Option is exercised pursuant to a "stock-for-stock exercise" as provided in Subsection 9.3(b), the shares of Common Stock surrendered thereby shall again be available for grant and distribution under the Plan as if no Stock Option had been granted with respect to such shares. The maximum number of shares of Common Stock that shall be issuable upon the exercise of any and all Options granted to any one individual during any fiscal year of the Company shall be 900,000. 8.2 Capital Structure Adjustments. Except as otherwise provided herein, in the event of a stock dividend (but only on Common Stock), stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, separation, or like change in the corporate or capital structure of the Company affecting the stock or securities of the Company, appropriate and proportionate capital structure adjustments shall be made in (i) the aggregate number of shares of Common Stock reserved for issuance under the Plan, (ii) the kind, number and Option Price of shares subject to outstanding Stock Options granted under the Plan, and (iii) the kind, number and purchase price of shares issuable pursuant to awards of Restricted Stock. The foregoing adjustments shall be made by the Plan Administrator, in his sole discretion, the determination of which in that respect shall be final, binding, and conclusive; provided that each Incentive Stock Option granted pursuant to the Plan shall not be adjusted in a manner that causes it to fail to continue to qualify as an Incentive Stock Option. In the event of a liquidation, a merger, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, any unexercised Stock Option rights theretofore granted under the Plan shall be (i) assumed by any surviving corporation or similar stock options shall be substituted therefor, or (ii) such Stock Options shall continue in full force and effect. 9. Terms and Conditions of Stock Options. Stock Options granted under the Plan shall be evidenced by agreements (which need not be identical) in such form and containing such provisions that are consistent with the Plan as the Plan Administrator shall from time to time approve. Such agreements may incorporate all or any of the terms hereof by reference and shall comply with and be subject to the following terms and conditions: 9.1 Number of Shares Subject to Stock Option. Each Stock Option agreement shall specify the number of shares subject to the Stock Option. 5 9.2 Stock Option Price. The Option Price for the shares subject to any Stock Option shall be such amount as is determined by the Plan Administrator. Anything to the contrary contained herein notwithstanding, the Option Price for the shares subject to any Nonqualified Stock Option or any Incentive Stock Option shall not be less than 100% of the Fair Market Value of the shares of Common Stock of the Company on the date the Stock Option is granted. In the case of an Incentive Stock Option granted to an employee who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its parent or subsidiary corporations, the Option Price shall not be less than 110% of the Fair Market Value of the shares of Common Stock of the Company on the date the Stock Option is granted. 9.3 Notice and Payment. Any exercisable portion of a Stock Option may be exercised only by: (a) delivery of a written notice to the Company, prior to the time when such Stock Option becomes unexercisable under Section 9.6 hereof, stating the number of shares being purchased and complying with all applicable rules established by the Plan Administrator; (b) payment in full of the Option Price of such Option by, as applicable; (i) cash or check for an amount equal to the aggregate Option Price for the number of shares being purchased; (ii) in the discretion of the Plan Administrator, upon such terms as the Plan Administrator shall approve, a copy of instructions to a broker directing such broker to sell the Common Stock for which such Stock Option is exercised, and to remit to the Company the aggregate Option Price of such Stock Option (a "cashless exercise"); (iii) in the discretion of the Plan Administrator, upon such terms as the Plan Administrator shall approve, the Optionee may pay all or a portion of the Option Price for the number of shares being purchased by tendering shares of the Company's Common Stock owned by the Optionee, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the aggregate Option Price of the shares with respect to which such Stock Option or portion is thereby exercised (a "stock-for-stock exercise"); or (iv) in any other form of legal consideration that may be acceptable to the Plan Administrator ("other legal consideration"); (c) payment of the amount of tax required to be withheld (if any) by the Company or any parent or subsidiary corporation as a result of the exercise of a Stock Option. At the discretion of the Plan Administrator, upon such terms as the Plan Administrator shall approve, the Optionee may pay all or a portion of the tax withholding by; (i) cash or check payable to the Company; (ii) cashless exercise; (iii) stock-for-stock exercise; (iv) other legal consideration; or (v) a combination of (i), (ii), (iii) and (iv); and (d) delivery of a written notice to the Company requesting that the Company direct the transfer agent to issue to the Optionee (or to his designee) a certificate for the number of shares of Common Stock for which the Stock Option was exercised or, in the case of a cashless exercise, for any shares that were not sold in the cashless exercise. Notwithstanding the foregoing, the Company, subject to the provisions of Section 9.11 hereof, may extend and maintain, or arrange for the extension and maintenance of, credit to any Optionee to finance the Optionee's payment of the Option Price upon the exercise of any Stock Option, on such terms as may be approved by the Plan Administrator, subject to applicable regulations of the Federal Reserve Board and any other laws or regulations in effect at the time such credit is extended. The Plan Administrator may, at any time and in his discretion, authorize a cash payment, determined in accordance with Section 9.12, which shall not exceed the amount required to pay in full the federal, state and local tax consequences of an exercise of any Stock Option granted under the Plan. 6 9.4 Non-Transferability of Options. (a) Generally. No Stock Option granted under this Plan shall be assignable or transferable, directly or indirectly, by an Optionee other than by will or the laws of descent and distribution, and such Stock Option may be exercised during the Optionee's lifetime only by the Optionee, or in the event of death or Disability, by the Optionee's legal representative or personal representative. (b) Exceptions. Notwithstanding Section 9.4(a), a Nonqualified Stock Option may be transferred to a Family Member of the Optionee. In the case of a transfer pursuant to this Section, the remaining provisions of this Plan and the terms of any Stock Option agreement under this Plan shall continue to apply as if the Optionee retained ownership of the Stock Option. 9.5 Exercise of Stock Option. The Plan Administrator shall have the power to set the time or times within which each Stock Option shall be exercisable and to accelerate the time or times of exercise. To the extent that an Optionee has the right to exercise a Stock Option and purchase shares pursuant thereto, the Stock Option may be exercised from time to time as provided in this Section 9.5. Subject to the actions, conditions and/or limitations set forth in this Plan and/or any applicable Stock Option agreement entered into hereunder, Stock Options granted under this Plan shall be exercisable in accordance with the following rules: (a) Subject in all cases to the provisions of Sections 8 and 9.6 hereof, Stock Options shall vest and become exercisable as determined by the Plan Administrator; provided, however that by a resolution adopted after a Stock Option is granted the Plan Administrator, may, on such terms and conditions as the Plan Administrator may determine to be appropriate, accelerate the time at which such Stock Option or installment thereof may be exercised. (b) Subject to the provisions of Sections 8 and 9.6 hereof, a Stock Option may be exercised when and to the extent such Stock Option becomes an Accrued Installment as provided in the terms under which such Stock Option was granted and at any time thereafter during the term of such Stock Option; provided, however, that in no event shall any Stock Option be granted after the Plan Termination Date. 7 9.6 Term of Stock Option. Any unexercised Accrued Installment of any Stock Option granted hereunder shall expire and become unexercisable and no Stock Option shall be exercisable after the earliest of: (a) ten (10) years from the date of grant; or (b) the expiration date of the Stock Option established by the Plan Administrator at the time of grant of any Stock Option; or (c) thirty (30) days following the effective date of the termination of employment or directorship (if such individual is not then an officer or employee of the Company) with the Company or any Affiliate, as the case may be, of an Optionee for any reason other than death or Disability (the "Termination Date"). The Plan Administrator, in his sole discretion, may extend such thirty (30) day period for a period following the Termination Date, but in no event beyond ten years from the date of grant. Any installments under Stock Options that have not accrued (become vested) as of said Termination Date shall expire and become unexercisable as of said Termination Date. The Plan Administrator, in his sole discretion, may vest any installments under Stock Options. Unless otherwise determined by the Plan Administrator in its sole discretion, any portion of a Stock Option that expires hereunder shall remain unexercisable and be of no effect whatsoever after such expiration notwithstanding that such Optionee may be reemployed by, or again become a director of, the Company or a subsidiary thereof, as the case may be; or (d) notwithstanding the foregoing provisions of this Section 9.6, in the event of the death of an Optionee while an employee, consultant, officer or director of the Company or any Affiliate, as the case may be, or in the event of the termination of employment, directorship or a contract to render services to the Company by reason of the Optionee's Disability, any unexercised Accrued Installment of the Stock Option granted hereunder to such Optionee shall expire and become unexercisable as of the earlier of: (i) the expiration date of the Stock Option established by the Plan Administrator at the time of grant of any Stock Option; (ii) ten (10) years from the date of grant; or (iii) eighteen (18) months after the date of death of such Optionee (if applicable) and one (1) year after the date of the termination of employment or directorship by reason of Disability (if applicable). Any installments under a deceased Optionee's Option that have not become exercisable as of the date of his or her death shall expire and become unexercisable as of said date of termination of employment as a result of death or Disability. For purposes of this Subsection 9.6(d), an Optionee shall be deemed employed by the Company or any of its subsidiaries, as the case may be, during any period of leave of absence from active employment as authorized by the Company or any of its subsidiaries, as the case may be; or (e) in the case of an Incentive Stock Option granted to an employee who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its parent or subsidiary corporations, the term set forth in Subsection 9.6(a), above, shall not be more than five years after the date the Stock Option is granted. 8 9.7 Limit on Incentive Stock Options. The aggregate Fair Market Value (determined at the time the Incentive Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options granted under this Plan are exercisable for the first time by an Optionee during any calendar year shall not exceed $300,000. To the extent that the aggregate Fair Market Value (determined at the time the Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year (under all Incentive Stock Option plans of the Company and any parent or subsidiary corporations) exceeds $300,000, such Stock Options shall be treated as Nonqualified Stock Options. The determination of which Stock Options shall be treated as Nonqualified Stock Options shall be made by taking Stock Options into account in the order in which they were granted. 9.8 No Fractional Shares. In no event shall the Company be required to issue fractional shares upon the exercise of a Stock Option. 9.9 Exercisability in the Event of Death. In the event of the death of the Optionee, any such Accrued Installment of a deceased Optionee may be exercised prior to its expiration pursuant to Section 9.6 by (and only by) the Optionee's personal representatives, heirs, or legatees or other person or persons to whom the Optionee's rights shall pass by will or by the laws of the descent and distribution, if applicable, subject, however, to all of the terms and conditions of this Plan and the applicable Stock Option agreement governing the exercise of Stock Options granted hereunder. 9.10 Modification, Extension, and Renewal of Stock Options. Subject to the terms and conditions and within the limitations of the Plan, the Plan Administrator may modify, extend, or renew outstanding Stock Options granted under the Plan, accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised). The Plan Administrator may modify any outstanding Stock Options so as to specify a lower Option Price. The Plan Administrator shall not, however, without the consent of the Optionee, modify any outstanding Incentive Stock Option in any manner that would cause the Stock Option not to qualify as an Incentive Stock Option. Notwithstanding the foregoing, no modification of a Stock Option shall, without the consent of the Optionee, alter or impair any rights of the Optionee under the Stock Option. 9.11 Loans. The Company may extend and maintain, or arrange for the extension and maintenance of, credit to any Optionee to finance the Optionee's purchase of shares pursuant to the exercise of any Stock Option, on such terms as may be approved by the Plan Administrator, subject to applicable regulations of the Federal Reserve Board and any other laws or regulations in effect at the time such credit is extended, either on or after the date of grant of such Stock Option. Such loans may be either in connection with the grant or exercise of any Stock Option, or in connection with the payment of any federal, state and local income taxes in respect of income recognized upon exercise of a Stock Option. The Plan Administrator shall have full authority to decide whether to make a loan hereunder and to determine the amount, term, and provisions of any such loan, including the interest rate (which may be zero) charged in respect of any such loan, whether the loan is to be secured or unsecured, the terms on which the loan is to be repaid and the conditions, if any, under which it may be forgiven. However, no loan hereunder shall have a term (including extensions) exceeding ten years in duration or be an amount exceeding the total Option Price paid by the borrower under a Stock Option or for related Common Stock under the Plan plus an amount equal to the cash payment permitted in Section 9.12 below. 9 9.12 Cash Payments. The Plan Administrator may, at any time and in his discretion, authorize a cash payment in respect of the grant or exercise of a Stock Option under the Plan or the lapse or waiver of restrictions under a Stock Option, which shall not exceed the amount that would be required in order to pay in full the federal, state and local income taxes due as a result of income recognized by the recipient as a consequence of: (i) the receipt of a Stock Option or the exercise of rights thereunder, and (ii) the receipt of such cash payment. The Plan Administrator shall have complete authority to decide whether to make such cash payments in any case, to make provisions for such payments either simultaneously with or after the grant of the associated Stock Option, and to determine the amount of any such payment. 10. Restricted Stock. 10.1 General. Restricted Stock may be issued either alone or in addition to Stock Options granted under the Plan. The Plan Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Restricted Stock shall be made; the number of shares to be awarded; the price, if any, to be paid by the recipient of Restricted Stock; the Restricted Period, as defined in Section 10.3 hereof, applicable to Restricted Stock; the date or dates on which restrictions applicable to Restricted Stock awards shall lapse during the Restricted Period; and all other conditions of the Restricted Stock awards. Subject to the requirements of Section 162(m) of the Code, as applicable, the Plan Administrator may also condition the grant of Restricted Stock upon the exercise of Stock Options, or upon such other criteria as the Plan Administrator may determine, in his sole discretion. The provisions of Restricted Stock awards need not be the same with respect to each recipient. In the sole discretion of the Plan Administrator, loans may be made to Participants in connection with the purchase of Restricted Stock under substantially the same terms and conditions as provided in Section 9.11 hereof with respect to the exercise of Stock Options. 10 10.2 Awards and Certificates. The prospective recipient of a Restricted Stock award shall not have any rights with respect to such award, unless and until such recipient has executed an agreement evidencing the award (a "Restricted Stock Award Agreement") and delivered a fully executed copy thereof to the Company, within a period of sixty days (or such other period as the Plan Administrator may specify) after the award date. Except as otherwise provided below in this Section 10.2, (i) each Participant who is awarded Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock; and (ii) such certificate shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such award. The Plan Administrator may require that the stock certificates evidencing Restricted Stock awards hereunder be held in the custody of the Company until the restrictions thereon shall have lapsed, and that, as a condition of any Restricted Stock award, the Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such award. 10.3 Restrictions and Conditions. The Restricted Stock awards granted pursuant to this Section 10 shall be subject to the following restrictions and conditions: (a) Subject to the provisions of the Plan and the Restricted Stock Award Agreement, as appropriate, governing such award, during such period as may be set by the Plan Administrator commencing on the grant date (the "Restricted Period"), the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock awarded under the Plan; provided, however, that the Plan Administrator may, in his sole discretion, provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Plan Administrator may determine, in its sole discretion, including, but not limited to, the attainment of certain performance related goals, the Participant's termination of employment or service, death or Disability. (b) Except as provided in Section 10.3(a), the Participant shall generally have, with respect to shares of Restricted Stock, all of the rights of a stockholder with respect to such stock during the Restricted Period. Certificates for shares of unrestricted Common Stock shall be delivered to the Participant promptly after, and only after, the Restricted Period shall expire without forfeiture in respect of such shares of Restricted Stock, except as the Plan Administrator, in his sole discretion, shall otherwise determine. (c) The rights of holders of Restricted Stock awards upon termination of employment or service for any reason during the Restricted Period shall be set forth in the Restricted Stock Award Agreement governing such awards. 11. Termination or Amendment of the Plan. The Board may at any time terminate or amend the Plan in accordance with the following provisions: 11 11.1 Amendment to Plan. Except as provided in Section 11.3 hereof, the Board may amend this Plan from time to time in such respect as the Board may deem advisable, provided, however, that no such amendment shall operate to affect adversely a Participant's rights under this Plan with respect to any Stock Option or Restricted Stock award granted hereunder prior to the adoption of such amendment, except as may be necessary, in the judgment of counsel to the Company, to comply with any applicable law. 11.2 Effect of Termination of Plan on Outstanding Stock Options or Restricted Stock. Except as set forth in Section 8.2 hereof, no termination of the Plan prior to the Plan Termination Date shall, without the written consent of the Participant, alter the terms of Stock Options or Restricted Stock already granted and such Stock Options or Restricted Stock shall remain in full force and effect as if this Plan had not been terminated. 11.3 Stockholder Approval for Amendment to Plan. Any amendment to the Plan that would result in any of the following changes (except by operation of Section 8.2) must be approved by the stockholders of the Company: (i) an increase in the total number of shares of Common Stock covered by the Plan; (ii) a change in the class of persons deemed to be Eligible Recipients under the Plan; and (iii) an extension of the term of the Plan beyond ten (10) years from the Effective Date. 12. Indemnification. In addition to such other rights of indemnification as they may have as members of the Board, the Compensation Committee, and each member individually, and the Plan Administrator shall be indemnified by the Company against reasonable expense, including reasonable attorney's fees, actually and necessarily incurred in connection with the defense of any action, suit, or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any grant thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any action, suit, or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit, or proceeding that any of them is liable for gross negligence or misconduct in the performance of their duties, provided that within sixty (60) days after institution of any such action, suit, or proceeding, they shall offer in writing to the Company the opportunity, at their own expense, to handle and defend the same. 13. Withholding. Whenever the Company proposes or is required to issue or transfer shares under the Plan, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such shares of Common Stock. If an Optionee surrenders shares acquired pursuant to the exercise of an Incentive Stock Option in payment of the Option Price and such surrender constitutes a disqualifying disposition for purposes of obtaining Incentive Stock Option treatment under the Code, the Company shall have the right to require the Optionee to remit to the Company an amount sufficient to satisfy any federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. Whenever under the Plan payments are to be made in cash, such payments shall be net of an amount sufficient to satisfy any federal, state and local withholding tax requirements. An Optionee may elect with respect to any Stock Option that is paid in whole or in part in shares of Common Stock, to surrender previously acquired shares of Common Stock or authorize the Company to withhold shares (valued at Fair Market Value on the date of surrender or withholding of the shares) in satisfaction of all such withholding requirements (the "Share Surrender Withholding Election") in accordance with the following: 12 13.1 Irrevocable Election. Any Share Surrender Withholding Election shall be made by written notice to the Company and thereafter shall be irrevocable by the Optionee. 13.2 Approval by Plan Administrator. Any Share Surrender Withholding Election shall be subject to the consent or disapproval of the Plan Administrator in accordance with rules established from time to time by the Plan Administrator. 13.3 Timing of Election. Any Share Surrender Withholding Election must be made prior to the date on which the Optionee recognizes taxable income with respect to the receipt of such shares (the "Tax Date"). 13.4 Timing of Delivery. When the Tax Date falls after the exercise of a Stock Option and the Optionee makes a Share Surrender Withholding Election, the full number of shares subject to the Stock Option being exercised will be issued, but the Optionee will be unconditionally obligated to deliver to the Company on the Tax Date the number of shares having a value on the Tax Date equal to the Optionee's federal, state and local withholding tax requirements. 13.5 Terms in Agreement. For purposes of this Section 13.5, the Plan Administrator shall have the discretion to provide (by general rule or a provision in the specific Stock Option agreement) at the election of the Optionee, "federal, state and local withholding tax requirements" that shall be deemed to be any amount designated by the Optionee that does not exceed his estimated federal, state and local tax obligations associated with the transaction, including FICA taxes to the extent applicable. 14. General Provisions. 14.1 Transfer of Common Stock. Common Stock issued pursuant to the exercise of a Stock Option or the grant of a Restricted Stock award granted under this Plan or any interest in such Common Stock, may be sold, assigned, gifted, pledged, hypothecated, encumbered or otherwise transferred or alienated in any manner by the holder(s) thereof, subject, however, to any restrictions contained in the Company's Restated Articles of Incorporation, to the provisions of this Plan, including any representations or warranties requested under Section 14.5 hereof, and also subject to compliance with any applicable federal, state, local or other law, regulation or rule governing the sale or transfer of stock or securities. 14.2 Reservation of Shares of Common Stock. The Company, during the term of this Plan, will at all times reserve and keep available such number of shares of its Common Stock as shall be sufficient to satisfy the requirements of the Plan. 14.3 Restrictions on Issuance of Shares. The Company, during the term of this Plan, will use commercially reasonable efforts to seek to obtain from the appropriate regulatory agencies any requisite authorization in order to issue and sell such number of shares of its Common Stock as shall be sufficient to satisfy the requirements of the Plan. The inability of the Company to obtain from any such regulatory agency having jurisdiction thereof the authorization deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares of its Common Stock hereunder or the inability of the Company to confirm to its satisfaction that any issuance and sale of any shares of such Common Stock will meet applicable legal requirements shall relieve the Company of any liability in respect of the non-issuance or sale of such Common Stock as to which such authorization or confirmation shall have not been obtained. 13 14.4 Notices. Any notice to be given to the Company pursuant to the provisions of this Plan shall be in writing and addressed to the Company in care of its Plan Administrator at its principal office, and any notice to be given to a director, officer, employee or consultant of the Company or any of its Affiliates to whom a Stock Option or Restricted Stock award is granted hereunder shall be in writing and addressed to him or her at the address given beneath his or her signature on his or her Stock Option agreement or Restricted Stock Award agreement, as the case may be, or at such other address as such employee, officer, director or consultant or his or her transferee (upon the transfer of Common Stock) may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when delivered in person or mailed by first-class mail (return receipt requested), telecopy or overnight courier to the other's address. It shall be the obligation of each Participant and each transferee holding Common Stock granted pursuant to the Plan to provide the Plan Administrator, by letter mailed as provided hereinabove, with written notice of his or her correct mailing address. 14.5 Representations and Warranties. As a condition to the exercise of any portion of a Stock Option or the grant of any Restricted Stock award, the Company may require the person exercising such Stock Option or receiving such Restricted Stock to make any representation and/or warranty to the Company as may, in the judgment of counsel to the Company, be required under any applicable law or regulation, including, but not limited to, a representation and warranty that the shares are being acquired only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required under the Securities Act of 1933, as amended (the "Securities Act"), or any other applicable law, regulation or rule of any governmental agency. 14.6 No Enlargement of Employee Rights. This Plan is purely voluntary on the part of the Company, and while the Company hopes to continue it indefinitely, the continuance of the Plan shall not be deemed to constitute a contract between the Company or any of its Affiliates and any director, officer, consultant or employee, or to be consideration for, or a condition of, the employment of any employee. Nothing contained in the Plan shall be deemed to give any employee the right to be retained in the employ of the Company or any of its Affiliates or to interfere with the right of the Company or any of its Affiliates to terminate the employment or service of any of its officers, directors, employees or consultants at any time. No officer, director, employee or consultant shall have any right to or interest in Stock Options or Restricted Stock awards authorized hereunder prior to the grant of such a Stock Option or Restricted Stock award to such officer, director, employee or consultant, and upon such grant he shall have only such rights and interests as are expressly provided herein, subject, however, to all applicable provisions of the Company's Restated Articles of Incorporation, as the same may be amended from time to time. 14 14.7 Restrictions on Issuance of Shares. The issuance of Stock Options, Restricted Stock awards and shares of Common Stock related thereto shall be subject to compliance with all of the applicable requirements of law with respect to the issuance and sale of securities as the Plan Administrator may deem advisable under the Securities Act, including, without limitation, any required qualification under the rules, regulations or other requirements of the Securities and Exchange Commission, any Stock exchange upon which the Common Stock is then listed and any applicable federal and state securities laws including, without limitation, any required qualification under the California Corporate Securities Law of 1968, as amended, or the Securities Act. 14.8 Legends on Stock Certificates. Unless there is a currently effective appropriate registration statement on file with the Securities and Exchange Commission pursuant to the Securities Act with respect to the shares of Common Stock issuable under this Plan, each Certificate representing such Common Stock shall be endorsed on its face with the following legend or its equivalent: "Neither the shares represented by this Certificate, nor the Options pursuant to which such shares were issued, have been registered under the Securities Act of 1933, as amended. These shares have been acquired for investment (and not with a view to distribution or resale) and may not be sold, mortgaged, pledged, hypothecated or otherwise transferred without an effective registration statement for such shares under the Securities Act of 1933, as amended, or until the issuer has been furnished with an opinion of counsel for the registered owner of these shares, reasonably satisfactory to counsel for the issuer, that such sale, transfer or disposition is exempt from the registration or qualification provisions of the Securities Act of 1933, as amended." A copy of this Plan shall be delivered to the Secretary of the Company and shall be shown by him to any eligible person making reasonable inquiry concerning it. In addition, the Company reserves the right to place any legends or other restrictions on each certificate representing Common Stock that may be required by any applicable state securities or other laws. 14.9 Remedies. Should any dispute arise concerning the sale or other disposition of a Stock Option, Restricted Stock or shares of Common Stock issued or issuable upon the exercise of a Stock Option, or any breach by the Company of the terms of the Plan, any Stock Option agreement or any Restricted Stock Award agreement, a Participant's sole and exclusive remedy shall be damages. 15 14.10 Invalid Provisions. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability shall not be construed as rendering any other provisions contained herein invalid or unenforceable, and all such other provisions shall be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein. 14.11 Applicable Law. This Plan shall be governed by and construed in accordance with the laws of the State of California applicable to agreements made and to be performed entirely within such state and without regard to the conflict of law principles thereof. 14.12 Successors and Assigns. This Plan shall be binding on and inure to the benefit of the Company and the officers, directors, employees and consultants of the Company and any Affiliate to whom a Stock Option or Restricted Stock is granted hereunder, and their heirs, executors, administrators, legatees personal representatives, assignees and transferees. 14.13 Rights as a Stockholder or Employee. A Participant or transferee of a Stock Option or Restricted Stock shall have no right as a stockholder of the Company with respect to any shares covered by any grant under this Plan until the date of the issuance of a share certificate for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether cash, securities, or other property) or distributions or other rights for which the record date is prior to the date such share certificate is issued, except as provided in Section 8.2 hereof. IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer and to be effective on this 29th day of June, 2000. Pollution Research and Control Corp. By: /s/ Albert E. Gosselin -------------------------------- Albert E. Gosselin President and Chief Executive Officer Attest: By: /s/ Marcia Smith ------------------------------- Marcia Smith EX-10.239 4 0004.txt STOCK PURCHASE WARRANT-ASTOR CAPITAL Exhibit 10.239 EXHIBIT 10.239 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, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase 21,900 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, Astor Capital, Inc. (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 Twenty-One Thousand Nine Hundred (21,900) 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 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). 1 3. Exercise of Warrant. Except as provided in Section 3(b) or 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 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 respects 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 of Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that Holder would otherwise be entitled to 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 2 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 bo7oks 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. 8. No Rights as Shareholder 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 of 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 3 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 it 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. (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 its 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 of 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 4 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 disposition 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 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 at 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 or any other securities or property, or to receive any other right, or 5 (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 addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 15. Authorized Shares. (a) The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized an 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 6 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 therefor 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 the 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 such 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. 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 state and Federal securities laws. (c) Nonwaiver and Expenses.No course of dealing or 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. 7 (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 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. (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 king 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 warrantholder of the Company. (i) 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 ineffective 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. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. 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 Pollution Research and Control Corp., 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 not 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: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration 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. 11 EX-10.240 5 0005.txt STOCK PURCHASE WARRANT-CHRIS BIGGS Exhibit 10.240 EXHIBIT 10.240 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, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase 6,000 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, Chris Briggs (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 Six Thousand (6,000) 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 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). 1 3. Exercise of Warrant. Except as provided in Section 3(b) or 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 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 respects 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 of Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that Holder would otherwise be entitled to 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 2 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 bo7oks 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. 8. No Rights as Shareholder 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 of 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 3 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 it 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. (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 its 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 of 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 4 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 disposition 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 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 at 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 or any other securities or property, or to receive any other right, or 5 (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 addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 15. Authorized Shares. (a) The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized an 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 6 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 therefor 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 the 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 such 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. 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 state and Federal securities laws. (c) Nonwaiver and Expenses.No course of dealing or 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. 7 (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 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. (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 king 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 warrantholder of the Company. (i) 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 ineffective 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. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. 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 Pollution Research and Control Corp., 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 not 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: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration 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. 11 EX-10.241 6 0006.txt STOCK PURCHASE WARRANT-JOSEPH CHAZANOW Exhibit 10.241 EXHIBIT 10.241 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, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase 15,000 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, Joseph Chazanow (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 Fifteen Thousand (15,000) 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 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). 1 3. Exercise of Warrant. Except as provided in Section 3(b) or 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 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 respects 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 of Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that Holder would otherwise be entitled to 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 2 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 bo7oks 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. 8. No Rights as Shareholder 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 of 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 3 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 it 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. (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 its 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 of 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 4 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 disposition 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 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 at 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 or any other securities or property, or to receive any other right, or 5 (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 addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 15. Authorized Shares. (a) The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized an 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 6 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 therefor 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 the 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 such 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. 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 state and Federal securities laws. (c) Nonwaiver and Expenses.No course of dealing or 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. 7 (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 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. (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 king 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 warrantholder of the Company. (i) 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 ineffective 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. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. 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 Pollution Research and Control Corp., 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 not 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: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration 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. 11 EX-10.242 7 0007.txt STOCK PURCHASE WARRANT-CHRISTOPHER MEHRINGER Exhibit 10.242 EXHIBIT 10.242 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, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase 4,500 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, Christopher Mehringer (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 Four Thousand Five Hundred (4,500) 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 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). 1 3. Exercise of Warrant. Except as provided in Section 3(b) or 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 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 respects 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 of Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that Holder would otherwise be entitled to 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 2 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 bo7oks 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. 8. No Rights as Shareholder 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 of 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 3 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 it 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. (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 its 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 of 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 4 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 disposition 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 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 at 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 or any other securities or property, or to receive any other right, or 5 (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 addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 15. Authorized Shares. (a) The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized an 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 6 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 therefor 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 the 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 such 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. 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 state and Federal securities laws. (c) Nonwaiver and Expenses.No course of dealing or 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. 7 (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 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. (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 king 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 warrantholder of the Company. (i) 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 ineffective 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. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. 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 Pollution Research and Control Corp., 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 not 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: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration 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. 11 EX-10.243 8 0008.txt STOCK PURCHASE WARRANT-CRISTOBAL GARCIA Exhibit 10.243 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, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase 1,500 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, Cristobal Garcia (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 One Thousand Five Hundred (1,500) 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 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). 1 3. Exercise of Warrant. Except as provided in Section 3(b) or 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 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 respects 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 of Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that Holder would otherwise be entitled to 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 2 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 bo7oks 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. 8. No Rights as Shareholder 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 of 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 3 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 it 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. (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 its 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 of 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 4 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 disposition 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 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 at 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 or any other securities or property, or to receive any other right, or 5 (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 addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 15. Authorized Shares. (a) The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized an 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 6 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 therefor 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 the 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 such 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. 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 state and Federal securities laws. (c) Nonwaiver and Expenses.No course of dealing or 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. 7 (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 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. (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 king 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 warrantholder of the Company. (i) 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 ineffective 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. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. 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 Pollution Research and Control Corp., 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 not 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: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration 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. 11 EX-10.244 9 0009.txt STOCK PURCHASE WARRANT-GEORGE T. HEISEL Exhibit 10.244 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, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase 9,000 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, George T. Heisel, Jr. (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 Nine Thousand (9 ,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 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). 1 3. Exercise of Warrant. Except as provided in Section 3(b) or 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 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 respects 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 of Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that Holder would otherwise be entitled to 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 2 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 bo7oks 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. 8. No Rights as Shareholder 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 of 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 3 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 it 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. (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 its 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 of 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 4 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 disposition 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 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 at 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 or any other securities or property, or to receive any other right, or 5 (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 addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 15. Authorized Shares. (a) The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized an 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 6 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 therefor 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 the 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 such 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. 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 state and Federal securities laws. (c) Nonwaiver and Expenses.No course of dealing or 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. 7 (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 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. (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 king 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 warrantholder of the Company. (i) 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 ineffective 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. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. 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 Pollution Research and Control Corp., 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 not 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: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration 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. 11 EX-10.245 10 0010.txt STOCK PURCHASE WARRANT-JRT HOLDINGS Exhibit 10.245 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, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase 6,000 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, JRT Holdings (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 Six Thousand (6 ,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 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). 1 3. Exercise of Warrant. Except as provided in Section 3(b) or 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 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 respects 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 of Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that Holder would otherwise be entitled to 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 2 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 bo7oks 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. 8. No Rights as Shareholder 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 of 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 3 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 it 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. (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 its 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 of 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 4 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 disposition 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 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 at 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 or any other securities or property, or to receive any other right, or 5 (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 addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 15. Authorized Shares. (a) The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized an 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 6 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 therefor 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 the 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 such 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. 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 state and Federal securities laws. (c) Nonwaiver and Expenses.No course of dealing or 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. 7 (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 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. (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 king 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 warrantholder of the Company. (i) 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 ineffective 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. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. 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 Pollution Research and Control Corp., 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 not 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: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration 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. 11 EX-10.246 11 0011.txt STOCK PURCHASE WARRANT-ROBERT DEL GUERCIO Exhibit 10.246 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, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT To Purchase 7,500 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, Robert Del Guercio (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 Seven Thousand Five Hundred (7,500) 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 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). 1 3. Exercise of Warrant. Except as provided in Section 3(b) or 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 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 respects 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 of Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that Holder would otherwise be entitled to 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 2 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 bo7oks 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. 8. No Rights as Shareholder 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 of 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 3 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 it 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. (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 its 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 of 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 4 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 disposition 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 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 at 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 or any other securities or property, or to receive any other right, or 5 (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 addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 15. Authorized Shares. (a) The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized an 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 6 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 therefor 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 the 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 such 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. 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 state and Federal securities laws. (c) Nonwaiver and Expenses.No course of dealing or 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. 7 (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 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. (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 king 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 warrantholder of the Company. (i) 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 ineffective 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. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. 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 Pollution Research and Control Corp., 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 not 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: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration 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. 11 EX-10.247 12 0012.txt STOCK OPTION AGREEMENT-IMELDA FACUNDO Exhibit 10.247 EXHIBIT 10.247 DASIBI ENVIRONMENTAL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Imelda Facundo ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 4,480 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Imelda Facundo By: /s/ Albert E. Gosselin - ------------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 4,480 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Imelda Facundo By: /s/ Imelda Fucundo - ----------------------------- -------------------------------- (Print Your Name) Imelda Fucundo 6 EX-10.248 13 0013.txt PROMISSORY NOTE-IMELDA FACUNDO Exhibit 10.248 PROMISSORY NOTE (NO INTEREST) $8,960.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Imelda Facundo (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $8,960.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Imelda Facundo -------------------------------- Imelda Facundo EX-10.249 14 0014.txt STOCK PLEDGE AGREEMENT-IMELDA FACUNDO Exhibit 10.249 EXHIBIT 10.249 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Imelda Facundo ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $8,960.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Imelda Facundo - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 4,480 shares of Common Stock ofPOLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Imelda Facundo -------------------------------- Imelda Fecundo 15 EX-10.250 15 0015.txt STOCK OPTION AGREEMENT-LUZ RENDON Exhibit 10.250 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Luz Rendon ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 6,428 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Luz Rendon By: /s/ Albert E. Gosselin - -------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 6,428 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Luz Rendon By: /s/ Luz Rendon - ----------------------------- -------------------------------- (Print Your Name) Luz Rendon EX-10.251 16 0016.txt PROMISSORY NOTE-LUZ RENDON Exhibit 10.251 PROMISSORY NOTE (NO INTEREST) $12,856.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Luz Rendon (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $12,856.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Luz Rendon -------------------------------- Luz Rendon EX-10.252 17 0017.txt STOCK PLEDGE AGREEMENT-LUZ RENDON Exhibit 10.252 EXHIBIT 10.252 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Luz Rendon ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $12,856.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Luz Rendon - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 6,428 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Luz Rendon -------------------------------- Luz Rendon EX-10.253 18 0018.txt STOCK OPTION AGREEMENT-ROGER JORDAN Exhibit 10.253 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Roger Jordan ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 22,000 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Roger Jordan By: /s/ Albert E. Gosselin - -------------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 22,000 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Roger Jordan By: /s/ Roger Jordan - ----------------------------- -------------------------------- (Print Your Name) Roger Jordan 6 EX-10.254 19 0019.txt PROMISSORY NOTE Exhibit 10.254 PROMISSORY NOTE (NO INTEREST) $44,000.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Roger Jordan (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $44,000.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Roger Jordan -------------------------------- Roger Jordan EX-10.255 20 0020.txt STOCK PLEDGE AGREEMENT-ROGER JORDAN Exhibit 10.255 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Roger Jordan ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $44,000.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Roger Jordan - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 22,000 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Roger Jordan -------------------------------- Roger Jordan EX-10.256 21 0021.txt STOCK OPTION AGREEMENT-CARLOS PINEDA Exhibit 10.256 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Carlos Pineda ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 6,428 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Carlos Pineda By: /s/ Albert E. Gosselin - ----------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 6,428 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Carlos Pineda By: /s/ Carlos Pineda - ----------------------------- -------------------------------- (Print Your Name) Carlos Pineda EX-10.257 22 0022.txt PROMISSORY NOTE-CARLOS PINEDA Exhibit 10.257 PROMISSORY NOTE (NO INTEREST) $12,856.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Carlos Pineda (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $12,856.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Carlos Pineda -------------------------------- Carlos Pineda EX-10.258 23 0023.txt STOCK PLEDGE AGREEMENT-CARLOS PINEDA Exhibit 10.258 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Carlos Pineda ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $12,856.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Carlos Pineda - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 6,428 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Carlos Pineda -------------------------------- Carlos Pineda EX-10.259 24 0024.txt STOCK OPTION AGREEM,ENT-ILIJA SAKOTA Exhibit 10.259 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Ilija Sakota ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 6,428 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Ilija Sakota By: /s/ Albert E. Gosselin - ---------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 6,428 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Ilija Sakota By: /s/ Ilija Sakota - ----------------------------- -------------------------------- (Print Your Name) Ilija Sakota 6 EX-10.260 25 0025.txt PROMISSORY NOTE-ILIJA SAKOTA Exhibit 10.260 PROMISSORY NOTE (NO INTEREST) $12,856.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Ilija Sakota (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $12,856.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Ilija Sakota -------------------------------- Ilija Sakota EX-10.261 26 0026.txt STOCK PLADGE AGREEMENT Exhibit 10.261 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Ilija Sakota ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $12,856.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Ilija Sakota - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 6,428 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Ilija Sakota -------------------------------- Ilija Sakota EX-10.262 27 0027.txt STOCK OPTION AGREEMENT-ROBERT BASA Exhibit 10.262 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Robert Basa ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 7,347 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Robert Basa By: /s/ Albert E. Gosselin - --------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 7,347 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Robert Basa By: /s/ Robert Basa - ----------------------------- -------------------------------- (Print Your Name) Robert Basa 6 EX-10.263 28 0028.txt PROMMISSORY NOTE-ROBERT BASA Exhibit 10.263 PROMISSORY NOTE (NO INTEREST) $14,694.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Robert Basa (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $14,694.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Robert Basa -------------------------------- Robert Basa EX-10.264 29 0029.txt STOCK PLEDGE AGREEMENT Exhibit 10.264 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Robert Basa ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $14,694.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Robert Basa - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 7,347 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Robert Basa -------------------------------- Robert Basa 15 EX-10.265 30 0030.txt STOCK OPTION AGREEMENT-JENNIFER JAUREGUI Exhibit 10.265 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Jennifer Jauregui an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 10,142 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Jennifer Jauregui By: /s/ Albert E. Gosselin - --------------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 10,142 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Jennifer Jauregui By: /s/ Jennifer Jauregui - ----------------------------- -------------------------------- (Print Your Name) Jennifer Jauregui EX-10.266 31 0031.txt PROMISSORY NOTE-JENNIFER JAUREGUI Exhibit 10.266 PROMISSORY NOTE (NO INTEREST) $20,284.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Jennifer Jauregui ("Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $20,284.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Jennifer Jauregui -------------------------------- Jennifer Jauregui EX-10.267 32 0032.txt STOCK PLEDGE AGREEMENT-JENNIFER JAUREGUI Exhibit 10.267 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Jennifer Jauregui ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $20,284.