-----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, NRmZ2QiFv+bxHyXMMyQ1ygR6XdwC1QpWuZa1cgofwGRDQQuE6yexnmNWd3DZuLUZ GhM2pZ7OoRtRfTd87KSdEQ== 0001000096-99-000147.txt : 19990330 0001000096-99-000147.hdr.sgml : 19990330 ACCESSION NUMBER: 0001000096-99-000147 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 27 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990329 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: 99576015 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 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, 1998 { } Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) Pollution Research and Control Corp. ------------------------------------ (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: $2,800,000 The aggregate market value of the voting stock held by non-affiliates of the Small Business Issuer, computed by reference to the average bid and asked prices of such stock on March 22, 1999 was $3,158,833. Total number of pages - 206 Exhibit Index is located at Page E-1 DOCUMENTS INCORPORATED BY REFERENCE: Certain exhibits to this Annual Report as set forth in the Exhibit Index located at page E-1. 1 POLLUTION RESEARCH AND CONTROL CORP. Form 10-KSB For the Fiscal Year Ended December 31, 1998 TABLE OF CONTENTS Part I Page ---- Item 1. Description of Business 4 General 4 History of the Company 4 The Air Pollution Industry 6 Instrument Market 6 Control Market 7 Governmental Approval 7 Governmental Regulation and Enforcement 8 Company Products 8 Marketing and Sales; Backlog 9 Foreign Sales 10 Manufacturing and Purchasing 11 Research and Development 11 Employees 11 Competition 12 Intellectual Property 12 Item 2. Description of Properties 12 Item 3. Legal Proceedings 13 Item 4. Submission of Matters to a Vote of Security Holders 14 Part II. Item 5. Market for Common Equity and Related Stockholder Matters 16 Item 6. Management's Discussion and Analysis or Plan of Operation 16 Liquidity and Capital Resources 18 Seasonality 18 Year 2000 Compliance 18 Item 7. Financial Statements 18 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 19 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 20 Directors, Executive Officers and Key Employees 20 Family Relationships 20 Business Experience 20 Section 16(a) Beneficial Ownership Reporting Compliance 23 Item 10. Executive Compensation 23 Executive Compensation 23 Compensation of Directors 23 Employment Agreements 24 Item 11. Security Ownership of Certain Beneficial Owners and Management 24 Item 12. Certain Relationships and Related Transactions 26 Item 13. Exhibits and Reports on Form 8-KA (a) Exhibits 27 (b) Reports on Form 8-KA 27 3 Item 1. Description of Business General The Company's core business for over twenty years has been primarily the design, manufacture and marketing of automated continuous monitoring instruments used to detect and measure various types of air pollution, such as "acid rain," "ozone depletion" and "smog episodes," through its wholly-owned subsidiary, Dasibi Environmental Corp. The Company's products are generally used to measure air pollution levels in geographic areas which range in size from small industrial sites to entire states or countries. The Company also supplies computer-controlled calibration systems that verify the accuracy of its instruments, data loggers to collect and manage pollutant information and final reporting software for remote centralized applications, which is classified as "core business related." Because severe competitive price pressures in its core business have developed (see "History of the Company" below), the Company has during the past few years, pursued various areas of diversification of its developed technology primarily including air pollution control of flue gas-emitted air pollutants and medical, asthma-related, diagnostic instrumentation. At this time no diversification is being pursued (See "Instrumentation Market" and "Control Market" below) and singular focus is being applied to the "core business" as described above. History of the Company and Recent Developments The Company was organized as a California corporation on December 24, 1971, under the name of "A.E. Gosselin Engineering, Inc." as a wholly-owned subsidiary of "Pollution Research and Control Corp." ("PRCC"), a California corporation co-founded in 1966 by Albert E. Gosselin, Jr., the Company's President and Chief Executive Officer, and his wife, Barbara Gosselin, an executive officer and director of the Company. Mr. and Mrs. Gosselin founded the Company to design, manufacture and market air pollution monitoring equipment for ambient air (i.e., the surrounding air) as distinguished from the customer stack source monitoring systems then being designed, manufactured and sold by PRCC. The name of the Company was changed to "Dasibi Environmental Corp." on March 22, 1973. (See Item 9. "Directors, Executive Officers, Promoters and Control Person; Compliance with Section 16(a) of the Exchange Act - Directors, Executive Officers and Key Employees.") The Company was operated as a wholly-owned subsidiary of PRCC until its initial public offering of securities in May 1985. In 1984, PRCC discontinued its research and development activities and assigned them to the Company. From 1984 through May 1985, PRCC acted primarily as a holding company for the Company and Applied Conservation Technology, Inc. ("ACT"), then a wholly-owned subsidiary of PRCC engaged in the business of providing environmental impact reports to electric utilities. ACT was purchased by its management from PRCC in November 1986. Gary Dudley, a director and former Vice President of the Company and a former executive officer and director of PRCC, has been the President and a principal shareholder of ACT, a diversified environmental consulting firm now located in Westminster, California, since November 1986. (See Item 9. "Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act - Directors, Executive Officers and Key Employees.") 4 The Company changed its name to "Pollution Research and Control Corp.," the name of its former parent, PRCC, in November 1989. In January 1990, the Company acquired all of the issued and outstanding shares of Common Stock, $1.00 par value per share, of an inactive California corporation, organized by Mr. and Mrs. Gosselin as co-founders under the name of "Baral Engineering, Inc." in July 1976, which changed its name to "Dasibi Environmental Corp." ("Dasibi") in January 1990. All of the Company's operations were transferred to Dasibi subsequent to the acquisition. Also in 1990, the Company changed its fiscal year from June 30 to December 31. In March 1994, the Company entered into an exclusive worldwide requirements agreement over a three-year period with London-based Logan Research, Ltd. ("LRL") to provide LRL with oxides of nitrogen instrument parts on an "as required" basis for use in medical technology applications. In October 1995, the agreement was modified to be exclusive with a domestic corporation, Logan Medical Devices ("LMD"), which acquired Logan Research, Ltd. In 1995, the Company advanced $164,000 to LRL. The $164,000 was charged against operations in 1995. In June 1996 the Company acquired 100% of the common stock of LMD for 150,125 options to LMD shareholders, all options above market bid price and vesting in January, 1998, such bid price as existed in the date of agreement. In addition, the Company contributed $250,000 to LMD for working capital. Also, in June, 1996, the Company acquired 100% of the stock of Nutek, Inc., a Pensacola, Florida, electrical control panel and printed circuit board manufacturer. No company stock was issued, but 85,000 options at above market bid price on the date of agreement were issued to key employees in this transaction, lawyers and "finders." Such options vested in January 1998. The Company directly paid $250,000 cash into an estimated total purchase price of $1,900,000, the balance obtained from asset based financing solely on Nutek's assets. The Company acquired Nutek primarily for the customer list as it would fit into the Company's air pollution control technology diversification plans. In January, 1998, the the Company began a reorganization program designed to focus on its "core business" alone. The Company's management believed that it could secure long-term contractual business in The People's Republic of China ("China") sufficient to allow expansion of the Company's business independent of competitive price pressures. The initial step of the reorganization was dissolution of the Nutek subsidiary and separation of "LRL" from "LMD". The Company is involved in significant litigation regarding the Nutek dissolution. (See Item 3. "Legal Proceedings.") In June, 1998, the Company signed a $5.1 million dollar contract with China to supply equipment and software to monitor air pollution in eleven cities. Initiation of the work was contingent on final agreement between China and U.S. banks and the Export-Import Bank (Ex-Im) guarantee for financing arranged by the Company. Financing was expected to be completed within a few months, however, the Company has been informed that the earliest date for Ex-Im approval is March 29, 1999. (See "Foreign Sales.") Concurrently, the Company requires in-house financing for above normal working capital needs for a project considerably larger than previously experienced. At this time management believes the Company can obtain, at least, a minimum required through debt financing. There is no assurance that the Company can obtain more than a minimum to initiate the project by debt financing, in which case, the Company would be required to pursue equity financing in which the Company has demonstrated successful experience. 