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Jennifer Jauregui - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 10,142 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Jennifer Jauregui -------------------------------- Jennifer Jauregui EX-10.268 33 0033.txt STOCK OPTION AGREEMENT-ARAMIS MARKAROVANES Exhibit 10.268 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Aramis Markarovanes ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 5,600 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Aramis Markarovanes By: /s/ Albert E. Gosselin - ----------------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 5,600 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Aramis Markarovanes By: /s/ Aramis Markarovanes - ----------------------------- ----------------------------------- (Print Your Name) Aramis Markarovanes 6 EX-10.269 34 0034.txt PROMISSORY NOTE-ARAMIS MARKAROVANES Exhibit 10.269 PROMISSORY NOTE (NO INTEREST) $11,200.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Aramis Markarovanes (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $11,200.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Aramis Markarovanes -------------------------------- Aramis Markarovanes EX-10.270 35 0035.txt STOCK PLEDGE AGREEMENT-ARAMIS MARKAROVANES Exhibit 10.270 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Aramis Markarovanes ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $11,200.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Aramis Markarovanes - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 5600 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Aramis Markarovanes -------------------------------- Aramis Markarovanes EX-10.271 36 0036.txt STOCK OPTION AGREEMENT-MINDA BASA Exhibit 10.271 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Minda Basa ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 9,000 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Minda Basa By: /s/ Albert E. Gosselin - -------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 9,000 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Minda Basa By: /s/ Minda Basa - ----------------------------- -------------------------------- (Print Your Name) Minda Basa 6 EX-10.272 37 0037.txt PROMISSORY NOTE-MINDA BASA Exhibit 10.272 EXHIBIT 10.272 PROMISSORY NOTE (NO INTEREST) $18,000.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Minda Basa (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $18,000.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Minda Basa -------------------------------- Minda Basa EX-10.273 38 0038.txt STOCK PLEDGE AGREEMENT-MINDA BASA Exhibit 10.273 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Minda Basa ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $18,000.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Minda Basa - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 7,347 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Minda Basa -------------------------------- Minda Basa 15 EX-10.274 39 0039.txt STOCK OPTION AGREEMENT-VICENTE TIO Exhibit 10.274 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Vicente Tio ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 32,144 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Vicente Tio By: /s/ Albert E. Gosselin - --------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 32,144 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Vicente Tio By: /s/ Vicente Tio - ----------------------------- -------------------------------- (Print Your Name) Vicente Tio EX-10.275 40 0040.txt PROMISSORY NOTE-VINCENTE TIO Exhibit 10.10.275 PROMISSORY NOTE (NO INTEREST) $64,288.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Vicente Tio (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $64,288.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Vicente Tio -------------------------------- Vicente Tio EX-10.276 41 0041.txt STOCK OPTION PLEDGE-VICENTE TIO Exhibit 10.276 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Vicente Tio ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $64,288.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Vicente Tio - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 32,144 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Vicente Tio -------------------------------- Vicente Tio 15 EX-10.277 42 0042.txt STOCK OPTION AGREEMENT-KEN LUONG Exhibit 10.277 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Ken Luong ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 4,592 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Ken Luong By: /s/ Albert E. Gosselin - --------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 4,592 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Ken Luong By: /s/ Ken Luong - ----------------------------- -------------------------------- (Print Your Name) Ken Luong 6 EX-10.278 43 0043.txt PROMISSORY NOTE-KEN LUONG Exhibit 10.278 PROMISSORY NOTE (NO INTEREST) $9,184.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Ken Luong (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $9,184.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Ken Luong -------------------------------- Ken Luong EX-10.279 44 0044.txt STOCK PLEDGE AGREEMENT-KEN LUONG Exhibit 10.279 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Ken Luong ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $9,184.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Ken Luong - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 4,592 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Ken Luong -------------------------------- Ken Luong 15 EX-10.280 45 0045.txt STOCK OPTION PLAN-ELIUD MARTINEZ Exhibti 10.280 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Eliud Martinez ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 4,592 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Eliud Martinez By: /s/ Albert E. Gosselin - ------------------ -------------------------------- Grantee (Signature) Ablert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 4,592 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Eliud Martinez By: /s/ Eliud Martinez - ----------------------------- -------------------------------- (Print Your Name) Eliud Martinez 6 EX-10.281 46 0046.txt PROMISSORY NOTE-ELIUD MARTINEZ Exhibit 10.281 PROMISSORY NOTE (NO INTEREST) $9,184.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Eliud Martinez (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $9,184.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Eliud Martinez -------------------------------- Eliud Martinez EX-10.282 47 0047.txt STOCK PLEDGE AGREEMENT-ELIUD MARTINEZ Exhibit 10.282 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Eliud Martinez ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $9,184.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Eliud Martinez - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 4,592 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Eliud Martinez -------------------------------- Eliud Martinez 15 EX-10.283 48 0048.txt STOCK OPTION AGREEMENT-JOE MARTIN Exhibit 10.283 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Joe Martin ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 4,592 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Joe Martin By: /s/ Albert E. Gosselin - ---------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 4,592 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Joe Martin By: /s/ Joe Martin - ----------------------------- -------------------------------- (Print Your Name) Joe Martin 6 EX-10.284 49 0049.txt PROMISSORY NOTE-JOE MARTIN Exhibit 10.284 PROMISSORY NOTE (NO INTEREST) $9,184.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Joe Martin (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $9,184.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Joe Martin -------------------------------- Joe Martin EX-10.285 50 0050.txt STOCK PLEDGE AGREEMENT-JOE MARTIN Exhibit 10.285 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Joe Martin ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $9,184.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Joe Martin - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 4,592 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Joe Martin -------------------------------- Joe Martin 15 EX-10.286 51 0051.txt STOCK OPTION AGREEMENT-THUAN CHAU POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Thuan Chau ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 4,592 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Thuan Chau By: /s/ Albert E. Gosselin - -------------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 4,592 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Thuan Chau By: /s/ Thuan Chau - ----------------------------- -------------------------------- (Print Your Name) Thuan Chau 6 EX-10.287 52 0052.txt PROMISSORY NOTE-THUAN CHAU ERxhibit 10.287 PROMISSORY NOTE (NO INTEREST) $9,184.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Thuan Chau (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $9,184.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Thuan Chau -------------------------------- Thuan Chau EX-10.288 53 0053.txt STOCK PLEDGE AGREEMENT-THUAN CHAU Exhibit 10.288 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Thuan Chau ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $9,184.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Thuan Chau - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 4,592 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Thuan Chau -------------------------------- Thuan Chau 15 EX-10.289 54 0054.txt STOCK OPTION AGREEMENT-JOEY BARIS Exhibit 10.289 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN ---------------------------- 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Joey Baris ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 4,592 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent 1 disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 2 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upont any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 3 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision 4 contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Joey Baris By: /s/ Albert E. Gosselin - ---------------- -------------------------------- Grantee (Signature) Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 5 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 June 29, 2000 as to 4,592 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Joey Baris By: /s/ Joey Baris - ----------------------------- -------------------------------- (Print Your Name) Joey Baris 6 EX-10.290 55 0055.txt PROMISSORY NOTE-JOEY BARIS Exhibit 10.290 PROMISSORY NOTE (NO INTEREST) $9,184.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Joey Baris (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $9,184.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: By: /s/ Joey Baris -------------------------------- Joey Baris EX-10.291 56 0056.txt STOCK PLEDGE AGREEMENT-JOEY BARIS Exhibit 10.291 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Joey Baris ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $9,184.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like 2 capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 3 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 4 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default . 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for 5 future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the 6 Collateral so sold and hold the same thereafter in its own right, free from any claim of Pledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and 7 Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, 8 provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, 9 Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 10 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 11 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Imelda Facundo 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and 12 wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 13 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Joey Baris - ----------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President 14 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 4,592 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 By: /s/ Joey Baris -------------------------------- Joey Baris 15 EX-10.292 57 0057.txt STOCK OPTION AGREEMENT EXHIBIT 10.292 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Joe Macias ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 5,510 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Joe Macias By: Albert E. Gosselin - -------------- ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 5,510 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Joe Macias /s/ Joe Macias - ------------------------- -------------- (Print Your Name) Signature EX-10.293 58 0058.txt PROMISSORY NOTE EXHIBIT 10.293 PROMISSORY NOTE (NO INTEREST) $11,020.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Joe Macias (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $11,020.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Joe Macias -------------- (Signature) EX-10.294 59 0059.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.294 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Joe Macias ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $11,020.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral"). the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Joe Macias 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Joe Macias Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - --------------------------------- -------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 5,510 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Joe Macias -------------------- Signature EX-10.295 60 0060.txt STOCK OPTION AGREEMENT EXHIBIT 10.295 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Jose Argueta ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 5,510 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Jose Argueta By: Albert E. Gosselin - ---------------- ------------------ Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 5,510 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Jose Argueta /s/ Jose Argueta - --------------------------- ----------------- (Print Your Name) Signature EX-10.296 61 0061.txt PROMISSORY NOTE EXHIBIT 10.296 PROMISSORY NOTE (NO INTEREST) $11,020.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Jose Argueta (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $11,020.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Jose Argueta ---------------- (Signature) EX-10.297 62 0062.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.297 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Jose Argueta ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $11,020.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral"). the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Jose Argueta 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18. Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Jose Argueta Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ------------------------------------ ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 5,510 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Jose Argueta --------------------- Signature EX-10.298 63 0063.txt STOCK OPTION AGREEMENT EXHIBIT 10.298 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Jimmy Luu ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 6,423 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Jimmy Luu By: Albert E. Gosselin - --------------- ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 6,423 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Jimmy Luu /s/ Jimmy Luu - -------------------------------- --------------------------- (Print Your Name) Signature EX-10.299 64 0064.txt PROMISSORY NOTE EXHIBIT 10.299 PROMISSORY NOTE (NO INTEREST) $12,846.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Jimmy Luu (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $12,846.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Jimmy Luu --------------------------------- (Signature) EX-10.300 65 0065.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.300 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Jimmy Luu ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $12,846.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Jimmy Luu 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18. Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Jimmy Luu Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - -------------------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 6,423 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Jimmy Luu ------------------- Signature EX-10.301 66 0066.txt STOCK OPTION AGREEMENT EXHIBIT 10.301 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Anthony Graber ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 3,673 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Anthony Graber By: Albert E. Gosselin - ------------------ ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 3,673 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Anthony Graber /s/ Anthony Graber - ----------------------------------- -------------------------------------- (Print Your Name) Signature EX-10.302 67 0067.txt PROMISSORY NOTE EXHIBIT 10.302 PROMISSORY NOTE (NO INTEREST) $7,346.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Anthony Graber (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $7,346.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Anthony Graber --------------------------------- (Signature) EX-10.303 68 0068.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.303 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Anthony Graber ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $7,346.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right, power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Anthony Graber 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18. Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Anthony Graber Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - --------------------------------------- ------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 3,673 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Anthony Graber ------------------------ Signature EX-10.304 69 0069.txt STOCK OPTION AGREEMENT EXHIBIT 10.304 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Hovannes Nalbandyan ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 3,673 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Hovannes Nalbandyan By: Albert E. Gosselin - ----------------------- ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 3,673 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Hovannes Nalbandyan /s/ Hovannes Nalbandyan - -------------------------------- ---------------------------------- (Print Your Name) Signature EX-10.305 70 0070.txt PROMISSORY NOTE EXHIBIT 10.305 PROMISSORY NOTE (NO INTEREST) $7,346.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Hovannes Nalbandyan (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $7,346.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Hovannes Nalbandyan ----------------------------- (Signature) EX-10.306 71 0071.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.306 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Hovannes Nalbandyan ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $7,346.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Hovannes Nalbandyan 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18. Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Hovannes Nalbandyan Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - -------------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 3,673 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Hovannes Nalbandyan Signature EX-10.307 72 0072.txt STOCK OPTION AGREEMENT EXHIBIT 10.307 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Dennis Molina ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 7,806 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Dennis Molina By: Albert E. Gosselin - -------------------- ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 7,806 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Dennis Molina /s/ Dennis Molina - --------------------------------- --------------------------------------- (Print Your Name) Signature EX-10.308 73 0073.txt PROMISSORY NOTE EXHIBIT 10.308 PROMISSORY NOTE (NO INTEREST) $15,612.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Dennis Molina (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $15,612.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Dennis Molina ----------------------------- (Signature) EX-10.309 74 0074.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.309 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Dennis Molina ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $15,612.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right, power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Dennis Molina 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18. Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Dennis Molina Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ---------------------------------- ------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 7,806 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Dennis Molina Signature EX-10.310 75 0075.txt STOCK OPTION AGREEMENT EXHIBIT 10.310 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Veronica Boone ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 4,224 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Veronica Boone By: Albert E. Gosselin - ------------------ ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 4,224 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Veronica Boone /s/ Veronica Boone - -------------------------------- -------------------------------------- (Print Your Name) Signature EX-10.311 76 0076.txt PROMISSORY NOTE EXHIBIT 10.311 PROMISSORY NOTE (NO INTEREST) $8,448.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Veronica Boone (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $8.448.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Veronica Boone ----------------------------- (Signature) EX-10.312 77 0077.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.312 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Veronica Boone ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $8,448.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right, power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Veronica Boone 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Veronica Boone Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - -------------------------------- --------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 4,224 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Veronica Boone Signature EX-10.313 78 0078.txt STOCK OPTION AGREEMENT EXHIBIT 10.313 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Lucy Marquez ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 4,592 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Lucy Marquez By: Albert E. Gosselin - ---------------- ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 4,592 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Lucy Marquez /s/ Lucy Marquez - --------------------------- ------------------------------------- (Print Your Name) Signature EX-10.314 79 0079.txt PROMISSORY NOTE EXHIBIT 10.314 PROMISSORY NOTE (NO INTEREST) $9,184.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Lucy Marquez (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $9,184.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Lucy Marquez --------------------------- (Signature) EX-10.315 80 0080.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.315 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Lucy Marquez ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $9,184.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Lucy Marquez 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Lucy Marquez Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - --------------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 4,592 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Lucy Marquez Signature EX-10.316 81 0081.txt STOCK OPTION AGREEMENT EXHIBIT 10.316 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Eric Lai ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 10,102 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Eric Lai By: Albert E. Gosselin - ------------------------ ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 10,102 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Eric Lai /s/ Eric Lai - ---------------------------- ------------------------------------- (Print Your Name) Signature EX-10.317 82 0082.txt PROMISSORY NOTE EXHIBIT 10.317 PROMISSORY NOTE (NO INTEREST) $20,204.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Eric Lai (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $20,204.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Eric Lai ----------------------- (Signature) EX-10.318 83 0083.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.318 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Eric Lai ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $20,204.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Eric Lai 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Eric Lai Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ------------------------------- --------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 10,102 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Eric Lai Signature EX-10.319 84 0084.txt STOCK OPTION AGREEMENT EXHIBIT 10.319 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Rich Tobin ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 5,051 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Rich Tobin By: Albert E. Gosselin - -------------- ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 5,051 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Rich Tobin /s/ Rich Tobin - ---------------------------- ----------------------------------- (Print Your Name) Signature EX-10.320 85 0085.txt PROMISSORY NOTE EXHIBIT 10.320 PROMISSORY NOTE (NO INTEREST) $10,102.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Rich Tobin (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $10,102.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Rich Tobin ------------------------- (Signature) EX-10.321 86 0086.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.321 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Rich Tobin ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledgee pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $10,102.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Rich Tobin 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Rich Tobin Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ---------------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 5,051 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Rich Tobin Signature EX-10.322 87 0087.txt STOCK OPTION AGREEMENT EXHIBIT 10.322 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Albert E. Gosselin ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 174,160 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Albert E. Gosselin By: Albert E. Gosselin - ---------------------- ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 174,160 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Albert E. Gosselin /s/ Albert E. Gosselin - ------------------------------- ------------------------------------- (Print Your Name) Signature EX-10.323 88 0088.txt PROMISSORY NOTE EXHIBIT 10.323 PROMISSORY NOTE (NO INTEREST) $348,320.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Albert E. Gosselin (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $348,320.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $100.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Albert E. Gosselin ------------------------ (Signature) EX-10.324 89 0089.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.324 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Albert E. Gosselin ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $348,320.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral"). the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Albert E. Gosselin 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Albert E. Gosselin - -------------------------------- Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - --------------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfersunto Pollution Research and Control Corp. the 174,160 shares of Common Stock ofPOLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in theundersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Albert E. Gosselin --------------------------- Signature EX-10.325 90 0090.txt STOCK OPTION AGREEMENT EXHIBIT 10.325 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Cindy Gosselin ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 98,528 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Cindy Gosselin By: Albert E. Gosselin - ------------------ ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 98,528 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Cindy Gosselin /s/ Cindy Gosselin - --------------------------- ---------------------------------------- (Print Your Name) Signature EX-10.326 91 0091.txt PROMISSORY NOTE EXHIBIT 10.326 PROMISSORY NOTE (NO INTEREST) $197,056 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Cindy Gosselin (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $197,056.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $100.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Cindy Gosselin --------------------------------------- (Signature) EX-10.327 92 0092.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.327 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Cindy Gosselin ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $197,056.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right, power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Cindy Gosselin 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Cindy Gosselin Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ------------------------------ --------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfersunto Pollution Research and Control Corp. the 98,528 shares of Common Stock ofPOLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in theundersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Cindy Gosselin ------------------------ Signature EX-10.328 93 0093.txt STOCK OPTION AGREEMENT EXHIBIT 10.328 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Marcia Smith ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 105,280 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Marcia Smith By: Albert E. Gosselin - ---------------- ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 105,280 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Marcia Smith /s/ Marcia Smith - -------------------------------- --------------------------------------- (Print Your Name) Signature EX-10.329 94 0094.txt PROMISSORY NOTE EXHIBIT 10.329 PROMISSORY NOTE (NO INTEREST) $210,560.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Marcia Smith (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $210,560.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $100.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Marcia Smith ------------------------------------ (Signature) EX-10.330 95 0095.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.330 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Marcia Smith "Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $210,560.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Marcia Smith 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Marcia Smith Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ---------------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfersunto Pollution Research and Control Corp. the 105,280 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in theundersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Marcia Smith --------------------------- Signature EX-10.331 96 0096.txt STOCK OPTION AGREEMENT EXHIBIT 10.331 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Robert Klein ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 24,640 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Robert Klein By: Albert E. Gosselin - -------------------------- ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 24,640 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Robert Klein /s/ Robert Klein - -------------------------------------- --------------------------------------- (Print Your Name) Signature EX-10.332 97 0097.txt PROMISSORY NOTE EXHIBIT 10.332 PROMISSORY NOTE (NO INTEREST) $49,280.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Robert Klein (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $49,280.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Robert Klein ------------------------------------ (Signature) EX-10.333 98 0098.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.333 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Robert Klein ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $49,280.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral"). the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Robert Klein 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Robert Klein Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ---------------------------- ---------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfersunto Pollution Research and Control Corp. the 24,640 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in theundersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Robert Klein --------------------- Signature EX-10.334 99 0099.txt STOCK OPTION AGREEMENT EXHIBIT 10.334 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Prisciliano Flores ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 45,800 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Prisciliano Flores By: Albert E. Gosselin - ---------------------- ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 22,900 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Prisciliano Flores /s/ Prisciliano Flores - ------------------------------ --------------------------------------- (Print Your Name) Signature EX-10.335 100 0100.txt PROMISSORY NOTE EXHIBIT 10.335 PROMISSORY NOTE (NO INTEREST) $45,800.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Prisciliano Flores (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $45,800.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Prisciliano Flores --------------------------------------- (Signature) EX-10.336 101 0101.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.336 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Prisciliano Flores ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $45,800.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed within thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Prisciliano Flores 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18. Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Prisciliano Flores Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - --------------------------------- ---------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfersunto Pollution Research and Control Corp. the 22,900 shares of Common Stock ofPOLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in theundersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Prisciliano Flores Signature EX-10.337 102 0102.txt STOCK OPTION AGREEMENT EXHIBIT 10.337 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Barbara Gosselin ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 87,248 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Barbara Gosselin By: Albert E. Gosselin - -------------------- ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 87,248 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Barbara Gosselin /s/ Barbara Gosselin - ---------------------------------- -------------------------------- (Print Your Name) Signature EX-10.338 103 0103.txt PROMISSORY NOTE EXHIBIT 10.338 PROMISSORY NOTE (NO INTEREST) $174,496.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Barbara Gosselin (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $174,496.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $100.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Barbara Gosselin ------------------------------- (Signature) EX-10.339 104 0104.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.339 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Barbara Gosselin ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $174,496.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Barbara Gosselin 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Barbara Gosselin Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------------- -------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 87,248 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Barbara Gosselin Signature EX-10.340 105 0105.txt STOCK OPTION AGREEMENT EXHIBIT 10.340 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Anthony Reneau ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 50,512 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Anthony Reneau By: Albert E. Gosselin - ------------------ ---------------------- Grantee (Signature) 506 Paula Avenue Glendale, Ca 91201 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 June 29, 2000 as to 50,512 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Anthony Reneau /s/ Anthony Reneau - --------------------------------- ---------------------------------- (Print Your Name) Signature EX-10.341 106 0106.txt PROMISSORY NOTE EXHIBIT 10.341 PROMISSORY NOTE (NO INTEREST) $101,024.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Anthony Reneau (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $101,024.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Anthony Reneau ----------------------------------- (Signature) EX-10.342 107 0107.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.342 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Anthony Reneau ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $101,024.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Anthony Reneau 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Anthony Reneau Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - -------------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 50,512 shares of Common Stock ofPOLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Anthony Reneau ----------------------- Signature EX-10.343 108 0108.txt STOCK OPTION AGREEMENT EXHIBIT 10.343 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Paz Laroya ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 55,105 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Paz Laroya By: Albert E. Gosselin - --------------- ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 55,105 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Paz Laroya /s/ Paz Laroya - ---------------------------------- ---------------------------- (Print Your Name) Signature EX-10.344 109 0109.txt PROMISSORY NOTE EXHIBIT 10.344 PROMISSORY NOTE (NO INTEREST) $110,210.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Paz Laroya (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $110,210.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $100.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Paz Laroya ---------------------------------- (Signature) EX-10.345 110 0110.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.345 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Paz Laroya ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $110,210.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ( "Default" ) under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Paz Laroya 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Paz Laroya Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - --------------------------------- --------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfersunto Pollution Research and Control Corp. the 55,105 shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in theundersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Paz Laroya ------------------- Signature EX-10.346 111 0111.txt STOCK OPTION AGREEMENT EXHIBIT 10.346 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Fernando Galang ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 13,776 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Fernando Galang By: Albert E. Gosselin - ------------------- ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 13,776 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Fernando Galang /s/ Fernando Galang - ----------------------------------- ------------------------------------ (Print Your Name) Signature EX-10.347 112 0112.txt PROMISSORY NOTE EXHIBIT 10.347 PROMISSORY NOTE (NO INTEREST) $27,552.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Fernando Galang (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $27,552.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Fernando Galang --------------------------------------- (Signature) EX-10.348 113 0113.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.348 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Fernando Galang ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $27,552.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral. Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Fernando Galang 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18. Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Fernando Galang Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ------------------------------------ ------------------------------- Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 13,776 shares of Common Stock ofPOLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Fernando Galang Signature EX-10.349 114 0114.txt STOCK OPTION AGREEMENT EXHIBIT 10.349 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Domingo Diaz ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 6,428 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Domingo Diaz By: Albert E. Gosselin - ---------------- ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 6,428 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Domingo Diaz /s/ Domingo Diaz - ------------------------------------- ---------------------------------------- (Print Your Name) Signature EX-10.350 115 0115.txt PROMISSORY NOTE EXHIBIT 10.350 PROMISSORY NOTE (NO INTEREST) $12,856.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Domingo Diaz (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $12,856.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Domingo Diaz ------------------------------------ (Signature) EX-10.351 116 0116.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.351 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Domingo Diaz ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $12,856.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral . Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right , power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Domingo Diaz 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18. Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Domingo Diaz Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ---------------------------------- ------------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 13,776 shares of Common Stock ofPOLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Domingo Diaz --------------------- Signature EX-10.352 117 0117.txt STOCK OPTION AGREEMENT EXHIBIT 10.352 POLLUTION RESEARCH AND CONTROL CORP. a California Corporation STOCK OPTION AGREEMENT UNDER THE DASIBI ENVIRONMENTAL CORP. EMPLOYEES' STOCK OPTION PLAN 1. Grant of Option. POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), wishing to provide Mike Hamden ("Grantee") an opportunity to purchase shares of the Company's Common Stock ("Common Stock"), no par value, hereby grants to Grantee and Grantee hereby accepts as of the 29th day of June, 2000, an option to purchase 11,902 shares of Common Stock ("Option Shares") at a price of $2.00 per share, on the terms and conditions stated herein. 2. Option Dates, Term of Option. 2.1 Exerciseability. This Option may be immediately exercised and at any time before the expiration of the term of this option 2.2 Term of Option. This Option shall terminate on June 29, 2010 unless earlier terminated as provided in this Section 2. 2.3 Term for Ten Percent Shareholders. If on the date hereof, Grantee owns shares of the Company's outstanding capital stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent corporations or its subsidiary corporations ("affiliates"), this Option shall terminate on June 29, 2005. 2.4 Termination of Employment. If Grantee's employment by the Company or any of its affiliates is terminated for any reason other than death or permanent disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")), this Option shall immediately become void and of no further force or effect; provided, however, that if such cessation of employment shall be due to (i) Grantee's voluntary resignation with the consent of the Board, expressed in the form of a written resignation, or (ii) Grantee's retirement under the provisions of any Pension or Retirement Plan of the Company, this Option shall terminate three (3) months after the date Grantee ceases to be an employee of the Company or such affiliate. A leave of absence approved in writing by the Board, including but not limited to, military service leave or other temporary employment with the United States Government and sick leave, shall not be deemed a termination of employment for the purposes of this paragraph, but this Option may not be exercised after the first three (3) months of such leave. 2.5 Death or Permanent Disability. If Grantee shall die or become permanently disabled while employed by the Company or one of its affiliates, this Option shall expire one (1) year after the date of such death or permanent disability. During such period after death, Grantee's legal representative or representatives, or the person or persons entitled to do so under Grantee's last will and testament or under applicable interstate laws, shall have the right to exercise this Option as to only the number of shares to which Grantee was entitled to purchase on the date of his/her death. 2.6 Terminating Transactions. Upon the dissolution or liquidation of the Company, this Option shall terminate. 2.7 Assumption by Successor. Upon the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, the Board shall cause the surviving corporation to assume this Option by converting this Option into an option to purchase the stock of such successor or a parent or subsidiary thereof, pursuant to the terms hereof. 3. Non-Transferability of Option. Except by will or the laws descent and distribution, this Option shall not be transferred, or assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. During Grantee's lifetime this Option is exercisable only by Grantee, regardless of any community property interest therein of the spouse of Grantee, or such spouse's permitted successor-in-interest. If the spouse of Grantee shall have acquired a community property interest in this Option, Grantee or Grantee's permitted successor-in-interest, may exercise this Option on behalf of the spouse of Grantee or such spouse's permitted successor-in-interest. 4. Adjustments. If the outstanding shares of the Common Stock are increased, decreased, changed into or exchanged for a different number or king of shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares subject to the unexercised portion of this Option. Any such adjustment in the unexercised portion of this Option shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option but with a corresponding adjustment and price for each share or other unit of any security covered by this Option. Adjustments shall be made by the Board, whose determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive. No fractional shares of stock shall be issued under this Option on any such adjustment. 5. Mechanics. This Option may be exercised by Grantee or any other person then entitled to exercise it by giving ten (10) days written notice of exercise to the Company specifying the number of Option Shares to be purchased and the total purchase price, accompanied by payment of such purchase price, in cash, by certified or cashier's check payable to the Company, or the tender of a promissory note for the purchase price, secured by a pledge of the Option Shares. 6. Withholding Taxes. The Company shall have the right to require Grantee or such other holder of the Option or the Option Shares to pay to the Company any and all sums equal to any taxes which the Company may be required to withhold by reason of the Option, the Option Shares or the disposition of the Option or the Option Shares. 7. Rights Before Issuance and Delivery. Neither Grantee nor any holder of the Option shall be entitled to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to such person as fully paid shares. 8. Sale or Disposition of Option Shares. 8.1 General. By accepting this Option, Grantee represents and agrees for himself and his transferees by will or the laws of descent and distribution that, unless a registration statement under the Securities Act of 1933, as amended (the "Act") is in effect as to the Option Shares purchased upon any exercise of this Option, any and all Option Shares so purchased shall be acquired for his personal account and not for sale or for distribution, and each notice of the exercise of any portion of this Option shall be accompanied by a representation and warranty in writing, signed by the person entitled to exercise the same, that the Option Shares are being so acquired in good faith for his personal account and not for sale or distribution. In the event the Company's legal counsel shall advise it that registration under the Act of the Option Shares as to which this Option is at the time being exercised is required prior to delivery thereof, the Company shall not be required to issue or deliver such Shares unless and until such legal counsel shall advise that such registration has been completed or that it is not required. 8.2 Legend. Until such time as the Option Shares are registered under the Act, all stock certificates representing Option Shares, if the Option is exercised, shall bear a legend in substantially the form that follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE REGISTERED OR SOLD IN THE ABSENCE OF REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." Such certificates shall also bear the following legend: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED BY THE COMMISSIONER'S RULES." 8.3 Certain Securities Law Restrictions. This Option, as well as the Option Shares, are subject to the restrictions upon transfer set forth in Section 260.141 11, Title 10, California Administrative Code, a copy of which is attached hereto as exhibit "A". 8.4 Tax Treatment. In order to preserve the favored tax treatment afforded stock options, Grantee should not dispose of any Option Shares within two years of the date hereof or within one year after the purchase of such shares. 9. Employment Obligation. 9.1 General. In consideration for the granting of this Option, Grantee agrees that during the period of his employment by the Company or its affiliates, he shall faithfully and to the best of his ability devote his time, energy and skills during all normal working hours to the service of the Company or its subsidiaries in the promotion of their interests. 9.2 No Guarantee of Employment. Nothing in this Agreement shall be construed to confer upon Grantee any right to continued employment with the Company or its affiliates or to restrict in any way the right of the Company or its affiliates to terminate his employment or modify the terms and conditions thereof at any time. 10. Employees' Stock Option Plan. This Option is subject to, and the Company and Grantee agree to be bound by all of the terms and conditions of the Company's Employees' Stock Option Plan ("Plan"), as the same may be amended from time to time in accordance with the terms thereof. A copy of the Plan in its present form is attached hereto as Exhibit "B". 11. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal office and any notice to be give to Grantee shall be addressed to him at the address given beneath the signature hereto or at such other address as Grantee may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when personally delivered or deposited in the United States mail. 12. Applicable Law and Severability. This Option shall, in all respects, be governed by the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. IN WITNESS WHEREOF, the parties have entered into this Option as of the day and year first written above. POLLUTION RESEARCH AND CONTROL CORP., a California corporation /s/ Mike Hamden By: Albert E. Gosselin - --------------- ---------------------- Grantee (Signature) 506 Paula Avenue Street Address Glendale, Ca 91201 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 June 29, 2000 as to 11,902 shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 5 of my Agreement regarding the Option. Mike Hamden /s/ Mike Hamden - ----------------------------------- -------------------------------- (Print Your Name) Signature EX-10.353 118 0118.txt PROMISSORY NOTE EXHIBIT 10.353 PROMISSORY NOTE (NO INTEREST) $23,804.00 Glendale, California June 29, 2000 FOR VALUE RECEIVED, Mike Hamden (Payor") promises to pay in lawful money of the United States of America to Pollution Research and Control Corp., a California corporation ("Payee"), or order, at Glendale, California, the sum of $23,804.00 Dollars from the date hereof on the unpaid principal payable in installments of principal only in the sum of $50.00 Dollars commencing on July 15, 2000 and payable on the same day of each month thereafter until paid in full. The unpaid principal may be prepaid without penalty. Each payment hereunder shall be credited to the principal amount. If each installment under this note is not paid when due, the undersigned shall pay all costs of collection thereof, including reasonable attorneys' fees, whether or not suit or action is commenced to enforce payment of this note, and Payee may, at its option, declare the entire amount of the then unpaid principal immediately due and payable if such default is not cured within 10 days after Payee provides the undersigned written notice of such default. The undersigned hereby waives presentment, notice of dishonor and protest. This note is secured by shares of Payee's common stock, no par value (the "Shares"), pursuant to a certain Stock Pledge Agreement, dated as of June 29, 2000 (the "Pledge Agreement"). Upon the termination of employment of Payor as an employee of Payee for any reason, the unpaid balance of this note shall be cancelled, and the pro rata portion of Shares which then not fully paid for, shall be returned to Payee pursuant to the terms of the Pledge Agreement. Payor: /s/ Mike Hamden ----------------------------------- (Signature) EX-10.354 119 0119.txt STOCK PLEDGE AGREEMENT EXHIBIT 10.354 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into this 29th day of June 2000, by and among Mike Hamden ("Pledgor"), POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("Pledgee"), and Craig E. Gosselin ("Pledgeholder"), with respect to the following facts: A. Pledgor has purchased common stock, no par value ("Common Stock"), of Pledge pursuant to the excersise of an option granted under Pledgee's Employees' Stock Option Plan. B. Pledgor has paid for the Common Stock by issuing to Pledgee a promissory note ("Note") in the amount of $23,804.00 (the "Indebtedness"). C. As security for the Indebtedness, Pledgor hasagreed to pledge to pledgee all of the outstanding shares of Common Stock ("Shares"), owned beneficially or otherwise by Pledgor to secure the performance of his obligations under the Note. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereafter contained, the parties hereto agree as follows: 1. Assignment of Collateral. As security for the due and punctual performance of all of the covenants and obligation of Pledgor under the Note,including payment of the Indebtedness,Pledgor hereby pledges to, deposits with, and delivers to Pledgeholder, and hereby creates a security interest in favor of Pledgee in the Shares and all dividends, interest or other distributions with respect to the Shares or made on account thereof (collectively "Collateral") . the term "Collateral," as used herein, shall include not only the Shares but also any of the following derived from or on account of the ownership thereof by Pledgor: 1.1 Any stock dividend declared on the Shares; 1.2 Any shares acquired by reason of the exercise of any stock rights, or rights of preemption, or warrants with respect to any of the Shares or stock dividends; 1.3 Any shares acquired by reason of any dividends or by reason of any reorganizations, recapitalization or otherwise; 1.4 Any shares of any other corporation distributed as a spin-off or otherwise; and 1.5 Any property of any nature whatsoever distributed in liquidation or partial liquidation by reason of Pledgor's ownership of the Shares: Concurrent herewith, Pledgor shall deliver a certificate representing the Shares to Pledgeholder together with a Stock Assignment Separate From Certificate or Form of Assignment, as the case may be, executed in blank ("stock powers") in the form of Exhibit 1. 2. Representations and Covenants. Pledgor represents, warrants and agree that: 2.1 Pledgor has the right to enter into this Pledge Agreement and to pledge the Collateral as herein provided; and 2.2 Each and every representation and warranty set forth in the Agreement is true and correct as of the date hereof. 2.3 At the time of delivery of the Shares to Pledgeholder, the Shares will be free and clear of any and all liens, charges or encumbrances of any nature other than the security interest of Pledgeholder and Pledgee therein and Pledgor will not, directly or indirectly, create, assume, incur or suffer to exist any liens, charges or emcumbrances of any nature on any of the Shares, other than (a) the security interest of Pledgeholder and Pledgee therein, (b) liens, charges or encumbrances arising from Pledgee' or Pledgeholder's own act and (c) as otherwise provided herein. 3. Additional Assignments. In the event of the dissolution or liquidation of the Company, or in the event of any reorganization, merger or consolidation thereof, or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any reclasssification or increase in the number of issued shares of capital stock of the Company by reason of a stock dividend, stock split, recapitalization, conversion or exchange of shares or any like capital adjustment, all securities issued in exchange for or in respect of the Shares and all securities , monies or other property of whatever nature distributed with respect to the Shares shall be pledged and delivered to Pledgeholder hereunder and Pledgor will promptly execute and deliver to Pledgeholder an assignment of all shares resulting therefrom and attributable to the Shares, and Pledgor agrees to transfer the certificates evidencing the same as additional collateral, and to be held by the Pledgeholder subject to all of the terms hereof. 4. Compromise of Claims. Pledgee may compromise or settle, at Pledgor's expense, any claim which may materially adversely affect Pledgee's interest in, or rights hereunder with respect to the collateral. 5. Payment of Taxes. Pledgor agrees to pay, prior to delinquency, all claims, taxes, charges, liens and assessments against the Collateral, or any part thereof, and upon the failure of Pledgor to do so, Pledgee, at his option, may pay the same and shall be the sole judge of the legality or validity thereof and the amount necessary for the discharge thereof; provided, however, that Pledgee may not pay or discharge any such claim, tax, charge, lien or assessment so long as the same does not matrrially adversely affect the Pledgee's interest or rights with respect to the Collateral and Pledgor is contesting the validity or amount thereof in good faith. 6. Release of Collateral . Pledgeholder and Pledgee agree that upon the payment in full of the principal on the Note in accordance with the terms thereof, the Collateral shall immediately be delivered to Pledgor free and clear of this Agreement and any all liens created hereby shall terminate and the Collateral then remaining and not previously applied against such obligations as provided herein held by Pledgeholder shall be promptly returned to Pledgor. Any Collateral to be returned to Pledgor upon termination of this Agreement shall be delivered, net of any transfer taxes or other expenses in connection with such return or release, by Pledgeholder, to Pledgor. Neither Pledgeholder nor Pledgee shall be deemed to have made any representation or warranty with respect to any Collateral so delivered , except that such Collateral is free and clear, on the date of delivery, of any and all liens, charges and emcumbrances arising from its own act or, in the case of Pledgee, the acts of Pledgeholder. 7. Voting of Collateral. Unless and until any "Default" (as defined in Section 8 below) occurs under the Note or this Agreement, Pledgor shall have the right to vote the Shares or any portion thereof for any purpose not inconsistent with the terms of this Agreement. Pledgor shall be entitled to receive and retain cash dividends payable on the Collateral (provided the payment thereof does not violate the terms of this Agreement ), but any and all other dividends or stock or liquidating dividends, interest, distributions in property, returns of capital or other distibutions made on or in respect of the Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock company received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any such issuer may be a party or otherwise, and any and all cash and other property received in exchage for a redemption of any Collateral shall be and become part of the Collateral and, if received by Pledgor, shall be held in trust for the benefit of Pledgee and shall forthwith be delivered to Pledgeholder (registered in the name of Pledgor and accompanied by proper instruments of assignment executed by Pledgor in accordance with Pledgeholder's instuctions) to be held subject to the terms of this Agreement. Pledgeholder shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, power of attorney, dividend orders, and other instruments as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to this paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to this paragraph 7. 8. Defaults. The occurrence of any of the following events shall constitute a default by Pledgor ("Default") under this Agreement: 8.1 Failure of Pledgor to keep or perform any of its obligations under this Agreement; 8.2 Failure of Pledgor to pay the Indebtedness when due; 8.3 Any representation or warranty made by Pledgor in this Agreement or the Agreement shall be false or misleading in any material respect; 8.4 Should Pledgor become insolvent or admit in writing his inability to pay his debts as they mature, or should Pledgor make an assignment for the benefit of creditors, or should bankruptcy, insolvency or other proceeding for relief of debtors be instituted by or against Pledgor, and if instituted against Pledgor assented to or not dismissed wihtin thirty 30 days after such institution; 8.5 The levy of an attachment of execution against any of the Collateral. 9. Remedies after Default. 9.1 Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which it is entitled to exercise pursuant to paragraph 7 and/or to receive the dividends which it is authorized to receive and retain pursuant to paragraph 7 shall cease, and all such rights shall thereupon become vested in Pledgeholder who shall have the sole andexclusive right and authority to excercise such voting and/or consensual rights and powers and/or to receive and retain the dividends which Pledgor would otherwise be authorized to retain pursuant to paragraph 7. Any and all money and other property paid over to or received by Pledgeholder pursuant to the provisions of this paragraph 7 shall be retained by Pledgeholder as part of the Collateral and be applied in accordance with the provisions hereof. In the event of a default, Pledgeholder or Pledges may use the stock powers executed in blank and delivered hereunder to require that all or any part of the Collateral be transferred to Pledgee on the records of the Company and Pledgee shall be entitled to represent and vote the Shares. In addition to having the right to exercise any right or remedy of a secured party upon default under the California Commercial Code, Pledgeholder shall, if directed to do so by Written Notice, to the extent permitted by law, without being required to give any notice to Pledgor except as provided below: 9.1.1 Apply any cash held by it hereunder to the payment of all obligations of Pledgor under the Note as provided below in this paragraph 9. 9.1.2 If there shall be no such cash or if the cash so applied shall be insufficient to pay in full all such oblgations, sell the Collateral, or any part thereof, at public or private sale for cash, upon credit or for future delivery, and at such price or prices as Pledgeholder may deem best, and Pledgeholder or Pledgee may (except as otherwise provided by law ) be the purchaser of any or all of the Collateral so sold and thereafter may hold the same, absolutely, free from any right or claim of whatsoever kind. Pledgeholder is authorized, at such sale, if it deems it is advisable so to do, to restrict the number of prspective bidders or purchasers and/or further retrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account, for investment, and not with a view to the distribution or resale of the Collateral and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Pledgeholders may deem necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities laws; upon any such sale Pledgeholder shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold, absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption, of Pledgor, who hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted. Pledgeholder shall give Pledgor not less than 10 days' written notice of its intention to make any such public or private sale. Such notice, in case of public sale. shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Pledgeholder may fix in the notice of such sale. At any sale the Collateral may be sold in whole or in part, as Pledgeholder may determine. Pledgeholder shall not be obligated to make any sale pursuant to any such notice. Pledgholder may, without notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Pledgeholder until the selling price is paid by the purchaser thereof, but neither Pledgeholder nor Pledgee shall incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Pledgee may be the purchaser of any or all of the Collateral so sold and hold the same thereafter in its own right, free from any claim ofPledgor or right of redemption. At any such sale, for the purpose of making settlement or paymentfor the Shares so purchased, Pledgee shall be entitled to apply the unpaid principal balance, the Note toward the payment of the purchase price, or any part therof. 9.2 On any sale of the Collateral, Pledgeholder is hereby authorized to comply with any limitation or restriction in connection with such sale that it may be advised by counsel is necessary in order to avoid any violation of applicable law or in order to obtain any required approval of the purchaser or purchasers by any governmental regulatory authority or officer or court. Compliance with the foregoing procedures shall result in such sale or disposition being considered or deemed to have been made in a commercially reasonable manner. The rights and remedies specified in this Agreement are cumulative and may be exercised from time to time in accordance with applicable law and as often as Pledgeholder deems advisable. No failure to execise or delay in the exercise of any right or remedy by Pledgeholder shall constitute a waiver of any such right or remedy. Notwithstanding the occurrence of an Event of Default, nothing in this Agreement shall be deemed to impose upon Pledgeholder or Pledgee any obligation to exercise any remedy hereunder. 