5 The Air Pollution Industry Air pollution consist of certain gases or particles, generally the products of combustion or other industrial processes, which are or may be hazardous to human health. Pollutants include carbon monoxide, ozone, oxides of sulfur and nitrogen, hydrogen sulfide and particles. Small amounts of these pollutants, such as a few parts per million or part per billion, may be harmful. The instruments produced and sold by the Company, the "core business" detect and measure these pollutants and are also utilized in calibrating other pollution measurement equipment. Any systems or processes such as the Company's "flue gas purification system" patent employ chemical and mechanical means to remove these same pollutants from combustion exhaust gases. (See "Research and Development" under this Item 1. "Description of Business"). Industrial entities require equipment to detect the presence and measure the level of pollutants in order to comply with governmental regulations and government regulatory agencies require equipment to enforce governmental standards. Currently, international priority has been given to control (and therefore to monitor) such gaseous pollutants as sulfur dioxide, oxides of nitrogen, carbon monoxide, ozone and particulates (suspended dust). Although manual sampling of both gases and particulates is still performed routinely, improvements in the reliability and accuracy of automated, continuous monitoring equipment, such as that manufactured and sold by the Company, have made manual sampling less desirable and automated monitoring increasingly common. In basic continuous monitoring instruments, ambient air is taken into a manifold, the function of which is to direct a fast-moving stream of ambient air to the monitor. The instrument may use a filter to remove particulates or scrubbers to remove gasses that might interfere with accurate measurement of the pollutant. The pollutant is then introduced into a measurement cell environment where it undergoes a chemical or physical reaction, the output of which can be converted to an electrical signal which, in turn, can be read locally or transmitted to some remote monitoring plant or computer. Measurement cells can be based in many different methods for the detection of the pollutants of interest. Thus, an instrument designer may have many different methods available by which a pollutant may be identified and measured. Some methods used by the Company are flame photometry (wherein concentrations of gaseous elements are measured by burning them and optically observing the color and intensity of the flame generated thereby), infrared absorption (wherein concentrations of infrared absorbing gases are measured by detecting changes in intensity of a radiation beam closed cell), chemiluminescence (wherein a chemical generates a light or a wave length measurable by a photo multiplier tube), ultraviolet spectroscopy (wherein the pollutants' decrease in ultraviolet light intensity is converted by a photoelectric detector to an electric signal) and beta ray attenuation (wherein a radioactive source's beta ray emanation is reduced in direct proportion to the mass of a particle). Instrument Market The air pollution monitoring equipment market includes two markets: (i) source instrumentation for monitoring the source's pollutant emissions as they 6 are discharged into the air and (ii) ambient air for instrumentation for monitoring ambient air pollution. The two markets are quite different in that source instrumentation is generally not subject to rigid governmental-imposed guidelines because of the difficult analyses involved, while ambient air instruments are subject to rigid governmental guidelines because the pollutants are easier to define and measure. Generally, the Company sells its instruments for use in systems for the measurement of ambient air pollution. In a system, air pollution monitoring instruments are united with additional equipment to provide a comprehensive measurement unit. In an ambient air instrumentation system, the monitoring instrument is combined with a manifold intake, a calibrator and data transmitters. The system samples the ambient air, measure the pollutants and transmits the data. The Company designs and manufactures all instruments used in a system, including the data tabulation and transmission devices. Control Market The air pollution control market makes only minimal use of measurement instrumentation. This market is concerned with "purification" of exhaust gases emanating from combustion-related or even chemical-only processes. The "purification" process consists of using various types of equipment which may or may not involve catalysts and/or reagents to cause reactions and/or mechanical removal of a high percentage of selected air pollutants. The highest percentage obtainable will relate, at any given time, to the state-of-the-art of the technology involved and the economics of implementing the technology. The market is old, in essence dating to the beginnings of the industry when soot collectors were first installed on combustion chambers. However, the market size is embryonic since technology has not materially advanced and implementation remains costly so as not to allow any generally accepted control of source pollutants. The Company filed a patent application in April 1994 for a "flue gas purification system," which issued in 1996, and a second patent issued on the system in March, 1999, however, the commercial viability of a market for this invention is not assured. (See "Research and Development" and "Intellectual Property" under this Item 1. "Description of Business.") Governmental Approval The Environmental Protection Agency (the "EPA") administers the federal Clean Air Act, as amended by the Clean Air Act Amendments of 1990, and approves ambient air pollution monitoring equipment meeting certain requirements as either reference or equivalent methods for measuring pollutants. The EPA established the reference method as the basic method for measuring a pollutant. An equivalent method measures the same pollutant utilizing a different technique which achieves results identical to those of the referenced method. As a practical matter, before a monitoring instrument can be sold in the United States, it must receive EPA-approval as either a "reference" or "equivalent" method. Such approvals are given only after rigorous and expensive testing by the applicant and the submission to, and approval by, the EPA of the results of such testing. The testing and approval process generally requires between 12 and 18 months. Following approval, the EPA typically acquires and tests a production model of the device. If the model being tested does not meet the standards established by the approval process, the approval may be withdrawn. 7 Each of the Company's models of ozone monitors and its sulfur dioxide and oxides of nitrogen monitors have been approved as equivalent methods by the EPA. Additionally, the Company's carbon monoxide have been approved as equivalent methods by the EPA. The Company is currently testing a particulate analyzer (beta ray attenuation) for approval as an equivalent method by the EPA. The Company has never had, or been threatened with, a recall as the result of subsequent testing by the EPA of a production model of any of its instruments. The Company believes that, as the performance of air monitoring equipment improves and monitoring technology becomes available in the market, government regulatory agencies tend to adopt regulations requiring the use of such technology. The Company has never been required to modify or discontinue any of its products as a result of improved technology. However, there can be no assurance that future technological improvements will not mandate changes in, or cause the obsolescence of, Company products. Governmental Regulation and Enforcement Legislation requiring more precise air pollution monitoring and enforcement is increasing as the sophistication of the technology improves and as concern for the environment, particularly the depletion of the ozone layer, becomes more acute. The Clean Air Act and the Clean Air Act Amendments of 1990 (the "1990 Amendments"), require increased control of industrial air pollution and represent an increasing threat of shut-down for U.S. industrial concerns which fail to obtain necessary permits and engage in other conduct violative of the legislation. Because increased control requires increased management and monitoring of air pollutants by government and industry, the Company expects, but cannot assure, an increasing market for its products. Company management believes that governmental enforcement policy also has a significant effect on the demand for the Company's products. A relaxation during 1982 in the federal enforcement of governmental standards resulted in a decrease in demand for the Company's products. Since then, the worldwide trend toward increasingly stringent environmental standards for industrial air pollution together with stricter governmental enforcement of environmental regulations, is expected by management to cause continued expansion of segments of the analytical instruments market and a continued increase in demand for the Company's products. In essence, the Company furnishes a product that the customer does not want to buy voluntarily. In previous years, price difference was not significant to the selection process. Since 1994, sizeable discounts have become significant to the purchasers. Company Products In 1972, the Company developed, and in 1974 initially marketed, the first ultraviolet ozone monitor, of which eight models are currently marketed by the Company, including high concentration, manual, remote and microprocessor-controlled versions. The Company will continue to seek to develop new versions of its basic model of ozone monitor, but does not expect any change in the basic principle upon which the instrument operates. Since 1974 the Company has been generally considered the leader in ozone measurement technology in the world. The Company developed microprocessor-controlled carbon monoxide, sulfur dioxide and oxides of nitrogen monitors in 1981, 1986 and 1987, respectively. 