9.3 The proceeds of any sale of all or any part of the Collateral pursuant to this paragraph 9, together with all other moneys and property held as or received by Pledgeholder as or in respect of the Collateral shall be applied by the Pledgeholder in the following order of priority: First, to the payment of all costs and expenses of such sale, including reasonable compensation to Pledgeholder and his agents and counsel, and all expenses, liabilities and advances made or incurred by Pledgholder in connection therewith; Second, to the payment of the principal of, the Note; Third, if any moneys or other property shall remain, to the payment, of any other amounts due and owing under this Agreement (as specified by written notice to Pledgeholder from Pledgee); and Fourth, to the payment of any surplus then remaining from such proceeds to the Pledgor, or otherwise as a court of competent jurisdiction may direct. 9.4 Except as provided herein, Pledgor hereby agrees that it shall have no rights to the Collateral or the proceeds from the sale thereof in the event of a Default. 10. Termination of Employment of Pledgor. Upon the receipt of notice of the termination of Pledgor's employment with Pledgee for any reason, Pledgeholder shall deliver the Shares to Pledgee and this pledge sall be terminated. Upon receipt of the Shares, Pledgee shall cancel the Note and deliver to Pledgor the pro rate portion of Shares paid for by Pledgor under the Note. 11. Rights and obligations of Pledgeholder. 11.1 General. Pledgeholder and Pledgee agree to hold the Collateral subject to and in accordance with the terms and provisions of this Agreement. It is understood and agreed that Pledgholder and Pledgee shall have no liability of any kind with respect to the Collateral other than to hold and deliver the Collateral in accordance with this Agreement. 11.2 Resignation of Renewal. Pledgeholder may resign at any time by giving written notice of resignation to Pledgee and Pledgor. No resignation of Pledgeholder shall become effective untill the acceptance of its appoinment by a successor Pledgeholder appointed by Pledgee in accordance with this paragraph; provided, however, that, if no successor Pledgeholder shall have accepted its appointment at the expiration of 90 days from the date of delivery of such notice of resignation, the resigning Pledgeholder may petition any court of competent jurisdiction for the appointment of a successor Pledgeholder. Pledgee may at any time remove Pledgeholder for or without cause by written notice to Pledgeholder and Pledgor; provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. No removal of Pledgeholder shall become effective until the acceptance of its appointment by successor Pledgeholder appointed by Pledgee in accordance with this paragraph. If Pledgeholder shall resign, be removed or otherwise become incapable of acting as such on behalf of Pledgee, Pledgee shall, by written notice as promptly thereafter as practicable, appoint a successor Pledgeholder, provided the successor Pledgeholder is a bank, trust company, savings and loan association, escrow company or such other institution. Pledgee shall furnish notice to Pledgor of the appoinment of a successor Pledgeholder. Every successor Pledgeholder appointed by Pledgee shall execute and deliver to Pledgor and Pledgee an instrument accepting its appointment and assuming all of the obligations of a Pledgeholder under this Agreement. Upon the removal, resignation or other incapacity of a Pledgeholder, such Pledgeholder shall assign, transfer and deliver to the successor Pledgeholder the Shares and all other property and instruments delivered to Pledgeholder hereunder. 11.3 Liability. Pledgeholder shall not be liable for any action taken or omitted by it except in the case of his gross negligence, willful misconduct or bad faith and may consult with counsel of his own choice and shall have full and complete authorization and protection for any action taken or suffered by him hereunder in good faith and in accordance witrh the opinion of such counsel. Pledgor and Pledgee hereby waive all claims of any kind against Pledgeholder; each hereby agrees to indemnify Pledgeholder from and against any and all obligations, liabilities, loss, cost, or expense, including but not limited to attorneys' fees, arising in any way from any claims, demands or action of any kind being made or taken against Pledgeholder in connection with this Pledge Agreement; and should conflicting demands be made on Pledgeholder, Pledgeholder may act or refuse to act, in his sole discretion, unless pursuant to court order, or he may interplead the parties and, if he does, Pledgor and Pledgee jointly and severally agree to pay his attorneys' fees in connection therewith. 11.4 No Investigation. Pledgeholder shall not be required to make any investigation or inquiry as to the existence of any event of default, but for all purposes of this Agreement shall conclusively rely, as to the existence or nonexistence of any event or Default on a written notice of Pledgee, delivered to the Pledgeholder; provided Pledgor is given at least ten (10) days written notice of the notice received by Pledgeholder from Pledgee. Notwithstanding the foregoing, Pledgeholder shall conclusively rely on such written notice of Pledgee even if Pledgeholder receives a conflicting notice from Pledgor. Pledgeholder shall give prompt written notice to Pledgee of any failure by Pledgor to comply with the provisions of this Agreement. If, and only if, Pledgor is in Default, Pledgee may, upon written notification thereof to Pledgeholder, cause the Collateral to be transferred to Pledgee. Pledgeholder, upon receipt of written notification of Default from Pledgee, shall give written notice to Pledgor of the instructions received by Pledgeholder from Pledgee and if, within ten (10) days after such notice shall be deemed received by Pledgor, Pledgeholder has not received written instructions from Pledgor claiming that no Default has occured and the Collateral should not be transferred to Pledgee, then Pledgeholder shall cause the Collateral to be transferred to Pledgee, If , however, Pledgeholder shall receive such written instructions from Pledgor within such ten (10) day period, then Pledgeholder shall file an interpleader action with respect to the Collateral. 11.5 Fees and Expenses. Pledgor and Pledgee shall each pay one-half of all fees and expenses (including counsel fees) incurred or charged by Pledgeholder acting hereunder or in connection herewith. 12. Advances. All advances, charges, costs and expenses, including but not limited to attorneys' fees, incurred or paid by Pledgee in excercising any right, power or remedy conferred by this Pledge Agreement, or in the enforcement thereof, or in exercising any right, power, or remedy conferred by the California Commercial Code or state rule or statute, Shall be and become a part of the Indebtedness secured hereunder and shall be paid to Pledgee by Pledgor upon demand. 13. Presentment and Notice. Pledgee shall not be under any duty or obligation whatsoever to make or give any presentment, demand for perfomance, notice of non-performance, protest, notice of protest or notice of dishonor in connection with the Indebtedness or otherwise. 14. Waivers by Pledgor. Pledgor waives any right to require Pledgee to: 14.1 proceed against any other person 14.2 proceed against or exhaust any other security which Pledgee may now or hereafter have, or any indebtedness which Pledgee may now or hereafter have; or 14.3 pursue any other remedy in Pledgee's power. 14.4 plead any statute of limitations as a defense to any demand, action, suit, or proceeding pursuant to this Pledge Agreement. Any forbearance or failure or delay by Pledgee in exercising any right, power or remedy hereunder, shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy and shall not preclude the further exercise thereof; and every right, power or remedy of Pledgee shall continue in full force and effectuntil such right, power or remedy is specifically waived by an instrument in writing excuted byPledgee. Pledgor waives any defense arising by reason of any disability or other defense of Pledgor or any other person, or by reason of cessation from any cause whatsoever of the liability of Pledgor or any other person. Until the Indebtedness shall have been fully satisfied, Pledgor shall not have any right of subrogation, and Pledgor waives any right to enforce any remedy which Pledgee now or hereafter may have against any person, and waives any benefit of any right to participate in the Collateral or any other Security whatsoever now or hereafter held by Pledgee. 15. Subordination. Pledgor hereby subordinates to and in favor of Pledgee, all right, title and interest now or hereafter possessed or aquired by Pledgor in or with respect to any of the property which is or may hereafeter be or become included as part of the Collateral, to the end and the intent that the pledge hereunder in favor of Pledgee shall be and remain prior and preferred to any pledge, lien, charge or claim of Pledgor of, on or with respect to any such property until the Indebtedness shall have been fully satisied. 16. Transfers by Pledgee. Upon the transfer of all or any part of the Pledgee's right under the Indebtedness, Pledgee may transfer its rights hereunder with respect to all or any part of the Collateral and shall be fully discharged thereafter from all liability and responsibility in connection with such of the Collateral with respect to which such rights have been so transferred, and the transferee shall be vested with all the rights and powers of Pledgee hereunder in connection with such of the Collateral with respect to which such rights have been so transferred; provided, however, that with respect to any Collateral to which Pledgee's rights have not been so transferred, Pledgee shall retain all rights and powers hereby given. 17. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given be personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication be given by personal delivery, telex, facsimile or telegram, notice shall be conclusively deemed made at the time such delivery. If such notice, demand or other communication be given by mail, such shall be conclusively deemed given forty-eight (48) hours after the deposit therof in the United States mail addressed to the party to whom such notice, demand or communication is to be given as hereinafter set forth: To Pledgee: Pollution Research and Control Corp 506 Paula Avenue Glendale, Ca 91201 To Pledgor: Mike Hamden 506 Paula Avenue Glendale, Ca 91201 To Pledgeholder: Craig E. Gosselin 506 Paula Avenue Glendale, Ca 91201 Any party hereto may change its address for the purpose of receiveing notices, demands and other communications as herein provided by a written notice given in the manner aforsaid to the other party or parties hereto. 18.Governing Law. This document shall, in all respects, be governed by the laws of State of California applicable to agreements excuted and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 19. Specific Performance. It is agreed that the ights granted to the Pledgee hereunder are of a special and nique kind and character and that, if there is a breach by ledgor of any material provision of this document, Pledgee would ot have any adequate remedy at law. It is expressly agreed, herefore, that the rights of Pledgee he under may be enforced y an action for specific performance and such other equitable relief as is provided under the laws of the State of California. 20. Further Assurance. Each of the parties hereto shall execute and deliver any and all additional papers, document, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 21. Costs. Any and all costs, including reasonable attorneys' fees, incurred by the Pledgee in connection with the collection of the Indebtedness, the enforcement of this Agreement or the recovery of the Collateral or its sale to satisfy the Indebtedness, shall be the personal obligation of and shall be paid by Pledgor. 22. Amendment. no amendment, change or modification of this document shall be valid unless in writing and signed by all of the parties hereto. 23. Sucessors and Assigns. All of the terms and provisions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representives, successors and assigns. 24. Exhibits. All exhibits attached hereto and referred to herein are hereby incorporated herein as though set forth at length. 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written Pledgor: /s/ Mike Hamden Pledgeholder: Pledgee: POLLUTION RESEARCH AND CONTROL CORP. /s/ Craig E. Gosselin By: /s/ Albert E. Gosselin - ----------------------------------- ------------------------------ Craig E. Gosselin Albert E. Gosselin, President ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, the undersigned hereby sells, asigns and transfers unto Pollution Research and Control Corp. the 11,902 shares of Common Stock ofPOLLUTION RESEARCH AND CONTROL CORP., a California corporation, standing in the undersigned's name on the books of said Corporation represented by Certificate No._________________ herewith, and does hereby irrevocably constitute and appoint Albert E. Gosselin, Jr., Attorney to transfer said stock listed on the books of said Corporation with full power of subtitution in the premises. Dated: June 29, 2000 /s/ Mike Hamden -------------------- Signature EX-10.355 120 0120.txt PROMISSORY NOTE EXHIBIT 10.355 PROMISSORY NOTE Glendale, California $50,000.00 February 23, 2001 FOR VALUE RECEIVED, the undersigned, Pollution Research and Control Corp., a California corporation (hereinafter referred to as the "Maker"), with its address at 506 Paula Avenue, Glendale, California 91201, agrees and promises to pay to the order of Steven Sion (herein referred to as the "Holder"), at 9913 Robin Oaks Drive, Las Vegas, Nv 89117, or such other place as the Holder may designate in writing, in coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, the principal sum of fifty thousand dollars ($50,000), together with interest thereon at the rate of twelve per cent ("12% ") per annum, from the date hereof until maturity, as hereinafter provided. The principal balance of this Promissory Note (hereinafter referred to as the "Note"), together with all interest then accrued and unpaid, shall be due and payable on March 23, 2001. The Maker may prepay any part or all of this Note at any time without penalty. Each payment or pre-payment made by the Maker hereunder shall be applied first to the payment or pre-payment of accrued and unpaid interest, if any, due on the unpaid principal balance of this Note and the remainder of each payment or pre-payment made by the Maker shall be applied to the reduction of the unpaid principal balance hereof. If the entire outstanding principal balance becomes due, the Maker agrees to pay the Holder's reasonable costs (including reasonable attorney's fees and court costs) in collecting on this Note, including the reasonable costs of obtaining and enforcing a judgment for any balance due on this Note. This Note has been executed in the City identified in the heading and delivered to the Holder at the address stated herein. It is to be performed, in whole or in part, in the State of California, and the laws of such state shall govern the validity, construction, enforcement and interpretation of this Note. Jurisdiction and venue for any action hereunder shall be in the County of the City identified in the heading. The Maker represents that it is duly authorized and empowered to enter into, deliver, perform and be fully bound by all of the terms, provisions and conditions of this Note. The Maker also represents that the making and delivery of this Note, and the performance of any agreement or instrument made in connection herewith, does not conflict with or violate any other agreement to which the Maker is a party. In the event that any word, phrase, clause, sentence or other provision hereof shall violate any applicable statute, ordinance or rule of law in any jurisdiction in which it is used, such provision shall be ineffective to the extent of such violation without invalidating any other provision hereof. IN WITNESS HEREOF, this Note is executed on the date and year above written. POLLUTION RESEARCH AND CONTROL CORP By: /S/ Albert E. Gosselin, Jr. --------------------------------- Albert E. Gosselin, Jr., President EX-10.356 121 0121.txt CONSULTING AGREEMENT EXHIBIT 10.356 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, Inc., 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 proposes to deal with 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: Fees and Benefits. 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-approval expenses shall not be required to be paid by the Company to the Consultant. 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 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 currently 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. 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, INC. 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 contract 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. 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 court 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. 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. 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. 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, INC. LTD. By: /s/ Albert E. Gosselin, Jr. By: /s/ Director of Silverline Products - --------------------------------- --------------------------------------- Albert E. Gosselin, Jr. President (Authorized Officer) EX-10.357 122 0122.txt PROMISSORY NOTE EXHIBIT 10.357 PROMISSORY NOTE Glendale, California $650,000 December 22, 2000 FOR VALUE RECEIVED, the undersigned, Pollution Research and Control Corp., a California corporation (hereinafter referred to as the "Maker"), with its address at 506 Paula Avenue, Glendale, California 91201, agrees and promises to pay to the order of Mr. Steven Sion (hereinafter referred to as the "Holder"), at 9913 Robin Oaks Drive, Las Vegas, Nevada 89117. or such other place as the Holder may designate in writing, in coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, the principal sum of six hundred fifty thousand dollars ($650,000.00), together with interest thereon at the rate of twelve per cent (12%) per annum (based upon a 360-day year), from the date hereof until maturity, as hereinafter provided. The principal balance of this Promissory Note (hereinafter referred to as the "Note"), together with all interest then accrued and unpaid, shall be due and payable on the first to occur of February 20, 2001, or the date on which the Maker receives the funds from the Standard Bank of New York as a result of forfaiting that certain letter of credit in the amount of $2,000,000 drawn on China Construction Bank. This Note and the payment hereof shall be subject to the execution by the Maker and the Holder contemporaneously with this Note of that certain Agreement (hereinafter referred to as the "Agreement") of even date herewith, a copy of which is attached hereto and incoporated herein by this reference; which Agreement provides for the Maker, as an incentive for making the loan described in this Note, to (i) issue to the Holder options exercisable to purchase 100,000 shares of common stock, no par value per share (the "Common Stock"). of the Maker at an exercise price of $.875; (ii) cause Brittanica Associates Limited to assign, transfer and convey 50,000 free-trading shares of Common Stock to the Holder on February 20, 2001; (iii) issue to the Holder 50,000 newly-issued, restricted shares of Common Stock that the Maker will register with the U.S. Securities and Exchange Commision on an appropriate form of registration statement prior to December 31, 2001; and (iv) issue to the Holder, in the event of default in the payment of this Note, a debenture in the principal amount of $1,000,000 convertible into 500,000 shares of Common Stock. The Agreement provides that the remuneration described in items (i) through (iv) above shall be issuable, assignable, transferable and/or conveyable by the Maker to the Holder even if the Maker fails to consummate the proposed business combination with Nettires.com, Inc. ("Nettires"). Additionally, the Agreement provides, in the event of, and subject to, the consummation (the "Closing") of the proposed business combination between the Maker and Nettires, (a) for the Holder to purchase for the total amount of $200,000 in cash, on the date of payment of this Note, 228,571 newly-issued, restricted shares of Common Stock that the Maker will register with the U.S. Securities and Exchange Commission on an appropriate form of registration statement prior to December 31, 2001; (b) for the Maker to issue to the Holder, on the date of payment of this Note,m options exercisable to purchase 228,571 shares of Common Stock at an exercise price of $.875; and (c) for the Maker to pay to the Holder, on the date of the Closing, a finder's fee in the amount of 10% of the value of the total net assets realized by the Maker from the proposed business combination with Nettires; provided, however, that, the foregoing provision notwithstanding, said finder's fee shall in no event exceed the sum of $400,000. The Maker may prepay any part or all of this Note at any time without penalty. Each payment or pre-payment made by the Maker hereunder shall be applied first to the payment or pre-payment of accrued and unpaid interest, if any, due on the unpaid principal balance of this Note and the remainder of each payment or pre-payment made by the Maker shall be applied to the reduction of the unpaid principal balance hereof. If default is made in the payment of this Note, as and when the same is or becomes due, the Holder may, after notice and failure to cure as hereinafter provided, without additional notice or demand, declare the entire unpaid principal balance hereof and accrued and unpaid interest, if any, at once due and payable. Except as otherwise specifically set out herein, the Maker waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of acceleration of the indebtedness due hereunder, bringing of suit and iligence in taking any action to collect amounts called for hereunder, and agrees that the time of payments hereof may be extended without notice at any time and from time-to-time, and for perioods of time for a term or terms in excess of the original term without notice or consideration to, or consent from the Maker, without same constituting a waiver of the Holder's rights under this Note. If payment is not received by the tenth day after it is due, then the Holder agrees to give written notice of such to the Maker. If payment is not received within five day of said notice, then the Holder may at his election accelerate this Note. The Holder may charge a late charge of two percent (2%) of the amount of the payment received after the tenth day such payment is due. The Maker represents that it is duly authorized and empowered to enter into, deliver, perform and be fully bound by all of the terms, provisions and conditions of this Note. The Maker also represents that the making and delivery of this note, and the performance of any agreement or instrument made in connection herewith, does not conflict with or violate any other agreement to which the Maker is a party. No provision of this Note shall require the payment or permit the collection of interest in excess of the maximum permitted by law, and in the event of any such excess, neither the Maker nor its successors or assigns shall be obligated to pay any such excess to the extent that it is more than the amount permitted by law. If an excess amount is received, charged, collected or applied as interest, it shall automatically be made so as to reduce the rate to that permitted by law and any excess interest then received, charged or collected shall be applied to reduce the amount of any collateral to which the Holder is entitled. In the event that any word, phrase, clause, sentence or other provision, hereof shall violate any applicable statute, ordinance or rule of law in any jurisdiction in which it is used, such provision shall be ineffective to the extent of such violation without invalidating any other provision hereof. IN WITNESS HEREOF, this Note effective as of the date and year written above, is executed on the 22nd day of December, 2000. POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. ------------------------------------ Albert E. Gosselin, Jr., President EX-10.358 123 0123.txt MEMORANDUM EXHIBIT 10.358 MEMORANDUM OF UNDERSTANDING AND CONSULTING AGREEMENT This Memorandum of Understanding and Consulting Agreement (the "Agreement"), dated as of February 2, 2001, is by and between Pollution Research and Control Corp. (the "Company") and Steven Sion or his assignee(s), (the "Consultant"). All references to stock, shares, or options shall be that of the Company. WHEREAS, Company has retained Consultant to assist Corporation in a possible stock transaction with Grace Productions and/or Nettires; WHEREAS, Company has borrowed certain monies from Consultant; WHEREAS, Consultant has provided certain services and has participated in, or may participate in the future, various monetary arrangements with Company; and WHEREAS, Company and consultant wish to reduce to writing, including any modifications of existing written instruments, any and all of their verbal arrangements to the mutual satisfaction of both parties. IT IS HEREBY AGREED AS FOLLOWS: 1. Lee Sion and Consultant presently own 25,000 options each with a $3.10 strike price. Said total of 50,000 options shall be reduced to a strike price equal to that of the lowest offered on the date the Nettires deal is executed (the "Date"). 2. On said Date, Consultant shall receive a convertible note from Company for $300,000 @ 12% simple interest due and payable on or before 12/31/01. It may be converted at $1.50/share. If for any reason the total consideration of stock purchase and/or loan shall result in monies totalling less than $3,000,000, the note shall be reduced prorata based on the previously agreed upon finder's fee of 10%. 3. On the Date, Consultant shall receive 100,000 free shares plus 100,000 free options with a strike price of $1.50/share with a 3 year option period. 4. Consultant presently holds a Promissory Note from Company dated 12/22/00 in the amount of $650,000 (the "Note"). The Note shall be paid as follows: A) $100,000 of principal on 2/20/01 B) $13,000 accrued interest on 2/20/01 C) $550,000 of principal on 3/22/01 (30 days) and D) $5,500 of accrued interest on 3/22/01 Notwithstanding this Paragraph 4, all other rights under that Note shall remain. 5. Upon receipt of all monies due under the modified $650,000 obligation, Consultant shall have 90 days to elect to purchase 228,571 additional shares at .875/share for a total of $200,000. If Consultant elects to purchase those shares, Consultant will also receive 228,571 options with a strike price of .875/share with a 3 year option period. This will be in lieu of a similar arrangement detailed in the 12/22/00 Note. Consultant shall not be entitled to those rights referenced in the Note plus the rights described in this Paragraph 5. 6. Pat Cudd, Esq. will register all of these shares and options in the same S-3 filing that Company will be doing for Grace Productions about April 1-15. If any rights under this Agreement accrue subsequent to said S-s filing, Ms. Cudd will immediately take any and all steps necessary to register those shares or options. In addition, Ms. Cudd will file any paperwork on behalf of Consultant with the SEC or other government agency which is required under law as a result of these stock and option arrangements. 7. Paragraphs 1,2,3, and 4 are explicitly dependent upon not only the execution by both the Company and Grace Productions of their Stock Purchase and Exchange Agreement, but said paragraphs shall be null and void unless Grace Productions, or its representatives, tenders the first $1,000,000 pursuant to their understanding. Once said $1,000,000 has been delivered to the Company or an agreed upon escrow agent, Paragraphs 1-4 will be deemed to have full legal effect. 8. Notwithstanding Paragraph 7 or any other implications herein, both Company and Consultant specifically acknowledge that Paragraph 5 herein shall have full legal effect; the only difference being that Company's payment of the Note shall be fully due and payable on February 20, 2001 as opposed to the schedule set forth in Paragraph 4 herein. 9. This Agreement shall be construed and governed by the laws of the State of Nevada. All parties thereto agree that jurisdiction to resolve any and all disputes shall lie with Nevada. AGREED TO AND ACCEPTED AS OF THE SECOND DAY OF FEBRUARY, 2001. COMPANY: POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin - --------------------------------------------- Albert E. Gosselin, President CONSULTANT: By: /s/ Steven P. Sion - --------------------------------------------- Steven P. Sion EX-10.359 124 0124.txt 9% CONVERTIBLE DEBENTURE - IIG EQUITIES Exhibit 10.359 9% CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. 1 $200,000 Principal Amount Pollution Research and Control Corp. 9% CONVERTIBLE DEBENTURE DUE JULY 17, 2001 THIS DEBENTURE is issued by Pollution Research and Control Corp., a California corporation (the "Company"), and is part of an issue of an aggregate of up to $900,000 principal amount of 9% Convertible Debentures due July 17, 2001 (the "Convertible Debentures"). FOR VALUE RECEIVED, the Company promises to pay to IIG Equities Opportunities Fund Ltd., or permitted assigns (the "Holder"), the principal sum of Two Hundred Thousand (US $200,000) Dollars on July 17, 2001 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 9% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue daily on the basis of a 360 day year until payment in full of the principal sum has been made or duly provided for. Quarterly interest payments shall be due and payable on March 31, June 30, September 30 and December 31 of each year, commencing with September 30, 2000. If any interest payment date or the Maturity Date is not a business day in the State of California, then such payment shall be made on the next succeeding business day. Subject to the provisions of Section 4 below, principal and accrued interest on this Debenture are payable in cash on the interest payment date or the Maturity Date, as applicable, 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 principal of and any accrued but unpaid interest due upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check, plus any amounts so deducted. This Debenture is subject to the following additional provisions: 1. Withholding and Issuance Taxes. 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. The issuance of certificates for shares of common stock, no par value (the "Common Stock"), of the Company upon conversion of this Debenture shall be made without charge to the Holder for any United States issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder of this Debenture. 2. Transfer of Debenture. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign 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 the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 3. Conversion. The Holder of this Debenture is entitled, at its option, to convert, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Principal Amount of this Debenture or any portion thereof, together with accrued and unpaid interest on such Principal Amount, into shares of Common Stock as follows: (a) Right to Convert. (i) Subject to the terms, conditions, and restrictions of this Section 3, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Holder of this Debenture shall have the right to convert all or any portion of the Principal Amount of this Debenture, together with the accrued and unpaid interest on such Principal Amount so converted, into that number of fully-paid and nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Subsection 3(e), at the Conversion Rate (as defined below). 2 (ii) Anything is Subsection 3(a)(i) to the contrary notwithstanding, in no event shall any Holder be entitled to convert all or any portion of the Principal Amount of this Debenture in excess of that amount of the Principal Amount of this Debenture that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of this Subsection, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of the Principal Amount of this Debenture beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants or convertible preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Subjection 3(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For purposes of this Subsection, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Holder, the Company shall immediately confirm orally and in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of this Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Subsection 3(a)(ii) applies, the determination of whether such portion of this Debenture is convertible (in relation to other securities owned by a Holder) and of what portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of whether such portion of this Debenture is convertible (in relation to other securities owned by such Holder) and of what portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert such portion of this Debenture at such time as such conversion will not violate the provisions of this Subsection. A Holder of this Debenture may waive the provisions of this Subsection 3(a)(ii) as to itself (and solely as to itself) upon not less than 75 days' prior notice to the Company, and the provisions of this Subsection 3(a)(ii) shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Subsection 3(a)(ii), but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. Subsection 3(g) below sets forth additional limitations on the Company's obligation to issue shares of Common Stock upon conversion of this Debenture. 3 (b) Conversion Rate and Other Definitions. The number of shares of Common Stock issuable upon conversion of all or any portion of the Principal Amount of this Debenture pursuant to Subsection (3)(a) shall be determined according to the following formula (the "Conversion Rate"): Conversion Amount Conversion Price For purposes of this Debenture, the following terms shall have the following meanings: "Change of Control" means: (i) The acquisition by any Person (as defined below) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of the subsection (i), the following acquisitions of stock shall not result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of subsection (iii) of this definition; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Incumbent Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding share of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from 4 such Business Combination, including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (any such corporation being referred to herein as a "Resulting Company"), in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, immediately prior to such Business Combination, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or a Resulting Company) beneficially owns, directly or indirectly, 30% or more of, respectively, the outstanding shares of Common Stock of the Resulting Company or the combined voting power of the then outstanding voting securities of such Resulting Company except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the Resulting Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Corporation; or (v) Termination of Albert E. Gosselin, Jr. as Chief Executive Officer of the Company (including a change or diminution of his duties as such), whether by resignation, termination, death, disability or otherwise, without the written consent of the Holder. "Closing Bid Price" or "Closing Ask Price" means, for any security as of any date, the last closing bid or ask price, as the case may be, for such security on the Principal Market (as defined below) as reported by Bloomberg L.P. ("Bloomberg"), or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid or ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid or ask price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid or ask price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid or ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price or Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price or Closing Ask Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the currently outstanding Principal Amount of all Convertible Debentures. If the Company and the Holders of the Convertible Debentures are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Subsection 3(h). (All such determinations are to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). "Conversion Amount" means that portion of this Debenture being converted by such Holder. "Conversion Price" means, as of any Conversion Date or other date of determination, 80% of the Market Price, but in no event more than $2.10 (the "Maximum Conversion Price"). 5 "Market Price" means the lowest Closing Bid Price of the Common Stock on the Principal Market as reported by Bloomberg for the five Trading Days immediately preceding the date of determination. "Principal Market" means the Nasdaq SmallCap Market. "Registration Rights Agreement" means that certain Registration Rights Agreement among the Company and the initial holders of the Convertible Debentures concerning the registration of the resale of the shares of Common Stock issuable upon conversion of the Convertible Debentures. "Trading Day" means any day during which the Principal Market shall be open for business. (c) Conversion Notice. The Holder of this Debenture may exercise its conversion right by giving a written conversion notice in the form of Exhibit A hereto (the "Conversion Notice") to the Company's transfer agent for its Common Stock, as designated by the Company from time to time (the "Transfer Agent"), (x) by facsimile or (y) by registered mail or overnight delivery service, with a copy by facsimile to the Company and the Company's outside counsel as specified from time to time by written notice to the holders of the Convertible Debentures. Promptly, but in no event more than five (5) Trading Days after the receipt of the Conversion Notice, a holder of this Debenture shall surrender this Debenture to the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Convertible Debentures). If this Debenture has been only partially converted, the Company shall, or instruct the Transfer Agent to, deliver to the Holder of this Debenture a new Debenture evidencing the unconverted Principal Amount of this Debenture. (d) Issuance of Certificates; Time Conversion Effected. (i) Promptly, but in no event more than three (3) Trading Days after the receipt of the Conversion Notice referred to in Subsection 3(c), the Transfer Agent shall issue and deliver, or the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which this Debenture has been converted. In the alternative, if the Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with The Depository Trust Company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Transfer Agent. The rights of the Holder of this Debenture shall cease, and the person or persons in whose name or names any certificate or certificates for share of Common Stock shall be issuable upon such conversion shall be deemed to have become the Holder or Holders of record of the shares represented thereby, on the Conversion Date. Issuance of shares of Common Stock issuable upon conversion that are requested to be registered in a name other than that of the registered Holder shall be subject o compliance with all applicable federal and state securities laws. 6 (ii) The Company understands that a delay in the issuance of the shares of Common Stock beyond three (3) Trading Days after the Conversion Date could result in economic loss to the Holder of this Debenture. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of shares of Common Stock upon conversion in accordance with the following schedule (where "No. Trading Days Late" means the number of Trading Days after three (3) Trading Days from the date of receipt by the Transfer Agent of the Conversion Notice to and including the date of the Holder's or its designees' receipt of such shares): No. Trading Days Late Late Payment for Each $5,000 of Conversion Amount of Principal Amount Being Converted - ----------------------------------- -------------------------------- 1 $100 2 $200 3 $300 4 $400 5 $500 6 $600 7 $700 8 $800 9 $900 10 $1,000 >10 $1,000 + $200 for each Trading Day late after 10 Calendar Days The Company shall make all payments due under this Subsection 3(d)(ii) in immediately available funds upon demand. Nothing herein shall limit the Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver (or to cause its Transfer Agent to issue and deliver) Common Stock to the Holder as required by Subsection 3(d)(i), including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies that may be available to the Holder, if the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days after the Conversion Date, the Holder will be entitled to revoke the relevant Conversion Notice by delivering a notice to such effect to the Transfer Agent, with a copy by facsimile to the Company and the Company's outside counsel. Upon delivery of such notice of revocation, the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Conversion Notice, except that the Holder shall retain the right to receive both the late payment amounts set forth above plus the actual cost of any "buy-in." 7 (iii) If, at any time, (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Common Stock or otherwise dishonors or rejects, or causes the Transfer Agent to dishonor or reject, any Conversion Notice properly delivered in accordance with this Section 3 or (b) any third party who is not and has never been an affiliate of the Holder obtains a judgment or order from any court or public or governmental authority that denies, enjoins, limits, modifies, or delays the right of the Holder to effect the conversion of this Debenture into Common Stock, then the Holder shall have the right, by written notice to the Company, to require the Company to promptly redeem this Debenture in accordance with Section 4. Under any of the circumstances set forth above, the Company shall indemnify the Holder against and hold it harmless from, and be responsible for the payment of, all costs and expenses of the Holder, including its reasonable legal fees and expenses, as any when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the Holder). The Company shall not refuse to honor, or cause the Transfer Agent to refuse to honor, any Conversion Notice unless the Company or the Transfer Agent, as the case may be, has actually been enjoined by a court of competent jurisdiction from doing so and, if so enjoined, the Company shall post with such court a performance bond equal to 150% of the Conversion Amount of this Debenture sought to be converted by a Holder that is the subject of such injunction. (iv) The Holder of this Debenture shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under 11 U.S.C. 101 et seq: (the "Bankruptcy Code"). The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the Holder's conversion privilege, if the Company becomes a debtor under the Bankruptcy Code. The Company agrees to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362 without cost or expense to the Holder. (e) Fractional Shares. The Company shall not, nor shall it cause the Transfer Agent to, issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of this Debenture by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after such aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay, or cause the Transfer Agent to pay, a cash adjustment in respect of such fraction of a share of Common Stock based upon the Closing Bid Price of the Common Stock on the Conversion Date. (f) Adjustment to Conversion Price; Dilution and Other Events. In order to prevent dilution of the rights granted under this Debenture, the Conversion Price will be subject to adjustment from time to time as provided in this Subsection 3(f). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Conversion Shares (as defined in the Purchase Agreement) and shares of Common Stock deemed to have been issued by the Company in connection with Approved Issuances (as defined below)) for a consideration per share (the "Applicable Price") less than the Conversion Price as in effect 8 immediately prior to such time (an "Offering"), then immediately after such issue or sale, the Conversion Price shall be reduced to an amount equal to (X) the sum of (A) the product of the Conversion Price in effect immediately prior to such issue or sale and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issue or sale, and (B) the consideration, if any, received by the Company upon such issue or sale divided by (Y) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants any rights or options to subscribe for or to purchase Common Stock (other than in connection with an Approved Issuance or upon conversion of this Debenture) or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities") and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of this Subsection 3(f)(i)(A), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (I) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No adjustment of the Maximum Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Applicable Price, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities 9 shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Subsection 3(f)(i)(B), the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (I) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No adjustment of the Maximum Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Maximum Conversion Price had been or are to be made pursuant to other provisions of this Subsection 3(f)(i), no further adjustment of the Maximum Conversion Price shall be made by reason of such issue or sale. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which an Convertible Securities are convertible into or exchangeable for Common Stock change at any time, the Maximum Conversion Price in effect at the time of such change shall be readjusted to the Maximum Conversion Price in effect that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Maximum Conversion Price then in effect. (D) Certain Definitions. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following terms have meanings set forth below: (I) "Approved Issuances" shall mean (i) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (ii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option plan, restricted stock plan, stock purchase plan or other plan or written compensation contract for the benefit of the Company's employees, directors or consultants in effect on the date hereof. (II) "Common Stock Deemed Outstanding" means, at any given time, the number os shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be 10 outstanding pursuant to Sections 3(f)(i)(A) and 3(f)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock issuable upon conversion of the Convertible Debentures. (E) Effect of Certain Events on Maximum Conversion Price. For purposes of determining the adjusted Maximum Conversion Price under this Section 3(f), the following shall be applicable: (I) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the amount received by the Company therefore, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Bid Prices of such security for the five consecutive Trading Days immediately preceding the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders constituting more than fifty percent (50%) of the Principal Amount of all Convertible Debentures then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within forty-eight (48) hours of the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected by the Company. The determination of such appraiser shall be deemed binding upon all parties absent manifest error. (II) Integrated Transactions. In case any Option is issued in connections with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. (III) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock. 11 (IV) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ii) Adjustment of Maximum Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Maximum Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Maximum Conversion Price in effect immediately prior to such combination will be proportionately increased. (iii) Adjustment of Conversion Price upon Issuance of Convertible Securities. If the Company in any manner issues or sells Convertible Securities that are convertible into Common Stock at a price that varies with the market price of the Common Stock (the formulation for such variable price being herein referred to as, the "Variable Price") and such Variable Price is not calculated using the same formula used to calculate the Variabe Conversion Price in effect immediately prior to the time of such issue or sale, the Company shall provide written notice thereof via facsimile and overnight courier to each holder of this Debenture ("Variable Notice") on the date of issuance of such Convertible Securities. If the Holder of this Debenture provides written notice via facsimile and overnight courier (the "Varirable Price Election Notice") to the Company within five (5) business days of receiving a Variable Notice that the Holder desires to replace the Conversion Price then in effect with the Variable Price described in such Variable Notice, then from and after the date of the Company's receipt of the Variable Price Election Notice, the Conversion Price will automatically be replaced with the Variable Price (together with such modifications to this Debenture as may be required to give full effect to the substitution of the Variable Price for the Conversion Price). The Holder's delivery of a Variable Price Election Notice shall serve as the consent required to amend this Debenture. In the event that the Holder delivers a Conversion Notice at any time after the Company's issuance of Convertible Securities with a Variable Price but before the Holder's receipt of the Company's Variable Notice, then such holder shall have the option by written notice to the Company to rescind such Conversion Notice or to have the Conversion Price be equal to such Variable Price for the conversion effected by such Conversion Notice. (iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as 12 defined below) or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) to insure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock otherwise acquirable and receivable upon the conversion of this Debenture, such shares of stock, securities or assets as would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable had this Debenture been converted into shares of Common Stock immediately prior to such Organic Change (without taking into account any limitations or restrictions on the timing or amount of conversions). In any such case, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) with respect to the Holder's rights and interest to insure that the provisions of this Section 3(f) will thereafter be applicable to this Debenture (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Maximum Conversion Price in accordance with Subsection 3(f)(i) using the value for the Common Stock reflected by the terms of such consolidation, merger or sale, if the value so reflected is less than the Maximum Conversion Price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance reasonably satisfactory to the holders of a more than fifty percent (50%) of Principal Amount of the Convertible Debentures then outstanding), the obligation to deliver to each holder of Convertible Debentures such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. "Person" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (v) Certain Events. If any event occurs of the type contemplated by the provisions of this Subsection 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders this Debenture and the other holders of Convertible Debentures; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 3(f). (g) Limitation on Number of Conversion Shares. Notwithstanding any other provision herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock plus shares of Common Stock issued upon the exercise of the Warrants issued under the Securities Purchase Agreement would exceed 19.9% of the shares of Common Stock issued and outstanding on the date of the Purchase Agreement (the "Exchange Cap") without the Company's violating the 13 corporate governance rules of the Nasdaq Stock Market, except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the corporate governane rules of the Nasdaq Stock Market for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of more than fifty percent (50%) of the Principal Amount of the Convertible Debentures then outstanding. Until such approval or written opinion is obtained or such action has been taken by the required number of holders, no purchaser of Convertible Debentures pursuant to the Purchase Agreement, collectively, (the "Investors" and, individually, an "Investor") shall be issued, upon conversion of Convertible Debentures, shares of Common Stock in an amount greater than the product of (x) the Exchange Cap amount multiplied by (y) a fraction, the numerator of which is the Principal Amount of Convertible Debentures purchased by such Investor pursuant to the Purchase Agreement and the denominator of which is the aggregate Principal Amount of all the Convertible Debentures purchased by the Investors pursuant to the Purchase Agreement (the "Cap Allocation Amount"). In the event that any Investor shall sell or otherwise transfer any of such Investor's Convertible Debentures, the transferee shall be allocated a pro rata portion of such Investor's Cap Allocation Amount. In the event that any holder of a Convertible Debenture shall convert all of such holder's Convertible Debenture into a number of shares of Common Stock that, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Convertible Debentures on a pro rata basis in proportion to the Principal Amount of Convertible Debentures then held by each such Holder. (h) Dispute Resolution. In the case of a dispute as to the determination of the Closing Ask Price or Closing Bid Price of any security or the arithmetic calculation of the Conversion Rate, the Company shall, or shall cause the Transfer Agent to, promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) business day of receipt of the Holder's Converstion Notice. If the Holder and the Company are unable to agree upon the determination os such Closing Ask Price or Closing Bid Price, as the case may be, or the arithmetic calculation of the Conversion Rate within one (1) business day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall within one (1) business day folling such date of delivery submit via facsimile (A) the disputed determination of the Closing Ask Price or Closing Bid Price, as the case may be, to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent certified public accounting firm. The Company shall cause the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accounting firm's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. 14 4. Redenption. (a) Holder's Option if Company Cannot Fully Convert or Holder Cannot Sell Without Restriction. If, (i) upon the Transfer Agent's receipt of a Conversion Notice, the Transfer Agent fails to issue shares of Common Stock as contemplated by Subsection 3(d)(i) or cannot issue shares of Common Stock registered for resale under the registration statement required to be filed under the Registration Rights Agreement with respect to the shares of Common Stock issuable upon conversion of this Debenture (the "Registration Statement") (or which are exempt from the registration requirements under the Securities Act pursuant to Rule 144(k) under the Securities Act) for any reason, including, without limitation, because the Company (x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or its securities, including without limitation the Exchange Cap, from issuing all of the Common Stock that is to be issued to the Holder of this Debenture pursuant to a Conversion Notice or (z) fails to have a sufficient number of shares of Common Stock registered for resale under the Registration Statement, or (ii) a Registration Default (as defined in the Registration Rights Agreement) shall have occurred and be continuing, the Company shall have defaulted in the payment of any Funded Debt (as hereinafter defined) for a period in excess of any cure period thereunder (regardless of whether the creditor of such Funded Debt shall have declared a default), or the employment of Albert E. Gosselin, Jr. shall have terminated for any reason, or (iii) the Common Stock is delisted from the Principal Market and not immediately listed on the New York Stock Exchange, the American Stock Exchange or another national securities exchange approved by holders of Convertible Debentures constituting more than fifth percent (50%) of the Principal Amount of all Convertible Debentures then outstanding, then in the case of clause (i), the Company shall, or shall cause the Transfer Agent to, issue as many shares of Common Stock as it is able to issue in accordance with such holder's Conversion Notice (if the holder shall have given such a Conversion Notice) and pursuant to the provisions of Section 3(d), and with respect to all or any part of the unconverted Principal Amount of this Debenture held by such Holder, the Holder, solely at such Holder's option, can elect to: (A) require the Company to redeem from such Holder all or any part of its remaining Principal Amount of this Debenture ("Redemption") at a premium equal to the greater of (I) the sum of: (a) 150% of such Principal Amount and (b) the accrued interest thereon or (II) the product of (a) the Conversion Rate on the date of such Holder's delivery of an Election Response Notice (as defined below) and (b) the greater of (i) the Closing Ask Price of the Common Stock on the Trading Day immediately preceding the event giving rise to Redemption or (ii) the Closing Ask Price of the Common Stock on the date of the Holder's delivery to the Company of a notice of redemption or, if such date of delivery is not a Trading Day, the next date on which the exchange or market on which the Common Stock is traded is open (the "Redemption Price"); (B) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(z) of this Subsection 4(a) above, require the Company to, or cause the Transfer Agent to, issue restricted shares of Common Stock in accordance with such Holder's Conversion Notice; 15 (C) void its Conversion Notice and retain the Principal Amount of this Debenture that was to be converted pursuant to such Holder's Conversion Notice (provided that the Holder's voiding its Conversion Notice shall not affect the Company's obligations to make any payments that have accrued prior to the date of such notice); or (D) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(y) of this Subsection 4(a) above, requrie the Company to, or cause the Transfer Agent to, issue shares of Common Stock in accordance with such Holder's Conversion Notice and pursuant to Section 4(d) at a Conversion Price equal to the average of the Closing Bid Prices of the Common Stock for the five consecutive Trading Days preceding such Holder's Election Responsxe Notice or such other market price that satisfies the applicable exchange or trading market. For purposes hereof, "Funded Debt" means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade liabilities and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices), whether on open account or evidenced by a note, bond, debenture or similar instrument or otherwise, (b) obligations under capital leases, (c) reimbursement obligations for letters of credit, banker's acceptances or other credit accommodations, (d) contingent obligations and (e) obligations secured by any lien on the Company's property, even if the Company has not assumed such obligations. (b) Mechanics of Fulfilling Holder's Election. The Company shall within one (1) business day send via facsimile to the Holder of this Debenture, upon receipt of a facsimile copy of a Conversion Notice from such Holder that cannot be fully satisfied as described in Subsection 4(a), a notice of the Company's inability to fully satisfy such Holder's Notice shall indicate (i) the reason why the Company is unable to fully satisfy such Holder's Conversion Notice, (ii) the Principal Amount of this Debenture that cannot be converted and (iii) the applicable Redemption Price. The Holder shall notify the Company of its election pursuant to Subsection 4(a) above by delivering written notice via facsimile to the Company (the "Election Response Notice"). (c) Payment of Redemption Price. If the Holder shall elect to have this Debenture redeemed pursuant to Subsection 4(a)(i), the Company shall pay the Redemption Price to such Holder in Cash by Wire transfer of immediately available funds in accordance with such Holder's written wire transfer instructions within five (5) days after the Company's receipt of the Holder's Election Response Notice. If the Company shall fail to pay the applicable Redemption Price to such holder within such five (5) day period (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Redemption Price), in addition to any remedy the Holder of this Debenture may ahve hereunder, or under the Securities Purchase Agreement and the Registration Rights Agreement, such unpaid amount shall bear interest at the rate of 3.0% per month (prorated for partial months) until paid in full. Until the Redemption Price is paid in full to such Holder, such Holder may void the Redemption with respect to Principal Amount of this Debenture for which the full Redemption Price has not been paid and receive back a Convertible Debenture 16 representing such Principal Amount. Notwithstanding the foregoing, if the Company fails to pay the applicable Redemption Price within such period of five (5) days due to a dispute as to the determination of the Redemption Price, such dispute shall be resolved pursuant to Section 3(h) with the term "Redemption Price" being substituted for the term "Conversion Rate." (d) Pro-rata Conversion and Redemption. If the Company or the Transfer Agent receives a Conversion Notice or Election Response Notice electing Redemption from more than one holder of Convertible Debentures on the same day, and the Company can convert and/or redeem some, but not all, of such Convertible Debentures pursuant to this Section 4, the Company shall convert and/or redeem from each holder of Convertible Debentures electing to have its Convertible Debenture converted and/or redeemed at such time an amount equal to such holder's pro-rata amount (based on the Principal Amount of Convertible Debentures held by such holder relative to the Principal Amount of Convertible Debentures sought to be converted) of all Convertible Debentures being converted and/or redeemed as such time. 5. Notices. In case at any time: (a) the Company shall declare any dividend upon its Common Stock payable in cash or stock or make any other pro rata distribution to the holders of its Common Stock; or (b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (c) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, or by telex or facsimile or by recognized overnight delivery service, addressed to the Holder at the address of the Holder as shown on the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganiztion, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (ii) in the case of any such reorganization, reclassification, consolidation , merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other properly deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 17 6. Stock to be Reserved. The Company has a sufficient number of shares of Common Stock available to reserve for issuance upon the conversion of all outstanding Convertible Debentures, assuming immediate conversion. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of all of its Convertible Debentures as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all Convertible Debentures. The Company covenants that all shares of Common Stock that shall be so issued shall be duly and validly issued, fully-paid and non assessable. The Company will take all such action as may be so taken without violation of any applicable law or regulation to have a sufficient number of authorized but unissued shares of Common Stock to issue upon conversion of all Convertible Debentures. The Company will not take any action that results in any adjustment of the conversion rights if the total number of shares of Common Stock issued and issuable after such action upon conversion of this Debenture would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 7. Default and Remedies. (a) Event of Default. Each of the following shall constitute an "Event of Default": (i) the Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) days; or (ii) any of the representations or warranties made by the Company herein, in the Purchase Agreement, in the Registration Rights Agreement, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement, shall be false or misleading in any material respect at the time made; or (iii) a default or an event of default shall have occurred and be continuing with respect to any Funded Debt; or (iv) the Company shall (A) admit in writing its inability to pay its debts generally as they mature; (B) make an assignmtne for the benefit of recditors or commence proceedings for its dissolution; or (C) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property of business; or (v) a trustee, liwuidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (vi) 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 sixty (60) days thereafter; or 18 (vii) any money judgment, writ or 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 sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (viii) 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. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, the Holder may declare this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, 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 enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default shall be made at the fair market value of the shares of Common Stock that would be issued at the Conversion Price on the date the Debenture becomes due and payable pursuant to this provision. Such payment shall be made withint three (3) Trading Days of such demand, and if not paid within such period, the Company shall pay the holder liquidated damages of three percent (3%) per month of such amount until paid, pro-rated for any partial months. 8. Payment Obligation Unconditional. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. 9. No Recourse to Stockholders, etc. 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, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any 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. 10. No Rights as Stockholder. No provision of 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 stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. 19 11. Definitions. As used in this Debenture, the term "Common Stock" shall mean and include the Company's authorized common stock, no par value, as constituted on the issuance date of this Debenture, and shall also include any capital stock of any class of the Company thereafter authorized that shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntaryl liquidation, dissolution or winding up of the Company; provided that the shares of Common Stock receivable upon conversion of this Debenture shall include only shares of Common Stock receivable upon conversion of this Debenture shall include only shares designated as Common Stock of the Company on the issuance date of this Debenture, or in case of any reorganization, reclassification, or stock split of the outstanding shares thereof, the stock, securities or assets provided for in Sections 3(f) and (g). Any capitalized terms used in this Debenture but not defined herein shall have the meanings set forth in the Purchase Agreement. 12. Loss, Theft, Destruction of Debenture. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutiliation of this Debenture and, in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (which shall not include the posting of any bond), or, in the case of any such mutiliation, upon surrender and cancellation of this Debenture, the Company shall make, issue and deliver, in lieu of such lost, stoledn, destroyed or mutiliated Debenture, one or more new Debentures of like tenor. This Debenture shall be held and owned upon the express condition that the provisions of this Section 12 are exclusive with respect to the replacement of mutiliated, destroyed, lost or stolen Debentures and shall preclude any and all other rights and remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement of negotiable instruments or other securities without the surrender thereof. 13. Record Owner. The Company may deem the person in whose name this Debenture shall be registered upon the registry books of the Company to be, and may treat such person as, the absolute owner of this Debenture for the purpose of conversion of this Debenture and for all other purposes, and the Company shall not be affected by any notice to the contrary. All such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Debenture to the extent of the sum or sums so paid or the conversion so made. 14. Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of Convertible Debentures. Upon any transfer of this Debenture in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Convertible Debenture register. 15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with 20 the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation therof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of this Debenture and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of this Debenture shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 16. Construction. This Debenture shall be deemed to be jointly drafted by the Company and the initial Holders of the Convertible Debentures and shall not be construed against any person as the drafter hereof. 17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder of this Debenture in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof (except to the extent that such power, right or privilege must, in accordance with the terms of this Debenture, be exercised within a specified period of time and such period of time has lapsed without such power, right or privilege being exercised), nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 18. Governing Law. 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 City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles 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 conveniens, to the bringing of any such proceeding in such jurisdictions. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. President Attest: /s/ Marcia Smith - ----------------------------- 21 EX-10.360 125 0125.txt 9% CONVERTIBLE DEBENTURE - CHRIS BRIGGS Exhibit 10.360 9% CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. 2 $20,000 Principal Amount Pollution Research and Control Corp. 9% CONVERTIBLE DEBENTURE DUE JULY 17, 2001 THIS DEBENTURE is issued by Pollution Research and Control Corp., a California corporation (the "Company"), and is part of an issue of an aggregate of up to $900,000 principal amount of 9% Convertible Debentures due July 17, 2001 (the "Convertible Debentures"). FOR VALUE RECEIVED, the Company promises to pay to Chris Briggs, or permitted assigns (the "Holder"), the principal sum of Twenty Thousand (US $20,000) Dollars on July 17, 2001 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 9% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue daily on the basis of a 360 day year until payment in full of the principal sum has been made or duly provided for. Quarterly interest payments shall be due and payable on March 31, June 30, September 30 and December 31 of each year, commencing with September 30, 2000. If any interest payment date or the Maturity Date is not a business day in the State of California, then such payment shall be made on the next succeeding business day. Subject to the provisions of Section 4 below, principal and accrued interest on this Debenture are payable in cash on the interest payment date or the Maturity Date, as applicable, 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 principal of and any accrued but unpaid interest due upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check, plus any amounts so deducted. This Debenture is subject to the following additional provisions: 1. Withholding and Issuance Taxes. 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. The issuance of certificates for shares of common stock, no par value (the "Common Stock"), of the Company upon conversion of this Debenture shall be made without charge to the Holder for any United States issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder of this Debenture. 2. Transfer of Debenture. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign 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 the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 3. Conversion. The Holder of this Debenture is entitled, at its option, to convert, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Principal Amount of this Debenture or any portion thereof, together with accrued and unpaid interest on such Principal Amount, into shares of Common Stock as follows: (a) Right to Convert. (i) Subject to the terms, conditions, and restrictions of this Section 3, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Holder of this Debenture shall have the right to convert all or any portion of the Principal Amount of this Debenture, together with the accrued and unpaid interest on such Principal Amount so converted, into that number of fully-paid and nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Subsection 3(e), at the Conversion Rate (as defined below). 2 (ii) Anything is Subsection 3(a)(i) to the contrary notwithstanding, in no event shall any Holder be entitled to convert all or any portion of the Principal Amount of this Debenture in excess of that amount of the Principal Amount of this Debenture that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of this Subsection, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of the Principal Amount of this Debenture beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants or convertible preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Subjection 3(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For purposes of this Subsection, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Holder, the Company shall immediately confirm orally and in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of this Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Subsection 3(a)(ii) applies, the determination of whether such portion of this Debenture is convertible (in relation to other securities owned by a Holder) and of what portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of whether such portion of this Debenture is convertible (in relation to other securities owned by such Holder) and of what portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert such portion of this Debenture at such time as such conversion will not violate the provisions of this Subsection. A Holder of this Debenture may waive the provisions of this Subsection 3(a)(ii) as to itself (and solely as to itself) upon not less than 75 days' prior notice to the Company, and the provisions of this Subsection 3(a)(ii) shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Subsection 3(a)(ii), but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. Subsection 3(g) below sets forth additional limitations on the Company's obligation to issue shares of Common Stock upon conversion of this Debenture. 3 (b) Conversion Rate and Other Definitions. The number of shares of Common Stock issuable upon conversion of all or any portion of the Principal Amount of this Debenture pursuant to Subsection (3)(a) shall be determined according to the following formula (the "Conversion Rate"): Conversion Amount Conversion Price For purposes of this Debenture, the following terms shall have the following meanings: "Change of Control" means: (i) The acquisition by any Person (as defined below) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of the subsection (i), the following acquisitions of stock shall not result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of subsection (iii) of this definition; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Incumbent Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding share of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from 4 such Business Combination, including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (any such corporation being referred to herein as a "Resulting Company"), in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, immediately prior to such Business Combination, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or a Resulting Company) beneficially owns, directly or indirectly, 30% or more of, respectively, the outstanding shares of Common Stock of the Resulting Company or the combined voting power of the then outstanding voting securities of such Resulting Company except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the Resulting Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Corporation; or (v) Termination of Albert E. Gosselin, Jr. as Chief Executive Officer of the Company (including a change or diminution of his duties as such), whether by resignation, termination, death, disability or otherwise, without the written consent of the Holder. "Closing Bid Price" or "Closing Ask Price" means, for any security as of any date, the last closing bid or ask price, as the case may be, for such security on the Principal Market (as defined below) as reported by Bloomberg L.P. ("Bloomberg"), or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid or ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid or ask price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid or ask price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid or ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price or Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price or Closing Ask Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the currently outstanding Principal Amount of all Convertible Debentures. If the Company and the Holders of the Convertible Debentures are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Subsection 3(h). (All such determinations are to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). "Conversion Amount" means that portion of this Debenture being converted by such Holder. "Conversion Price" means, as of any Conversion Date or other date of determination, 80% of the Market Price, but in no event more than $2.10 (the "Maximum Conversion Price"). 5 "Market Price" means the lowest Closing Bid Price of the Common Stock on the Principal Market as reported by Bloomberg for the five Trading Days immediately preceding the date of determination. "Principal Market" means the Nasdaq SmallCap Market. "Registration Rights Agreement" means that certain Registration Rights Agreement among the Company and the initial holders of the Convertible Debentures concerning the registration of the resale of the shares of Common Stock issuable upon conversion of the Convertible Debentures. "Trading Day" means any day during which the Principal Market shall be open for business. (c) Conversion Notice. The Holder of this Debenture may exercise its conversion right by giving a written conversion notice in the form of Exhibit A hereto (the "Conversion Notice") to the Company's transfer agent for its Common Stock, as designated by the Company from time to time (the "Transfer Agent"), (x) by facsimile or (y) by registered mail or overnight delivery service, with a copy by facsimile to the Company and the Company's outside counsel as specified from time to time by written notice to the holders of the Convertible Debentures. Promptly, but in no event more than five (5) Trading Days after the receipt of the Conversion Notice, a holder of this Debenture shall surrender this Debenture to the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Convertible Debentures). If this Debenture has been only partially converted, the Company shall, or instruct the Transfer Agent to, deliver to the Holder of this Debenture a new Debenture evidencing the unconverted Principal Amount of this Debenture. (d) Issuance of Certificates; Time Conversion Effected. (i) Promptly, but in no event more than three (3) Trading Days after the receipt of the Conversion Notice referred to in Subsection 3(c), the Transfer Agent shall issue and deliver, or the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which this Debenture has been converted. In the alternative, if the Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with The Depository Trust Company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Transfer Agent. The rights of the Holder of this Debenture shall cease, and the person or persons in whose name or names any certificate or certificates for share of Common Stock shall be issuable upon such conversion shall be deemed to have become the Holder or Holders of record of the shares represented thereby, on the Conversion Date. Issuance of shares of Common Stock issuable upon conversion that are requested to be registered in a name other than that of the registered Holder shall be subject o compliance with all applicable federal and state securities laws. 6 (ii) The Company understands that a delay in the issuance of the shares of Common Stock beyond three (3) Trading Days after the Conversion Date could result in economic loss to the Holder of this Debenture. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of shares of Common Stock upon conversion in accordance with the following schedule (where "No. Trading Days Late" means the number of Trading Days after three (3) Trading Days from the date of receipt by the Transfer Agent of the Conversion Notice to and including the date of the Holder's or its designees' receipt of such shares): No. Trading Days Late Late Payment for Each $5,000 of Conversion Amount of Principal Amount Being Converted - ----------------------------------- -------------------------------- 1 $100 2 $200 3 $300 4 $400 5 $500 6 $600 7 $700 8 $800 9 $900 10 $1,000 >10 $1,000 + $200 for each Trading Day late after 10 Calendar Days The Company shall make all payments due under this Subsection 3(d)(ii) in immediately available funds upon demand. Nothing herein shall limit the Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver (or to cause its Transfer Agent to issue and deliver) Common Stock to the Holder as required by Subsection 3(d)(i), including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies that may be available to the Holder, if the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days after the Conversion Date, the Holder will be entitled to revoke the relevant Conversion Notice by delivering a notice to such effect to the Transfer Agent, with a copy by facsimile to the Company and the Company's outside counsel. Upon delivery of such notice of revocation, the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Conversion Notice, except that the Holder shall retain the right to receive both the late payment amounts set forth above plus the actual cost of any "buy-in." 7 (iii) If, at any time, (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Common Stock or otherwise dishonors or rejects, or causes the Transfer Agent to dishonor or reject, any Conversion Notice properly delivered in accordance with this Section 3 or (b) any third party who is not and has never been an affiliate of the Holder obtains a judgment or order from any court or public or governmental authority that denies, enjoins, limits, modifies, or delays the right of the Holder to effect the conversion of this Debenture into Common Stock, then the Holder shall have the right, by written notice to the Company, to require the Company to promptly redeem this Debenture in accordance with Section 4. Under any of the circumstances set forth above, the Company shall indemnify the Holder against and hold it harmless from, and be responsible for the payment of, all costs and expenses of the Holder, including its reasonable legal fees and expenses, as any when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the Holder). The Company shall not refuse to honor, or cause the Transfer Agent to refuse to honor, any Conversion Notice unless the Company or the Transfer Agent, as the case may be, has actually been enjoined by a court of competent jurisdiction from doing so and, if so enjoined, the Company shall post with such court a performance bond equal to 150% of the Conversion Amount of this Debenture sought to be converted by a Holder that is the subject of such injunction. (iv) The Holder of this Debenture shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under 11 U.S.C. 101 et seq: (the "Bankruptcy Code"). The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the Holder's conversion privilege, if the Company becomes a debtor under the Bankruptcy Code. The Company agrees to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362 without cost or expense to the Holder. (e) Fractional Shares. The Company shall not, nor shall it cause the Transfer Agent to, issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of this Debenture by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after such aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay, or cause the Transfer Agent to pay, a cash adjustment in respect of such fraction of a share of Common Stock based upon the Closing Bid Price of the Common Stock on the Conversion Date. (f) Adjustment to Conversion Price; Dilution and Other Events. In order to prevent dilution of the rights granted under this Debenture, the Conversion Price will be subject to adjustment from time to time as provided in this Subsection 3(f). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Conversion Shares (as defined in the Purchase Agreement) and shares of Common Stock deemed to have been issued by the Company in connection with Approved Issuances (as defined below)) for a consideration per share (the "Applicable Price") less than the Conversion Price as in effect 8 immediately prior to such time (an "Offering"), then immediately after such issue or sale, the Conversion Price shall be reduced to an amount equal to (X) the sum of (A) the product of the Conversion Price in effect immediately prior to such issue or sale and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issue or sale, and (B) the consideration, if any, received by the Company upon such issue or sale divided by (Y) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants any rights or options to subscribe for or to purchase Common Stock (other than in connection with an Approved Issuance or upon conversion of this Debenture) or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities") and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of this Subsection 3(f)(i)(A), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (I) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No adjustment of the Maximum Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Applicable Price, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities 9 shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Subsection 3(f)(i)(B), the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (I) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No adjustment of the Maximum Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Maximum Conversion Price had been or are to be made pursuant to other provisions of this Subsection 3(f)(i), no further adjustment of the Maximum Conversion Price shall be made by reason of such issue or sale. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which an Convertible Securities are convertible into or exchangeable for Common Stock change at any time, the Maximum Conversion Price in effect at the time of such change shall be readjusted to the Maximum Conversion Price in effect that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Maximum Conversion Price then in effect. (D) Certain Definitions. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following terms have meanings set forth below: (I) "Approved Issuances" shall mean (i) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (ii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option plan, restricted stock plan, stock purchase plan or other plan or written compensation contract for the benefit of the Company's employees, directors or consultants in effect on the date hereof. (II) "Common Stock Deemed Outstanding" means, at any given time, the number os shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be 10 outstanding pursuant to Sections 3(f)(i)(A) and 3(f)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock issuable upon conversion of the Convertible Debentures. (E) Effect of Certain Events on Maximum Conversion Price. For purposes of determining the adjusted Maximum Conversion Price under this Section 3(f), the following shall be applicable: (I) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the amount received by the Company therefore, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Bid Prices of such security for the five consecutive Trading Days immediately preceding the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders constituting more than fifty percent (50%) of the Principal Amount of all Convertible Debentures then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within forty-eight (48) hours of the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected by the Company. The determination of such appraiser shall be deemed binding upon all parties absent manifest error. (II) Integrated Transactions. In case any Option is issued in connections with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. (III) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock. 11 (IV) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ii) Adjustment of Maximum Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Maximum Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Maximum Conversion Price in effect immediately prior to such combination will be proportionately increased. (iii) Adjustment of Conversion Price upon Issuance of Convertible Securities. If the Company in any manner issues or sells Convertible Securities that are convertible into Common Stock at a price that varies with the market price of the Common Stock (the formulation for such variable price being herein referred to as, the "Variable Price") and such Variable Price is not calculated using the same formula used to calculate the Variabe Conversion Price in effect immediately prior to the time of such issue or sale, the Company shall provide written notice thereof via facsimile and overnight courier to each holder of this Debenture ("Variable Notice") on the date of issuance of such Convertible Securities. If the Holder of this Debenture provides written notice via facsimile and overnight courier (the "Varirable Price Election Notice") to the Company within five (5) business days of receiving a Variable Notice that the Holder desires to replace the Conversion Price then in effect with the Variable Price described in such Variable Notice, then from and after the date of the Company's receipt of the Variable Price Election Notice, the Conversion Price will automatically be replaced with the Variable Price (together with such modifications to this Debenture as may be required to give full effect to the substitution of the Variable Price for the Conversion Price). The Holder's delivery of a Variable Price Election Notice shall serve as the consent required to amend this Debenture. In the event that the Holder delivers a Conversion Notice at any time after the Company's issuance of Convertible Securities with a Variable Price but before the Holder's receipt of the Company's Variable Notice, then such holder shall have the option by written notice to the Company to rescind such Conversion Notice or to have the Conversion Price be equal to such Variable Price for the conversion effected by such Conversion Notice. (iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as 12 defined below) or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) to insure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock otherwise acquirable and receivable upon the conversion of this Debenture, such shares of stock, securities or assets as would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable had this Debenture been converted into shares of Common Stock immediately prior to such Organic Change (without taking into account any limitations or restrictions on the timing or amount of conversions). In any such case, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) with respect to the Holder's rights and interest to insure that the provisions of this Section 3(f) will thereafter be applicable to this Debenture (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Maximum Conversion Price in accordance with Subsection 3(f)(i) using the value for the Common Stock reflected by the terms of such consolidation, merger or sale, if the value so reflected is less than the Maximum Conversion Price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance reasonably satisfactory to the holders of a more than fifty percent (50%) of Principal Amount of the Convertible Debentures then outstanding), the obligation to deliver to each holder of Convertible Debentures such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. "Person" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (v) Certain Events. If any event occurs of the type contemplated by the provisions of this Subsection 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders this Debenture and the other holders of Convertible Debentures; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 3(f). (g) Limitation on Number of Conversion Shares. Notwithstanding any other provision herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock plus shares of Common Stock issued upon the exercise of the Warrants issued under the Securities Purchase Agreement would exceed 19.9% of the shares of Common Stock issued and outstanding on the date of the Purchase Agreement (the "Exchange Cap") without the Company's violating the 13 corporate governance rules of the Nasdaq Stock Market, except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the corporate governane rules of the Nasdaq Stock Market for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of more than fifty percent (50%) of the Principal Amount of the Convertible Debentures then outstanding. Until such approval or written opinion is obtained or such action has been taken by the required number of holders, no purchaser of Convertible Debentures pursuant to the Purchase Agreement, collectively, (the "Investors" and, individually, an "Investor") shall be issued, upon conversion of Convertible Debentures, shares of Common Stock in an amount greater than the product of (x) the Exchange Cap amount multiplied by (y) a fraction, the numerator of which is the Principal Amount of Convertible Debentures purchased by such Investor pursuant to the Purchase Agreement and the denominator of which is the aggregate Principal Amount of all the Convertible Debentures purchased by the Investors pursuant to the Purchase Agreement (the "Cap Allocation Amount"). In the event that any Investor shall sell or otherwise transfer any of such Investor's Convertible Debentures, the transferee shall be allocated a pro rata portion of such Investor's Cap Allocation Amount. In the event that any holder of a Convertible Debenture shall convert all of such holder's Convertible Debenture into a number of shares of Common Stock that, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Convertible Debentures on a pro rata basis in proportion to the Principal Amount of Convertible Debentures then held by each such Holder. (h) Dispute Resolution. In the case of a dispute as to the determination of the Closing Ask Price or Closing Bid Price of any security or the arithmetic calculation of the Conversion Rate, the Company shall, or shall cause the Transfer Agent to, promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) business day of receipt of the Holder's Converstion Notice. If the Holder and the Company are unable to agree upon the determination os such Closing Ask Price or Closing Bid Price, as the case may be, or the arithmetic calculation of the Conversion Rate within one (1) business day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall within one (1) business day folling such date of delivery submit via facsimile (A) the disputed determination of the Closing Ask Price or Closing Bid Price, as the case may be, to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent certified public accounting firm. The Company shall cause the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accounting firm's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. 14 4. Redenption. (a) Holder's Option if Company Cannot Fully Convert or Holder Cannot Sell Without Restriction. If, (i) upon the Transfer Agent's receipt of a Conversion Notice, the Transfer Agent fails to issue shares of Common Stock as contemplated by Subsection 3(d)(i) or cannot issue shares of Common Stock registered for resale under the registration statement required to be filed under the Registration Rights Agreement with respect to the shares of Common Stock issuable upon conversion of this Debenture (the "Registration Statement") (or which are exempt from the registration requirements under the Securities Act pursuant to Rule 144(k) under the Securities Act) for any reason, including, without limitation, because the Company (x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or its securities, including without limitation the Exchange Cap, from issuing all of the Common Stock that is to be issued to the Holder of this Debenture pursuant to a Conversion Notice or (z) fails to have a sufficient number of shares of Common Stock registered for resale under the Registration Statement, or (ii) a Registration Default (as defined in the Registration Rights Agreement) shall have occurred and be continuing, the Company shall have defaulted in the payment of any Funded Debt (as hereinafter defined) for a period in excess of any cure period thereunder (regardless of whether the creditor of such Funded Debt shall have declared a default), or the employment of Albert E. Gosselin, Jr. shall have terminated for any reason, or (iii) the Common Stock is delisted from the Principal Market and not immediately listed on the New York Stock Exchange, the American Stock Exchange or another national securities exchange approved by holders of Convertible Debentures constituting more than fifth percent (50%) of the Principal Amount of all Convertible Debentures then outstanding, then in the case of clause (i), the Company shall, or shall cause the Transfer Agent to, issue as many shares of Common Stock as it is able to issue in accordance with such holder's Conversion Notice (if the holder shall have given such a Conversion Notice) and pursuant to the provisions of Section 3(d), and with respect to all or any part of the unconverted Principal Amount of this Debenture held by such Holder, the Holder, solely at such Holder's option, can elect to: (A) require the Company to redeem from such Holder all or any part of its remaining Principal Amount of this Debenture ("Redemption") at a premium equal to the greater of (I) the sum of: (a) 150% of such Principal Amount and (b) the accrued interest thereon or (II) the product of (a) the Conversion Rate on the date of such Holder's delivery of an Election Response Notice (as defined below) and (b) the greater of (i) the Closing Ask Price of the Common Stock on the Trading Day immediately preceding the event giving rise to Redemption or (ii) the Closing Ask Price of the Common Stock on the date of the Holder's delivery to the Company of a notice of redemption or, if such date of delivery is not a Trading Day, the next date on which the exchange or market on which the Common Stock is traded is open (the "Redemption Price"); (B) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(z) of this Subsection 4(a) above, require the Company to, or cause the Transfer Agent to, issue restricted shares of Common Stock in accordance with such Holder's Conversion Notice; 15 (C) void its Conversion Notice and retain the Principal Amount of this Debenture that was to be converted pursuant to such Holder's Conversion Notice (provided that the Holder's voiding its Conversion Notice shall not affect the Company's obligations to make any payments that have accrued prior to the date of such notice); or (D) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(y) of this Subsection 4(a) above, requrie the Company to, or cause the Transfer Agent to, issue shares of Common Stock in accordance with such Holder's Conversion Notice and pursuant to Section 4(d) at a Conversion Price equal to the average of the Closing Bid Prices of the Common Stock for the five consecutive Trading Days preceding such Holder's Election Responsxe Notice or such other market price that satisfies the applicable exchange or trading market. For purposes hereof, "Funded Debt" means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade liabilities and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices), whether on open account or evidenced by a note, bond, debenture or similar instrument or otherwise, (b) obligations under capital leases, (c) reimbursement obligations for letters of credit, banker's acceptances or other credit accommodations, (d) contingent obligations and (e) obligations secured by any lien on the Company's property, even if the Company has not assumed such obligations. (b) Mechanics of Fulfilling Holder's Election. The Company shall within one (1) business day send via facsimile to the Holder of this Debenture, upon receipt of a facsimile copy of a Conversion Notice from such Holder that cannot be fully satisfied as described in Subsection 4(a), a notice of the Company's inability to fully satisfy such Holder's Notice shall indicate (i) the reason why the Company is unable to fully satisfy such Holder's Conversion Notice, (ii) the Principal Amount of this Debenture that cannot be converted and (iii) the applicable Redemption Price. The Holder shall notify the Company of its election pursuant to Subsection 4(a) above by delivering written notice via facsimile to the Company (the "Election Response Notice"). (c) Payment of Redemption Price. If the Holder shall elect to have this Debenture redeemed pursuant to Subsection 4(a)(i), the Company shall pay the Redemption Price to such Holder in Cash by Wire transfer of immediately available funds in accordance with such Holder's written wire transfer instructions within five (5) days after the Company's receipt of the Holder's Election Response Notice. If the Company shall fail to pay the applicable Redemption Price to such holder within such five (5) day period (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Redemption Price), in addition to any remedy the Holder of this Debenture may ahve hereunder, or under the Securities Purchase Agreement and the Registration Rights Agreement, such unpaid amount shall bear interest at the rate of 3.0% per month (prorated for partial months) until paid in full. Until the Redemption Price is paid in full to such Holder, such Holder may void the Redemption with respect to Principal Amount of this Debenture for which the full Redemption Price has not been paid and receive back a Convertible Debenture 16 representing such Principal Amount. Notwithstanding the foregoing, if the Company fails to pay the applicable Redemption Price within such period of five (5) days due to a dispute as to the determination of the Redemption Price, such dispute shall be resolved pursuant to Section 3(h) with the term "Redemption Price" being substituted for the term "Conversion Rate." (d) Pro-rata Conversion and Redemption. If the Company or the Transfer Agent receives a Conversion Notice or Election Response Notice electing Redemption from more than one holder of Convertible Debentures on the same day, and the Company can convert and/or redeem some, but not all, of such Convertible Debentures pursuant to this Section 4, the Company shall convert and/or redeem from each holder of Convertible Debentures electing to have its Convertible Debenture converted and/or redeemed at such time an amount equal to such holder's pro-rata amount (based on the Principal Amount of Convertible Debentures held by such holder relative to the Principal Amount of Convertible Debentures sought to be converted) of all Convertible Debentures being converted and/or redeemed as such time. 5. Notices. In case at any time: (a) the Company shall declare any dividend upon its Common Stock payable in cash or stock or make any other pro rata distribution to the holders of its Common Stock; or (b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (c) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, or by telex or facsimile or by recognized overnight delivery service, addressed to the Holder at the address of the Holder as shown on the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganiztion, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (ii) in the case of any such reorganization, reclassification, consolidation , merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other properly deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 17 6. Stock to be Reserved. The Company has a sufficient number of shares of Common Stock available to reserve for issuance upon the conversion of all outstanding Convertible Debentures, assuming immediate conversion. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of all of its Convertible Debentures as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all Convertible Debentures. The Company covenants that all shares of Common Stock that shall be so issued shall be duly and validly issued, fully-paid and non assessable. The Company will take all such action as may be so taken without violation of any applicable law or regulation to have a sufficient number of authorized but unissued shares of Common Stock to issue upon conversion of all Convertible Debentures. The Company will not take any action that results in any adjustment of the conversion rights if the total number of shares of Common Stock issued and issuable after such action upon conversion of this Debenture would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 7. Default and Remedies. (a) Event of Default. Each of the following shall constitute an "Event of Default": (i) the Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) days; or (ii) any of the representations or warranties made by the Company herein, in the Purchase Agreement, in the Registration Rights Agreement, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement, shall be false or misleading in any material respect at the time made; or (iii) a default or an event of default shall have occurred and be continuing with respect to any Funded Debt; or (iv) the Company shall (A) admit in writing its inability to pay its debts generally as they mature; (B) make an assignmtne for the benefit of recditors or commence proceedings for its dissolution; or (C) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property of business; or (v) a trustee, liwuidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (vi) 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 sixty (60) days thereafter; or 18 (vii) any money judgment, writ or 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 sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (viii) 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. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, the Holder may declare this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, 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 enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default shall be made at the fair market value of the shares of Common Stock that would be issued at the Conversion Price on the date the Debenture becomes due and payable pursuant to this provision. Such payment shall be made withint three (3) Trading Days of such demand, and if not paid within such period, the Company shall pay the holder liquidated damages of three percent (3%) per month of such amount until paid, pro-rated for any partial months. 8. Payment Obligation Unconditional. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. 9. No Recourse to Stockholders, etc. 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, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any 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. 10. No Rights as Stockholder. No provision of 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 stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. 19 11. Definitions. As used in this Debenture, the term "Common Stock" shall mean and include the Company's authorized common stock, no par value, as constituted on the issuance date of this Debenture, and shall also include any capital stock of any class of the Company thereafter authorized that shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntaryl liquidation, dissolution or winding up of the Company; provided that the shares of Common Stock receivable upon conversion of this Debenture shall include only shares of Common Stock receivable upon conversion of this Debenture shall include only shares designated as Common Stock of the Company on the issuance date of this Debenture, or in case of any reorganization, reclassification, or stock split of the outstanding shares thereof, the stock, securities or assets provided for in Sections 3(f) and (g). Any capitalized terms used in this Debenture but not defined herein shall have the meanings set forth in the Purchase Agreement. 12. Loss, Theft, Destruction of Debenture. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutiliation of this Debenture and, in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (which shall not include the posting of any bond), or, in the case of any such mutiliation, upon surrender and cancellation of this Debenture, the Company shall make, issue and deliver, in lieu of such lost, stoledn, destroyed or mutiliated Debenture, one or more new Debentures of like tenor. This Debenture shall be held and owned upon the express condition that the provisions of this Section 12 are exclusive with respect to the replacement of mutiliated, destroyed, lost or stolen Debentures and shall preclude any and all other rights and remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement of negotiable instruments or other securities without the surrender thereof. 13. Record Owner. The Company may deem the person in whose name this Debenture shall be registered upon the registry books of the Company to be, and may treat such person as, the absolute owner of this Debenture for the purpose of conversion of this Debenture and for all other purposes, and the Company shall not be affected by any notice to the contrary. All such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Debenture to the extent of the sum or sums so paid or the conversion so made. 14. Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of Convertible Debentures. Upon any transfer of this Debenture in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Convertible Debenture register. 15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with 20 the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation therof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of this Debenture and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of this Debenture shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 16. Construction. This Debenture shall be deemed to be jointly drafted by the Company and the initial Holders of the Convertible Debentures and shall not be construed against any person as the drafter hereof. 17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder of this Debenture in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof (except to the extent that such power, right or privilege must, in accordance with the terms of this Debenture, be exercised within a specified period of time and such period of time has lapsed without such power, right or privilege being exercised), nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 18. Governing Law. 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 City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles 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 conveniens, to the bringing of any such proceeding in such jurisdictions. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. President Attest: /s/ Marcia Smith - ----------------------------- 21 EX-10.361 126 0126.txt 9% CONVERTIBLE DEBENTURE - JRT HOLDINGS Exhibit 10.361 9% CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. 3 $20,000 Principal Amount Pollution Research and Control Corp. 9% CONVERTIBLE DEBENTURE DUE JULY 17, 2001 THIS DEBENTURE is issued by Pollution Research and Control Corp., a California corporation (the "Company"), and is part of an issue of an aggregate of up to $900,000 principal amount of 9% Convertible Debentures due July 17, 2001 (the "Convertible Debentures"). FOR VALUE RECEIVED, the Company promises to pay to JRT Holdings, or permitted assigns (the "Holder"), the principal sum of Twenty Thousand (US $20,000) Dollars on July 17, 2001 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 9% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue daily on the basis of a 360 day year until payment in full of the principal sum has been made or duly provided for. Quarterly interest payments shall be due and payable on March 31, June 30, September 30 and December 31 of each year, commencing with September 30, 2000. If any interest payment date or the Maturity Date is not a business day in the State of California, then such payment shall be made on the next succeeding business day. Subject to the provisions of Section 4 below, principal and accrued interest on this Debenture are payable in cash on the interest payment date or the Maturity Date, as applicable, 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 principal of and any accrued but unpaid interest due upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check, plus any amounts so deducted. This Debenture is subject to the following additional provisions: 1. Withholding and Issuance Taxes. 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. The issuance of certificates for shares of common stock, no par value (the "Common Stock"), of the Company upon conversion of this Debenture shall be made without charge to the Holder for any United States issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder of this Debenture. 2. Transfer of Debenture. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign 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 the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 3. Conversion. The Holder of this Debenture is entitled, at its option, to convert, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Principal Amount of this Debenture or any portion thereof, together with accrued and unpaid interest on such Principal Amount, into shares of Common Stock as follows: (a) Right to Convert. (i) Subject to the terms, conditions, and restrictions of this Section 3, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Holder of this Debenture shall have the right to convert all or any portion of the Principal Amount of this Debenture, together with the accrued and unpaid interest on such Principal Amount so converted, into that number of fully-paid and nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Subsection 3(e), at the Conversion Rate (as defined below). 2 (ii) Anything is Subsection 3(a)(i) to the contrary notwithstanding, in no event shall any Holder be entitled to convert all or any portion of the Principal Amount of this Debenture in excess of that amount of the Principal Amount of this Debenture that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of this Subsection, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of the Principal Amount of this Debenture beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants or convertible preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Subjection 3(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For purposes of this Subsection, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Holder, the Company shall immediately confirm orally and in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of this Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Subsection 3(a)(ii) applies, the determination of whether such portion of this Debenture is convertible (in relation to other securities owned by a Holder) and of what portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of whether such portion of this Debenture is convertible (in relation to other securities owned by such Holder) and of what portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert such portion of this Debenture at such time as such conversion will not violate the provisions of this Subsection. A Holder of this Debenture may waive the provisions of this Subsection 3(a)(ii) as to itself (and solely as to itself) upon not less than 75 days' prior notice to the Company, and the provisions of this Subsection 3(a)(ii) shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Subsection 3(a)(ii), but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. Subsection 3(g) below sets forth additional limitations on the Company's obligation to issue shares of Common Stock upon conversion of this Debenture. 3 (b) Conversion Rate and Other Definitions. The number of shares of Common Stock issuable upon conversion of all or any portion of the Principal Amount of this Debenture pursuant to Subsection (3)(a) shall be determined according to the following formula (the "Conversion Rate"): Conversion Amount Conversion Price For purposes of this Debenture, the following terms shall have the following meanings: "Change of Control" means: (i) The acquisition by any Person (as defined below) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of the subsection (i), the following acquisitions of stock shall not result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of subsection (iii) of this definition; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Incumbent Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding share of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from 4 such Business Combination, including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (any such corporation being referred to herein as a "Resulting Company"), in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, immediately prior to such Business Combination, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or a Resulting Company) beneficially owns, directly or indirectly, 30% or more of, respectively, the outstanding shares of Common Stock of the Resulting Company or the combined voting power of the then outstanding voting securities of such Resulting Company except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the Resulting Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Corporation; or (v) Termination of Albert E. Gosselin, Jr. as Chief Executive Officer of the Company (including a change or diminution of his duties as such), whether by resignation, termination, death, disability or otherwise, without the written consent of the Holder. "Closing Bid Price" or "Closing Ask Price" means, for any security as of any date, the last closing bid or ask price, as the case may be, for such security on the Principal Market (as defined below) as reported by Bloomberg L.P. ("Bloomberg"), or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid or ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid or ask price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid or ask price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid or ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price or Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price or Closing Ask Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the currently outstanding Principal Amount of all Convertible Debentures. If the Company and the Holders of the Convertible Debentures are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Subsection 3(h). (All such determinations are to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). "Conversion Amount" means that portion of this Debenture being converted by such Holder. "Conversion Price" means, as of any Conversion Date or other date of determination, 80% of the Market Price, but in no event more than $2.10 (the "Maximum Conversion Price"). 5 "Market Price" means the lowest Closing Bid Price of the Common Stock on the Principal Market as reported by Bloomberg for the five Trading Days immediately preceding the date of determination. "Principal Market" means the Nasdaq SmallCap Market. "Registration Rights Agreement" means that certain Registration Rights Agreement among the Company and the initial holders of the Convertible Debentures concerning the registration of the resale of the shares of Common Stock issuable upon conversion of the Convertible Debentures. "Trading Day" means any day during which the Principal Market shall be open for business. (c) Conversion Notice. The Holder of this Debenture may exercise its conversion right by giving a written conversion notice in the form of Exhibit A hereto (the "Conversion Notice") to the Company's transfer agent for its Common Stock, as designated by the Company from time to time (the "Transfer Agent"), (x) by facsimile or (y) by registered mail or overnight delivery service, with a copy by facsimile to the Company and the Company's outside counsel as specified from time to time by written notice to the holders of the Convertible Debentures. Promptly, but in no event more than five (5) Trading Days after the receipt of the Conversion Notice, a holder of this Debenture shall surrender this Debenture to the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Convertible Debentures). If this Debenture has been only partially converted, the Company shall, or instruct the Transfer Agent to, deliver to the Holder of this Debenture a new Debenture evidencing the unconverted Principal Amount of this Debenture. (d) Issuance of Certificates; Time Conversion Effected. (i) Promptly, but in no event more than three (3) Trading Days after the receipt of the Conversion Notice referred to in Subsection 3(c), the Transfer Agent shall issue and deliver, or the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which this Debenture has been converted. In the alternative, if the Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with The Depository Trust Company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Transfer Agent. The rights of the Holder of this Debenture shall cease, and the person or persons in whose name or names any certificate or certificates for share of Common Stock shall be issuable upon such conversion shall be deemed to have become the Holder or Holders of record of the shares represented thereby, on the Conversion Date. Issuance of shares of Common Stock issuable upon conversion that are requested to be registered in a name other than that of the registered Holder shall be subject o compliance with all applicable federal and state securities laws. 6 (ii) The Company understands that a delay in the issuance of the shares of Common Stock beyond three (3) Trading Days after the Conversion Date could result in economic loss to the Holder of this Debenture. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of shares of Common Stock upon conversion in accordance with the following schedule (where "No. Trading Days Late" means the number of Trading Days after three (3) Trading Days from the date of receipt by the Transfer Agent of the Conversion Notice to and including the date of the Holder's or its designees' receipt of such shares): No. Trading Days Late Late Payment for Each $5,000 of Conversion Amount of Principal Amount Being Converted - ----------------------------------- -------------------------------- 1 $100 2 $200 3 $300 4 $400 5 $500 6 $600 7 $700 8 $800 9 $900 10 $1,000 (10) $1,000 + $200 for each Trading Day late after 10 Calendar Days The Company shall make all payments due under this Subsection 3(d)(ii) in immediately available funds upon demand. Nothing herein shall limit the Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver (or to cause its Transfer Agent to issue and deliver) Common Stock to the Holder as required by Subsection 3(d)(i), including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies that may be available to the Holder, if the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days after the Conversion Date, the Holder will be entitled to revoke the relevant Conversion Notice by delivering a notice to such effect to the Transfer Agent, with a copy by facsimile to the Company and the Company's outside counsel. Upon delivery of such notice of revocation, the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Conversion Notice, except that the Holder shall retain the right to receive both the late payment amounts set forth above plus the actual cost of any "buy-in." 7 (iii) If, at any time, (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Common Stock or otherwise dishonors or rejects, or causes the Transfer Agent to dishonor or reject, any Conversion Notice properly delivered in accordance with this Section 3 or (b) any third party who is not and has never been an affiliate of the Holder obtains a judgment or order from any court or public or governmental authority that denies, enjoins, limits, modifies, or delays the right of the Holder to effect the conversion of this Debenture into Common Stock, then the Holder shall have the right, by written notice to the Company, to require the Company to promptly redeem this Debenture in accordance with Section 4. Under any of the circumstances set forth above, the Company shall indemnify the Holder against and hold it harmless from, and be responsible for the payment of, all costs and expenses of the Holder, including its reasonable legal fees and expenses, as any when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the Holder). The Company shall not refuse to honor, or cause the Transfer Agent to refuse to honor, any Conversion Notice unless the Company or the Transfer Agent, as the case may be, has actually been enjoined by a court of competent jurisdiction from doing so and, if so enjoined, the Company shall post with such court a performance bond equal to 150% of the Conversion Amount of this Debenture sought to be converted by a Holder that is the subject of such injunction. (iv) The Holder of this Debenture shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under 11 U.S.C. 101 et seq: (the "Bankruptcy Code"). The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the Holder's conversion privilege, if the Company becomes a debtor under the Bankruptcy Code. The Company agrees to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362 without cost or expense to the Holder. (e) Fractional Shares. The Company shall not, nor shall it cause the Transfer Agent to, issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of this Debenture by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after such aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay, or cause the Transfer Agent to pay, a cash adjustment in respect of such fraction of a share of Common Stock based upon the Closing Bid Price of the Common Stock on the Conversion Date. (f) Adjustment to Conversion Price; Dilution and Other Events. In order to prevent dilution of the rights granted under this Debenture, the Conversion Price will be subject to adjustment from time to time as provided in this Subsection 3(f). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Conversion Shares (as defined in the Purchase Agreement) and shares of Common Stock deemed to have been issued by the Company in connection with Approved Issuances (as defined below)) for a consideration per share (the "Applicable Price") less than the Conversion Price as in effect 8 immediately prior to such time (an "Offering"), then immediately after such issue or sale, the Conversion Price shall be reduced to an amount equal to (X) the sum of (A) the product of the Conversion Price in effect immediately prior to such issue or sale and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issue or sale, and (B) the consideration, if any, received by the Company upon such issue or sale divided by (Y) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants any rights or options to subscribe for or to purchase Common Stock (other than in connection with an Approved Issuance or upon conversion of this Debenture) or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities") and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of this Subsection 3(f)(i)(A), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (I) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No adjustment of the Maximum Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Applicable Price, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities 9 shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Subsection 3(f)(i)(B), the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (I) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No adjustment of the Maximum Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Maximum Conversion Price had been or are to be made pursuant to other provisions of this Subsection 3(f)(i), no further adjustment of the Maximum Conversion Price shall be made by reason of such issue or sale. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which an Convertible Securities are convertible into or exchangeable for Common Stock change at any time, the Maximum Conversion Price in effect at the time of such change shall be readjusted to the Maximum Conversion Price in effect that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Maximum Conversion Price then in effect. (D) Certain Definitions. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following terms have meanings set forth below: (I) "Approved Issuances" shall mean (i) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (ii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option plan, restricted stock plan, stock purchase plan or other plan or written compensation contract for the benefit of the Company's employees, directors or consultants in effect on the date hereof. (II) "Common Stock Deemed Outstanding" means, at any given time, the number os shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be 10 outstanding pursuant to Sections 3(f)(i)(A) and 3(f)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock issuable upon conversion of the Convertible Debentures. (E) Effect of Certain Events on Maximum Conversion Price. For purposes of determining the adjusted Maximum Conversion Price under this Section 3(f), the following shall be applicable: (I) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the amount received by the Company therefore, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Bid Prices of such security for the five consecutive Trading Days immediately preceding the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders constituting more than fifty percent (50%) of the Principal Amount of all Convertible Debentures then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within forty-eight (48) hours of the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected by the Company. The determination of such appraiser shall be deemed binding upon all parties absent manifest error. (II) Integrated Transactions. In case any Option is issued in connections with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. (III) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock. 11 (IV) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ii) Adjustment of Maximum Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Maximum Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Maximum Conversion Price in effect immediately prior to such combination will be proportionately increased. (iii) Adjustment of Conversion Price upon Issuance of Convertible Securities. If the Company in any manner issues or sells Convertible Securities that are convertible into Common Stock at a price that varies with the market price of the Common Stock (the formulation for such variable price being herein referred to as, the "Variable Price") and such Variable Price is not calculated using the same formula used to calculate the Variabe Conversion Price in effect immediately prior to the time of such issue or sale, the Company shall provide written notice thereof via facsimile and overnight courier to each holder of this Debenture ("Variable Notice") on the date of issuance of such Convertible Securities. If the Holder of this Debenture provides written notice via facsimile and overnight courier (the "Varirable Price Election Notice") to the Company within five (5) business days of receiving a Variable Notice that the Holder desires to replace the Conversion Price then in effect with the Variable Price described in such Variable Notice, then from and after the date of the Company's receipt of the Variable Price Election Notice, the Conversion Price will automatically be replaced with the Variable Price (together with such modifications to this Debenture as may be required to give full effect to the substitution of the Variable Price for the Conversion Price). The Holder's delivery of a Variable Price Election Notice shall serve as the consent required to amend this Debenture. In the event that the Holder delivers a Conversion Notice at any time after the Company's issuance of Convertible Securities with a Variable Price but before the Holder's receipt of the Company's Variable Notice, then such holder shall have the option by written notice to the Company to rescind such Conversion Notice or to have the Conversion Price be equal to such Variable Price for the conversion effected by such Conversion Notice. (iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as 12 defined below) or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) to insure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock otherwise acquirable and receivable upon the conversion of this Debenture, such shares of stock, securities or assets as would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable had this Debenture been converted into shares of Common Stock immediately prior to such Organic Change (without taking into account any limitations or restrictions on the timing or amount of conversions). In any such case, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) with respect to the Holder's rights and interest to insure that the provisions of this Section 3(f) will thereafter be applicable to this Debenture (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Maximum Conversion Price in accordance with Subsection 3(f)(i) using the value for the Common Stock reflected by the terms of such consolidation, merger or sale, if the value so reflected is less than the Maximum Conversion Price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance reasonably satisfactory to the holders of a more than fifty percent (50%) of Principal Amount of the Convertible Debentures then outstanding), the obligation to deliver to each holder of Convertible Debentures such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. "Person" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (v) Certain Events. If any event occurs of the type contemplated by the provisions of this Subsection 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders this Debenture and the other holders of Convertible Debentures; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 3(f). (g) Limitation on Number of Conversion Shares. Notwithstanding any other provision herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock plus shares of Common Stock issued upon the exercise of the Warrants issued under the Securities Purchase Agreement would exceed 19.9% of the shares of Common Stock issued and outstanding on the date of the Purchase Agreement (the "Exchange Cap") without the Company's violating the 13 corporate governance rules of the Nasdaq Stock Market, except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the corporate governane rules of the Nasdaq Stock Market for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of more than fifty percent (50%) of the Principal Amount of the Convertible Debentures then outstanding. Until such approval or written opinion is obtained or such action has been taken by the required number of holders, no purchaser of Convertible Debentures pursuant to the Purchase Agreement, collectively, (the "Investors" and, individually, an "Investor") shall be issued, upon conversion of Convertible Debentures, shares of Common Stock in an amount greater than the product of (x) the Exchange Cap amount multiplied by (y) a fraction, the numerator of which is the Principal Amount of Convertible Debentures purchased by such Investor pursuant to the Purchase Agreement and the denominator of which is the aggregate Principal Amount of all the Convertible Debentures purchased by the Investors pursuant to the Purchase Agreement (the "Cap Allocation Amount"). In the event that any Investor shall sell or otherwise transfer any of such Investor's Convertible Debentures, the transferee shall be allocated a pro rata portion of such Investor's Cap Allocation Amount. In the event that any holder of a Convertible Debenture shall convert all of such holder's Convertible Debenture into a number of shares of Common Stock that, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Convertible Debentures on a pro rata basis in proportion to the Principal Amount of Convertible Debentures then held by each such Holder. (h) Dispute Resolution. In the case of a dispute as to the determination of the Closing Ask Price or Closing Bid Price of any security or the arithmetic calculation of the Conversion Rate, the Company shall, or shall cause the Transfer Agent to, promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) business day of receipt of the Holder's Converstion Notice. If the Holder and the Company are unable to agree upon the determination os such Closing Ask Price or Closing Bid Price, as the case may be, or the arithmetic calculation of the Conversion Rate within one (1) business day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall within one (1) business day folling such date of delivery submit via facsimile (A) the disputed determination of the Closing Ask Price or Closing Bid Price, as the case may be, to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent certified public accounting firm. The Company shall cause the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accounting firm's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. 14 4. Redenption. (a) Holder's Option if Company Cannot Fully Convert or Holder Cannot Sell Without Restriction. If, (i) upon the Transfer Agent's receipt of a Conversion Notice, the Transfer Agent fails to issue shares of Common Stock as contemplated by Subsection 3(d)(i) or cannot issue shares of Common Stock registered for resale under the registration statement required to be filed under the Registration Rights Agreement with respect to the shares of Common Stock issuable upon conversion of this Debenture (the "Registration Statement") (or which are exempt from the registration requirements under the Securities Act pursuant to Rule 144(k) under the Securities Act) for any reason, including, without limitation, because the Company (x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or its securities, including without limitation the Exchange Cap, from issuing all of the Common Stock that is to be issued to the Holder of this Debenture pursuant to a Conversion Notice or (z) fails to have a sufficient number of shares of Common Stock registered for resale under the Registration Statement, or (ii) a Registration Default (as defined in the Registration Rights Agreement) shall have occurred and be continuing, the Company shall have defaulted in the payment of any Funded Debt (as hereinafter defined) for a period in excess of any cure period thereunder (regardless of whether the creditor of such Funded Debt shall have declared a default), or the employment of Albert E. Gosselin, Jr. shall have terminated for any reason, or (iii) the Common Stock is delisted from the Principal Market and not immediately listed on the New York Stock Exchange, the American Stock Exchange or another national securities exchange approved by holders of Convertible Debentures constituting more than fifth percent (50%) of the Principal Amount of all Convertible Debentures then outstanding, then in the case of clause (i), the Company shall, or shall cause the Transfer Agent to, issue as many shares of Common Stock as it is able to issue in accordance with such holder's Conversion Notice (if the holder shall have given such a Conversion Notice) and pursuant to the provisions of Section 3(d), and with respect to all or any part of the unconverted Principal Amount of this Debenture held by such Holder, the Holder, solely at such Holder's option, can elect to: (A) require the Company to redeem from such Holder all or any part of its remaining Principal Amount of this Debenture ("Redemption") at a premium equal to the greater of (I) the sum of: (a) 150% of such Principal Amount and (b) the accrued interest thereon or (II) the product of (a) the Conversion Rate on the date of such Holder's delivery of an Election Response Notice (as defined below) and (b) the greater of (i) the Closing Ask Price of the Common Stock on the Trading Day immediately preceding the event giving rise to Redemption or (ii) the Closing Ask Price of the Common Stock on the date of the Holder's delivery to the Company of a notice of redemption or, if such date of delivery is not a Trading Day, the next date on which the exchange or market on which the Common Stock is traded is open (the "Redemption Price"); (B) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(z) of this Subsection 4(a) above, require the Company to, or cause the Transfer Agent to, issue restricted shares of Common Stock in accordance with such Holder's Conversion Notice; 15 (C) void its Conversion Notice and retain the Principal Amount of this Debenture that was to be converted pursuant to such Holder's Conversion Notice (provided that the Holder's voiding its Conversion Notice shall not affect the Company's obligations to make any payments that have accrued prior to the date of such notice); or (D) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(y) of this Subsection 4(a) above, requrie the Company to, or cause the Transfer Agent to, issue shares of Common Stock in accordance with such Holder's Conversion Notice and pursuant to Section 4(d) at a Conversion Price equal to the average of the Closing Bid Prices of the Common Stock for the five consecutive Trading Days preceding such Holder's Election Responsxe Notice or such other market price that satisfies the applicable exchange or trading market. For purposes hereof, "Funded Debt" means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade liabilities and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices), whether on open account or evidenced by a note, bond, debenture or similar instrument or otherwise, (b) obligations under capital leases, (c) reimbursement obligations for letters of credit, banker's acceptances or other credit accommodations, (d) contingent obligations and (e) obligations secured by any lien on the Company's property, even if the Company has not assumed such obligations. (b) Mechanics of Fulfilling Holder's Election. The Company shall within one (1) business day send via facsimile to the Holder of this Debenture, upon receipt of a facsimile copy of a Conversion Notice from such Holder that cannot be fully satisfied as described in Subsection 4(a), a notice of the Company's inability to fully satisfy such Holder's Notice shall indicate (i) the reason why the Company is unable to fully satisfy such Holder's Conversion Notice, (ii) the Principal Amount of this Debenture that cannot be converted and (iii) the applicable Redemption Price. The Holder shall notify the Company of its election pursuant to Subsection 4(a) above by delivering written notice via facsimile to the Company (the "Election Response Notice"). (c) Payment of Redemption Price. If the Holder shall elect to have this Debenture redeemed pursuant to Subsection 4(a)(i), the Company shall pay the Redemption Price to such Holder in Cash by Wire transfer of immediately available funds in accordance with such Holder's written wire transfer instructions within five (5) days after the Company's receipt of the Holder's Election Response Notice. If the Company shall fail to pay the applicable Redemption Price to such holder within such five (5) day period (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Redemption Price), in addition to any remedy the Holder of this Debenture may ahve hereunder, or under the Securities Purchase Agreement and the Registration Rights Agreement, such unpaid amount shall bear interest at the rate of 3.0% per month (prorated for partial months) until paid in full. Until the Redemption Price is paid in full to such Holder, such Holder may void the Redemption with respect to Principal Amount of this Debenture for which the full Redemption Price has not been paid and receive back a Convertible Debenture 16 representing such Principal Amount. Notwithstanding the foregoing, if the Company fails to pay the applicable Redemption Price within such period of five (5) days due to a dispute as to the determination of the Redemption Price, such dispute shall be resolved pursuant to Section 3(h) with the term "Redemption Price" being substituted for the term "Conversion Rate." (d) Pro-rata Conversion and Redemption. If the Company or the Transfer Agent receives a Conversion Notice or Election Response Notice electing Redemption from more than one holder of Convertible Debentures on the same day, and the Company can convert and/or redeem some, but not all, of such Convertible Debentures pursuant to this Section 4, the Company shall convert and/or redeem from each holder of Convertible Debentures electing to have its Convertible Debenture converted and/or redeemed at such time an amount equal to such holder's pro-rata amount (based on the Principal Amount of Convertible Debentures held by such holder relative to the Principal Amount of Convertible Debentures sought to be converted) of all Convertible Debentures being converted and/or redeemed as such time. 5. Notices. In case at any time: (a) the Company shall declare any dividend upon its Common Stock payable in cash or stock or make any other pro rata distribution to the holders of its Common Stock; or (b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (c) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, or by telex or facsimile or by recognized overnight delivery service, addressed to the Holder at the address of the Holder as shown on the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganiztion, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (ii) in the case of any such reorganization, reclassification, consolidation , merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other properly deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 17 6. Stock to be Reserved. The Company has a sufficient number of shares of Common Stock available to reserve for issuance upon the conversion of all outstanding Convertible Debentures, assuming immediate conversion. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of all of its Convertible Debentures as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all Convertible Debentures. The Company covenants that all shares of Common Stock that shall be so issued shall be duly and validly issued, fully-paid and non assessable. The Company will take all such action as may be so taken without violation of any applicable law or regulation to have a sufficient number of authorized but unissued shares of Common Stock to issue upon conversion of all Convertible Debentures. The Company will not take any action that results in any adjustment of the conversion rights if the total number of shares of Common Stock issued and issuable after such action upon conversion of this Debenture would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 7. Default and Remedies. (a) Event of Default. Each of the following shall constitute an "Event of Default": (i) the Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) days; or (ii) any of the representations or warranties made by the Company herein, in the Purchase Agreement, in the Registration Rights Agreement, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement, shall be false or misleading in any material respect at the time made; or (iii) a default or an event of default shall have occurred and be continuing with respect to any Funded Debt; or (iv) the Company shall (A) admit in writing its inability to pay its debts generally as they mature; (B) make an assignmtne for the benefit of recditors or commence proceedings for its dissolution; or (C) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property of business; or (v) a trustee, liwuidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (vi) 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 sixty (60) days thereafter; or 18 (vii) any money judgment, writ or 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 sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (viii) 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. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, the Holder may declare this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, 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 enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default shall be made at the fair market value of the shares of Common Stock that would be issued at the Conversion Price on the date the Debenture becomes due and payable pursuant to this provision. Such payment shall be made withint three (3) Trading Days of such demand, and if not paid within such period, the Company shall pay the holder liquidated damages of three percent (3%) per month of such amount until paid, pro-rated for any partial months. 8. Payment Obligation Unconditional. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. 9. No Recourse to Stockholders, etc. 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, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any 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. 10. No Rights as Stockholder. No provision of 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 stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. 19 11. Definitions. As used in this Debenture, the term "Common Stock" shall mean and include the Company's authorized common stock, no par value, as constituted on the issuance date of this Debenture, and shall also include any capital stock of any class of the Company thereafter authorized that shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntaryl liquidation, dissolution or winding up of the Company; provided that the shares of Common Stock receivable upon conversion of this Debenture shall include only shares of Common Stock receivable upon conversion of this Debenture shall include only shares designated as Common Stock of the Company on the issuance date of this Debenture, or in case of any reorganization, reclassification, or stock split of the outstanding shares thereof, the stock, securities or assets provided for in Sections 3(f) and (g). Any capitalized terms used in this Debenture but not defined herein shall have the meanings set forth in the Purchase Agreement. 12. Loss, Theft, Destruction of Debenture. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutiliation of this Debenture and, in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (which shall not include the posting of any bond), or, in the case of any such mutiliation, upon surrender and cancellation of this Debenture, the Company shall make, issue and deliver, in lieu of such lost, stoledn, destroyed or mutiliated Debenture, one or more new Debentures of like tenor. This Debenture shall be held and owned upon the express condition that the provisions of this Section 12 are exclusive with respect to the replacement of mutiliated, destroyed, lost or stolen Debentures and shall preclude any and all other rights and remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement of negotiable instruments or other securities without the surrender thereof. 13. Record Owner. The Company may deem the person in whose name this Debenture shall be registered upon the registry books of the Company to be, and may treat such person as, the absolute owner of this Debenture for the purpose of conversion of this Debenture and for all other purposes, and the Company shall not be affected by any notice to the contrary. All such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Debenture to the extent of the sum or sums so paid or the conversion so made. 14. Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of Convertible Debentures. Upon any transfer of this Debenture in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Convertible Debenture register. 15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with 20 the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation therof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of this Debenture and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of this Debenture shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 16. Construction. This Debenture shall be deemed to be jointly drafted by the Company and the initial Holders of the Convertible Debentures and shall not be construed against any person as the drafter hereof. 17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder of this Debenture in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof (except to the extent that such power, right or privilege must, in accordance with the terms of this Debenture, be exercised within a specified period of time and such period of time has lapsed without such power, right or privilege being exercised), nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 18. Governing Law. 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 City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles 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 conveniens, to the bringing of any such proceeding in such jurisdictions. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. President Attest: /s/ Marcia Smith - ----------------------------- 21 EX-10.362 127 0127.txt 9% CONVERTIBLE DEBENTURE - CRISTOBAL GARCIA Exhibit 10.362 9% CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. 4 $5,000 Principal Amount Pollution Research and Control Corp. 9% CONVERTIBLE DEBENTURE DUE JULY 17, 2001 THIS DEBENTURE is issued by Pollution Research and Control Corp., a California corporation (the "Company"), and is part of an issue of an aggregate of up to $900,000 principal amount of 9% Convertible Debentures due July 17, 2001 (the "Convertible Debentures"). FOR VALUE RECEIVED, the Company promises to pay to Cristobal Garcia, or permitted assigns (the "Holder"), the principal sum of Five Thousand (US $5,000) Dollars on July 17, 2001 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 9% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue daily on the basis of a 360 day year until payment in full of the principal sum has been made or duly provided for. Quarterly interest payments shall be due and payable on March 31, June 30, September 30 and December 31 of each year, commencing with September 30, 2000. If any interest payment date or the Maturity Date is not a business day in the State of California, then such payment shall be made on the next succeeding business day. Subject to the provisions of Section 4 below, principal and accrued interest on this Debenture are payable in cash on the interest payment date or the Maturity Date, as applicable, 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 principal of and any accrued but unpaid interest due upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check, plus any amounts so deducted. This Debenture is subject to the following additional provisions: 1. Withholding and Issuance Taxes. 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. The issuance of certificates for shares of common stock, no par value (the "Common Stock"), of the Company upon conversion of this Debenture shall be made without charge to the Holder for any United States issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder of this Debenture. 2. Transfer of Debenture. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign 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 the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 3. Conversion. The Holder of this Debenture is entitled, at its option, to convert, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Principal Amount of this Debenture or any portion thereof, together with accrued and unpaid interest on such Principal Amount, into shares of Common Stock as follows: (a) Right to Convert. (i) Subject to the terms, conditions, and restrictions of this Section 3, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Holder of this Debenture shall have the right to convert all or any portion of the Principal Amount of this Debenture, together with the accrued and unpaid interest on such Principal Amount so converted, into that number of fully-paid and nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Subsection 3(e), at the Conversion Rate (as defined below). 2 (ii) Anything is Subsection 3(a)(i) to the contrary notwithstanding, in no event shall any Holder be entitled to convert all or any portion of the Principal Amount of this Debenture in excess of that amount of the Principal Amount of this Debenture that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of this Subsection, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of the Principal Amount of this Debenture beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants or convertible preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Subjection 3(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For purposes of this Subsection, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Holder, the Company shall immediately confirm orally and in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of this Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Subsection 3(a)(ii) applies, the determination of whether such portion of this Debenture is convertible (in relation to other securities owned by a Holder) and of what portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of whether such portion of this Debenture is convertible (in relation to other securities owned by such Holder) and of what portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert such portion of this Debenture at such time as such conversion will not violate the provisions of this Subsection. A Holder of this Debenture may waive the provisions of this Subsection 3(a)(ii) as to itself (and solely as to itself) upon not less than 75 days' prior notice to the Company, and the provisions of this Subsection 3(a)(ii) shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Subsection 3(a)(ii), but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. Subsection 3(g) below sets forth additional limitations on the Company's obligation to issue shares of Common Stock upon conversion of this Debenture. 3 (b) Conversion Rate and Other Definitions. The number of shares of Common Stock issuable upon conversion of all or any portion of the Principal Amount of this Debenture pursuant to Subsection (3)(a) shall be determined according to the following formula (the "Conversion Rate"): Conversion Amount Conversion Price For purposes of this Debenture, the following terms shall have the following meanings: "Change of Control" means: (i) The acquisition by any Person (as defined below) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of the subsection (i), the following acquisitions of stock shall not result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of subsection (iii) of this definition; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Incumbent Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding share of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from 4 such Business Combination, including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (any such corporation being referred to herein as a "Resulting Company"), in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, immediately prior to such Business Combination, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or a Resulting Company) beneficially owns, directly or indirectly, 30% or more of, respectively, the outstanding shares of Common Stock of the Resulting Company or the combined voting power of the then outstanding voting securities of such Resulting Company except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the Resulting Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Corporation; or (v) Termination of Albert E. Gosselin, Jr. as Chief Executive Officer of the Company (including a change or diminution of his duties as such), whether by resignation, termination, death, disability or otherwise, without the written consent of the Holder. "Closing Bid Price" or "Closing Ask Price" means, for any security as of any date, the last closing bid or ask price, as the case may be, for such security on the Principal Market (as defined below) as reported by Bloomberg L.P. ("Bloomberg"), or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid or ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid or ask price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid or ask price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid or ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price or Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price or Closing Ask Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the currently outstanding Principal Amount of all Convertible Debentures. If the Company and the Holders of the Convertible Debentures are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Subsection 3(h). (All such determinations are to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). "Conversion Amount" means that portion of this Debenture being converted by such Holder. "Conversion Price" means, as of any Conversion Date or other date of determination, 80% of the Market Price, but in no event more than $2.10 (the "Maximum Conversion Price"). 5 "Market Price" means the lowest Closing Bid Price of the Common Stock on the Principal Market as reported by Bloomberg for the five Trading Days immediately preceding the date of determination. "Principal Market" means the Nasdaq SmallCap Market. "Registration Rights Agreement" means that certain Registration Rights Agreement among the Company and the initial holders of the Convertible Debentures concerning the registration of the resale of the shares of Common Stock issuable upon conversion of the Convertible Debentures. "Trading Day" means any day during which the Principal Market shall be open for business. (c) Conversion Notice. The Holder of this Debenture may exercise its conversion right by giving a written conversion notice in the form of Exhibit A hereto (the "Conversion Notice") to the Company's transfer agent for its Common Stock, as designated by the Company from time to time (the "Transfer Agent"), (x) by facsimile or (y) by registered mail or overnight delivery service, with a copy by facsimile to the Company and the Company's outside counsel as specified from time to time by written notice to the holders of the Convertible Debentures. Promptly, but in no event more than five (5) Trading Days after the receipt of the Conversion Notice, a holder of this Debenture shall surrender this Debenture to the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Convertible Debentures). If this Debenture has been only partially converted, the Company shall, or instruct the Transfer Agent to, deliver to the Holder of this Debenture a new Debenture evidencing the unconverted Principal Amount of this Debenture. (d) Issuance of Certificates; Time Conversion Effected. (i) Promptly, but in no event more than three (3) Trading Days after the receipt of the Conversion Notice referred to in Subsection 3(c), the Transfer Agent shall issue and deliver, or the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which this Debenture has been converted. In the alternative, if the Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with The Depository Trust Company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Transfer Agent. The rights of the Holder of this Debenture shall cease, and the person or persons in whose name or names any certificate or certificates for share of Common Stock shall be issuable upon such conversion shall be deemed to have become the Holder or Holders of record of the shares represented thereby, on the Conversion Date. Issuance of shares of Common Stock issuable upon conversion that are requested to be registered in a name other than that of the registered Holder shall be subject o compliance with all applicable federal and state securities laws. 6 (ii) The Company understands that a delay in the issuance of the shares of Common Stock beyond three (3) Trading Days after the Conversion Date could result in economic loss to the Holder of this Debenture. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of shares of Common Stock upon conversion in accordance with the following schedule (where "No. Trading Days Late" means the number of Trading Days after three (3) Trading Days from the date of receipt by the Transfer Agent of the Conversion Notice to and including the date of the Holder's or its designees' receipt of such shares): No. Trading Days Late Late Payment for Each $5,000 of Conversion Amount of Principal Amount Being Converted - ----------------------------------- -------------------------------- 1 $100 2 $200 3 $300 4 $400 5 $500 6 $600 7 $700 8 $800 9 $900 10 $1,000 (10) $1,000 + $200 for each Trading Day late after 10 Calendar Days The Company shall make all payments due under this Subsection 3(d)(ii) in immediately available funds upon demand. Nothing herein shall limit the Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver (or to cause its Transfer Agent to issue and deliver) Common Stock to the Holder as required by Subsection 3(d)(i), including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies that may be available to the Holder, if the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days after the Conversion Date, the Holder will be entitled to revoke the relevant Conversion Notice by delivering a notice to such effect to the Transfer Agent, with a copy by facsimile to the Company and the Company's outside counsel. Upon delivery of such notice of revocation, the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Conversion Notice, except that the Holder shall retain the right to receive both the late payment amounts set forth above plus the actual cost of any "buy-in." 7 (iii) If, at any time, (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Common Stock or otherwise dishonors or rejects, or causes the Transfer Agent to dishonor or reject, any Conversion Notice properly delivered in accordance with this Section 3 or (b) any third party who is not and has never been an affiliate of the Holder obtains a judgment or order from any court or public or governmental authority that denies, enjoins, limits, modifies, or delays the right of the Holder to effect the conversion of this Debenture into Common Stock, then the Holder shall have the right, by written notice to the Company, to require the Company to promptly redeem this Debenture in accordance with Section 4. Under any of the circumstances set forth above, the Company shall indemnify the Holder against and hold it harmless from, and be responsible for the payment of, all costs and expenses of the Holder, including its reasonable legal fees and expenses, as any when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the Holder). The Company shall not refuse to honor, or cause the Transfer Agent to refuse to honor, any Conversion Notice unless the Company or the Transfer Agent, as the case may be, has actually been enjoined by a court of competent jurisdiction from doing so and, if so enjoined, the Company shall post with such court a performance bond equal to 150% of the Conversion Amount of this Debenture sought to be converted by a Holder that is the subject of such injunction. (iv) The Holder of this Debenture shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under 11 U.S.C. 101 et seq: (the "Bankruptcy Code"). The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the Holder's conversion privilege, if the Company becomes a debtor under the Bankruptcy Code. The Company agrees to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362 without cost or expense to the Holder. (e) Fractional Shares. The Company shall not, nor shall it cause the Transfer Agent to, issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of this Debenture by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after such aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay, or cause the Transfer Agent to pay, a cash adjustment in respect of such fraction of a share of Common Stock based upon the Closing Bid Price of the Common Stock on the Conversion Date. (f) Adjustment to Conversion Price; Dilution and Other Events. In order to prevent dilution of the rights granted under this Debenture, the Conversion Price will be subject to adjustment from time to time as provided in this Subsection 3(f). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Conversion Shares (as defined in the Purchase Agreement) and shares of Common Stock deemed to have been issued by the Company in connection with Approved Issuances (as defined below)) for a consideration per share (the "Applicable Price") less than the Conversion Price as in effect 8 immediately prior to such time (an "Offering"), then immediately after such issue or sale, the Conversion Price shall be reduced to an amount equal to (X) the sum of (A) the product of the Conversion Price in effect immediately prior to such issue or sale and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issue or sale, and (B) the consideration, if any, received by the Company upon such issue or sale divided by (Y) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants any rights or options to subscribe for or to purchase Common Stock (other than in connection with an Approved Issuance or upon conversion of this Debenture) or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities") and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of this Subsection 3(f)(i)(A), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (I) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No adjustment of the Maximum Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Applicable Price, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities 9 shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Subsection 3(f)(i)(B), the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (I) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No adjustment of the Maximum Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Maximum Conversion Price had been or are to be made pursuant to other provisions of this Subsection 3(f)(i), no further adjustment of the Maximum Conversion Price shall be made by reason of such issue or sale. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which an Convertible Securities are convertible into or exchangeable for Common Stock change at any time, the Maximum Conversion Price in effect at the time of such change shall be readjusted to the Maximum Conversion Price in effect that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Maximum Conversion Price then in effect. (D) Certain Definitions. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following terms have meanings set forth below: (I) "Approved Issuances" shall mean (i) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (ii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option plan, restricted stock plan, stock purchase plan or other plan or written compensation contract for the benefit of the Company's employees, directors or consultants in effect on the date hereof. (II) "Common Stock Deemed Outstanding" means, at any given time, the number os shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be 10 outstanding pursuant to Sections 3(f)(i)(A) and 3(f)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock issuable upon conversion of the Convertible Debentures. (E) Effect of Certain Events on Maximum Conversion Price. For purposes of determining the adjusted Maximum Conversion Price under this Section 3(f), the following shall be applicable: (I) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the amount received by the Company therefore, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Bid Prices of such security for the five consecutive Trading Days immediately preceding the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders constituting more than fifty percent (50%) of the Principal Amount of all Convertible Debentures then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within forty-eight (48) hours of the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected by the Company. The determination of such appraiser shall be deemed binding upon all parties absent manifest error. (II) Integrated Transactions. In case any Option is issued in connections with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. (III) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock. 11 (IV) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ii) Adjustment of Maximum Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Maximum Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Maximum Conversion Price in effect immediately prior to such combination will be proportionately increased. (iii) Adjustment of Conversion Price upon Issuance of Convertible Securities. If the Company in any manner issues or sells Convertible Securities that are convertible into Common Stock at a price that varies with the market price of the Common Stock (the formulation for such variable price being herein referred to as, the "Variable Price") and such Variable Price is not calculated using the same formula used to calculate the Variabe Conversion Price in effect immediately prior to the time of such issue or sale, the Company shall provide written notice thereof via facsimile and overnight courier to each holder of this Debenture ("Variable Notice") on the date of issuance of such Convertible Securities. If the Holder of this Debenture provides written notice via facsimile and overnight courier (the "Varirable Price Election Notice") to the Company within five (5) business days of receiving a Variable Notice that the Holder desires to replace the Conversion Price then in effect with the Variable Price described in such Variable Notice, then from and after the date of the Company's receipt of the Variable Price Election Notice, the Conversion Price will automatically be replaced with the Variable Price (together with such modifications to this Debenture as may be required to give full effect to the substitution of the Variable Price for the Conversion Price). The Holder's delivery of a Variable Price Election Notice shall serve as the consent required to amend this Debenture. In the event that the Holder delivers a Conversion Notice at any time after the Company's issuance of Convertible Securities with a Variable Price but before the Holder's receipt of the Company's Variable Notice, then such holder shall have the option by written notice to the Company to rescind such Conversion Notice or to have the Conversion Price be equal to such Variable Price for the conversion effected by such Conversion Notice. (iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as 12 defined below) or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) to insure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock otherwise acquirable and receivable upon the conversion of this Debenture, such shares of stock, securities or assets as would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable had this Debenture been converted into shares of Common Stock immediately prior to such Organic Change (without taking into account any limitations or restrictions on the timing or amount of conversions). In any such case, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) with respect to the Holder's rights and interest to insure that the provisions of this Section 3(f) will thereafter be applicable to this Debenture (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Maximum Conversion Price in accordance with Subsection 3(f)(i) using the value for the Common Stock reflected by the terms of such consolidation, merger or sale, if the value so reflected is less than the Maximum Conversion Price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance reasonably satisfactory to the holders of a more than fifty percent (50%) of Principal Amount of the Convertible Debentures then outstanding), the obligation to deliver to each holder of Convertible Debentures such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. "Person" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (v) Certain Events. If any event occurs of the type contemplated by the provisions of this Subsection 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders this Debenture and the other holders of Convertible Debentures; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 3(f). (g) Limitation on Number of Conversion Shares. Notwithstanding any other provision herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock plus shares of Common Stock issued upon the exercise of the Warrants issued under the Securities Purchase Agreement would exceed 19.9% of the shares of Common Stock issued and outstanding on the date of the Purchase Agreement (the "Exchange Cap") without the Company's violating the 13 corporate governance rules of the Nasdaq Stock Market, except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the corporate governane rules of the Nasdaq Stock Market for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of more than fifty percent (50%) of the Principal Amount of the Convertible Debentures then outstanding. Until such approval or written opinion is obtained or such action has been taken by the required number of holders, no purchaser of Convertible Debentures pursuant to the Purchase Agreement, collectively, (the "Investors" and, individually, an "Investor") shall be issued, upon conversion of Convertible Debentures, shares of Common Stock in an amount greater than the product of (x) the Exchange Cap amount multiplied by (y) a fraction, the numerator of which is the Principal Amount of Convertible Debentures purchased by such Investor pursuant to the Purchase Agreement and the denominator of which is the aggregate Principal Amount of all the Convertible Debentures purchased by the Investors pursuant to the Purchase Agreement (the "Cap Allocation Amount"). In the event that any Investor shall sell or otherwise transfer any of such Investor's Convertible Debentures, the transferee shall be allocated a pro rata portion of such Investor's Cap Allocation Amount. In the event that any holder of a Convertible Debenture shall convert all of such holder's Convertible Debenture into a number of shares of Common Stock that, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Convertible Debentures on a pro rata basis in proportion to the Principal Amount of Convertible Debentures then held by each such Holder. (h) Dispute Resolution. In the case of a dispute as to the determination of the Closing Ask Price or Closing Bid Price of any security or the arithmetic calculation of the Conversion Rate, the Company shall, or shall cause the Transfer Agent to, promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) business day of receipt of the Holder's Converstion Notice. If the Holder and the Company are unable to agree upon the determination os such Closing Ask Price or Closing Bid Price, as the case may be, or the arithmetic calculation of the Conversion Rate within one (1) business day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall within one (1) business day folling such date of delivery submit via facsimile (A) the disputed determination of the Closing Ask Price or Closing Bid Price, as the case may be, to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent certified public accounting firm. The Company shall cause the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accounting firm's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. 14 4. Redenption. (a) Holder's Option if Company Cannot Fully Convert or Holder Cannot Sell Without Restriction. If, (i) upon the Transfer Agent's receipt of a Conversion Notice, the Transfer Agent fails to issue shares of Common Stock as contemplated by Subsection 3(d)(i) or cannot issue shares of Common Stock registered for resale under the registration statement required to be filed under the Registration Rights Agreement with respect to the shares of Common Stock issuable upon conversion of this Debenture (the "Registration Statement") (or which are exempt from the registration requirements under the Securities Act pursuant to Rule 144(k) under the Securities Act) for any reason, including, without limitation, because the Company (x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or its securities, including without limitation the Exchange Cap, from issuing all of the Common Stock that is to be issued to the Holder of this Debenture pursuant to a Conversion Notice or (z) fails to have a sufficient number of shares of Common Stock registered for resale under the Registration Statement, or (ii) a Registration Default (as defined in the Registration Rights Agreement) shall have occurred and be continuing, the Company shall have defaulted in the payment of any Funded Debt (as hereinafter defined) for a period in excess of any cure period thereunder (regardless of whether the creditor of such Funded Debt shall have declared a default), or the employment of Albert E. Gosselin, Jr. shall have terminated for any reason, or (iii) the Common Stock is delisted from the Principal Market and not immediately listed on the New York Stock Exchange, the American Stock Exchange or another national securities exchange approved by holders of Convertible Debentures constituting more than fifth percent (50%) of the Principal Amount of all Convertible Debentures then outstanding, then in the case of clause (i), the Company shall, or shall cause the Transfer Agent to, issue as many shares of Common Stock as it is able to issue in accordance with such holder's Conversion Notice (if the holder shall have given such a Conversion Notice) and pursuant to the provisions of Section 3(d), and with respect to all or any part of the unconverted Principal Amount of this Debenture held by such Holder, the Holder, solely at such Holder's option, can elect to: (A) require the Company to redeem from such Holder all or any part of its remaining Principal Amount of this Debenture ("Redemption") at a premium equal to the greater of (I) the sum of: (a) 150% of such Principal Amount and (b) the accrued interest thereon or (II) the product of (a) the Conversion Rate on the date of such Holder's delivery of an Election Response Notice (as defined below) and (b) the greater of (i) the Closing Ask Price of the Common Stock on the Trading Day immediately preceding the event giving rise to Redemption or (ii) the Closing Ask Price of the Common Stock on the date of the Holder's delivery to the Company of a notice of redemption or, if such date of delivery is not a Trading Day, the next date on which the exchange or market on which the Common Stock is traded is open (the "Redemption Price"); (B) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(z) of this Subsection 4(a) above, require the Company to, or cause the Transfer Agent to, issue restricted shares of Common Stock in accordance with such Holder's Conversion Notice; 15 (C) void its Conversion Notice and retain the Principal Amount of this Debenture that was to be converted pursuant to such Holder's Conversion Notice (provided that the Holder's voiding its Conversion Notice shall not affect the Company's obligations to make any payments that have accrued prior to the date of such notice); or (D) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(y) of this Subsection 4(a) above, requrie the Company to, or cause the Transfer Agent to, issue shares of Common Stock in accordance with such Holder's Conversion Notice and pursuant to Section 4(d) at a Conversion Price equal to the average of the Closing Bid Prices of the Common Stock for the five consecutive Trading Days preceding such Holder's Election Responsxe Notice or such other market price that satisfies the applicable exchange or trading market. For purposes hereof, "Funded Debt" means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade liabilities and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices), whether on open account or evidenced by a note, bond, debenture or similar instrument or otherwise, (b) obligations under capital leases, (c) reimbursement obligations for letters of credit, banker's acceptances or other credit accommodations, (d) contingent obligations and (e) obligations secured by any lien on the Company's property, even if the Company has not assumed such obligations. (b) Mechanics of Fulfilling Holder's Election. The Company shall within one (1) business day send via facsimile to the Holder of this Debenture, upon receipt of a facsimile copy of a Conversion Notice from such Holder that cannot be fully satisfied as described in Subsection 4(a), a notice of the Company's inability to fully satisfy such Holder's Notice shall indicate (i) the reason why the Company is unable to fully satisfy such Holder's Conversion Notice, (ii) the Principal Amount of this Debenture that cannot be converted and (iii) the applicable Redemption Price. The Holder shall notify the Company of its election pursuant to Subsection 4(a) above by delivering written notice via facsimile to the Company (the "Election Response Notice"). (c) Payment of Redemption Price. If the Holder shall elect to have this Debenture redeemed pursuant to Subsection 4(a)(i), the Company shall pay the Redemption Price to such Holder in Cash by Wire transfer of immediately available funds in accordance with such Holder's written wire transfer instructions within five (5) days after the Company's receipt of the Holder's Election Response Notice. If the Company shall fail to pay the applicable Redemption Price to such holder within such five (5) day period (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Redemption Price), in addition to any remedy the Holder of this Debenture may ahve hereunder, or under the Securities Purchase Agreement and the Registration Rights Agreement, such unpaid amount shall bear interest at the rate of 3.0% per month (prorated for partial months) until paid in full. Until the Redemption Price is paid in full to such Holder, such Holder may void the Redemption with respect to Principal Amount of this Debenture for which the full Redemption Price has not been paid and receive back a Convertible Debenture 16 representing such Principal Amount. Notwithstanding the foregoing, if the Company fails to pay the applicable Redemption Price within such period of five (5) days due to a dispute as to the determination of the Redemption Price, such dispute shall be resolved pursuant to Section 3(h) with the term "Redemption Price" being substituted for the term "Conversion Rate." (d) Pro-rata Conversion and Redemption. If the Company or the Transfer Agent receives a Conversion Notice or Election Response Notice electing Redemption from more than one holder of Convertible Debentures on the same day, and the Company can convert and/or redeem some, but not all, of such Convertible Debentures pursuant to this Section 4, the Company shall convert and/or redeem from each holder of Convertible Debentures electing to have its Convertible Debenture converted and/or redeemed at such time an amount equal to such holder's pro-rata amount (based on the Principal Amount of Convertible Debentures held by such holder relative to the Principal Amount of Convertible Debentures sought to be converted) of all Convertible Debentures being converted and/or redeemed as such time. 5. Notices. In case at any time: (a) the Company shall declare any dividend upon its Common Stock payable in cash or stock or make any other pro rata distribution to the holders of its Common Stock; or (b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (c) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, or by telex or facsimile or by recognized overnight delivery service, addressed to the Holder at the address of the Holder as shown on the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganiztion, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (ii) in the case of any such reorganization, reclassification, consolidation , merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other properly deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 17 6. Stock to be Reserved. The Company has a sufficient number of shares of Common Stock available to reserve for issuance upon the conversion of all outstanding Convertible Debentures, assuming immediate conversion. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of all of its Convertible Debentures as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all Convertible Debentures. The Company covenants that all shares of Common Stock that shall be so issued shall be duly and validly issued, fully-paid and non assessable. The Company will take all such action as may be so taken without violation of any applicable law or regulation to have a sufficient number of authorized but unissued shares of Common Stock to issue upon conversion of all Convertible Debentures. The Company will not take any action that results in any adjustment of the conversion rights if the total number of shares of Common Stock issued and issuable after such action upon conversion of this Debenture would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 7. Default and Remedies. (a) Event of Default. Each of the following shall constitute an "Event of Default": (i) the Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) days; or (ii) any of the representations or warranties made by the Company herein, in the Purchase Agreement, in the Registration Rights Agreement, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement, shall be false or misleading in any material respect at the time made; or (iii) a default or an event of default shall have occurred and be continuing with respect to any Funded Debt; or (iv) the Company shall (A) admit in writing its inability to pay its debts generally as they mature; (B) make an assignmtne for the benefit of recditors or commence proceedings for its dissolution; or (C) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property of business; or (v) a trustee, liwuidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (vi) 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 sixty (60) days thereafter; or 18 (vii) any money judgment, writ or 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 sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (viii) 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. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, the Holder may declare this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, 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 enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default shall be made at the fair market value of the shares of Common Stock that would be issued at the Conversion Price on the date the Debenture becomes due and payable pursuant to this provision. Such payment shall be made withint three (3) Trading Days of such demand, and if not paid within such period, the Company shall pay the holder liquidated damages of three percent (3%) per month of such amount until paid, pro-rated for any partial months. 8. Payment Obligation Unconditional. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. 9. No Recourse to Stockholders, etc. 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, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any 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. 10. No Rights as Stockholder. No provision of 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 stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. 19 11. Definitions. As used in this Debenture, the term "Common Stock" shall mean and include the Company's authorized common stock, no par value, as constituted on the issuance date of this Debenture, and shall also include any capital stock of any class of the Company thereafter authorized that shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntaryl liquidation, dissolution or winding up of the Company; provided that the shares of Common Stock receivable upon conversion of this Debenture shall include only shares of Common Stock receivable upon conversion of this Debenture shall include only shares designated as Common Stock of the Company on the issuance date of this Debenture, or in case of any reorganization, reclassification, or stock split of the outstanding shares thereof, the stock, securities or assets provided for in Sections 3(f) and (g). Any capitalized terms used in this Debenture but not defined herein shall have the meanings set forth in the Purchase Agreement. 12. Loss, Theft, Destruction of Debenture. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutiliation of this Debenture and, in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (which shall not include the posting of any bond), or, in the case of any such mutiliation, upon surrender and cancellation of this Debenture, the Company shall make, issue and deliver, in lieu of such lost, stoledn, destroyed or mutiliated Debenture, one or more new Debentures of like tenor. This Debenture shall be held and owned upon the express condition that the provisions of this Section 12 are exclusive with respect to the replacement of mutiliated, destroyed, lost or stolen Debentures and shall preclude any and all other rights and remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement of negotiable instruments or other securities without the surrender thereof. 13. Record Owner. The Company may deem the person in whose name this Debenture shall be registered upon the registry books of the Company to be, and may treat such person as, the absolute owner of this Debenture for the purpose of conversion of this Debenture and for all other purposes, and the Company shall not be affected by any notice to the contrary. All such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Debenture to the extent of the sum or sums so paid or the conversion so made. 14. Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of Convertible Debentures. Upon any transfer of this Debenture in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Convertible Debenture register. 15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with 20 the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation therof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of this Debenture and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of this Debenture shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 16. Construction. This Debenture shall be deemed to be jointly drafted by the Company and the initial Holders of the Convertible Debentures and shall not be construed against any person as the drafter hereof. 17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder of this Debenture in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof (except to the extent that such power, right or privilege must, in accordance with the terms of this Debenture, be exercised within a specified period of time and such period of time has lapsed without such power, right or privilege being exercised), nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 18. Governing Law. 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 City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles 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 conveniens, to the bringing of any such proceeding in such jurisdictions. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. President Attest: /s/ Marcia Smith - ----------------------------- 21 EX-10.363 128 0128.txt 9% CONVERTIBLE DEBENTURE - GEORGE T. HEISEL Exhibit 10.363 9% CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. 5 $30,000 Principal Amount Pollution Research and Control Corp. 9% CONVERTIBLE DEBENTURE DUE JULY 17, 2001 THIS DEBENTURE is issued by Pollution Research and Control Corp., a California corporation (the "Company"), and is part of an issue of an aggregate of up to $900,000 principal amount of 9% Convertible Debentures due July 17, 2001 (the "Convertible Debentures"). FOR VALUE RECEIVED, the Company promises to pay to George T. Heisel, Jr., or permitted assigns (the "Holder"), the principal sum of Thirty Thousand (US $30,000) Dollars on July 17, 2001 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 9% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue daily on the basis of a 360 day year until payment in full of the principal sum has been made or duly provided for. Quarterly interest payments shall be due and payable on March 31, June 30, September 30 and December 31 of each year, commencing with September 30, 2000. If any interest payment date or the Maturity Date is not a business day in the State of California, then such payment shall be made on the next succeeding business day. Subject to the provisions of Section 4 below, principal and accrued interest on this Debenture are payable in cash on the interest payment date or the Maturity Date, as applicable, 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 principal of and any accrued but unpaid interest due upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check, plus any amounts so deducted. This Debenture is subject to the following additional provisions: 1. Withholding and Issuance Taxes. 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. The issuance of certificates for shares of common stock, no par value (the "Common Stock"), of the Company upon conversion of this Debenture shall be made without charge to the Holder for any United States issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder of this Debenture. 2. Transfer of Debenture. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign 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 the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 3. Conversion. The Holder of this Debenture is entitled, at its option, to convert, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Principal Amount of this Debenture or any portion thereof, together with accrued and unpaid interest on such Principal Amount, into shares of Common Stock as follows: (a) Right to Convert. (i) Subject to the terms, conditions, and restrictions of this Section 3, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Holder of this Debenture shall have the right to convert all or any portion of the Principal Amount of this Debenture, together with the accrued and unpaid interest on such Principal Amount so converted, into that number of fully-paid and nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Subsection 3(e), at the Conversion Rate (as defined below). 2 (ii) Anything is Subsection 3(a)(i) to the contrary notwithstanding, in no event shall any Holder be entitled to convert all or any portion of the Principal Amount of this Debenture in excess of that amount of the Principal Amount of this Debenture that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of this Subsection, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of the Principal Amount of this Debenture beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants or convertible preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Subjection 3(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For purposes of this Subsection, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Holder, the Company shall immediately confirm orally and in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of this Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Subsection 3(a)(ii) applies, the determination of whether such portion of this Debenture is convertible (in relation to other securities owned by a Holder) and of what portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of whether such portion of this Debenture is convertible (in relation to other securities owned by such Holder) and of what portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert such portion of this Debenture at such time as such conversion will not violate the provisions of this Subsection. A Holder of this Debenture may waive the provisions of this Subsection 3(a)(ii) as to itself (and solely as to itself) upon not less than 75 days' prior notice to the Company, and the provisions of this Subsection 3(a)(ii) shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Subsection 3(a)(ii), but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. Subsection 3(g) below sets forth additional limitations on the Company's obligation to issue shares of Common Stock upon conversion of this Debenture. 3 (b) Conversion Rate and Other Definitions. The number of shares of Common Stock issuable upon conversion of all or any portion of the Principal Amount of this Debenture pursuant to Subsection (3)(a) shall be determined according to the following formula (the "Conversion Rate"): Conversion Amount Conversion Price For purposes of this Debenture, the following terms shall have the following meanings: "Change of Control" means: (i) The acquisition by any Person (as defined below) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of the subsection (i), the following acquisitions of stock shall not result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of subsection (iii) of this definition; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Incumbent Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding share of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from 4 such Business Combination, including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (any such corporation being referred to herein as a "Resulting Company"), in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, immediately prior to such Business Combination, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or a Resulting Company) beneficially owns, directly or indirectly, 30% or more of, respectively, the outstanding shares of Common Stock of the Resulting Company or the combined voting power of the then outstanding voting securities of such Resulting Company except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the Resulting Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Corporation; or (v) Termination of Albert E. Gosselin, Jr. as Chief Executive Officer of the Company (including a change or diminution of his duties as such), whether by resignation, termination, death, disability or otherwise, without the written consent of the Holder. "Closing Bid Price" or "Closing Ask Price" means, for any security as of any date, the last closing bid or ask price, as the case may be, for such security on the Principal Market (as defined below) as reported by Bloomberg L.P. ("Bloomberg"), or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid or ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid or ask price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid or ask price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid or ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price or Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price or Closing Ask Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the currently outstanding Principal Amount of all Convertible Debentures. If the Company and the Holders of the Convertible Debentures are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Subsection 3(h). (All such determinations are to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). "Conversion Amount" means that portion of this Debenture being converted by such Holder. "Conversion Price" means, as of any Conversion Date or other date of determination, 80% of the Market Price, but in no event more than $2.10 (the "Maximum Conversion Price"). 