8 Calibration equipment, which is utilized to independently verify the measurements made by other monitoring equipment, was first manufactured and sold by the Company in 1976 and known as the "Auditor," was followed by a manually-operated, portable model which performs similar functions. In 1990, both of these models were superseded by the Company's Model 5008 state-of-the-art, programmable calibration equipment. The Company completed development, in 1991, of a Model 7001 beta-gauge to measure sub-micronic particulates, a Model 8001 data-logger to gather and transmit measured air pollutant information. In February 1994, the Company acquired the technology and inventory of the Byron Hydrocarbon Analyzer line which resulted in a completion of the ability to offer a System 1000. This analyzer is a microprocessor controlled, gas chromatograph type methane, non-methane analyzer designated as Model 302. All instruments plus proprietary reporting and predictive software (See "Research and Development") comprise a System 1000 which can serve as a stand-alone satellite in a regional monitoring network. The Company offers a two-year warranty on all of its instruments, with the exception of certain components, such as lamps, which have short lives. With respect to such components, the Company passes on to the customer the warranty (usually one year) which it receives from the manufacturer. The Company's warranty provides for repair or replacement of defective products. During each of the last five fiscal years, the Company has been required to honor its warranty with respect to less than 0.3% of total instruments sales during each such year. Marketing and Sales; Backlog Instruments The marketing and sales activities of the Company include advertising by mail and in trade journals (primarily Pollution Equipment News and Air Pollution Control Association Journal) and attendance and exhibition at worldwide air pollution conferences. The Company attends the annual conference of the Air Pollution Control Association as well as worldwide conferences. The Company's core business instruments have been sold to customers world-wide, including industrial manufacturers; federal, state, city, local and foreign governmental agencies; major industrial companies; and educational and research institutions in over 30 countries. Sales made in the United States are handled directly by the Company's sales staff. Nearly all of the Company's foreign sales are made to distributors who, in turn, resell to the end users. The Company sells to these distributors at a discount from the listed price. Management believes that, normally, the loss of a distributor who may account for a large percentage of sales would have little impact on net revenues as the end users of the Company's products could be transferred to new distributors. An exception in foreign sales is China. Here the Company's distributor serves a dual role with primary emphasis on a role as a representative, when the Company sells direct to the government. The recent China contract (See "Foreign Sales") is a direct sale. Further, it is expected that a loss of this distributor or representative would have a materially adverse impact on the Company's revenues. Historically and currently foreign sales represent approximately 50 percent of the Dasibi Environmental subsidiary - the core business. 9 The Company's core business sales in the export market are evenly distributed among all of its products. Export sales are billed and paid in United States dollars only. In 1999, it is expected that one customer, China, may account for as much as 90% of the sale of the Company products. The Company's core business instruments have been sold during the past five years to over 300 customers in over 30 countries, including industrial manufacturers; federal, state, city, local and foreign governmental agencies; and educational and research institutions. However, a significant loss in the number of government agencies, industrial companies or research agencies which typically purchase the Company's instruments could have a material adverse effect on the Company. Similarly in 1999, the loss of China would have a material adverse effect on the Company. Historically, none of the Company's business has been subject to the re-negotiation of profits, and no government orders have ever been terminated. The indicated core business backlog at December 31, 1998 was approximately $5,500,000 which amount the Company considers material. However, $5,100,000 of this backlog was due to the China contract, discussed below, which, although formally signed, had a contingency of no shipments until "bank to bank" document financing was completed. As of March 22, 1999 this financing has not been completed, although Ex-Im Bank approval was received. Foreign Sales The following table sets forth certain information regarding the Company's foreign sales for the last two fiscal years: Year Ended December 31, ------------ 1998 1997 ---- ---- (In thousands) Aggregate sales to unaffiliated foreign customers: Europe and The United Kingdom $ 987 $1,104 Asia and Pacific Rim $ 934 $ 622 Latin America & Other $ 397 $ 434 During the fiscal years ended December 31, 1997 & 1998, no one customer accounted for more than 10% of net sales. In June 1998, the Company was awarded a contract from China for installation of the Company's systems in an eleven city network. Since November, 1995, the Company negotiated U.S. Export-Import financing for China specifically for this project. Technical and contractual negotiations were concluded at the June award at The People's Hall in Beijing. Financing aspects of the project, however, required nearly nine months of apparently normal bank to bank delays. 