5 "Market Price" means the lowest Closing Bid Price of the Common Stock on the Principal Market as reported by Bloomberg for the five Trading Days immediately preceding the date of determination. "Principal Market" means the Nasdaq SmallCap Market. "Registration Rights Agreement" means that certain Registration Rights Agreement among the Company and the initial holders of the Convertible Debentures concerning the registration of the resale of the shares of Common Stock issuable upon conversion of the Convertible Debentures. "Trading Day" means any day during which the Principal Market shall be open for business. (c) Conversion Notice. The Holder of this Debenture may exercise its conversion right by giving a written conversion notice in the form of Exhibit A hereto (the "Conversion Notice") to the Company's transfer agent for its Common Stock, as designated by the Company from time to time (the "Transfer Agent"), (x) by facsimile or (y) by registered mail or overnight delivery service, with a copy by facsimile to the Company and the Company's outside counsel as specified from time to time by written notice to the holders of the Convertible Debentures. Promptly, but in no event more than five (5) Trading Days after the receipt of the Conversion Notice, a holder of this Debenture shall surrender this Debenture to the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Convertible Debentures). If this Debenture has been only partially converted, the Company shall, or instruct the Transfer Agent to, deliver to the Holder of this Debenture a new Debenture evidencing the unconverted Principal Amount of this Debenture. (d) Issuance of Certificates; Time Conversion Effected. (i) Promptly, but in no event more than three (3) Trading Days after the receipt of the Conversion Notice referred to in Subsection 3(c), the Transfer Agent shall issue and deliver, or the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which this Debenture has been converted. In the alternative, if the Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with The Depository Trust Company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Transfer Agent. The rights of the Holder of this Debenture shall cease, and the person or persons in whose name or names any certificate or certificates for share of Common Stock shall be issuable upon such conversion shall be deemed to have become the Holder or Holders of record of the shares represented thereby, on the Conversion Date. Issuance of shares of Common Stock issuable upon conversion that are requested to be registered in a name other than that of the registered Holder shall be subject o compliance with all applicable federal and state securities laws. 6 (ii) The Company understands that a delay in the issuance of the shares of Common Stock beyond three (3) Trading Days after the Conversion Date could result in economic loss to the Holder of this Debenture. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of shares of Common Stock upon conversion in accordance with the following schedule (where "No. Trading Days Late" means the number of Trading Days after three (3) Trading Days from the date of receipt by the Transfer Agent of the Conversion Notice to and including the date of the Holder's or its designees' receipt of such shares): No. Trading Days Late Late Payment for Each $5,000 of Conversion Amount of Principal Amount Being Converted - ----------------------------------- -------------------------------- 1 $100 2 $200 3 $300 4 $400 5 $500 6 $600 7 $700 8 $800 9 $900 10 $1,000 (10) $1,000 + $200 for each Trading Day late after 10 Calendar Days The Company shall make all payments due under this Subsection 3(d)(ii) in immediately available funds upon demand. Nothing herein shall limit the Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver (or to cause its Transfer Agent to issue and deliver) Common Stock to the Holder as required by Subsection 3(d)(i), including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies that may be available to the Holder, if the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days after the Conversion Date, the Holder will be entitled to revoke the relevant Conversion Notice by delivering a notice to such effect to the Transfer Agent, with a copy by facsimile to the Company and the Company's outside counsel. Upon delivery of such notice of revocation, the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Conversion Notice, except that the Holder shall retain the right to receive both the late payment amounts set forth above plus the actual cost of any "buy-in." 7 (iii) If, at any time, (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Common Stock or otherwise dishonors or rejects, or causes the Transfer Agent to dishonor or reject, any Conversion Notice properly delivered in accordance with this Section 3 or (b) any third party who is not and has never been an affiliate of the Holder obtains a judgment or order from any court or public or governmental authority that denies, enjoins, limits, modifies, or delays the right of the Holder to effect the conversion of this Debenture into Common Stock, then the Holder shall have the right, by written notice to the Company, to require the Company to promptly redeem this Debenture in accordance with Section 4. Under any of the circumstances set forth above, the Company shall indemnify the Holder against and hold it harmless from, and be responsible for the payment of, all costs and expenses of the Holder, including its reasonable legal fees and expenses, as any when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the Holder). The Company shall not refuse to honor, or cause the Transfer Agent to refuse to honor, any Conversion Notice unless the Company or the Transfer Agent, as the case may be, has actually been enjoined by a court of competent jurisdiction from doing so and, if so enjoined, the Company shall post with such court a performance bond equal to 150% of the Conversion Amount of this Debenture sought to be converted by a Holder that is the subject of such injunction. (iv) The Holder of this Debenture shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under 11 U.S.C. 101 et seq: (the "Bankruptcy Code"). The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the Holder's conversion privilege, if the Company becomes a debtor under the Bankruptcy Code. The Company agrees to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362 without cost or expense to the Holder. (e) Fractional Shares. The Company shall not, nor shall it cause the Transfer Agent to, issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of this Debenture by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after such aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay, or cause the Transfer Agent to pay, a cash adjustment in respect of such fraction of a share of Common Stock based upon the Closing Bid Price of the Common Stock on the Conversion Date. (f) Adjustment to Conversion Price; Dilution and Other Events. In order to prevent dilution of the rights granted under this Debenture, the Conversion Price will be subject to adjustment from time to time as provided in this Subsection 3(f). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Conversion Shares (as defined in the Purchase Agreement) and shares of Common Stock deemed to have been issued by the Company in connection with Approved Issuances (as defined below)) for a consideration per share (the "Applicable Price") less than the Conversion Price as in effect 8 immediately prior to such time (an "Offering"), then immediately after such issue or sale, the Conversion Price shall be reduced to an amount equal to (X) the sum of (A) the product of the Conversion Price in effect immediately prior to such issue or sale and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issue or sale, and (B) the consideration, if any, received by the Company upon such issue or sale divided by (Y) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants any rights or options to subscribe for or to purchase Common Stock (other than in connection with an Approved Issuance or upon conversion of this Debenture) or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities") and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of this Subsection 3(f)(i)(A), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (I) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No adjustment of the Maximum Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Applicable Price, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities 9 shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Subsection 3(f)(i)(B), the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (I) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No adjustment of the Maximum Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Maximum Conversion Price had been or are to be made pursuant to other provisions of this Subsection 3(f)(i), no further adjustment of the Maximum Conversion Price shall be made by reason of such issue or sale. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which an Convertible Securities are convertible into or exchangeable for Common Stock change at any time, the Maximum Conversion Price in effect at the time of such change shall be readjusted to the Maximum Conversion Price in effect that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Maximum Conversion Price then in effect. (D) Certain Definitions. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following terms have meanings set forth below: (I) "Approved Issuances" shall mean (i) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (ii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option plan, restricted stock plan, stock purchase plan or other plan or written compensation contract for the benefit of the Company's employees, directors or consultants in effect on the date hereof. (II) "Common Stock Deemed Outstanding" means, at any given time, the number os shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be 10 outstanding pursuant to Sections 3(f)(i)(A) and 3(f)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock issuable upon conversion of the Convertible Debentures. (E) Effect of Certain Events on Maximum Conversion Price. For purposes of determining the adjusted Maximum Conversion Price under this Section 3(f), the following shall be applicable: (I) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the amount received by the Company therefore, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Bid Prices of such security for the five consecutive Trading Days immediately preceding the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders constituting more than fifty percent (50%) of the Principal Amount of all Convertible Debentures then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within forty-eight (48) hours of the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected by the Company. The determination of such appraiser shall be deemed binding upon all parties absent manifest error. (II) Integrated Transactions. In case any Option is issued in connections with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. (III) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock. 11 (IV) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ii) Adjustment of Maximum Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Maximum Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Maximum Conversion Price in effect immediately prior to such combination will be proportionately increased. (iii) Adjustment of Conversion Price upon Issuance of Convertible Securities. If the Company in any manner issues or sells Convertible Securities that are convertible into Common Stock at a price that varies with the market price of the Common Stock (the formulation for such variable price being herein referred to as, the "Variable Price") and such Variable Price is not calculated using the same formula used to calculate the Variabe Conversion Price in effect immediately prior to the time of such issue or sale, the Company shall provide written notice thereof via facsimile and overnight courier to each holder of this Debenture ("Variable Notice") on the date of issuance of such Convertible Securities. If the Holder of this Debenture provides written notice via facsimile and overnight courier (the "Varirable Price Election Notice") to the Company within five (5) business days of receiving a Variable Notice that the Holder desires to replace the Conversion Price then in effect with the Variable Price described in such Variable Notice, then from and after the date of the Company's receipt of the Variable Price Election Notice, the Conversion Price will automatically be replaced with the Variable Price (together with such modifications to this Debenture as may be required to give full effect to the substitution of the Variable Price for the Conversion Price). The Holder's delivery of a Variable Price Election Notice shall serve as the consent required to amend this Debenture. In the event that the Holder delivers a Conversion Notice at any time after the Company's issuance of Convertible Securities with a Variable Price but before the Holder's receipt of the Company's Variable Notice, then such holder shall have the option by written notice to the Company to rescind such Conversion Notice or to have the Conversion Price be equal to such Variable Price for the conversion effected by such Conversion Notice. (iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as 12 defined below) or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) to insure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock otherwise acquirable and receivable upon the conversion of this Debenture, such shares of stock, securities or assets as would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable had this Debenture been converted into shares of Common Stock immediately prior to such Organic Change (without taking into account any limitations or restrictions on the timing or amount of conversions). In any such case, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) with respect to the Holder's rights and interest to insure that the provisions of this Section 3(f) will thereafter be applicable to this Debenture (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Maximum Conversion Price in accordance with Subsection 3(f)(i) using the value for the Common Stock reflected by the terms of such consolidation, merger or sale, if the value so reflected is less than the Maximum Conversion Price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance reasonably satisfactory to the holders of a more than fifty percent (50%) of Principal Amount of the Convertible Debentures then outstanding), the obligation to deliver to each holder of Convertible Debentures such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. "Person" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (v) Certain Events. If any event occurs of the type contemplated by the provisions of this Subsection 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders this Debenture and the other holders of Convertible Debentures; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 3(f). (g) Limitation on Number of Conversion Shares. Notwithstanding any other provision herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock plus shares of Common Stock issued upon the exercise of the Warrants issued under the Securities Purchase Agreement would exceed 19.9% of the shares of Common Stock issued and outstanding on the date of the Purchase Agreement (the "Exchange Cap") without the Company's violating the 13 corporate governance rules of the Nasdaq Stock Market, except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the corporate governane rules of the Nasdaq Stock Market for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of more than fifty percent (50%) of the Principal Amount of the Convertible Debentures then outstanding. Until such approval or written opinion is obtained or such action has been taken by the required number of holders, no purchaser of Convertible Debentures pursuant to the Purchase Agreement, collectively, (the "Investors" and, individually, an "Investor") shall be issued, upon conversion of Convertible Debentures, shares of Common Stock in an amount greater than the product of (x) the Exchange Cap amount multiplied by (y) a fraction, the numerator of which is the Principal Amount of Convertible Debentures purchased by such Investor pursuant to the Purchase Agreement and the denominator of which is the aggregate Principal Amount of all the Convertible Debentures purchased by the Investors pursuant to the Purchase Agreement (the "Cap Allocation Amount"). In the event that any Investor shall sell or otherwise transfer any of such Investor's Convertible Debentures, the transferee shall be allocated a pro rata portion of such Investor's Cap Allocation Amount. In the event that any holder of a Convertible Debenture shall convert all of such holder's Convertible Debenture into a number of shares of Common Stock that, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Convertible Debentures on a pro rata basis in proportion to the Principal Amount of Convertible Debentures then held by each such Holder. (h) Dispute Resolution. In the case of a dispute as to the determination of the Closing Ask Price or Closing Bid Price of any security or the arithmetic calculation of the Conversion Rate, the Company shall, or shall cause the Transfer Agent to, promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) business day of receipt of the Holder's Converstion Notice. If the Holder and the Company are unable to agree upon the determination os such Closing Ask Price or Closing Bid Price, as the case may be, or the arithmetic calculation of the Conversion Rate within one (1) business day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall within one (1) business day folling such date of delivery submit via facsimile (A) the disputed determination of the Closing Ask Price or Closing Bid Price, as the case may be, to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent certified public accounting firm. The Company shall cause the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accounting firm's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. 14 4. Redenption. (a) Holder's Option if Company Cannot Fully Convert or Holder Cannot Sell Without Restriction. If, (i) upon the Transfer Agent's receipt of a Conversion Notice, the Transfer Agent fails to issue shares of Common Stock as contemplated by Subsection 3(d)(i) or cannot issue shares of Common Stock registered for resale under the registration statement required to be filed under the Registration Rights Agreement with respect to the shares of Common Stock issuable upon conversion of this Debenture (the "Registration Statement") (or which are exempt from the registration requirements under the Securities Act pursuant to Rule 144(k) under the Securities Act) for any reason, including, without limitation, because the Company (x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or its securities, including without limitation the Exchange Cap, from issuing all of the Common Stock that is to be issued to the Holder of this Debenture pursuant to a Conversion Notice or (z) fails to have a sufficient number of shares of Common Stock registered for resale under the Registration Statement, or (ii) a Registration Default (as defined in the Registration Rights Agreement) shall have occurred and be continuing, the Company shall have defaulted in the payment of any Funded Debt (as hereinafter defined) for a period in excess of any cure period thereunder (regardless of whether the creditor of such Funded Debt shall have declared a default), or the employment of Albert E. Gosselin, Jr. shall have terminated for any reason, or (iii) the Common Stock is delisted from the Principal Market and not immediately listed on the New York Stock Exchange, the American Stock Exchange or another national securities exchange approved by holders of Convertible Debentures constituting more than fifth percent (50%) of the Principal Amount of all Convertible Debentures then outstanding, then in the case of clause (i), the Company shall, or shall cause the Transfer Agent to, issue as many shares of Common Stock as it is able to issue in accordance with such holder's Conversion Notice (if the holder shall have given such a Conversion Notice) and pursuant to the provisions of Section 3(d), and with respect to all or any part of the unconverted Principal Amount of this Debenture held by such Holder, the Holder, solely at such Holder's option, can elect to: (A) require the Company to redeem from such Holder all or any part of its remaining Principal Amount of this Debenture ("Redemption") at a premium equal to the greater of (I) the sum of: (a) 150% of such Principal Amount and (b) the accrued interest thereon or (II) the product of (a) the Conversion Rate on the date of such Holder's delivery of an Election Response Notice (as defined below) and (b) the greater of (i) the Closing Ask Price of the Common Stock on the Trading Day immediately preceding the event giving rise to Redemption or (ii) the Closing Ask Price of the Common Stock on the date of the Holder's delivery to the Company of a notice of redemption or, if such date of delivery is not a Trading Day, the next date on which the exchange or market on which the Common Stock is traded is open (the "Redemption Price"); (B) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(z) of this Subsection 4(a) above, require the Company to, or cause the Transfer Agent to, issue restricted shares of Common Stock in accordance with such Holder's Conversion Notice; 15 (C) void its Conversion Notice and retain the Principal Amount of this Debenture that was to be converted pursuant to such Holder's Conversion Notice (provided that the Holder's voiding its Conversion Notice shall not affect the Company's obligations to make any payments that have accrued prior to the date of such notice); or (D) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(y) of this Subsection 4(a) above, requrie the Company to, or cause the Transfer Agent to, issue shares of Common Stock in accordance with such Holder's Conversion Notice and pursuant to Section 4(d) at a Conversion Price equal to the average of the Closing Bid Prices of the Common Stock for the five consecutive Trading Days preceding such Holder's Election Responsxe Notice or such other market price that satisfies the applicable exchange or trading market. For purposes hereof, "Funded Debt" means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade liabilities and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices), whether on open account or evidenced by a note, bond, debenture or similar instrument or otherwise, (b) obligations under capital leases, (c) reimbursement obligations for letters of credit, banker's acceptances or other credit accommodations, (d) contingent obligations and (e) obligations secured by any lien on the Company's property, even if the Company has not assumed such obligations. (b) Mechanics of Fulfilling Holder's Election. The Company shall within one (1) business day send via facsimile to the Holder of this Debenture, upon receipt of a facsimile copy of a Conversion Notice from such Holder that cannot be fully satisfied as described in Subsection 4(a), a notice of the Company's inability to fully satisfy such Holder's Notice shall indicate (i) the reason why the Company is unable to fully satisfy such Holder's Conversion Notice, (ii) the Principal Amount of this Debenture that cannot be converted and (iii) the applicable Redemption Price. The Holder shall notify the Company of its election pursuant to Subsection 4(a) above by delivering written notice via facsimile to the Company (the "Election Response Notice"). (c) Payment of Redemption Price. If the Holder shall elect to have this Debenture redeemed pursuant to Subsection 4(a)(i), the Company shall pay the Redemption Price to such Holder in Cash by Wire transfer of immediately available funds in accordance with such Holder's written wire transfer instructions within five (5) days after the Company's receipt of the Holder's Election Response Notice. If the Company shall fail to pay the applicable Redemption Price to such holder within such five (5) day period (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Redemption Price), in addition to any remedy the Holder of this Debenture may ahve hereunder, or under the Securities Purchase Agreement and the Registration Rights Agreement, such unpaid amount shall bear interest at the rate of 3.0% per month (prorated for partial months) until paid in full. Until the Redemption Price is paid in full to such Holder, such Holder may void the Redemption with respect to Principal Amount of this Debenture for which the full Redemption Price has not been paid and receive back a Convertible Debenture 16 representing such Principal Amount. Notwithstanding the foregoing, if the Company fails to pay the applicable Redemption Price within such period of five (5) days due to a dispute as to the determination of the Redemption Price, such dispute shall be resolved pursuant to Section 3(h) with the term "Redemption Price" being substituted for the term "Conversion Rate." (d) Pro-rata Conversion and Redemption. If the Company or the Transfer Agent receives a Conversion Notice or Election Response Notice electing Redemption from more than one holder of Convertible Debentures on the same day, and the Company can convert and/or redeem some, but not all, of such Convertible Debentures pursuant to this Section 4, the Company shall convert and/or redeem from each holder of Convertible Debentures electing to have its Convertible Debenture converted and/or redeemed at such time an amount equal to such holder's pro-rata amount (based on the Principal Amount of Convertible Debentures held by such holder relative to the Principal Amount of Convertible Debentures sought to be converted) of all Convertible Debentures being converted and/or redeemed as such time. 5. Notices. In case at any time: (a) the Company shall declare any dividend upon its Common Stock payable in cash or stock or make any other pro rata distribution to the holders of its Common Stock; or (b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (c) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, or by telex or facsimile or by recognized overnight delivery service, addressed to the Holder at the address of the Holder as shown on the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganiztion, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (ii) in the case of any such reorganization, reclassification, consolidation , merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other properly deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 17 6. Stock to be Reserved. The Company has a sufficient number of shares of Common Stock available to reserve for issuance upon the conversion of all outstanding Convertible Debentures, assuming immediate conversion. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of all of its Convertible Debentures as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all Convertible Debentures. The Company covenants that all shares of Common Stock that shall be so issued shall be duly and validly issued, fully-paid and non assessable. The Company will take all such action as may be so taken without violation of any applicable law or regulation to have a sufficient number of authorized but unissued shares of Common Stock to issue upon conversion of all Convertible Debentures. The Company will not take any action that results in any adjustment of the conversion rights if the total number of shares of Common Stock issued and issuable after such action upon conversion of this Debenture would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 7. Default and Remedies. (a) Event of Default. Each of the following shall constitute an "Event of Default": (i) the Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) days; or (ii) any of the representations or warranties made by the Company herein, in the Purchase Agreement, in the Registration Rights Agreement, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement, shall be false or misleading in any material respect at the time made; or (iii) a default or an event of default shall have occurred and be continuing with respect to any Funded Debt; or (iv) the Company shall (A) admit in writing its inability to pay its debts generally as they mature; (B) make an assignmtne for the benefit of recditors or commence proceedings for its dissolution; or (C) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property of business; or (v) a trustee, liwuidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (vi) 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 sixty (60) days thereafter; or 18 (vii) any money judgment, writ or 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 sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (viii) 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. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, the Holder may declare this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, 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 enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default shall be made at the fair market value of the shares of Common Stock that would be issued at the Conversion Price on the date the Debenture becomes due and payable pursuant to this provision. Such payment shall be made withint three (3) Trading Days of such demand, and if not paid within such period, the Company shall pay the holder liquidated damages of three percent (3%) per month of such amount until paid, pro-rated for any partial months. 8. Payment Obligation Unconditional. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. 9. No Recourse to Stockholders, etc. 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, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any 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. 10. No Rights as Stockholder. No provision of 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 stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. 19 11. Definitions. As used in this Debenture, the term "Common Stock" shall mean and include the Company's authorized common stock, no par value, as constituted on the issuance date of this Debenture, and shall also include any capital stock of any class of the Company thereafter authorized that shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntaryl liquidation, dissolution or winding up of the Company; provided that the shares of Common Stock receivable upon conversion of this Debenture shall include only shares of Common Stock receivable upon conversion of this Debenture shall include only shares designated as Common Stock of the Company on the issuance date of this Debenture, or in case of any reorganization, reclassification, or stock split of the outstanding shares thereof, the stock, securities or assets provided for in Sections 3(f) and (g). Any capitalized terms used in this Debenture but not defined herein shall have the meanings set forth in the Purchase Agreement. 12. Loss, Theft, Destruction of Debenture. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutiliation of this Debenture and, in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (which shall not include the posting of any bond), or, in the case of any such mutiliation, upon surrender and cancellation of this Debenture, the Company shall make, issue and deliver, in lieu of such lost, stoledn, destroyed or mutiliated Debenture, one or more new Debentures of like tenor. This Debenture shall be held and owned upon the express condition that the provisions of this Section 12 are exclusive with respect to the replacement of mutiliated, destroyed, lost or stolen Debentures and shall preclude any and all other rights and remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement of negotiable instruments or other securities without the surrender thereof. 13. Record Owner. The Company may deem the person in whose name this Debenture shall be registered upon the registry books of the Company to be, and may treat such person as, the absolute owner of this Debenture for the purpose of conversion of this Debenture and for all other purposes, and the Company shall not be affected by any notice to the contrary. All such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Debenture to the extent of the sum or sums so paid or the conversion so made. 14. Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of Convertible Debentures. Upon any transfer of this Debenture in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Convertible Debenture register. 15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with 20 the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation therof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of this Debenture and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of this Debenture shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 16. Construction. This Debenture shall be deemed to be jointly drafted by the Company and the initial Holders of the Convertible Debentures and shall not be construed against any person as the drafter hereof. 17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder of this Debenture in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof (except to the extent that such power, right or privilege must, in accordance with the terms of this Debenture, be exercised within a specified period of time and such period of time has lapsed without such power, right or privilege being exercised), nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 18. Governing Law. 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 City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles 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 conveniens, to the bringing of any such proceeding in such jurisdictions. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. President Attest: /s/ Marcia Smith - ----------------------------- 21 EX-10.364 129 0129.txt 9% CONVERTIBLE DEBENTURE - CHRISTOPER MEHRINGER Exhibit 10.364 9% CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. 6 $15,000 Principal Amount Pollution Research and Control Corp. 9% CONVERTIBLE DEBENTURE DUE JULY 17, 2001 THIS DEBENTURE is issued by Pollution Research and Control Corp., a California corporation (the "Company"), and is part of an issue of an aggregate of up to $900,000 principal amount of 9% Convertible Debentures due July 17, 2001 (the "Convertible Debentures"). FOR VALUE RECEIVED, the Company promises to pay to Christopher Mehringer, or permitted assigns (the "Holder"), the principal sum of Fifteen Thousand (US $15,000) Dollars on July 17, 2001 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 9% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue daily on the basis of a 360 day year until payment in full of the principal sum has been made or duly provided for. Quarterly interest payments shall be due and payable on March 31, June 30, September 30 and December 31 of each year, commencing with September 30, 2000. If any interest payment date or the Maturity Date is not a business day in the State of California, then such payment shall be made on the next succeeding business day. Subject to the provisions of Section 4 below, principal and accrued interest on this Debenture are payable in cash on the interest payment date or the Maturity Date, as applicable, 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 principal of and any accrued but unpaid interest due upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check, plus any amounts so deducted. This Debenture is subject to the following additional provisions: 1. Withholding and Issuance Taxes. 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. The issuance of certificates for shares of common stock, no par value (the "Common Stock"), of the Company upon conversion of this Debenture shall be made without charge to the Holder for any United States issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder of this Debenture. 2. Transfer of Debenture. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign 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 the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 3. Conversion. The Holder of this Debenture is entitled, at its option, to convert, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Principal Amount of this Debenture or any portion thereof, together with accrued and unpaid interest on such Principal Amount, into shares of Common Stock as follows: (a) Right to Convert. (i) Subject to the terms, conditions, and restrictions of this Section 3, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Holder of this Debenture shall have the right to convert all or any portion of the Principal Amount of this Debenture, together with the accrued and unpaid interest on such Principal Amount so converted, into that number of fully-paid and nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Subsection 3(e), at the Conversion Rate (as defined below). 2 (ii) Anything is Subsection 3(a)(i) to the contrary notwithstanding, in no event shall any Holder be entitled to convert all or any portion of the Principal Amount of this Debenture in excess of that amount of the Principal Amount of this Debenture that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of this Subsection, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of the Principal Amount of this Debenture beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants or convertible preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Subjection 3(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For purposes of this Subsection, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Holder, the Company shall immediately confirm orally and in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of this Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Subsection 3(a)(ii) applies, the determination of whether such portion of this Debenture is convertible (in relation to other securities owned by a Holder) and of what portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of whether such portion of this Debenture is convertible (in relation to other securities owned by such Holder) and of what portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert such portion of this Debenture at such time as such conversion will not violate the provisions of this Subsection. A Holder of this Debenture may waive the provisions of this Subsection 3(a)(ii) as to itself (and solely as to itself) upon not less than 75 days' prior notice to the Company, and the provisions of this Subsection 3(a)(ii) shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Subsection 3(a)(ii), but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. Subsection 3(g) below sets forth additional limitations on the Company's obligation to issue shares of Common Stock upon conversion of this Debenture. 3 (b) Conversion Rate and Other Definitions. The number of shares of Common Stock issuable upon conversion of all or any portion of the Principal Amount of this Debenture pursuant to Subsection (3)(a) shall be determined according to the following formula (the "Conversion Rate"): Conversion Amount Conversion Price For purposes of this Debenture, the following terms shall have the following meanings: "Change of Control" means: (i) The acquisition by any Person (as defined below) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of the subsection (i), the following acquisitions of stock shall not result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of subsection (iii) of this definition; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Incumbent Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding share of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from 4 such Business Combination, including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (any such corporation being referred to herein as a "Resulting Company"), in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, immediately prior to such Business Combination, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or a Resulting Company) beneficially owns, directly or indirectly, 30% or more of, respectively, the outstanding shares of Common Stock of the Resulting Company or the combined voting power of the then outstanding voting securities of such Resulting Company except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the Resulting Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Corporation; or (v) Termination of Albert E. Gosselin, Jr. as Chief Executive Officer of the Company (including a change or diminution of his duties as such), whether by resignation, termination, death, disability or otherwise, without the written consent of the Holder. "Closing Bid Price" or "Closing Ask Price" means, for any security as of any date, the last closing bid or ask price, as the case may be, for such security on the Principal Market (as defined below) as reported by Bloomberg L.P. ("Bloomberg"), or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid or ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid or ask price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid or ask price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid or ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price or Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price or Closing Ask Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the currently outstanding Principal Amount of all Convertible Debentures. If the Company and the Holders of the Convertible Debentures are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Subsection 3(h). (All such determinations are to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). "Conversion Amount" means that portion of this Debenture being converted by such Holder. "Conversion Price" means, as of any Conversion Date or other date of determination, 80% of the Market Price, but in no event more than $2.10 (the "Maximum Conversion Price"). 5 "Market Price" means the lowest Closing Bid Price of the Common Stock on the Principal Market as reported by Bloomberg for the five Trading Days immediately preceding the date of determination. "Principal Market" means the Nasdaq SmallCap Market. "Registration Rights Agreement" means that certain Registration Rights Agreement among the Company and the initial holders of the Convertible Debentures concerning the registration of the resale of the shares of Common Stock issuable upon conversion of the Convertible Debentures. "Trading Day" means any day during which the Principal Market shall be open for business. (c) Conversion Notice. The Holder of this Debenture may exercise its conversion right by giving a written conversion notice in the form of Exhibit A hereto (the "Conversion Notice") to the Company's transfer agent for its Common Stock, as designated by the Company from time to time (the "Transfer Agent"), (x) by facsimile or (y) by registered mail or overnight delivery service, with a copy by facsimile to the Company and the Company's outside counsel as specified from time to time by written notice to the holders of the Convertible Debentures. Promptly, but in no event more than five (5) Trading Days after the receipt of the Conversion Notice, a holder of this Debenture shall surrender this Debenture to the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Convertible Debentures). If this Debenture has been only partially converted, the Company shall, or instruct the Transfer Agent to, deliver to the Holder of this Debenture a new Debenture evidencing the unconverted Principal Amount of this Debenture. (d) Issuance of Certificates; Time Conversion Effected. (i) Promptly, but in no event more than three (3) Trading Days after the receipt of the Conversion Notice referred to in Subsection 3(c), the Transfer Agent shall issue and deliver, or the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which this Debenture has been converted. In the alternative, if the Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with The Depository Trust Company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Transfer Agent. The rights of the Holder of this Debenture shall cease, and the person or persons in whose name or names any certificate or certificates for share of Common Stock shall be issuable upon such conversion shall be deemed to have become the Holder or Holders of record of the shares represented thereby, on the Conversion Date. Issuance of shares of Common Stock issuable upon conversion that are requested to be registered in a name other than that of the registered Holder shall be subject o compliance with all applicable federal and state securities laws. 6 (ii) The Company understands that a delay in the issuance of the shares of Common Stock beyond three (3) Trading Days after the Conversion Date could result in economic loss to the Holder of this Debenture. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of shares of Common Stock upon conversion in accordance with the following schedule (where "No. Trading Days Late" means the number of Trading Days after three (3) Trading Days from the date of receipt by the Transfer Agent of the Conversion Notice to and including the date of the Holder's or its designees' receipt of such shares): No. Trading Days Late Late Payment for Each $5,000 of Conversion Amount of Principal Amount Being Converted - ----------------------------------- -------------------------------- 1 $100 2 $200 3 $300 4 $400 5 $500 6 $600 7 $700 8 $800 9 $900 10 $1,000 (10) $1,000 + $200 for each Trading Day late after 10 Calendar Days The Company shall make all payments due under this Subsection 3(d)(ii) in immediately available funds upon demand. Nothing herein shall limit the Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver (or to cause its Transfer Agent to issue and deliver) Common Stock to the Holder as required by Subsection 3(d)(i), including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies that may be available to the Holder, if the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days after the Conversion Date, the Holder will be entitled to revoke the relevant Conversion Notice by delivering a notice to such effect to the Transfer Agent, with a copy by facsimile to the Company and the Company's outside counsel. Upon delivery of such notice of revocation, the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Conversion Notice, except that the Holder shall retain the right to receive both the late payment amounts set forth above plus the actual cost of any "buy-in." 7 (iii) If, at any time, (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Common Stock or otherwise dishonors or rejects, or causes the Transfer Agent to dishonor or reject, any Conversion Notice properly delivered in accordance with this Section 3 or (b) any third party who is not and has never been an affiliate of the Holder obtains a judgment or order from any court or public or governmental authority that denies, enjoins, limits, modifies, or delays the right of the Holder to effect the conversion of this Debenture into Common Stock, then the Holder shall have the right, by written notice to the Company, to require the Company to promptly redeem this Debenture in accordance with Section 4. Under any of the circumstances set forth above, the Company shall indemnify the Holder against and hold it harmless from, and be responsible for the payment of, all costs and expenses of the Holder, including its reasonable legal fees and expenses, as any when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the Holder). The Company shall not refuse to honor, or cause the Transfer Agent to refuse to honor, any Conversion Notice unless the Company or the Transfer Agent, as the case may be, has actually been enjoined by a court of competent jurisdiction from doing so and, if so enjoined, the Company shall post with such court a performance bond equal to 150% of the Conversion Amount of this Debenture sought to be converted by a Holder that is the subject of such injunction. (iv) The Holder of this Debenture shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under 11 U.S.C. 101 et seq: (the "Bankruptcy Code"). The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the Holder's conversion privilege, if the Company becomes a debtor under the Bankruptcy Code. The Company agrees to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362 without cost or expense to the Holder. (e) Fractional Shares. The Company shall not, nor shall it cause the Transfer Agent to, issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of this Debenture by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after such aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay, or cause the Transfer Agent to pay, a cash adjustment in respect of such fraction of a share of Common Stock based upon the Closing Bid Price of the Common Stock on the Conversion Date. (f) Adjustment to Conversion Price; Dilution and Other Events. In order to prevent dilution of the rights granted under this Debenture, the Conversion Price will be subject to adjustment from time to time as provided in this Subsection 3(f). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Conversion Shares (as defined in the Purchase Agreement) and shares of Common Stock deemed to have been issued by the Company in connection with Approved Issuances (as defined below)) for a consideration per share (the "Applicable Price") less than the Conversion Price as in effect 8 immediately prior to such time (an "Offering"), then immediately after such issue or sale, the Conversion Price shall be reduced to an amount equal to (X) the sum of (A) the product of the Conversion Price in effect immediately prior to such issue or sale and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issue or sale, and (B) the consideration, if any, received by the Company upon such issue or sale divided by (Y) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants any rights or options to subscribe for or to purchase Common Stock (other than in connection with an Approved Issuance or upon conversion of this Debenture) or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities") and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of this Subsection 3(f)(i)(A), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (I) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No adjustment of the Maximum Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Applicable Price, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities 9 shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Subsection 3(f)(i)(B), the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (I) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No adjustment of the Maximum Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Maximum Conversion Price had been or are to be made pursuant to other provisions of this Subsection 3(f)(i), no further adjustment of the Maximum Conversion Price shall be made by reason of such issue or sale. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which an Convertible Securities are convertible into or exchangeable for Common Stock change at any time, the Maximum Conversion Price in effect at the time of such change shall be readjusted to the Maximum Conversion Price in effect that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Maximum Conversion Price then in effect. (D) Certain Definitions. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following terms have meanings set forth below: (I) "Approved Issuances" shall mean (i) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (ii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option plan, restricted stock plan, stock purchase plan or other plan or written compensation contract for the benefit of the Company's employees, directors or consultants in effect on the date hereof. (II) "Common Stock Deemed Outstanding" means, at any given time, the number os shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be 10 outstanding pursuant to Sections 3(f)(i)(A) and 3(f)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock issuable upon conversion of the Convertible Debentures. (E) Effect of Certain Events on Maximum Conversion Price. For purposes of determining the adjusted Maximum Conversion Price under this Section 3(f), the following shall be applicable: (I) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the amount received by the Company therefore, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Bid Prices of such security for the five consecutive Trading Days immediately preceding the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders constituting more than fifty percent (50%) of the Principal Amount of all Convertible Debentures then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within forty-eight (48) hours of the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected by the Company. The determination of such appraiser shall be deemed binding upon all parties absent manifest error. (II) Integrated Transactions. In case any Option is issued in connections with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. (III) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock. 11 (IV) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ii) Adjustment of Maximum Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Maximum Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Maximum Conversion Price in effect immediately prior to such combination will be proportionately increased. (iii) Adjustment of Conversion Price upon Issuance of Convertible Securities. If the Company in any manner issues or sells Convertible Securities that are convertible into Common Stock at a price that varies with the market price of the Common Stock (the formulation for such variable price being herein referred to as, the "Variable Price") and such Variable Price is not calculated using the same formula used to calculate the Variabe Conversion Price in effect immediately prior to the time of such issue or sale, the Company shall provide written notice thereof via facsimile and overnight courier to each holder of this Debenture ("Variable Notice") on the date of issuance of such Convertible Securities. If the Holder of this Debenture provides written notice via facsimile and overnight courier (the "Varirable Price Election Notice") to the Company within five (5) business days of receiving a Variable Notice that the Holder desires to replace the Conversion Price then in effect with the Variable Price described in such Variable Notice, then from and after the date of the Company's receipt of the Variable Price Election Notice, the Conversion Price will automatically be replaced with the Variable Price (together with such modifications to this Debenture as may be required to give full effect to the substitution of the Variable Price for the Conversion Price). The Holder's delivery of a Variable Price Election Notice shall serve as the consent required to amend this Debenture. In the event that the Holder delivers a Conversion Notice at any time after the Company's issuance of Convertible Securities with a Variable Price but before the Holder's receipt of the Company's Variable Notice, then such holder shall have the option by written notice to the Company to rescind such Conversion Notice or to have the Conversion Price be equal to such Variable Price for the conversion effected by such Conversion Notice. (iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as 12 defined below) or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) to insure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock otherwise acquirable and receivable upon the conversion of this Debenture, such shares of stock, securities or assets as would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable had this Debenture been converted into shares of Common Stock immediately prior to such Organic Change (without taking into account any limitations or restrictions on the timing or amount of conversions). In any such case, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) with respect to the Holder's rights and interest to insure that the provisions of this Section 3(f) will thereafter be applicable to this Debenture (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Maximum Conversion Price in accordance with Subsection 3(f)(i) using the value for the Common Stock reflected by the terms of such consolidation, merger or sale, if the value so reflected is less than the Maximum Conversion Price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance reasonably satisfactory to the holders of a more than fifty percent (50%) of Principal Amount of the Convertible Debentures then outstanding), the obligation to deliver to each holder of Convertible Debentures such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. "Person" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (v) Certain Events. If any event occurs of the type contemplated by the provisions of this Subsection 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders this Debenture and the other holders of Convertible Debentures; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 3(f). (g) Limitation on Number of Conversion Shares. Notwithstanding any other provision herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock plus shares of Common Stock issued upon the exercise of the Warrants issued under the Securities Purchase Agreement would exceed 19.9% of the shares of Common Stock issued and outstanding on the date of the Purchase Agreement (the "Exchange Cap") without the Company's violating the 13 corporate governance rules of the Nasdaq Stock Market, except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the corporate governane rules of the Nasdaq Stock Market for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of more than fifty percent (50%) of the Principal Amount of the Convertible Debentures then outstanding. Until such approval or written opinion is obtained or such action has been taken by the required number of holders, no purchaser of Convertible Debentures pursuant to the Purchase Agreement, collectively, (the "Investors" and, individually, an "Investor") shall be issued, upon conversion of Convertible Debentures, shares of Common Stock in an amount greater than the product of (x) the Exchange Cap amount multiplied by (y) a fraction, the numerator of which is the Principal Amount of Convertible Debentures purchased by such Investor pursuant to the Purchase Agreement and the denominator of which is the aggregate Principal Amount of all the Convertible Debentures purchased by the Investors pursuant to the Purchase Agreement (the "Cap Allocation Amount"). In the event that any Investor shall sell or otherwise transfer any of such Investor's Convertible Debentures, the transferee shall be allocated a pro rata portion of such Investor's Cap Allocation Amount. In the event that any holder of a Convertible Debenture shall convert all of such holder's Convertible Debenture into a number of shares of Common Stock that, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Convertible Debentures on a pro rata basis in proportion to the Principal Amount of Convertible Debentures then held by each such Holder. (h) Dispute Resolution. In the case of a dispute as to the determination of the Closing Ask Price or Closing Bid Price of any security or the arithmetic calculation of the Conversion Rate, the Company shall, or shall cause the Transfer Agent to, promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) business day of receipt of the Holder's Converstion Notice. If the Holder and the Company are unable to agree upon the determination os such Closing Ask Price or Closing Bid Price, as the case may be, or the arithmetic calculation of the Conversion Rate within one (1) business day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall within one (1) business day folling such date of delivery submit via facsimile (A) the disputed determination of the Closing Ask Price or Closing Bid Price, as the case may be, to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent certified public accounting firm. The Company shall cause the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accounting firm's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. 14 4. Redenption. (a) Holder's Option if Company Cannot Fully Convert or Holder Cannot Sell Without Restriction. If, (i) upon the Transfer Agent's receipt of a Conversion Notice, the Transfer Agent fails to issue shares of Common Stock as contemplated by Subsection 3(d)(i) or cannot issue shares of Common Stock registered for resale under the registration statement required to be filed under the Registration Rights Agreement with respect to the shares of Common Stock issuable upon conversion of this Debenture (the "Registration Statement") (or which are exempt from the registration requirements under the Securities Act pursuant to Rule 144(k) under the Securities Act) for any reason, including, without limitation, because the Company (x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or its securities, including without limitation the Exchange Cap, from issuing all of the Common Stock that is to be issued to the Holder of this Debenture pursuant to a Conversion Notice or (z) fails to have a sufficient number of shares of Common Stock registered for resale under the Registration Statement, or (ii) a Registration Default (as defined in the Registration Rights Agreement) shall have occurred and be continuing, the Company shall have defaulted in the payment of any Funded Debt (as hereinafter defined) for a period in excess of any cure period thereunder (regardless of whether the creditor of such Funded Debt shall have declared a default), or the employment of Albert E. Gosselin, Jr. shall have terminated for any reason, or (iii) the Common Stock is delisted from the Principal Market and not immediately listed on the New York Stock Exchange, the American Stock Exchange or another national securities exchange approved by holders of Convertible Debentures constituting more than fifth percent (50%) of the Principal Amount of all Convertible Debentures then outstanding, then in the case of clause (i), the Company shall, or shall cause the Transfer Agent to, issue as many shares of Common Stock as it is able to issue in accordance with such holder's Conversion Notice (if the holder shall have given such a Conversion Notice) and pursuant to the provisions of Section 3(d), and with respect to all or any part of the unconverted Principal Amount of this Debenture held by such Holder, the Holder, solely at such Holder's option, can elect to: (A) require the Company to redeem from such Holder all or any part of its remaining Principal Amount of this Debenture ("Redemption") at a premium equal to the greater of (I) the sum of: (a) 150% of such Principal Amount and (b) the accrued interest thereon or (II) the product of (a) the Conversion Rate on the date of such Holder's delivery of an Election Response Notice (as defined below) and (b) the greater of (i) the Closing Ask Price of the Common Stock on the Trading Day immediately preceding the event giving rise to Redemption or (ii) the Closing Ask Price of the Common Stock on the date of the Holder's delivery to the Company of a notice of redemption or, if such date of delivery is not a Trading Day, the next date on which the exchange or market on which the Common Stock is traded is open (the "Redemption Price"); (B) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(z) of this Subsection 4(a) above, require the Company to, or cause the Transfer Agent to, issue restricted shares of Common Stock in accordance with such Holder's Conversion Notice; 15 (C) void its Conversion Notice and retain the Principal Amount of this Debenture that was to be converted pursuant to such Holder's Conversion Notice (provided that the Holder's voiding its Conversion Notice shall not affect the Company's obligations to make any payments that have accrued prior to the date of such notice); or (D) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(y) of this Subsection 4(a) above, requrie the Company to, or cause the Transfer Agent to, issue shares of Common Stock in accordance with such Holder's Conversion Notice and pursuant to Section 4(d) at a Conversion Price equal to the average of the Closing Bid Prices of the Common Stock for the five consecutive Trading Days preceding such Holder's Election Responsxe Notice or such other market price that satisfies the applicable exchange or trading market. For purposes hereof, "Funded Debt" means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade liabilities and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices), whether on open account or evidenced by a note, bond, debenture or similar instrument or otherwise, (b) obligations under capital leases, (c) reimbursement obligations for letters of credit, banker's acceptances or other credit accommodations, (d) contingent obligations and (e) obligations secured by any lien on the Company's property, even if the Company has not assumed such obligations. (b) Mechanics of Fulfilling Holder's Election. The Company shall within one (1) business day send via facsimile to the Holder of this Debenture, upon receipt of a facsimile copy of a Conversion Notice from such Holder that cannot be fully satisfied as described in Subsection 4(a), a notice of the Company's inability to fully satisfy such Holder's Notice shall indicate (i) the reason why the Company is unable to fully satisfy such Holder's Conversion Notice, (ii) the Principal Amount of this Debenture that cannot be converted and (iii) the applicable Redemption Price. The Holder shall notify the Company of its election pursuant to Subsection 4(a) above by delivering written notice via facsimile to the Company (the "Election Response Notice"). (c) Payment of Redemption Price. If the Holder shall elect to have this Debenture redeemed pursuant to Subsection 4(a)(i), the Company shall pay the Redemption Price to such Holder in Cash by Wire transfer of immediately available funds in accordance with such Holder's written wire transfer instructions within five (5) days after the Company's receipt of the Holder's Election Response Notice. If the Company shall fail to pay the applicable Redemption Price to such holder within such five (5) day period (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Redemption Price), in addition to any remedy the Holder of this Debenture may ahve hereunder, or under the Securities Purchase Agreement and the Registration Rights Agreement, such unpaid amount shall bear interest at the rate of 3.0% per month (prorated for partial months) until paid in full. Until the Redemption Price is paid in full to such Holder, such Holder may void the Redemption with respect to Principal Amount of this Debenture for which the full Redemption Price has not been paid and receive back a Convertible Debenture 16 representing such Principal Amount. Notwithstanding the foregoing, if the Company fails to pay the applicable Redemption Price within such period of five (5) days due to a dispute as to the determination of the Redemption Price, such dispute shall be resolved pursuant to Section 3(h) with the term "Redemption Price" being substituted for the term "Conversion Rate." (d) Pro-rata Conversion and Redemption. If the Company or the Transfer Agent receives a Conversion Notice or Election Response Notice electing Redemption from more than one holder of Convertible Debentures on the same day, and the Company can convert and/or redeem some, but not all, of such Convertible Debentures pursuant to this Section 4, the Company shall convert and/or redeem from each holder of Convertible Debentures electing to have its Convertible Debenture converted and/or redeemed at such time an amount equal to such holder's pro-rata amount (based on the Principal Amount of Convertible Debentures held by such holder relative to the Principal Amount of Convertible Debentures sought to be converted) of all Convertible Debentures being converted and/or redeemed as such time. 5. Notices. In case at any time: (a) the Company shall declare any dividend upon its Common Stock payable in cash or stock or make any other pro rata distribution to the holders of its Common Stock; or (b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (c) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, or by telex or facsimile or by recognized overnight delivery service, addressed to the Holder at the address of the Holder as shown on the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganiztion, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (ii) in the case of any such reorganization, reclassification, consolidation , merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other properly deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 17 6. Stock to be Reserved. The Company has a sufficient number of shares of Common Stock available to reserve for issuance upon the conversion of all outstanding Convertible Debentures, assuming immediate conversion. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of all of its Convertible Debentures as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all Convertible Debentures. The Company covenants that all shares of Common Stock that shall be so issued shall be duly and validly issued, fully-paid and non assessable. The Company will take all such action as may be so taken without violation of any applicable law or regulation to have a sufficient number of authorized but unissued shares of Common Stock to issue upon conversion of all Convertible Debentures. The Company will not take any action that results in any adjustment of the conversion rights if the total number of shares of Common Stock issued and issuable after such action upon conversion of this Debenture would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 7. Default and Remedies. (a) Event of Default. Each of the following shall constitute an "Event of Default": (i) the Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) days; or (ii) any of the representations or warranties made by the Company herein, in the Purchase Agreement, in the Registration Rights Agreement, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement, shall be false or misleading in any material respect at the time made; or (iii) a default or an event of default shall have occurred and be continuing with respect to any Funded Debt; or (iv) the Company shall (A) admit in writing its inability to pay its debts generally as they mature; (B) make an assignmtne for the benefit of recditors or commence proceedings for its dissolution; or (C) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property of business; or (v) a trustee, liwuidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (vi) 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 sixty (60) days thereafter; or 18 (vii) any money judgment, writ or 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 sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (viii) 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. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, the Holder may declare this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, 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 enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default shall be made at the fair market value of the shares of Common Stock that would be issued at the Conversion Price on the date the Debenture becomes due and payable pursuant to this provision. Such payment shall be made withint three (3) Trading Days of such demand, and if not paid within such period, the Company shall pay the holder liquidated damages of three percent (3%) per month of such amount until paid, pro-rated for any partial months. 8. Payment Obligation Unconditional. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. 9. No Recourse to Stockholders, etc. 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, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any 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. 10. No Rights as Stockholder. No provision of 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 stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. 19 11. Definitions. As used in this Debenture, the term "Common Stock" shall mean and include the Company's authorized common stock, no par value, as constituted on the issuance date of this Debenture, and shall also include any capital stock of any class of the Company thereafter authorized that shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntaryl liquidation, dissolution or winding up of the Company; provided that the shares of Common Stock receivable upon conversion of this Debenture shall include only shares of Common Stock receivable upon conversion of this Debenture shall include only shares designated as Common Stock of the Company on the issuance date of this Debenture, or in case of any reorganization, reclassification, or stock split of the outstanding shares thereof, the stock, securities or assets provided for in Sections 3(f) and (g). Any capitalized terms used in this Debenture but not defined herein shall have the meanings set forth in the Purchase Agreement. 12. Loss, Theft, Destruction of Debenture. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutiliation of this Debenture and, in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (which shall not include the posting of any bond), or, in the case of any such mutiliation, upon surrender and cancellation of this Debenture, the Company shall make, issue and deliver, in lieu of such lost, stoledn, destroyed or mutiliated Debenture, one or more new Debentures of like tenor. This Debenture shall be held and owned upon the express condition that the provisions of this Section 12 are exclusive with respect to the replacement of mutiliated, destroyed, lost or stolen Debentures and shall preclude any and all other rights and remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement of negotiable instruments or other securities without the surrender thereof. 13. Record Owner. The Company may deem the person in whose name this Debenture shall be registered upon the registry books of the Company to be, and may treat such person as, the absolute owner of this Debenture for the purpose of conversion of this Debenture and for all other purposes, and the Company shall not be affected by any notice to the contrary. All such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Debenture to the extent of the sum or sums so paid or the conversion so made. 14. Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of Convertible Debentures. Upon any transfer of this Debenture in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Convertible Debenture register. 15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with 20 the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation therof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of this Debenture and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of this Debenture shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 16. Construction. This Debenture shall be deemed to be jointly drafted by the Company and the initial Holders of the Convertible Debentures and shall not be construed against any person as the drafter hereof. 17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder of this Debenture in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof (except to the extent that such power, right or privilege must, in accordance with the terms of this Debenture, be exercised within a specified period of time and such period of time has lapsed without such power, right or privilege being exercised), nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 18. Governing Law. 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 City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles 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 conveniens, to the bringing of any such proceeding in such jurisdictions. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. President Attest: /s/ Marcia Smith - ----------------------------- 21 EX-10.365 130 0130.txt 9% CONVERTIBLE DEBENTURE - ROBERT DEL GUERCIO Exhibit 10.365 9% CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. 7 $25,000 Principal Amount Pollution Research and Control Corp. 9% CONVERTIBLE DEBENTURE DUE JULY 17, 2001 THIS DEBENTURE is issued by Pollution Research and Control Corp., a California corporation (the "Company"), and is part of an issue of an aggregate of up to $900,000 principal amount of 9% Convertible Debentures due July 17, 2001 (the "Convertible Debentures"). FOR VALUE RECEIVED, the Company promises to pay to Robert Del Guercio, or permitted assigns (the "Holder"), the principal sum of Twenty Five Thousand (US $25,000) Dollars on July 17, 2001 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 9% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue daily on the basis of a 360 day year until payment in full of the principal sum has been made or duly provided for. Quarterly interest payments shall be due and payable on March 31, June 30, September 30 and December 31 of each year, commencing with September 30, 2000. If any interest payment date or the Maturity Date is not a business day in the State of California, then such payment shall be made on the next succeeding business day. Subject to the provisions of Section 4 below, principal and accrued interest on this Debenture are payable in cash on the interest payment date or the Maturity Date, as applicable, 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 principal of and any accrued but unpaid interest due upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check, plus any amounts so deducted. This Debenture is subject to the following additional provisions: 1. Withholding and Issuance Taxes. 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. The issuance of certificates for shares of common stock, no par value (the "Common Stock"), of the Company upon conversion of this Debenture shall be made without charge to the Holder for any United States issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder of this Debenture. 2. Transfer of Debenture. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign 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 the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 3. Conversion. The Holder of this Debenture is entitled, at its option, to convert, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Principal Amount of this Debenture or any portion thereof, together with accrued and unpaid interest on such Principal Amount, into shares of Common Stock as follows: (a) Right to Convert. (i) Subject to the terms, conditions, and restrictions of this Section 3, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Holder of this Debenture shall have the right to convert all or any portion of the Principal Amount of this Debenture, together with the accrued and unpaid interest on such Principal Amount so converted, into that number of fully-paid and nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Subsection 3(e), at the Conversion Rate (as defined below). 2 (ii) Anything is Subsection 3(a)(i) to the contrary notwithstanding, in no event shall any Holder be entitled to convert all or any portion of the Principal Amount of this Debenture in excess of that amount of the Principal Amount of this Debenture that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of this Subsection, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of the Principal Amount of this Debenture beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants or convertible preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Subjection 3(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For purposes of this Subsection, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Holder, the Company shall immediately confirm orally and in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of this Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Subsection 3(a)(ii) applies, the determination of whether such portion of this Debenture is convertible (in relation to other securities owned by a Holder) and of what portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of whether such portion of this Debenture is convertible (in relation to other securities owned by such Holder) and of what portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert such portion of this Debenture at such time as such conversion will not violate the provisions of this Subsection. A Holder of this Debenture may waive the provisions of this Subsection 3(a)(ii) as to itself (and solely as to itself) upon not less than 75 days' prior notice to the Company, and the provisions of this Subsection 3(a)(ii) shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Subsection 3(a)(ii), but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. Subsection 3(g) below sets forth additional limitations on the Company's obligation to issue shares of Common Stock upon conversion of this Debenture. 3 (b) Conversion Rate and Other Definitions. The number of shares of Common Stock issuable upon conversion of all or any portion of the Principal Amount of this Debenture pursuant to Subsection (3)(a) shall be determined according to the following formula (the "Conversion Rate"): Conversion Amount Conversion Price For purposes of this Debenture, the following terms shall have the following meanings: "Change of Control" means: (i) The acquisition by any Person (as defined below) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of the subsection (i), the following acquisitions of stock shall not result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of subsection (iii) of this definition; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Incumbent Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding share of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from 4 such Business Combination, including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (any such corporation being referred to herein as a "Resulting Company"), in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, immediately prior to such Business Combination, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or a Resulting Company) beneficially owns, directly or indirectly, 30% or more of, respectively, the outstanding shares of Common Stock of the Resulting Company or the combined voting power of the then outstanding voting securities of such Resulting Company except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the Resulting Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Corporation; or (v) Termination of Albert E. Gosselin, Jr. as Chief Executive Officer of the Company (including a change or diminution of his duties as such), whether by resignation, termination, death, disability or otherwise, without the written consent of the Holder. "Closing Bid Price" or "Closing Ask Price" means, for any security as of any date, the last closing bid or ask price, as the case may be, for such security on the Principal Market (as defined below) as reported by Bloomberg L.P. ("Bloomberg"), or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid or ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid or ask price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid or ask price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid or ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price or Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price or Closing Ask Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the currently outstanding Principal Amount of all Convertible Debentures. If the Company and the Holders of the Convertible Debentures are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Subsection 3(h). (All such determinations are to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). "Conversion Amount" means that portion of this Debenture being converted by such Holder. "Conversion Price" means, as of any Conversion Date or other date of determination, 80% of the Market Price, but in no event more than $2.10 (the "Maximum Conversion Price"). 5 "Market Price" means the lowest Closing Bid Price of the Common Stock on the Principal Market as reported by Bloomberg for the five Trading Days immediately preceding the date of determination. "Principal Market" means the Nasdaq SmallCap Market. "Registration Rights Agreement" means that certain Registration Rights Agreement among the Company and the initial holders of the Convertible Debentures concerning the registration of the resale of the shares of Common Stock issuable upon conversion of the Convertible Debentures. "Trading Day" means any day during which the Principal Market shall be open for business. (c) Conversion Notice. The Holder of this Debenture may exercise its conversion right by giving a written conversion notice in the form of Exhibit A hereto (the "Conversion Notice") to the Company's transfer agent for its Common Stock, as designated by the Company from time to time (the "Transfer Agent"), (x) by facsimile or (y) by registered mail or overnight delivery service, with a copy by facsimile to the Company and the Company's outside counsel as specified from time to time by written notice to the holders of the Convertible Debentures. Promptly, but in no event more than five (5) Trading Days after the receipt of the Conversion Notice, a holder of this Debenture shall surrender this Debenture to the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Convertible Debentures). If this Debenture has been only partially converted, the Company shall, or instruct the Transfer Agent to, deliver to the Holder of this Debenture a new Debenture evidencing the unconverted Principal Amount of this Debenture. (d) Issuance of Certificates; Time Conversion Effected. (i) Promptly, but in no event more than three (3) Trading Days after the receipt of the Conversion Notice referred to in Subsection 3(c), the Transfer Agent shall issue and deliver, or the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which this Debenture has been converted. In the alternative, if the Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with The Depository Trust Company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Transfer Agent. The rights of the Holder of this Debenture shall cease, and the person or persons in whose name or names any certificate or certificates for share of Common Stock shall be issuable upon such conversion shall be deemed to have become the Holder or Holders of record of the shares represented thereby, on the Conversion Date. Issuance of shares of Common Stock issuable upon conversion that are requested to be registered in a name other than that of the registered Holder shall be subject o compliance with all applicable federal and state securities laws. 6 (ii) The Company understands that a delay in the issuance of the shares of Common Stock beyond three (3) Trading Days after the Conversion Date could result in economic loss to the Holder of this Debenture. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of shares of Common Stock upon conversion in accordance with the following schedule (where "No. Trading Days Late" means the number of Trading Days after three (3) Trading Days from the date of receipt by the Transfer Agent of the Conversion Notice to and including the date of the Holder's or its designees' receipt of such shares): No. Trading Days Late Late Payment for Each $5,000 of Conversion Amount of Principal Amount Being Converted - ----------------------------------- -------------------------------- 1 $100 2 $200 3 $300 4 $400 5 $500 6 $600 7 $700 8 $800 9 $900 10 $1,000 (10) $1,000 + $200 for each Trading Day late after 10 Calendar Days The Company shall make all payments due under this Subsection 3(d)(ii) in immediately available funds upon demand. Nothing herein shall limit the Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver (or to cause its Transfer Agent to issue and deliver) Common Stock to the Holder as required by Subsection 3(d)(i), including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies that may be available to the Holder, if the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days after the Conversion Date, the Holder will be entitled to revoke the relevant Conversion Notice by delivering a notice to such effect to the Transfer Agent, with a copy by facsimile to the Company and the Company's outside counsel. Upon delivery of such notice of revocation, the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Conversion Notice, except that the Holder shall retain the right to receive both the late payment amounts set forth above plus the actual cost of any "buy-in." 7 (iii) If, at any time, (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Common Stock or otherwise dishonors or rejects, or causes the Transfer Agent to dishonor or reject, any Conversion Notice properly delivered in accordance with this Section 3 or (b) any third party who is not and has never been an affiliate of the Holder obtains a judgment or order from any court or public or governmental authority that denies, enjoins, limits, modifies, or delays the right of the Holder to effect the conversion of this Debenture into Common Stock, then the Holder shall have the right, by written notice to the Company, to require the Company to promptly redeem this Debenture in accordance with Section 4. Under any of the circumstances set forth above, the Company shall indemnify the Holder against and hold it harmless from, and be responsible for the payment of, all costs and expenses of the Holder, including its reasonable legal fees and expenses, as any when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the Holder). The Company shall not refuse to honor, or cause the Transfer Agent to refuse to honor, any Conversion Notice unless the Company or the Transfer Agent, as the case may be, has actually been enjoined by a court of competent jurisdiction from doing so and, if so enjoined, the Company shall post with such court a performance bond equal to 150% of the Conversion Amount of this Debenture sought to be converted by a Holder that is the subject of such injunction. (iv) The Holder of this Debenture shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under 11 U.S.C. 101 et seq: (the "Bankruptcy Code"). The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the Holder's conversion privilege, if the Company becomes a debtor under the Bankruptcy Code. The Company agrees to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362 without cost or expense to the Holder. (e) Fractional Shares. The Company shall not, nor shall it cause the Transfer Agent to, issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of this Debenture by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after such aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay, or cause the Transfer Agent to pay, a cash adjustment in respect of such fraction of a share of Common Stock based upon the Closing Bid Price of the Common Stock on the Conversion Date. (f) Adjustment to Conversion Price; Dilution and Other Events. In order to prevent dilution of the rights granted under this Debenture, the Conversion Price will be subject to adjustment from time to time as provided in this Subsection 3(f). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Conversion Shares (as defined in the Purchase Agreement) and shares of Common Stock deemed to have been issued by the Company in connection with Approved Issuances (as defined below)) for a consideration per share (the "Applicable Price") less than the Conversion Price as in effect 8 immediately prior to such time (an "Offering"), then immediately after such issue or sale, the Conversion Price shall be reduced to an amount equal to (X) the sum of (A) the product of the Conversion Price in effect immediately prior to such issue or sale and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issue or sale, and (B) the consideration, if any, received by the Company upon such issue or sale divided by (Y) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants any rights or options to subscribe for or to purchase Common Stock (other than in connection with an Approved Issuance or upon conversion of this Debenture) or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities") and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of this Subsection 3(f)(i)(A), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (I) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No adjustment of the Maximum Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Applicable Price, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities 9 shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Subsection 3(f)(i)(B), the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (I) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No adjustment of the Maximum Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Maximum Conversion Price had been or are to be made pursuant to other provisions of this Subsection 3(f)(i), no further adjustment of the Maximum Conversion Price shall be made by reason of such issue or sale. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which an Convertible Securities are convertible into or exchangeable for Common Stock change at any time, the Maximum Conversion Price in effect at the time of such change shall be readjusted to the Maximum Conversion Price in effect that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Maximum Conversion Price then in effect. (D) Certain Definitions. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following terms have meanings set forth below: (I) "Approved Issuances" shall mean (i) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (ii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option plan, restricted stock plan, stock purchase plan or other plan or written compensation contract for the benefit of the Company's employees, directors or consultants in effect on the date hereof. (II) "Common Stock Deemed Outstanding" means, at any given time, the number os shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be 10 outstanding pursuant to Sections 3(f)(i)(A) and 3(f)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock issuable upon conversion of the Convertible Debentures. (E) Effect of Certain Events on Maximum Conversion Price. For purposes of determining the adjusted Maximum Conversion Price under this Section 3(f), the following shall be applicable: (I) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the amount received by the Company therefore, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Bid Prices of such security for the five consecutive Trading Days immediately preceding the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders constituting more than fifty percent (50%) of the Principal Amount of all Convertible Debentures then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within forty-eight (48) hours of the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected by the Company. The determination of such appraiser shall be deemed binding upon all parties absent manifest error. (II) Integrated Transactions. In case any Option is issued in connections with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. (III) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock. 11 (IV) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ii) Adjustment of Maximum Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Maximum Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Maximum Conversion Price in effect immediately prior to such combination will be proportionately increased. (iii) Adjustment of Conversion Price upon Issuance of Convertible Securities. If the Company in any manner issues or sells Convertible Securities that are convertible into Common Stock at a price that varies with the market price of the Common Stock (the formulation for such variable price being herein referred to as, the "Variable Price") and such Variable Price is not calculated using the same formula used to calculate the Variabe Conversion Price in effect immediately prior to the time of such issue or sale, the Company shall provide written notice thereof via facsimile and overnight courier to each holder of this Debenture ("Variable Notice") on the date of issuance of such Convertible Securities. If the Holder of this Debenture provides written notice via facsimile and overnight courier (the "Varirable Price Election Notice") to the Company within five (5) business days of receiving a Variable Notice that the Holder desires to replace the Conversion Price then in effect with the Variable Price described in such Variable Notice, then from and after the date of the Company's receipt of the Variable Price Election Notice, the Conversion Price will automatically be replaced with the Variable Price (together with such modifications to this Debenture as may be required to give full effect to the substitution of the Variable Price for the Conversion Price). The Holder's delivery of a Variable Price Election Notice shall serve as the consent required to amend this Debenture. In the event that the Holder delivers a Conversion Notice at any time after the Company's issuance of Convertible Securities with a Variable Price but before the Holder's receipt of the Company's Variable Notice, then such holder shall have the option by written notice to the Company to rescind such Conversion Notice or to have the Conversion Price be equal to such Variable Price for the conversion effected by such Conversion Notice. (iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as 12 defined below) or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) to insure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock otherwise acquirable and receivable upon the conversion of this Debenture, such shares of stock, securities or assets as would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable had this Debenture been converted into shares of Common Stock immediately prior to such Organic Change (without taking into account any limitations or restrictions on the timing or amount of conversions). In any such case, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) with respect to the Holder's rights and interest to insure that the provisions of this Section 3(f) will thereafter be applicable to this Debenture (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Maximum Conversion Price in accordance with Subsection 3(f)(i) using the value for the Common Stock reflected by the terms of such consolidation, merger or sale, if the value so reflected is less than the Maximum Conversion Price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance reasonably satisfactory to the holders of a more than fifty percent (50%) of Principal Amount of the Convertible Debentures then outstanding), the obligation to deliver to each holder of Convertible Debentures such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. "Person" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (v) Certain Events. If any event occurs of the type contemplated by the provisions of this Subsection 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders this Debenture and the other holders of Convertible Debentures; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 3(f). (g) Limitation on Number of Conversion Shares. Notwithstanding any other provision herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock plus shares of Common Stock issued upon the exercise of the Warrants issued under the Securities Purchase Agreement would exceed 19.9% of the shares of Common Stock issued and outstanding on the date of the Purchase Agreement (the "Exchange Cap") without the Company's violating the 13 corporate governance rules of the Nasdaq Stock Market, except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the corporate governane rules of the Nasdaq Stock Market for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of more than fifty percent (50%) of the Principal Amount of the Convertible Debentures then outstanding. Until such approval or written opinion is obtained or such action has been taken by the required number of holders, no purchaser of Convertible Debentures pursuant to the Purchase Agreement, collectively, (the "Investors" and, individually, an "Investor") shall be issued, upon conversion of Convertible Debentures, shares of Common Stock in an amount greater than the product of (x) the Exchange Cap amount multiplied by (y) a fraction, the numerator of which is the Principal Amount of Convertible Debentures purchased by such Investor pursuant to the Purchase Agreement and the denominator of which is the aggregate Principal Amount of all the Convertible Debentures purchased by the Investors pursuant to the Purchase Agreement (the "Cap Allocation Amount"). In the event that any Investor shall sell or otherwise transfer any of such Investor's Convertible Debentures, the transferee shall be allocated a pro rata portion of such Investor's Cap Allocation Amount. In the event that any holder of a Convertible Debenture shall convert all of such holder's Convertible Debenture into a number of shares of Common Stock that, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Convertible Debentures on a pro rata basis in proportion to the Principal Amount of Convertible Debentures then held by each such Holder. (h) Dispute Resolution. In the case of a dispute as to the determination of the Closing Ask Price or Closing Bid Price of any security or the arithmetic calculation of the Conversion Rate, the Company shall, or shall cause the Transfer Agent to, promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) business day of receipt of the Holder's Converstion Notice. If the Holder and the Company are unable to agree upon the determination os such Closing Ask Price or Closing Bid Price, as the case may be, or the arithmetic calculation of the Conversion Rate within one (1) business day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall within one (1) business day folling such date of delivery submit via facsimile (A) the disputed determination of the Closing Ask Price or Closing Bid Price, as the case may be, to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent certified public accounting firm. The Company shall cause the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accounting firm's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. 14 4. Redenption. (a) Holder's Option if Company Cannot Fully Convert or Holder Cannot Sell Without Restriction. If, (i) upon the Transfer Agent's receipt of a Conversion Notice, the Transfer Agent fails to issue shares of Common Stock as contemplated by Subsection 3(d)(i) or cannot issue shares of Common Stock registered for resale under the registration statement required to be filed under the Registration Rights Agreement with respect to the shares of Common Stock issuable upon conversion of this Debenture (the "Registration Statement") (or which are exempt from the registration requirements under the Securities Act pursuant to Rule 144(k) under the Securities Act) for any reason, including, without limitation, because the Company (x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or its securities, including without limitation the Exchange Cap, from issuing all of the Common Stock that is to be issued to the Holder of this Debenture pursuant to a Conversion Notice or (z) fails to have a sufficient number of shares of Common Stock registered for resale under the Registration Statement, or (ii) a Registration Default (as defined in the Registration Rights Agreement) shall have occurred and be continuing, the Company shall have defaulted in the payment of any Funded Debt (as hereinafter defined) for a period in excess of any cure period thereunder (regardless of whether the creditor of such Funded Debt shall have declared a default), or the employment of Albert E. Gosselin, Jr. shall have terminated for any reason, or (iii) the Common Stock is delisted from the Principal Market and not immediately listed on the New York Stock Exchange, the American Stock Exchange or another national securities exchange approved by holders of Convertible Debentures constituting more than fifth percent (50%) of the Principal Amount of all Convertible Debentures then outstanding, then in the case of clause (i), the Company shall, or shall cause the Transfer Agent to, issue as many shares of Common Stock as it is able to issue in accordance with such holder's Conversion Notice (if the holder shall have given such a Conversion Notice) and pursuant to the provisions of Section 3(d), and with respect to all or any part of the unconverted Principal Amount of this Debenture held by such Holder, the Holder, solely at such Holder's option, can elect to: (A) require the Company to redeem from such Holder all or any part of its remaining Principal Amount of this Debenture ("Redemption") at a premium equal to the greater of (I) the sum of: (a) 150% of such Principal Amount and (b) the accrued interest thereon or (II) the product of (a) the Conversion Rate on the date of such Holder's delivery of an Election Response Notice (as defined below) and (b) the greater of (i) the Closing Ask Price of the Common Stock on the Trading Day immediately preceding the event giving rise to Redemption or (ii) the Closing Ask Price of the Common Stock on the date of the Holder's delivery to the Company of a notice of redemption or, if such date of delivery is not a Trading Day, the next date on which the exchange or market on which the Common Stock is traded is open (the "Redemption Price"); (B) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(z) of this Subsection 4(a) above, require the Company to, or cause the Transfer Agent to, issue restricted shares of Common Stock in accordance with such Holder's Conversion Notice; 15 (C) void its Conversion Notice and retain the Principal Amount of this Debenture that was to be converted pursuant to such Holder's Conversion Notice (provided that the Holder's voiding its Conversion Notice shall not affect the Company's obligations to make any payments that have accrued prior to the date of such notice); or (D) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(y) of this Subsection 4(a) above, requrie the Company to, or cause the Transfer Agent to, issue shares of Common Stock in accordance with such Holder's Conversion Notice and pursuant to Section 4(d) at a Conversion Price equal to the average of the Closing Bid Prices of the Common Stock for the five consecutive Trading Days preceding such Holder's Election Responsxe Notice or such other market price that satisfies the applicable exchange or trading market. For purposes hereof, "Funded Debt" means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade liabilities and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices), whether on open account or evidenced by a note, bond, debenture or similar instrument or otherwise, (b) obligations under capital leases, (c) reimbursement obligations for letters of credit, banker's acceptances or other credit accommodations, (d) contingent obligations and (e) obligations secured by any lien on the Company's property, even if the Company has not assumed such obligations. (b) Mechanics of Fulfilling Holder's Election. The Company shall within one (1) business day send via facsimile to the Holder of this Debenture, upon receipt of a facsimile copy of a Conversion Notice from such Holder that cannot be fully satisfied as described in Subsection 4(a), a notice of the Company's inability to fully satisfy such Holder's Notice shall indicate (i) the reason why the Company is unable to fully satisfy such Holder's Conversion Notice, (ii) the Principal Amount of this Debenture that cannot be converted and (iii) the applicable Redemption Price. The Holder shall notify the Company of its election pursuant to Subsection 4(a) above by delivering written notice via facsimile to the Company (the "Election Response Notice"). (c) Payment of Redemption Price. If the Holder shall elect to have this Debenture redeemed pursuant to Subsection 4(a)(i), the Company shall pay the Redemption Price to such Holder in Cash by Wire transfer of immediately available funds in accordance with such Holder's written wire transfer instructions within five (5) days after the Company's receipt of the Holder's Election Response Notice. If the Company shall fail to pay the applicable Redemption Price to such holder within such five (5) day period (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Redemption Price), in addition to any remedy the Holder of this Debenture may ahve hereunder, or under the Securities Purchase Agreement and the Registration Rights Agreement, such unpaid amount shall bear interest at the rate of 3.0% per month (prorated for partial months) until paid in full. Until the Redemption Price is paid in full to such Holder, such Holder may void the Redemption with respect to Principal Amount of this Debenture for which the full Redemption Price has not been paid and receive back a Convertible Debenture 16 representing such Principal Amount. Notwithstanding the foregoing, if the Company fails to pay the applicable Redemption Price within such period of five (5) days due to a dispute as to the determination of the Redemption Price, such dispute shall be resolved pursuant to Section 3(h) with the term "Redemption Price" being substituted for the term "Conversion Rate." (d) Pro-rata Conversion and Redemption. If the Company or the Transfer Agent receives a Conversion Notice or Election Response Notice electing Redemption from more than one holder of Convertible Debentures on the same day, and the Company can convert and/or redeem some, but not all, of such Convertible Debentures pursuant to this Section 4, the Company shall convert and/or redeem from each holder of Convertible Debentures electing to have its Convertible Debenture converted and/or redeemed at such time an amount equal to such holder's pro-rata amount (based on the Principal Amount of Convertible Debentures held by such holder relative to the Principal Amount of Convertible Debentures sought to be converted) of all Convertible Debentures being converted and/or redeemed as such time. 5. Notices. In case at any time: (a) the Company shall declare any dividend upon its Common Stock payable in cash or stock or make any other pro rata distribution to the holders of its Common Stock; or (b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (c) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, or by telex or facsimile or by recognized overnight delivery service, addressed to the Holder at the address of the Holder as shown on the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganiztion, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (ii) in the case of any such reorganization, reclassification, consolidation , merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other properly deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 17 6. Stock to be Reserved. The Company has a sufficient number of shares of Common Stock available to reserve for issuance upon the conversion of all outstanding Convertible Debentures, assuming immediate conversion. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of all of its Convertible Debentures as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all Convertible Debentures. The Company covenants that all shares of Common Stock that shall be so issued shall be duly and validly issued, fully-paid and non assessable. The Company will take all such action as may be so taken without violation of any applicable law or regulation to have a sufficient number of authorized but unissued shares of Common Stock to issue upon conversion of all Convertible Debentures. The Company will not take any action that results in any adjustment of the conversion rights if the total number of shares of Common Stock issued and issuable after such action upon conversion of this Debenture would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 7. Default and Remedies. (a) Event of Default. Each of the following shall constitute an "Event of Default": (i) the Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) days; or (ii) any of the representations or warranties made by the Company herein, in the Purchase Agreement, in the Registration Rights Agreement, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement, shall be false or misleading in any material respect at the time made; or (iii) a default or an event of default shall have occurred and be continuing with respect to any Funded Debt; or (iv) the Company shall (A) admit in writing its inability to pay its debts generally as they mature; (B) make an assignmtne for the benefit of recditors or commence proceedings for its dissolution; or (C) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property of business; or (v) a trustee, liwuidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (vi) 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 sixty (60) days thereafter; or 18 (vii) any money judgment, writ or 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 sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (viii) 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. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, the Holder may declare this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, 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 enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default shall be made at the fair market value of the shares of Common Stock that would be issued at the Conversion Price on the date the Debenture becomes due and payable pursuant to this provision. Such payment shall be made withint three (3) Trading Days of such demand, and if not paid within such period, the Company shall pay the holder liquidated damages of three percent (3%) per month of such amount until paid, pro-rated for any partial months. 8. Payment Obligation Unconditional. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. 9. No Recourse to Stockholders, etc. 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, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any 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. 10. No Rights as Stockholder. No provision of 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 stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. 19 11. Definitions. As used in this Debenture, the term "Common Stock" shall mean and include the Company's authorized common stock, no par value, as constituted on the issuance date of this Debenture, and shall also include any capital stock of any class of the Company thereafter authorized that shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntaryl liquidation, dissolution or winding up of the Company; provided that the shares of Common Stock receivable upon conversion of this Debenture shall include only shares of Common Stock receivable upon conversion of this Debenture shall include only shares designated as Common Stock of the Company on the issuance date of this Debenture, or in case of any reorganization, reclassification, or stock split of the outstanding shares thereof, the stock, securities or assets provided for in Sections 3(f) and (g). Any capitalized terms used in this Debenture but not defined herein shall have the meanings set forth in the Purchase Agreement. 12. Loss, Theft, Destruction of Debenture. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutiliation of this Debenture and, in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (which shall not include the posting of any bond), or, in the case of any such mutiliation, upon surrender and cancellation of this Debenture, the Company shall make, issue and deliver, in lieu of such lost, stoledn, destroyed or mutiliated Debenture, one or more new Debentures of like tenor. This Debenture shall be held and owned upon the express condition that the provisions of this Section 12 are exclusive with respect to the replacement of mutiliated, destroyed, lost or stolen Debentures and shall preclude any and all other rights and remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement of negotiable instruments or other securities without the surrender thereof. 13. Record Owner. The Company may deem the person in whose name this Debenture shall be registered upon the registry books of the Company to be, and may treat such person as, the absolute owner of this Debenture for the purpose of conversion of this Debenture and for all other purposes, and the Company shall not be affected by any notice to the contrary. All such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Debenture to the extent of the sum or sums so paid or the conversion so made. 14. Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of Convertible Debentures. Upon any transfer of this Debenture in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Convertible Debenture register. 15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with 20 the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation therof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of this Debenture and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of this Debenture shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 16. Construction. This Debenture shall be deemed to be jointly drafted by the Company and the initial Holders of the Convertible Debentures and shall not be construed against any person as the drafter hereof. 17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder of this Debenture in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof (except to the extent that such power, right or privilege must, in accordance with the terms of this Debenture, be exercised within a specified period of time and such period of time has lapsed without such power, right or privilege being exercised), nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 18. Governing Law. 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 City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles 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 conveniens, to the bringing of any such proceeding in such jurisdictions. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. President Attest: /s/ Marcia Smith - ----------------------------- 21 EX-10.366 131 0131.txt 9% CONVERTIBLE DEBENTURE - JOSEPH CHAZANOW Exhibit 10.366 9% CONVERTIBLE DEBENTURE NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. No. 8 $50,000 Principal Amount Pollution Research and Control Corp. 9% CONVERTIBLE DEBENTURE DUE JULY 17, 2001 THIS DEBENTURE is issued by Pollution Research and Control Corp., a California corporation (the "Company"), and is part of an issue of an aggregate of up to $900,000 principal amount of 9% Convertible Debentures due July 17, 2001 (the "Convertible Debentures"). FOR VALUE RECEIVED, the Company promises to pay to Joseph Chazanow, or permitted assigns (the "Holder"), the principal sum of Fifty Thousand (US $50,000) Dollars on July 17, 2001 (the "Maturity Date") and to pay interest on the principal sum outstanding from time to time quarterly in arrears at the rate of 9% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue daily on the basis of a 360 day year until payment in full of the principal sum has been made or duly provided for. Quarterly interest payments shall be due and payable on March 31, June 30, September 30 and December 31 of each year, commencing with September 30, 2000. If any interest payment date or the Maturity Date is not a business day in the State of California, then such payment shall be made on the next succeeding business day. Subject to the provisions of Section 4 below, principal and accrued interest on this Debenture are payable in cash on the interest payment date or the Maturity Date, as applicable, 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 principal of and any accrued but unpaid interest due upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check, plus any amounts so deducted. This Debenture is subject to the following additional provisions: 1. Withholding and Issuance Taxes. 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. The issuance of certificates for shares of common stock, no par value (the "Common Stock"), of the Company upon conversion of this Debenture shall be made without charge to the Holder for any United States issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder of this Debenture. 2. Transfer of Debenture. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities Act or any applicable state or foreign 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 the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 3. Conversion. The Holder of this Debenture is entitled, at its option, to convert, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Principal Amount of this Debenture or any portion thereof, together with accrued and unpaid interest on such Principal Amount, into shares of Common Stock as follows: (a) Right to Convert. (i) Subject to the terms, conditions, and restrictions of this Section 3, at any time commencing 90 days after the initial issuance of the Convertible Debentures, the Holder of this Debenture shall have the right to convert all or any portion of the Principal Amount of this Debenture, together with the accrued and unpaid interest on such Principal Amount so converted, into that number of fully-paid and nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Subsection 3(e), at the Conversion Rate (as defined below). 2 (ii) Anything is Subsection 3(a)(i) to the contrary notwithstanding, in no event shall any Holder be entitled to convert all or any portion of the Principal Amount of this Debenture in excess of that amount of the Principal Amount of this Debenture that, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its "affiliates" (as defined in Rule 405 under the Securities Act) to exceed 4.99% of the outstanding shares of the Common Stock following such conversion. For purposes of this Subsection, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination is being made, but shall exclude the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of the Principal Amount of this Debenture beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants or convertible preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this Subjection 3(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For purposes of this Subsection, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Holder, the Company shall immediately confirm orally and in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of this Debenture by such Holder since the date as of which such number of outstanding shares of Common Stock was reported. To the extent that the limitation contained in this Subsection 3(a)(ii) applies, the determination of whether such portion of this Debenture is convertible (in relation to other securities owned by a Holder) and of what portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of whether such portion of this Debenture is convertible (in relation to other securities owned by such Holder) and of what portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation or right to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert such portion of this Debenture at such time as such conversion will not violate the provisions of this Subsection. A Holder of this Debenture may waive the provisions of this Subsection 3(a)(ii) as to itself (and solely as to itself) upon not less than 75 days' prior notice to the Company, and the provisions of this Subsection 3(a)(ii) shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No conversion in violation of this Subsection 3(a)(ii), but otherwise in accordance with this Debenture, shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. Subsection 3(g) below sets forth additional limitations on the Company's obligation to issue shares of Common Stock upon conversion of this Debenture. 3 (b) Conversion Rate and Other Definitions. The number of shares of Common Stock issuable upon conversion of all or any portion of the Principal Amount of this Debenture pursuant to Subsection (3)(a) shall be determined according to the following formula (the "Conversion Rate"): Conversion Amount Conversion Price For purposes of this Debenture, the following terms shall have the following meanings: "Change of Control" means: (i) The acquisition by any Person (as defined below) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (x) the then outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of the subsection (i), the following acquisitions of stock shall not result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A), (B), and (C) of subsection (iii) of this definition; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Incumbent Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding share of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from 4 such Business Combination, including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries (any such corporation being referred to herein as a "Resulting Company"), in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, immediately prior to such Business Combination, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or a Resulting Company) beneficially owns, directly or indirectly, 30% or more of, respectively, the outstanding shares of Common Stock of the Resulting Company or the combined voting power of the then outstanding voting securities of such Resulting Company except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the Resulting Company were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Corporation; or (v) Termination of Albert E. Gosselin, Jr. as Chief Executive Officer of the Company (including a change or diminution of his duties as such), whether by resignation, termination, death, disability or otherwise, without the written consent of the Holder. "Closing Bid Price" or "Closing Ask Price" means, for any security as of any date, the last closing bid or ask price, as the case may be, for such security on the Principal Market (as defined below) as reported by Bloomberg L.P. ("Bloomberg"), or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid or ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid or ask price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid or ask price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid or ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price or Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price or Closing Ask Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of a majority of the currently outstanding Principal Amount of all Convertible Debentures. If the Company and the Holders of the Convertible Debentures are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Subsection 3(h). (All such determinations are to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). "Conversion Amount" means that portion of this Debenture being converted by such Holder. "Conversion Price" means, as of any Conversion Date or other date of determination, 80% of the Market Price, but in no event more than $2.10 (the "Maximum Conversion Price"). 5 "Market Price" means the lowest Closing Bid Price of the Common Stock on the Principal Market as reported by Bloomberg for the five Trading Days immediately preceding the date of determination. "Principal Market" means the Nasdaq SmallCap Market. "Registration Rights Agreement" means that certain Registration Rights Agreement among the Company and the initial holders of the Convertible Debentures concerning the registration of the resale of the shares of Common Stock issuable upon conversion of the Convertible Debentures. "Trading Day" means any day during which the Principal Market shall be open for business. (c) Conversion Notice. The Holder of this Debenture may exercise its conversion right by giving a written conversion notice in the form of Exhibit A hereto (the "Conversion Notice") to the Company's transfer agent for its Common Stock, as designated by the Company from time to time (the "Transfer Agent"), (x) by facsimile or (y) by registered mail or overnight delivery service, with a copy by facsimile to the Company and the Company's outside counsel as specified from time to time by written notice to the holders of the Convertible Debentures. Promptly, but in no event more than five (5) Trading Days after the receipt of the Conversion Notice, a holder of this Debenture shall surrender this Debenture to the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the holders of the Convertible Debentures). If this Debenture has been only partially converted, the Company shall, or instruct the Transfer Agent to, deliver to the Holder of this Debenture a new Debenture evidencing the unconverted Principal Amount of this Debenture. (d) Issuance of Certificates; Time Conversion Effected. (i) Promptly, but in no event more than three (3) Trading Days after the receipt of the Conversion Notice referred to in Subsection 3(c), the Transfer Agent shall issue and deliver, or the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which this Debenture has been converted. In the alternative, if the Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with The Depository Trust Company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Transfer Agent. The rights of the Holder of this Debenture shall cease, and the person or persons in whose name or names any certificate or certificates for share of Common Stock shall be issuable upon such conversion shall be deemed to have become the Holder or Holders of record of the shares represented thereby, on the Conversion Date. Issuance of shares of Common Stock issuable upon conversion that are requested to be registered in a name other than that of the registered Holder shall be subject o compliance with all applicable federal and state securities laws. 6 (ii) The Company understands that a delay in the issuance of the shares of Common Stock beyond three (3) Trading Days after the Conversion Date could result in economic loss to the Holder of this Debenture. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of shares of Common Stock upon conversion in accordance with the following schedule (where "No. Trading Days Late" means the number of Trading Days after three (3) Trading Days from the date of receipt by the Transfer Agent of the Conversion Notice to and including the date of the Holder's or its designees' receipt of such shares): No. Trading Days Late Late Payment for Each $5,000 of Conversion Amount of Principal Amount Being Converted - ----------------------------------- -------------------------------- 1 $100 2 $200 3 $300 4 $400 5 $500 6 $600 7 $700 8 $800 9 $900 10 $1,000 (10) $1,000 + $200 for each Trading Day late after 10 Calendar Days The Company shall make all payments due under this Subsection 3(d)(ii) in immediately available funds upon demand. Nothing herein shall limit the Holder's right to pursue injunctive relief and/or actual damages for the Company's failure to issue and deliver (or to cause its Transfer Agent to issue and deliver) Common Stock to the Holder as required by Subsection 3(d)(i), including, without limitation, the Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies that may be available to the Holder, if the Company fails for any reason to effect delivery of such shares of Common Stock within five (5) Trading Days after the Conversion Date, the Holder will be entitled to revoke the relevant Conversion Notice by delivering a notice to such effect to the Transfer Agent, with a copy by facsimile to the Company and the Company's outside counsel. Upon delivery of such notice of revocation, the Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Conversion Notice, except that the Holder shall retain the right to receive both the late payment amounts set forth above plus the actual cost of any "buy-in." 7 (iii) If, at any time, (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Common Stock or otherwise dishonors or rejects, or causes the Transfer Agent to dishonor or reject, any Conversion Notice properly delivered in accordance with this Section 3 or (b) any third party who is not and has never been an affiliate of the Holder obtains a judgment or order from any court or public or governmental authority that denies, enjoins, limits, modifies, or delays the right of the Holder to effect the conversion of this Debenture into Common Stock, then the Holder shall have the right, by written notice to the Company, to require the Company to promptly redeem this Debenture in accordance with Section 4. Under any of the circumstances set forth above, the Company shall indemnify the Holder against and hold it harmless from, and be responsible for the payment of, all costs and expenses of the Holder, including its reasonable legal fees and expenses, as any when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the Holder). The Company shall not refuse to honor, or cause the Transfer Agent to refuse to honor, any Conversion Notice unless the Company or the Transfer Agent, as the case may be, has actually been enjoined by a court of competent jurisdiction from doing so and, if so enjoined, the Company shall post with such court a performance bond equal to 150% of the Conversion Amount of this Debenture sought to be converted by a Holder that is the subject of such injunction. (iv) The Holder of this Debenture shall be entitled to exercise its conversion privilege notwithstanding the commencement of any case under 11 U.S.C. 101 et seq: (the "Bankruptcy Code"). The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the Holder's conversion privilege, if the Company becomes a debtor under the Bankruptcy Code. The Company agrees to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362 without cost or expense to the Holder. (e) Fractional Shares. The Company shall not, nor shall it cause the Transfer Agent to, issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of this Debenture by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after such aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay, or cause the Transfer Agent to pay, a cash adjustment in respect of such fraction of a share of Common Stock based upon the Closing Bid Price of the Common Stock on the Conversion Date. (f) Adjustment to Conversion Price; Dilution and Other Events. In order to prevent dilution of the rights granted under this Debenture, the Conversion Price will be subject to adjustment from time to time as provided in this Subsection 3(f). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Conversion Shares (as defined in the Purchase Agreement) and shares of Common Stock deemed to have been issued by the Company in connection with Approved Issuances (as defined below)) for a consideration per share (the "Applicable Price") less than the Conversion Price as in effect 8 immediately prior to such time (an "Offering"), then immediately after such issue or sale, the Conversion Price shall be reduced to an amount equal to (X) the sum of (A) the product of the Conversion Price in effect immediately prior to such issue or sale and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issue or sale, and (B) the consideration, if any, received by the Company upon such issue or sale divided by (Y) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants any rights or options to subscribe for or to purchase Common Stock (other than in connection with an Approved Issuance or upon conversion of this Debenture) or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities") and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Applicable Price, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of this Subsection 3(f)(i)(A), the "price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" is determined by dividing (I) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No adjustment of the Maximum Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Applicable Price, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities 9 shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of this Subsection 3(f)(i)(B), the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (I) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (II) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No adjustment of the Maximum Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Maximum Conversion Price had been or are to be made pursuant to other provisions of this Subsection 3(f)(i), no further adjustment of the Maximum Conversion Price shall be made by reason of such issue or sale. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Subsection 3(f)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price that varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which an Convertible Securities are convertible into or exchangeable for Common Stock change at any time, the Maximum Conversion Price in effect at the time of such change shall be readjusted to the Maximum Conversion Price in effect that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Maximum Conversion Price then in effect. (D) Certain Definitions. For purposes of determining the adjusted Maximum Conversion Price under this Subsection 3(f)(i), the following terms have meanings set forth below: (I) "Approved Issuances" shall mean (i) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, or (ii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option plan, restricted stock plan, stock purchase plan or other plan or written compensation contract for the benefit of the Company's employees, directors or consultants in effect on the date hereof. (II) "Common Stock Deemed Outstanding" means, at any given time, the number os shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be 10 outstanding pursuant to Sections 3(f)(i)(A) and 3(f)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock issuable upon conversion of the Convertible Debentures. (E) Effect of Certain Events on Maximum Conversion Price. For purposes of determining the adjusted Maximum Conversion Price under this Section 3(f), the following shall be applicable: (I) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the amount received by the Company therefore, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the arithmetic average of the Closing Bid Prices of such security for the five consecutive Trading Days immediately preceding the date of receipt. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders constituting more than fifty percent (50%) of the Principal Amount of all Convertible Debentures then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within forty-eight (48) hours of the tenth (10th) day following the Valuation Event by an independent, reputable appraiser selected by the Company. The determination of such appraiser shall be deemed binding upon all parties absent manifest error. (II) Integrated Transactions. In case any Option is issued in connections with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. (III) Treasury Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock. 11 (IV) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (ii) Adjustment of Maximum Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Maximum Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Maximum Conversion Price in effect immediately prior to such combination will be proportionately increased. (iii) Adjustment of Conversion Price upon Issuance of Convertible Securities. If the Company in any manner issues or sells Convertible Securities that are convertible into Common Stock at a price that varies with the market price of the Common Stock (the formulation for such variable price being herein referred to as, the "Variable Price") and such Variable Price is not calculated using the same formula used to calculate the Variabe Conversion Price in effect immediately prior to the time of such issue or sale, the Company shall provide written notice thereof via facsimile and overnight courier to each holder of this Debenture ("Variable Notice") on the date of issuance of such Convertible Securities. If the Holder of this Debenture provides written notice via facsimile and overnight courier (the "Varirable Price Election Notice") to the Company within five (5) business days of receiving a Variable Notice that the Holder desires to replace the Conversion Price then in effect with the Variable Price described in such Variable Notice, then from and after the date of the Company's receipt of the Variable Price Election Notice, the Conversion Price will automatically be replaced with the Variable Price (together with such modifications to this Debenture as may be required to give full effect to the substitution of the Variable Price for the Conversion Price). The Holder's delivery of a Variable Price Election Notice shall serve as the consent required to amend this Debenture. In the event that the Holder delivers a Conversion Notice at any time after the Company's issuance of Convertible Securities with a Variable Price but before the Holder's receipt of the Company's Variable Notice, then such holder shall have the option by written notice to the Company to rescind such Conversion Notice or to have the Conversion Price be equal to such Variable Price for the conversion effected by such Conversion Notice. (iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as 12 defined below) or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) to insure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock otherwise acquirable and receivable upon the conversion of this Debenture, such shares of stock, securities or assets as would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable had this Debenture been converted into shares of Common Stock immediately prior to such Organic Change (without taking into account any limitations or restrictions on the timing or amount of conversions). In any such case, the Company will make appropriate provision (in form and substance reasonably satisfactory to the Holder) with respect to the Holder's rights and interest to insure that the provisions of this Section 3(f) will thereafter be applicable to this Debenture (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Maximum Conversion Price in accordance with Subsection 3(f)(i) using the value for the Common Stock reflected by the terms of such consolidation, merger or sale, if the value so reflected is less than the Maximum Conversion Price in effect immediately prior to such consolidation, merger or sale). The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance reasonably satisfactory to the holders of a more than fifty percent (50%) of Principal Amount of the Convertible Debentures then outstanding), the obligation to deliver to each holder of Convertible Debentures such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. "Person" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (v) Certain Events. If any event occurs of the type contemplated by the provisions of this Subsection 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders this Debenture and the other holders of Convertible Debentures; provided, however, that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 3(f). (g) Limitation on Number of Conversion Shares. Notwithstanding any other provision herein, the Company shall not be obligated to issue any shares of Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock plus shares of Common Stock issued upon the exercise of the Warrants issued under the Securities Purchase Agreement would exceed 19.9% of the shares of Common Stock issued and outstanding on the date of the Purchase Agreement (the "Exchange Cap") without the Company's violating the 13 corporate governance rules of the Nasdaq Stock Market, except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the corporate governane rules of the Nasdaq Stock Market for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of more than fifty percent (50%) of the Principal Amount of the Convertible Debentures then outstanding. Until such approval or written opinion is obtained or such action has been taken by the required number of holders, no purchaser of Convertible Debentures pursuant to the Purchase Agreement, collectively, (the "Investors" and, individually, an "Investor") shall be issued, upon conversion of Convertible Debentures, shares of Common Stock in an amount greater than the product of (x) the Exchange Cap amount multiplied by (y) a fraction, the numerator of which is the Principal Amount of Convertible Debentures purchased by such Investor pursuant to the Purchase Agreement and the denominator of which is the aggregate Principal Amount of all the Convertible Debentures purchased by the Investors pursuant to the Purchase Agreement (the "Cap Allocation Amount"). In the event that any Investor shall sell or otherwise transfer any of such Investor's Convertible Debentures, the transferee shall be allocated a pro rata portion of such Investor's Cap Allocation Amount. In the event that any holder of a Convertible Debenture shall convert all of such holder's Convertible Debenture into a number of shares of Common Stock that, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Convertible Debentures on a pro rata basis in proportion to the Principal Amount of Convertible Debentures then held by each such Holder. (h) Dispute Resolution. In the case of a dispute as to the determination of the Closing Ask Price or Closing Bid Price of any security or the arithmetic calculation of the Conversion Rate, the Company shall, or shall cause the Transfer Agent to, promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) business day of receipt of the Holder's Converstion Notice. If the Holder and the Company are unable to agree upon the determination os such Closing Ask Price or Closing Bid Price, as the case may be, or the arithmetic calculation of the Conversion Rate within one (1) business day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall within one (1) business day folling such date of delivery submit via facsimile (A) the disputed determination of the Closing Ask Price or Closing Bid Price, as the case may be, to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent certified public accounting firm. The Company shall cause the investment bank or the accounting firm, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accounting firm's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. 14 4. Redenption. (a) Holder's Option if Company Cannot Fully Convert or Holder Cannot Sell Without Restriction. If, (i) upon the Transfer Agent's receipt of a Conversion Notice, the Transfer Agent fails to issue shares of Common Stock as contemplated by Subsection 3(d)(i) or cannot issue shares of Common Stock registered for resale under the registration statement required to be filed under the Registration Rights Agreement with respect to the shares of Common Stock issuable upon conversion of this Debenture (the "Registration Statement") (or which are exempt from the registration requirements under the Securities Act pursuant to Rule 144(k) under the Securities Act) for any reason, including, without limitation, because the Company (x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or its securities, including without limitation the Exchange Cap, from issuing all of the Common Stock that is to be issued to the Holder of this Debenture pursuant to a Conversion Notice or (z) fails to have a sufficient number of shares of Common Stock registered for resale under the Registration Statement, or (ii) a Registration Default (as defined in the Registration Rights Agreement) shall have occurred and be continuing, the Company shall have defaulted in the payment of any Funded Debt (as hereinafter defined) for a period in excess of any cure period thereunder (regardless of whether the creditor of such Funded Debt shall have declared a default), or the employment of Albert E. Gosselin, Jr. shall have terminated for any reason, or (iii) the Common Stock is delisted from the Principal Market and not immediately listed on the New York Stock Exchange, the American Stock Exchange or another national securities exchange approved by holders of Convertible Debentures constituting more than fifth percent (50%) of the Principal Amount of all Convertible Debentures then outstanding, then in the case of clause (i), the Company shall, or shall cause the Transfer Agent to, issue as many shares of Common Stock as it is able to issue in accordance with such holder's Conversion Notice (if the holder shall have given such a Conversion Notice) and pursuant to the provisions of Section 3(d), and with respect to all or any part of the unconverted Principal Amount of this Debenture held by such Holder, the Holder, solely at such Holder's option, can elect to: (A) require the Company to redeem from such Holder all or any part of its remaining Principal Amount of this Debenture ("Redemption") at a premium equal to the greater of (I) the sum of: (a) 150% of such Principal Amount and (b) the accrued interest thereon or (II) the product of (a) the Conversion Rate on the date of such Holder's delivery of an Election Response Notice (as defined below) and (b) the greater of (i) the Closing Ask Price of the Common Stock on the Trading Day immediately preceding the event giving rise to Redemption or (ii) the Closing Ask Price of the Common Stock on the date of the Holder's delivery to the Company of a notice of redemption or, if such date of delivery is not a Trading Day, the next date on which the exchange or market on which the Common Stock is traded is open (the "Redemption Price"); (B) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(z) of this Subsection 4(a) above, require the Company to, or cause the Transfer Agent to, issue restricted shares of Common Stock in accordance with such Holder's Conversion Notice; 15 (C) void its Conversion Notice and retain the Principal Amount of this Debenture that was to be converted pursuant to such Holder's Conversion Notice (provided that the Holder's voiding its Conversion Notice shall not affect the Company's obligations to make any payments that have accrued prior to the date of such notice); or (D) if the Company's inability to fully convert this Debenture is pursuant to clause (a)(i)(y) of this Subsection 4(a) above, requrie the Company to, or cause the Transfer Agent to, issue shares of Common Stock in accordance with such Holder's Conversion Notice and pursuant to Section 4(d) at a Conversion Price equal to the average of the Closing Bid Prices of the Common Stock for the five consecutive Trading Days preceding such Holder's Election Responsxe Notice or such other market price that satisfies the applicable exchange or trading market. For purposes hereof, "Funded Debt" means all (a) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade liabilities and accrued expenses incurred in the ordinary course of business and payable in accordance with customary practices), whether on open account or evidenced by a note, bond, debenture or similar instrument or otherwise, (b) obligations under capital leases, (c) reimbursement obligations for letters of credit, banker's acceptances or other credit accommodations, (d) contingent obligations and (e) obligations secured by any lien on the Company's property, even if the Company has not assumed such obligations. (b) Mechanics of Fulfilling Holder's Election. The Company shall within one (1) business day send via facsimile to the Holder of this Debenture, upon receipt of a facsimile copy of a Conversion Notice from such Holder that cannot be fully satisfied as described in Subsection 4(a), a notice of the Company's inability to fully satisfy such Holder's Notice shall indicate (i) the reason why the Company is unable to fully satisfy such Holder's Conversion Notice, (ii) the Principal Amount of this Debenture that cannot be converted and (iii) the applicable Redemption Price. The Holder shall notify the Company of its election pursuant to Subsection 4(a) above by delivering written notice via facsimile to the Company (the "Election Response Notice"). (c) Payment of Redemption Price. If the Holder shall elect to have this Debenture redeemed pursuant to Subsection 4(a)(i), the Company shall pay the Redemption Price to such Holder in Cash by Wire transfer of immediately available funds in accordance with such Holder's written wire transfer instructions within five (5) days after the Company's receipt of the Holder's Election Response Notice. If the Company shall fail to pay the applicable Redemption Price to such holder within such five (5) day period (other than pursuant to a dispute as to the determination of the arithmetic calculation of the Redemption Price), in addition to any remedy the Holder of this Debenture may ahve hereunder, or under the Securities Purchase Agreement and the Registration Rights Agreement, such unpaid amount shall bear interest at the rate of 3.0% per month (prorated for partial months) until paid in full. Until the Redemption Price is paid in full to such Holder, such Holder may void the Redemption with respect to Principal Amount of this Debenture for which the full Redemption Price has not been paid and receive back a Convertible Debenture 16 representing such Principal Amount. Notwithstanding the foregoing, if the Company fails to pay the applicable Redemption Price within such period of five (5) days due to a dispute as to the determination of the Redemption Price, such dispute shall be resolved pursuant to Section 3(h) with the term "Redemption Price" being substituted for the term "Conversion Rate." (d) Pro-rata Conversion and Redemption. If the Company or the Transfer Agent receives a Conversion Notice or Election Response Notice electing Redemption from more than one holder of Convertible Debentures on the same day, and the Company can convert and/or redeem some, but not all, of such Convertible Debentures pursuant to this Section 4, the Company shall convert and/or redeem from each holder of Convertible Debentures electing to have its Convertible Debenture converted and/or redeemed at such time an amount equal to such holder's pro-rata amount (based on the Principal Amount of Convertible Debentures held by such holder relative to the Principal Amount of Convertible Debentures sought to be converted) of all Convertible Debentures being converted and/or redeemed as such time. 5. Notices. In case at any time: (a) the Company shall declare any dividend upon its Common Stock payable in cash or stock or make any other pro rata distribution to the holders of its Common Stock; or (b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (c) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, or by telex or facsimile or by recognized overnight delivery service, addressed to the Holder at the address of the Holder as shown on the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganiztion, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (ii) in the case of any such reorganization, reclassification, consolidation , merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other properly deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 17 6. Stock to be Reserved. The Company has a sufficient number of shares of Common Stock available to reserve for issuance upon the conversion of all outstanding Convertible Debentures, assuming immediate conversion. The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of all of its Convertible Debentures as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all Convertible Debentures. The Company covenants that all shares of Common Stock that shall be so issued shall be duly and validly issued, fully-paid and non assessable. The Company will take all such action as may be so taken without violation of any applicable law or regulation to have a sufficient number of authorized but unissued shares of Common Stock to issue upon conversion of all Convertible Debentures. The Company will not take any action that results in any adjustment of the conversion rights if the total number of shares of Common Stock issued and issuable after such action upon conversion of this Debenture would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 7. Default and Remedies. (a) Event of Default. Each of the following shall constitute an "Event of Default": (i) the Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) days; or (ii) any of the representations or warranties made by the Company herein, in the Purchase Agreement, in the Registration Rights Agreement, or in any agreement, certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement, shall be false or misleading in any material respect at the time made; or (iii) a default or an event of default shall have occurred and be continuing with respect to any Funded Debt; or (iv) the Company shall (A) admit in writing its inability to pay its debts generally as they mature; (B) make an assignmtne for the benefit of recditors or commence proceedings for its dissolution; or (C) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property of business; or (v) a trustee, liwuidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or (vi) 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 sixty (60) days thereafter; or 18 (vii) any money judgment, writ or 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 sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (viii) 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. (b) Remedies. Upon the occurrence and during the continuance of any Event of Default, the Holder may declare this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, 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 enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law; provided, that any payment of this Debenture in connection with an Event of Default shall be made at the fair market value of the shares of Common Stock that would be issued at the Conversion Price on the date the Debenture becomes due and payable pursuant to this provision. Such payment shall be made withint three (3) Trading Days of such demand, and if not paid within such period, the Company shall pay the holder liquidated damages of three percent (3%) per month of such amount until paid, pro-rated for any partial months. 8. Payment Obligation Unconditional. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock, herein prescribed. This Debenture is a direct obligation of the Company. 9. No Recourse to Stockholders, etc. 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, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any 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. 10. No Rights as Stockholder. No provision of 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 stockholder in respect of any meeting of stockholders or any rights whatsoever as a stockholder of the Company, unless and to the extent converted in accordance with the terms hereof. 19 11. Definitions. As used in this Debenture, the term "Common Stock" shall mean and include the Company's authorized common stock, no par value, as constituted on the issuance date of this Debenture, and shall also include any capital stock of any class of the Company thereafter authorized that shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference in the distribution of assets upon the voluntary or involuntaryl liquidation, dissolution or winding up of the Company; provided that the shares of Common Stock receivable upon conversion of this Debenture shall include only shares of Common Stock receivable upon conversion of this Debenture shall include only shares designated as Common Stock of the Company on the issuance date of this Debenture, or in case of any reorganization, reclassification, or stock split of the outstanding shares thereof, the stock, securities or assets provided for in Sections 3(f) and (g). Any capitalized terms used in this Debenture but not defined herein shall have the meanings set forth in the Purchase Agreement. 12. Loss, Theft, Destruction of Debenture. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutiliation of this Debenture and, in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (which shall not include the posting of any bond), or, in the case of any such mutiliation, upon surrender and cancellation of this Debenture, the Company shall make, issue and deliver, in lieu of such lost, stoledn, destroyed or mutiliated Debenture, one or more new Debentures of like tenor. This Debenture shall be held and owned upon the express condition that the provisions of this Section 12 are exclusive with respect to the replacement of mutiliated, destroyed, lost or stolen Debentures and shall preclude any and all other rights and remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement of negotiable instruments or other securities without the surrender thereof. 13. Record Owner. The Company may deem the person in whose name this Debenture shall be registered upon the registry books of the Company to be, and may treat such person as, the absolute owner of this Debenture for the purpose of conversion of this Debenture and for all other purposes, and the Company shall not be affected by any notice to the contrary. All such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Debenture to the extent of the sum or sums so paid or the conversion so made. 14. Register. The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the registration of Convertible Debentures. Upon any transfer of this Debenture in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Convertible Debenture register. 15. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with 20 the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation therof) shall be the amounts to be received by the Holder hereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of this Debenture and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of this Debenture shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 16. Construction. This Debenture shall be deemed to be jointly drafted by the Company and the initial Holders of the Convertible Debentures and shall not be construed against any person as the drafter hereof. 17. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder of this Debenture in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof (except to the extent that such power, right or privilege must, in accordance with the terms of this Debenture, be exercised within a specified period of time and such period of time has lapsed without such power, right or privilege being exercised), nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 18. Governing Law. 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 City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles, California or the state courts of the State of California sitting in the City of Los Angeles 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 conveniens, to the bringing of any such proceeding in such jurisdictions. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. Dated: July 17, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------- Albert E. Gosselin, Jr. President Attest: /s/ Marcia Smith - ----------------------------- 21 EX-10.367 132 0132.txt AGREEMENT EXHIBIT 10.367 AGREEMENT This Agreement (the "Agreement") is made and entered into this 20th day of March, 2001, by and between Pollution Research and Control Corp., a California corporation (the "Company"), 506 Paula Avenue, Glendale, California 91201, and Astor Capital, Inc., a California corporation ("Astor"), 9300 Wilshire Boulevard, Suite #308, Beverly Hills, California 90212. RECITALS: A. WHEREAS, Astor has all requisite corporate power and authority and the legal right, as agent for the various Holders (defined below) of the Debentures (defined below), to enter into this Agreement. B. WHEREAS, Astor desires to forbear from exercising any of its rights to receive additional shares of common stock, no par value per share (the "Common Stock"), of the Company under the anti-dilution provisions of the Debentures as a result of the issuance of 700,000 shares of the Company's Common Stock to Silverline pursuant to paragraph 5.ii of the Consulting Agreement dated January 4, 2001, between the Company and Silverline. NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises, covenants, agreements, representations and warranties set forth hereinafter, and for other good and valuable consideration, the receipt and sufficiency are hereby acknowledged, the parties hereto agree as follows: 1. Agency. Astor has all requisite corporate power and authority and the legal right, as agent for the various Holders, whose names are set forth in paragraph 3 below (collectively, the "Holders"), of the convertible debentures described in paragraph 3 (collectively, the "Debentures" and, individually, a "Debenture"), to enter into this Agreement and to consummate the transactions contemplated herein. 2. Forbearance from Exercising Rights under Debt Instruments. Astor agrees to forbear from exercising any of its rights to receive additional shares of Common Stock of the Company under the anti-dilution provisions of the Debentures as a result of the issuance of 700,000 shares of the Company's Common Stock to Silverline pursuant to paragraph 5.ii. of the Consulting Agreement dated January 4, 2001, between the Company and Silverline.
3. Payment and Retirement of Debentures. (i) Each of, the outstanding Debentures of the Company are as follows: Debenture Holder Price - --------- ------ ----- 18%-$500,000 face amount debenture due December Brittanica Associates $650,000 31, 2000, convertible into shares of common Limited plus all stock of the Company at the lesser accrued of $2.25 or 80% of the market price of the interest common stock on the date of conversion. 12%-$500,000 face amount debenture due February Target Growth $550,000 23, 2001, convertible into shares of common stock Fund plus all of the Company at the lesser of $2.00 or 85% of the accrued market price of the common stock on the interest date of conversion. 9%-$200,000 face amount debenture due July 17, 2001 IIG Equities $230,000 convertible into shares of common stock of the Opportunities plus all Company at the rate described in paragraph Fund, Ltd. accrued (3)(b) of the debenture. interest 9%-$50,000 face amount debenture due July 17, 2001, Joseph Chazanow $65,000 convertible into shares of common stock of the plus all Company at the rate described in paragraph accrued (3)(b) of the debenture. interest 9%-$20,000 face amount debenture due July 17, 2001, Chris Briggs $26,000 convertible into shares of common stock of the plus all Company at the rate described in paragraph accrued (3)(b) of the debenture. interest 9%-$20,000 face amount debenture due July 17, 2001, JRT Holdings $26,000 convertible into shares of common stock of the plus all Company at the rate described in paragraph accrued (3)(b) of the debenture. interest 9%-$5,000 face amount debenture due July 17, 2001, Cristobal Garcia $6,500 convertible into shares of common stock of the plus all Company at the rate described in paragraph accrued (3)(b) of the debenture. interest 9%-$30,000 face amount debenture due July 17, 2001, George T. $39,000 convertible into shares of common stock of the Heiser, Jr. plus all Company at the rate described in paragraph accrued (3)(b) of the debenture. interest 9%-$15,000 face amount debenture due July 17, 2001, Christopher $19,500 convertible into shares of common stock of the Mehringer. plus all Company at the rate described in paragraph accrued (3)(b) of the debenture. interest 9%-$30,000 face amount debenture due July 17, 2001, Robert $39,000 convertible into shares of common stock of the Del Guercio plus all Company at the rate described in paragraph accrued (3)(b) of the debenture. interest
4. Miscellaneous A. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed, registered or certified mail, return receipt requested, postage prepaid, to the following addresses: 1. If to the Company, to: Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Attn: Mr. Albert E. Gosselin, Jr., President 2. If to Astor Capital, to: Astor Capital, Inc. 9300 Wilshire Boulevard, Suite #308 Beverly Hills, California 90212 Attn: Mr. Jacques Tizabi, President Notices delivered personally shall be effective upon delivery. Notices transmitted by facsimile shall be effective when received. Notices delivered by registered or certified mail shall be effective on the date set forth on the receipt of registered or certified mail, or seventy-two hours after mailing, whichever is earlier. B. All agreements made and entered into in connection with this transaction shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns. C. The Company and Astor shall each bear its own expenses and costs, including the fees of any attorney retained by it, incurred in connection with the preparation of this Agreement and the consummation of the transactions hereby. D. This Agreement contains the entire agreement between the parties and supersedes all prior agreements, understandings and writings between the parties with respect to the subject matter hereof and thereof. Each party hereto acknowledges that no representations, inducements, promises or agreements, verbal or otherwise, have been made by either party, or anyone acting with authority on behalf of either party, which are not embodied herein or in an exhibit hereto, and that no other agreement, statement or promise may be relied upon or shall be valid or binding. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated verbally. This Agreement may be amended or any term hereof may be changed, waived, discharged or terminated by an agreement in writing signed by both parties hereto. E. This Agreement may be executed in one or more counterparts, each of which when so executed shall be an original, but both of which together shall constitute one agreement. F. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. G. This Agreement shall be construed and enforceable in accordance with, and be governed by, the internal laws of the State of California without regard to the principles of conflict of law. IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written. THE COMPANY; POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin ---------------------------------- Albert E. Gosselin, Jr., President ASTOR: ASTOR CAPITAL, INC. By: /s/ Jacques Tizabi --------------------------------- Jacques Tizabi, President EX-10.368 133 0133.txt EQUITY JOINT VENTURE CONTRACT EXHIBIT 10.368 Equity Joint Venture Contract between Shenyang Dongyu Group Co. Ltd. and Dasibi Environmental Corp. for the Establishment of Shenyang Dasibi-Dongyu Environmental Monitoring Equipment Company Limited September 6, 2000 CHAPTER ONE, GENERAL PROVISIONS 1.1 Parties to the Contract PARTY A: SHENYANG DONGYU GROUP CO., LTD. Registered in: China Registered Address: No.2 Xiaoqiaoxiang, Wenti Avenue, Heping District, Shenyang City, Liaoning Province, China Legal Representative: Zhuang Yuyang Position: Chairman of the Board Nationality: China PARTY B: DASIBI ENVIRONMENTAL CORP. Registered in: U.S.A. Registered Address: 506 Paula Avenue, Glendale, CA 91201 Legal Representative: Albert E. Gosselin Position: Chairman of the Board Nationality: U.S.A. 1.2 Party A and Party B (hereinafter referred to as both parties) agree to set up a Joint Venture in China under the Act of Sino-Foreign Joint Ventures of the People's Republic of China and the Implementation Rules for that Act, and other relevant Chinese laws and regulations. Both parties agree to be abided by the Contract sincerely. CHAPTER TWO, NAME AND ADDRESS 2.1 Chinese Name of Joint Venture: ?????--???????????? English name of Joint Venture: Shenyang Dasibi-Dongyu Environmental Monitoring Equipment Company Limited (Hereinafter referred to as JOINT VENTURE) Registered Address of Joint Venture: Shenyang High and New Technology Industry Development Zone CHAPTER THREE, AIMS AND SCOPE OF BUSINESS 3.1 Aims of setting up JOINT VENTURE are: to provide end users high quality equipment and services, and to gain economic profit for shareholders to JOINT VENTURE. 3.2 Business Scope of JOINT VENTURE is: manufacture and sale of air pollution monitoring equipment and provide related technical consultation, support and after-sale services. 3.3 With the relevant governmental department's approval, JOINT VENTURE may timely adjust its investment orientation, scope of business and management approaches to meet the development of businesses and the market demand. CHAPTER FOUR, TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL 4.1 JOINT VENTURE shall be a limited liability company. Both parties bear the limited responsibility of JOINT VENTURE respectively according to the quota subscribed by each of them. 4.2 Total amount of investment of JOINT VENTURE is USD 3,000,000.00 4.3 The registered capital is USD 3,000,000.00, which shall be contributed by both parties respectively according to their subscriptions in 2 installments: In the first installment, Party A shall contribute USD 1,000,000.00 in cash, Party B shall contribute USD 600,000.00 in cash and in the form of transfer the technology of the 3rd generation products, which is, valued USD 400,000.00. In the second installment, after setting up JOINT VENTURE, Party B shall continue to transfer the technology. With both parties' efforts, JOINT VENTURE shall complete the R&D of the 4th generation products, and the intellectual property right of the 4th generation products shall belong to JOINT VENTURE. Both parties agree that the technology transferred in the R&D period is valued USD 300,000.00 and is regarded as one part of the investment of Party B when the R&D is successful. USD 200,000.00 in cash is the other part of the investment contributed by Party B. Party A shall contribute USD 500, 000.00 in cash. 4.4 The transferred technology contributed by Party B should get the approval of the relevant Chinese governmental department. Party B should ensure the technology is advanced, practical and without any defect. The quality of the products manufactured by JOINT VENTURE utilizing the above technology should meet the relevant technical requirements of EPA and of SEPA. For details of the technology transfer, both parties shall sign a separate Technology Transfer Agreement, as Attachment I to the Contract, which shall be deemed as an integral part of the Contract and shall be of the same effect. 4.5 The first installment should complete within two (2) months after the establishment of JOINT VENTURE. The second installment should complete within 6 months after the establishment of JOINT VENTURE. 4.6 The R&D of the 4th generation products should be completed within one year beginning from the date of signing the Contract. While certain postponement should also be agreed, taking into consideration that the development of the system software and the certification by the US EPA to the products could also take a rather long time. 4.7 The ownership of the transferred instrumentation technology of Party B and the abovementioned intellectual property right cannot be assigned without both parties' agreement. 4.8 After transfer of the instrumentation technology, JOINT VENTURE, the exclusive possessor to that technology, has all the intellectual property right of the coequal technology. Any actualization and utilization of one part or total of the abovesaid technology should get the approval of the JOINT VENTURE. Party B should provide all the necessary materials, manuals, training, approval and assistants to the JOINT VENTURE for the above purpose. 4.9 After the subscribed capital is fully paid by both parties and is examined and checked and an examination report is presented by a Chinese certified public accountant employed by JOINT VENTURE. JOINT VENTURE shall issue the subscription certificate with signatures of the Chairman and vice Chairman of the Board. The main contents of which are: name of JOINT VENTURE, date of establishment, name of the parties to the Venture and subscribed quota of each, date of subscription, date of issuance of this certificate, etc. The subscription certificate is a non-negotiable document. 4.10 The registered capital shall not be reduced during the term of this contract. 4.11 Owing to the efforts that China Environmental Protection Science & Technology Development Investment Ltd., Co. and Smart E International (HK) Company Limited have contributed throughout the negotiation and execution of the JOINT VENTURE, both parties agree to grant partial shares to China Environmental Protection Science & Technology Development Investment Ltd., Co. and Smart E International (HK) Company Limited. Party A will transfer partial shares to China Environmental Protection Science & Technology Development Investment Ltd., Co. and Party B will transfer partial shares to. Smart E International (HK) Company Limited. China Environmental Protection Science & Technology Development Investment Ltd., Co. and Hualong Co., each is allowed to designate one director to the Board of Directors. For details of the shares transfer, both parties shall sign a separate Shares Transfer Agreement, as Attachment II to the Contract, which shall be deemed as an integral part of the Contract and shall be of the same effect. CHAPTER FIVE, OPERATION ARRANGEMENT 5.1 Both parties agree that JOINT VENTURE and ITS manufacturing plant to be based in Shenyang, China. 5.2 Both parties agree that all goods to be sold in China by party B not using U.S. Ex-Im Bank financing shall be provided by JOINT VENTURE. Both parties shall ensure JOINT VENTURE to be capable of selling directly and servicing directly to the end users within the shortest amount of time. 5.3 Party B agrees, during the validity period of the Contract, it will not seek any other opportunity to set up any company in China, which has such a similar business scope with JOINT VENTURE established under the Contract that may affect the business of JOINT VENTURE, other than the ones in cooperation with Party A. 5.4 Both parties agree to decide issues of product sale, after-sale service, and after-sale training through further negotiation, and to settle those issues by an additional attachment to the Contract or a separate agreement, which shall be deemed as an integral part of the Contract and shall be of the same effect. CHAPTER SIX, ADMINISTRATIVE STRUCTURE 6.1 Board of Directors is the supreme authority of JOINT VENTURE, which is responsible for all important issues. 6.2 Board of Directors is made of six directors, of which two are appointed or changed by Party A and two are appointed or changed by Party B, and one is appointed or changed by Smart E International (HK) Co., Ltd and one is appointed or changed by China Environmental Protection Science and Technology Investment Co., Ltd. Directors are appointed for four years and will be eligible for re-appointment where the appointing party chooses. 6.3 Chairman of the Board of Directors shall be appointed by Party B among its directors and the vice Chairman of the Board of Directors shall be appointed by Party A among its directors. Chairman of the Board of Directors is the legal representative of JOINT VENTURE. Where he/she may, for a short time, authorize Vice Chairman or any other director to act on behalf of himself/herself. 6.4 The general meeting of Board of Directors shall be held at least once per year and an extraordinary general meeting may be held upon the proposal of no less than one third of the directors. The general meeting shall be held in principal at the local of JOINT VENTURE, which shall be called for and presided over by the Chairman of the Board of Directors. In case the Chairman of the Board is in absent, the Vice Chairman shall call and preside over the meeting in the Chairman's place. A quorum at the general meeting shall consist of at least two thirds of the directors; no resolution passed shall be valid if there is no such quorum. Chairman of the Board shall inform the directors with written notice twenty (20) days in advance. 6.5 In case Chairman of the Board cannot present the general meeting, he/she shall authorize any other directors to act on behalf of himself/herself with written note. The general meeting shall handle the issues concerning the rights and benefits of each party under the principal of equality and mutual benefit. 6.6 Any resolution of the general meeting should be resulted through secret ballot. 6.7 Items aftersaid shall be approved by unanimous resolution of the Board: 1) Modifying of Articles of Association, 2) Prolonging the term of JOINT VENTURE, 3) Canceling or dissolving the JOINT VENTURE, 4) Increasing or assigning the registered capital, 5) Incorporating JOINT VENTURE with other economic entities. 6.8 Items aftersaid shall be approved by more than two-thirds of the directors present at the meeting of the Board: 1) Annual Profit Dividing Plan, 2) Middle and Long Term Development Plan, 3) Appointing and removing General Manager and Vice General Manager, and CFO, 4) Other material matters, which the Board believes, should be approved by two-thirds majority. Other items shall be approved by more than half of the directors present at the meeting of the Board. 6.9 Minutes of the Board meeting shall be made respectively in Chinese and English, and after being signed by the directors present at the meeting, shall be placed on file. 6.10 The administrative structure of JOINT VENTURE is the 'General Manager taking the responsibility under the leadership of the Board of Directors'. 6.11 The General Manager is responsible for the execution of all resolutions agreed and adopted at the meetings of the Board of Directors, organizes and manages routine administrative and operating work. 6.12 Without the approval of the Board of Directors, the General Manager and the Vice General Manager shall not concurrently hold the office of general manager or vice general manager(s) of other economic entities or in any wise compete for other business against JOINT VENTURE. Board of Directors may from time to time remove the General Manager or Vice General Manager(s) or other administrative person(s) by resolution where the General Manager or Vice General Manager(s) corrupt (s) or severely neglect (s) his/their duty. 6.13 Both parties agree with the selection of the CFO for Joint Venture appointed by Smart E International (HK) Co., Ltd. CHAPTER SEVEN, RESPONSIBILITY 7.1 Party A and Party B shall try to realize the business aims and targets with the most efficient and economic methods. Both parties shall respectively appoint the qualified and experienced managers and technicians who shall work hard in JOINT VENTURE. 7.2 Party A shall be respectively responsible for following matters. 1) Assisting to apply to the competent Chinese department (s) for the establishment of JOINT VENTURE, having JOINT VENTURE registered and getting the business license, 2) Responsible for conducting all domestic procedures in order to get the approval by relevant Chinese Government as mentioned in Article 4.4; all necessary cost thus occurred should be borne by JOINT VENTURE, 3) Assisting JOINT VENTURE to apply for the reducing of remitting taxes within the permissible limit, 4) Assisting the JOINT VENTURE to collect the information on the Chinese market demands, the competitive capability of the products and the trend of the sale opportunity etc., 5) Assisting foreign employees to get entrance visas, work licenses and travel permits, etc., 6) Assisting JOINT VENTURE to arrange the employees' businesses, lodging, food, transportation and medical treatment etc., 7) Assisting the JOINT VENTURE to employ Chinese employees, engineers, workers and interpreters, 8) Assisting the JOINT VENTURE to open foreign currency and RMB accounts in the bank permitted by the Chinese authorities concerned, 9) Assisting the JOINT VENTURE to arrange the domestic transportation and to apply to customs. Party A shall assist the JOINT VENTURE, under its requirements, to undertake other matters if the condition permits. 7.3 Party B shall be respectively responsible for following matters: 1) Positively and timely assisting the JOINT VENTURE to deal with the transfer of the knowledge property right of the technology of 3rd and 4th generation products possessed by Party B, 2) Guiding and assisting JOINT VENTURE to solve the problem in technology and business administration and, providing the advanced and practical technology as well as the experiences in administration to ensure the high quality of the products to gain the greatest profits, in additional assuming the relevant responsibilities of the technology, 3) Assigning and appointing the experts to do training in JOINT VENTURE, assisting JOINT VENTURE to make the training schedule to enable the Chinese employees to master the relevant workmanship and special skills within the scheduled time, 4) Providing and making the working regulations of workmanship, equipment maintenance, security and material storage to JOINT VENTURE, 5) Assisting JOINT VENTURE to collect the relevant and practicable information on the technologies, workmanship and economy as well as the material on law, 6) Assisting and supporting the technology development, products' replacement and R&D on the new products, 7) Ensuring all the products sold to mainland China, Hong Kong special administrative region, Macao special administrative region and Taiwan region to be manufactured or provided by JOINT VENTURE and positively assisting JOINT VENTURE to develop that specific overseas markets for facilitating the export of the products. Party B shall assist the JOINT VENTURE, under its requirements, to undertake other matters if the condition permits. CHAPTER EIGHT, DISTRIBUTION OF PROFITS AND TAXES 8.1 The net profits should be distributed by Party A and Party B as soon as possible according to their real shares in the registered capital. In order to reach that purpose, the hereinafter items should be deducted from the gross profits to get the net one: 1) The income tax which should be paid according to the relevant Chinese laws and regulations and the items described in the contract, 2) The reserve funds set up by the Board of Directors in terms of the relevant Chinese laws and regulations, 3) The enterprise development fund set up by the Board of Directors, 4) The welfare and employee-award fund set up by the Board of Directors in terms of the relevant Chinese laws and regulations. 8.2 The Board of Directors of JOINT VENTURE may determine one part or all of the profits will not be distributed; however, if there is an accumulated surplus, one part or all parts shall be distributed. 8.3 The JOINT VENTURE shall enjoy the relevant treatment of reducing of remitting taxes according to the relevant Chinese laws and regulations 8.4 The overseas Chinese, Macao and Hong Kong employees in JOINT VENTURE shall pay the income taxes according to the laws and regulations in Chinese Taxes Act. CHAPTER NINE, THE RIGHTS OF JOINT VENTURE AND WAGES 9.1 JOINT VENTURE has the aftersaid rights according to the relevant laws and regulations of People's Republic of China: 1) Independently managing the business of its own enterprises and may appoint staff from U.S. to undertake the technical and administrative work. 2) Employing the Chinese employees who are subject to the examination and enrolled on the basis of competitive selection, signing the contracts with the employees, trying out the enrolled employees for 3 to 6 months, dismissing the employees of whom are surplus caused by the changes of the production and technical condition and whom can't meet the relevant requirements after training and cannot be maneuvered to other post, according to how serious the case are giving a disciplinary warning to, recording a demerit or reducing the wages of or even dismissing any employee who violates the rules and regulations of JOINT VENTURE and causes the bad results. 9.2 JOINT VENTURE may set its salary payment rule according to its operation requirement like payment by piece, or by hour, or by day or by month. 9.3 The wages of the employed foreigners and the overseas Chinese that were paid the income taxes and other legitimate incomes should be remitted overseas though the China Bank or other banks according to the regulations of Foreign Currency Administration. 9.4 In case that JOINT VENTURE terminates before the date of expiration for any reason, the assets may be assigned and the capital may be remitted abroad after repaying the debt of JOINT VENTURE with the approval of the relevant department. CHAPTER TEN, ACCOUNT AND AUDIT 10.1 The accounts of JOINT VENTURE are subject to the regulations and laws for Sino-Foreign joint ventures of People's Republic of China. 10.2 JOINT VENTURE should make accounting report within the three months after the fiscal year and send its copies to Party A, Party B and each director. The accounting report contains a balance sheet and a profit and loss statement of the fiscal year, which should be made both in Chinese and English, and be audited to ensure its reality and accuracy by an accounting firm registered in China, which is entrusted by the Board of Directors. CHAPTER ELEVEN, EFFECTIVENESS OF THE CONTRACT AND THE TERM OF JOINT VENTURE 11.1 The contract should come into effect upon the approval by the governmental department in charge. JOINT VENTURE should register in the Industrial and Commercial Administration Bureau within one month after receiving the approval to apply for the license. The date of establishment of JOINT VENTURE is the same date of the issuance of the license of JOINT VENTURE. 11.2 The term of JOINT VENTURE is ten (10) years. 11.3 The contract may be terminated with both parties' agreement or the term of JOINT VENTURE may be prolonged with an approval of the relevant governmental department six months before the maturity of JOINT VENTURE. 11.4 The termination of the contract caused by any party for any reason should be applied to the original ratifying agency of the contract. CHAPTER TWELVE, ASSIGNMENT 12.1 Any party of JOINT VENTURE shall not assign, pledge or transfer to the third party or deal with in other ways any or all parts of its stock share without the unanimous resolution of the Board of Directors and the approval of the Chinese examining and ratifying agency in charge. One party who shall assign the stock share shall be subject to the hereinafter items: 1) Where one party shall assign any or parts of the stock shares, the non-assigning party shall have priority in purchasing the shares in assignment, 2) The non-assigning party who have priority in purchasing shall reply to the assigning party within 30 days after the written notice is put forward by the assigning party, otherwise the assigning party has the right to assign to the third party, 3) Where one party transfers any or all parts of its shares to the third party, the term of the transfer to the third party should not be more favorable than what to the non-transferring party except what described in the Clause 4.11 in the Contract, 4) Dealing with all the matters on the assignment by one party should not affect the operation and the administration structure of JOINT VENTURE. Where the assignment is approved, JOINT VENTURE shall re-register at the Industrial and Commercial Administration Bureau within 30 days. CHAPTER THIRTEEN, TERMINATION AND LIQUIDATION 13.1 Any party is entitled to send the written notice 60 days in advance to terminate the contract where any case as follows occurs: 1) One party willingly or unwillingly declares the bankruptcy, liquidation and dismissal, 2) One party materially breach the contract, 3) JOINT VENTURE shall not continue to operate due to the violation of the government's laws and regulations despite of the strict abidance of the regulations and laws of JOINT VENTURE by both parties. 13.2 Where the term of JOINT VENTURE is expired or the contract is terminated, the Board of Directors shall put forward the liquidation procedure and principles, nominate the candidates of the liquidation commission, and divide up the assets of JOINT VENTURE. The liquidation commission may employ the accountant and lawyer 13.3 According to the relevant Chinese laws and regulations, the liquidation commission may sell the JOINT VENTURE as ' company in operation' with the approval of the relevant agency. Under the same price condition, parties to the Contract shall have the priority in purchasing. Under the same price condition, Party A has the priority of purchasing to Party B. 13.4 In case that no party is willing to purchase the 'company in operation', JOINT VENTURE should be terminated. The liquidation commission may sell the assets of JOINT VENTURE separately. Under the same price condition, parties to the Contract shall have the priority in purchasing. Under the same price condition, Party A has the priority of purchasing to Party B. 13.5 The remaining property of JOINT VENTURE after the liquidation should be distributed to both parties according to their shares in the registered capital. CHAPTER FOURTEEN, INSURANCE 14.1 Insurance of JOINT VENTURE against all risks shall be from Chinese Insurance Company, in respect to the cover, amount, period, etc of the insurance, the General Manager of JOINT VENTURE shall make a decision under the provisions concerned of the People's Insurance Company of China. CHAPTER FIFTEEN, APPLICABLE LAWS AND REGULATIONS 15.1 The signing and the implement of the contract, the establishment, operation, administration, taxes, imported and exported materials, labor administration, usage of land, in and out of China, and other activities of JOINT VENTURE should be subject to the effective laws and regulations of People's Republic of China. 15.2 The property and the rights and benefits of JOINT VENTURE and, the registered capital, distribution of the profits and all the legal rights and benefits of and the quotas owe to Party B should be protected by the effective laws and regulations of People's Republic of China. CHAPTER SIXTEEN, REMEDIES FOR BREACH OF CONTRACT 16.1 If either party does not complete its capital contribution in accordance with the schedule and amounts set in the Contract, commencing from the first month for which contribution is overdue, the breaching Party shall pay liquidated damages to the non-breaching Party at the rate of one percent (1%) of the amount of the contribution to be made for every month of delay. If contribution is more than three months overdue, the breaching Party shall pay aggregate liquidated damages at the rates of three percent (3%) of the amount of the capital contribution to be made and, in addition, the non-breaching Party shall have the right to terminate the Contract and to claim the compensation from the breaching Party for all economic losses directly resulting from its breach of contract. If a party fails to perform any of its obligations under the Contract or if a party's representation or warranty under the Contract is untrue or materially inaccurate, such party shall be deemed to have breached the Contract. The breaching party shall have thirty days from receipt of notice form the other party specifying the breach to correct such breach and the non-breaching party shall have the duty to mitigate any losses incurring therefrom. If after such thirty-day period such breach is not corrected, the breaching party shall become liable to the other party for all economic losses directly caused by the breach. If any party cannot perform its obligations or responsibilities or loses arise form the implementation of the Contract due to reasons of issuance, amendments or cancellation of Chinese laws any losses thus incurred or arising thereof shall not be borne solely by either party and both parties shall discuss a solution. 16.2 If any party fails to raise or delay the raising of its claim, such action should not be deemed to waive its right of claim. CHAPTER SEVENTEEN, DISPUTE SOLVING 17.1 All disputes arising from the implementation of, or in connection with, the Contract shall be resolved by the parties through friendly consultation. 17.2 If a dispute cannot be resolved within sixty days of commencement of consultations, either party shall refer the dispute to final arbitration to the China International Economic and Trade Arbitration Commission in accordance with the Arbitration Rules for the time being in force, which rules are deemed to be incorporated by reference into this Article. The arbitral award shall be final and binding on both parties. The costs of arbitration shall be borne by the losing party. CHAPTER EIGHTEEN, FORCE MAJEURE 18.1 Where the performance hereof is hindered by or is absolutely impossible under the terms and conditions herein on account of force majeures, including earthquakes, typhoons, folds, fires, war or other unexpected, irresistible or unavoidable force in respect of their consequences or results, the time of performing the obligations described on the contract should be prolonged, which should be equal to the time delayed by the force majeures. 18.2 The party in contingency shall inform the other party of such contingency by telegram immediately, and within 14 days present valid documents signed by the notarial agency of the locale, stating the details of the incident and proving it is impossible to perform whole or part of this contract or that extension of time of performance hereof is necessary. Where the delay is over 90 days, whether continue to perform the contract or terminate the contract before the expiration should be determined under the friendly agreement. CHAPTER NINETEEN, LANGUAGE OF THE CONTRACT 19.1 There are two original contracts made respectively in Chinese and English, both of which are of the same effect. 19.2 The titles of each chapter are listed for the markedness, which should not affect the implications and the paraphrases of each item. 19.3 Following material documents of JOINT VENTURE should be written respectively in Chinese and English: 1) Minutes of the meetings of Board, 2) All accounting report. 19.4 Under both parties' agreements, Chinese is the working language. CHAPTER TWENTY, CONTRACT COPIES 20.1 Each party shall hold two copies of this contract; the extra copies should be made under the requirements of the governmental sectors in charge. CHAPTER TWENTY ONE, OTHERS 21.1 Any item in the contract or the documents concerning to the contract except the violated, the illegal and the non-compulsive should be performed without any effect or weakening 21.2 It is proved that the contract should be signed by the legal representatives or the authorize representatives of both parties on the date marked on the first page of the contract. CHAPTER TWENTY TWO, NOTICE 22.1 Where any party of JOINT VENTURE sends the notices comprising letters and facsimiles to the other party, the addresses on the notices should be subject to the following: Party A: Shenyang Dongyu Group Co., Ltd. Address: No2 Heping South Street, Heping District, Shenyang Zip: 110003 Tel: 86-24-2325 8801 Fax: 86-24-2325 8898 Party B: Dasibi Environmental Corp. Address: 506 Paula Avenue, Glendale, CA Zip: 91201 Tel: 001-818-247-7601 Fax: 001-818-247-7614 22.2 During the validity period of the Contract, any party has the right to modify the address above and shall send the written notice to the other party when making such modification. Party A: Shenyang Dongyu Group Co., Ltd. /s/ Zhuang Yuyang - ----------------- Authorized representative: Mr. Zhuang Yuyang Position: Chairman of the Board Party B: Dasibi Environmental Corp. /s/ Albert E. Gosselin - ---------------------- Authorized representative: Mr. Albert E. Gosselin Position: Chairman of the Board ATTACHMENT I - TECHNOLOGY TRANSFER AGREEMENT An integral part of the Joint Venture Contract Ref. 1.1 Parties to the Agreement Party A: Shenyang Dongyu Group Co., Ltd Party B: Dasibi Environmental Corp. 1.2 Party A and Party B (herein referred to as both parties) agree to set up a Joint Venture heretofore known as Shenyang Dasibi-Dongyu Environmental Monitoring Equipment Company Limited wherein Party B agree to transfer technology to the Joint Venture as capital consideration as follows: a. 3rd generation technology valued at USD 400,000 b. 4th generation technology valued at USD 300,000 Definition: Technology Transfer is composed of necessary documentation, training and direct instrument-related software with source code to manufacture the following equipment and related hardware comprising what is referred to as "System 1000" complete for US EPA approval: 1. Model 8001 - Data Acquisition System 2. Model 5008 - W/DET Programmable Multi-Gas Calibrator 3. Model 5011-B - Zero Air Unit 4. Model 7001 - TSP Analyzer W/PM10 5. Model 1008-AH - Ambient O3 Analyzer 6. Model 3008 - Ambient CO Analyzer 7. Model 4108 - Ambient SO2 Analyzer 8. Model 2108 - Ambient NOx, NO2, NO Analyzer 1.3 The transferred technology of Party B shall get the approval of the relevant Chinese government department. Party B shall ensure the technology is advanced, practical and without any defect. The products manufactured by JOINT VENTURE utilizing the above technologies shall meet the relevant technical requirements of US EPA and China SEPA. 1.4 The R&D of the 4th generation products shall be completed within one year of the date of signing the Contract. The manufacture of the products will be started after the development of the system software and the certification by the US EPA. 1.5 The ownership of the transferred instrumentation technology of Party B and the above-mentioned intellectual property right cannot be assigned without both parties' agreement. 1.6 After transfer of the instrumentation technology, JOINT VENTURE, the exclusive possessor to that technology, has all the intellectual property right of the co-equal technology. Any actualization and utilization of one part or total of the above said technology shall get the approval of the JOINT VENTURE. Party B shall provide all the necessary materials, manuals, training, approval and assistants to the JOINT VENTURE for the above purposes. Party B shall guaranty that the products manufactured by the JOINT VENTURE utilizing the transferred technology could be a complete and independent air monitoring system. The technology transfer should be started immediately after signing the Contract, in order to ensure that the JOINT VENTURE can manufacture 3rd generation products pursuant to the Contract before February 2001, utilizing the transferred technology. Party B shall provide the JOINT VENTURE all technical materials and documentation of the 3rd generation products within 3 months after signing the Contract. And especially the technical materials and documentation of the SO2, NOX, TSP(PM10), Multi-gas Calibrator and Datalogger shall be transferred to the Joint Venture before November 6, 2000. All know-How, advice, documentation, specified manufacture facilities and other information provided by Dasibi Environmental Corp. pursuant to this Contract shall be kept strictly confidential by the parties to the Contract and the JOINT VENTURE, and shall be used solely for benefit in connection with the manufacture and sale of the JOINT VENTURE products except, however, that the Company has to disclose any such information to government authorities due to Chinese Laws and regulations. PARTY A: SHENYANG DONGYU GROUP CO., LTD. /s/ Zhuang Yuyang Authorized Representative: Mr. Zhuang Yuyang Position: Chairman of the Board PARTY B: DASIBI ENVIRONMENTAL CORP. /s/ Albert E. Gosselin Authorized Representative: Mr. Albert E. Gosselin Position: Chairman of the Board ATTACHMENT II - SHARE TRANSFER AGREEMENT An integral part of the Joint Venture Contract Ref. 1.1 Parties to the Agreement PARTY A: SHENYANG DONGYU GROUP CO., LTD. PARTY B: DASIBI ENVIRONMENTAL CORP. PARTY C: CHINA ENVIRONMENTAL PROTECTION SCIENCE & TECHNOLOGY DEVELOPMENT INVESTMENT LTD., CO. PARTY D: SMART E INTERNATIONAL (HK) COMPANY LIMITED 2.11 Owing to the efforts that China Environmental Protection Science and Technology development Investment Ltd., and Smart E International (HK) Company Ltd. have contributed throughout the negotiation and execution of the JOINT VENTURE, both parties agree to grant partial shares to China Environmental Protection Science & Technology Development Investment Ltd., Co. and Smart E International (HK) Company Ltd. China Environmental Protection Science & Technology Development Investment Ltd., Co. and Smart E International (HK) Company Ltd, each is allowed to designate one director to the Board of Directors. Pursuant to the above Party A will transfer partial shares 10% of its interest in the JOINT VENTURE to China Environmental Protection Science and Technology development Investment Ltd., Co. Pursuant to the above Party B will transfer partial shares 15% of its interest in the JOINT VENTURE to Smart E International (HK) Company Ltd. By signature affixed hereto all parties agree to the share distribution: PARTY A: SHENYANG DONGYU GROUP CO., LTD. /s/ Zhuang Yuyang Authorized Representative: Mr. Zhuang Yuyang Position: Chairman of the Board PARTY B: DASIBI ENVIRONMENTAL CORP. /s/ Albert E. Gosselin Authorized Representative: Mr. Albert E. Gosselin Position: Chairman of the Board PARTY C: CHINA ENVIRONMENTAL PROTECTION SCIENCE & TECHNOLOGY DEVELOPMENT INVESTMENT LTD., CO. /s/ Liu Yige Authorized Representative: Mr. Liu Yige Position: Chairman of the Board PARTY D: SMART E INTERNATIONAL (HK) COMPANY LIMITED /s/ Li Peng Authorized Representative: Mr. Li Peng Position: Chairman of the Board EX-21 134 0134.txt LIST OF SUBSIDIARIES EXHIBIT 21 LIST OF SUBSIDIARIES Dasibi Environmental Corp. 506 Paula Avenue Glendale, Ca 91201 -----END PRIVACY-ENHANCED MESSAGE-----