10 Because it is not possible to define a time frame to anyone of three banks involved, the backlog of the China project is not considered "firm", until Ex-Im Bank approval received on March 22, 1999 is supplemented with completed bank agreements. Historically, backlog has not been significant to the Company's operations because orders usually require delivery in 45 to 60 days. As of December 31, 1998, the Company had approximately $300,000 in "firm" orders which required delivery in 90 days or less, a backlog which the Company does not consider significant. The $5,100,000 additional backlog attributed to China is significant to the Company since it is long term (8 months) in nature and therefore should allow cost saving benefits of manufacture planning and quantity purchase discounts. Manufacturing and Purchasing The Company manufactures many components and subsystems for use in its products, including critical optical components and analog and digital circuitry. Other components, including packaging materials, integrated circuits, microprocessors and minicomputers, are purchased from unaffiliated third parties. Most of the raw materials and supplies purchased by the Company are either available from a number of different suppliers or alternative sources could be developed without a materially adverse effect on the Company's business. However, the availability and quality of certain key instrument components, such as printed circuit board designs and lamps, are controlled by a limited number of vendors. A vendor's inability to supply these components to the Company in a timely fashion, or to the Company's satisfaction, can affect the Company's ability to deliver its instruments on time. Research and Development Historically, the Company has been actively engaged in research and development in order to produce new products. However, the competitive price pressures experienced by the Company since early 1994 have sharply limited the new product development to areas of software as opposed to hardware. Developed over the past three years, DECS (Dasibi Environmental Central Software) is a Windows-based, network control and reporting program for multi systems of pollutant analyzers and ancillaries. Similar programs exist but management believes none are under single manufacturer design and responsibility. Within the same constraints, the Company is developing predictive pollutant modeling programs. Because of price pressure demands, the Company has been limiting Flue Gas Purification System development work. Employees As of March 22, 1999, the Company had 31 full-time employees, of whom 5 were engaged in administration, 3 in engineering, 21 in manufacturing and 2 in sales and marketing. None of the Company's employees are represented by a labor union. The Company has never had a strike or lockout and considers its employee relations to be good. 11 Competition - Instruments The Company is the smallest competitor in the ambient air pollution instrumentation market. Therefore, it is subject to the effects of better-financed competitors and their research and development efforts, and price discounting. The Company competes on the basis of technical advances in its products and its reputation among customers as a quality provider of products and services. To a lesser extent, the Company competes on the basis of price. Although the Company is not aware of any other company that competes with it in all of its product lines and software capabilities, all of its competitors have resources substantially greater than those of the Company. There are also smaller companies that specialize in a limited number of the types of products manufactured by the Company. The Company's primary competitors in the domestic market are Thermo Instrument Systems, Inc. ("Thermo Instrument Systems") and Monitor Labs, Inc. ("Monitor Labs"). In the foreign market, the Company's primary competitors are Thermo Instrument Systems, Monitor Labs, Environnement S.A of France ("Environnement") and Horiba Instruments ("Horiba Instruments.") Intellectual Property Although the Company obtained patents for its ozone monitor and various techniques in instrument design, it has generally been the Company's policy to proceed without patent protection since it is management's belief that the disclosure requirements of the federal patent laws provide competitors with easy access to the secrets of rapidly changing technology. The instrument patents obtained by the Company, all of which have expired, are not deemed by management to be significant to the Company's business operations or potential success. The Company has no federal or state registered trademarks and no franchises or concessions. The Company has common law rights to the trademark "Dasibi." Albert E. Gosselin, Jr., the Company's co-founder, has, for the past several years, devoted personal research time to developing an innovative, cost conscious system for purifying exhaust gases. His efforts resulted in the filing of a patent application for such system on behalf of the Company in April 1994, subsequently granted in September 1996, and a second grant in March, 1999. Item 2. Description of Properties In July 1994, the Company moved its administrative, instrument manufacturing and employee facilities to 39,070 square feet, increased to 45,000 square feet in 1997, at 506 Paula Avenue, Glendale, California. The Company leases the space from an unaffiliated third party for a term of ten years commencing as of July 1, 1994, at a base rent of $24,223 per month plus operating costs and taxes, with a provision for increases in the base rent related to increases in the Consumer Price Index to the present rent of $30,000 per month. The Company utilizes most of its existing office and manufacturing space and believes that such space is more than adequate for its needs for the foreseeable future. In May, 1998, the Company acquired a facility consisting of approximately 3000 square feet and located in Macao, China. The facility was needed as a 12 and training center for an anticipated China contract. (See "History of Company and Recent Developments.") A lease back agreement with an affiliated company in Macau, PIC Computers, Ltd.("PIC") calls for $8,000 per month rent to the Company while PIC performs service and training for China requirements under specific contracts furnished as needed from the Company. (See Item 12. "Certain Relationships and Related Transactions.") No lease payments are due, nor are any contracts contemplated until the China contract shipments begin. The facility therefore is not utilized at this time, and no lease payments are due or accrued. Item 3. Legal Proceedings Turbodyne - --------- In August, 1998, the Company executed an agreement with Turbodyne Technologies, Inc. which was subsequently wrongfully repudiated by Turbodyne. On October 2, 1998, the Company filed suit in the Superior Court of the State of California, which case is entitled Pollution Research and Control Corp., Dasibi Environmental Corp. and Logan Medical Devices v. Turbodyne Technologies, Inc. and Does 1 through 100, inclusive, Case No. BC 198 521. The complaint alleges that Turbodyne breached an agreement to purchase the Company's two subsidiaries, Dasibi Environmental Corp. and Logan Medical Devices when Turbodyne willfully repudiated its contract with the Company shortly after signing and delivering it. The Complaint alleges that Turbodyne's actions constituted breach of contract, a breach of the covenant of good faith and fair dealing, intentional interference with prospective business advantage and negligent interference with prospective business advantage. The Complaint seeks compensatory damages, punitive damages and declaratory relief. Fidelity Funding - ---------------- In seeking to focus on its core business the Company attempted to sell Nutek. This attempt failed. Management then decided that every effort should be made to maximize the liquidated value of fabrication equipment and that the "printed circuit board" portion of Nutek, Inc. had operating value as a vehicle to eventually pay off deficiency sums, if any, and unsecured creditors. Nutek was therefore placed into Chapter 11 reorganization. The major secured lender opposed this filing and at a June 19, 1998 hearing before the Bankruptcy Court, prevailed against Nutek, Inc. in having the Bankruptcy Code's automatic stay, imposed when the case was filed, vacated, to permit a secured lender sale of the mortgaged property based principally upon the secured lender's assertion that the assets of Nutek, Inc. were insufficient to cover the amount of the secured loans. The assertion was supported by a "new" appraisal which management of Nutek, Inc. had not seen until the proceedings were commenced by the secured lender to vacate the automatic stay. From an original 1996 appraisal which disclosed a forced liquidation value for the mortgaged property of $1,200,000, the new appraisal indicated an apparent value of approximately $341,000. Management believes that there is the possibility of questionable activities on the "selling" side in the original 1996 purchase of Nutek, Inc. and the financing with the secured lender and appraisal obtained and utilized, and is investigating the role of all parties involved in the acquisition and financing. An auction sale was held by the secured lender on July 28, 1998 which realized only $160,000. On July 1, 1998, the Company received a notice of default Judgment against the Company's guarantee of debt entered in a Texas State court in the sum of $766,708.77. The Company has retained Texas counsel, filed a Notice of Removal of the Texas State court case to the United States District 13 Court Northern District of Texas, Dallas Division, and has filed a Motion to dismiss and/or quash service of process and to set aside the Default Judgment. Although the matter is still pending, the amount of the Default Judgment described above has been reduced to approximately $400,000 by collection of Nutek receivables. The Company has established a reserve of $350,000 for this matter. Item 4. Submission of Matters to a Vote of Security Holders On May 6, 1998, the Board of Directors voted in favor of a reverse stock split of the Company's issued and outstanding shares of common stock, no par value per share (the "Common Stock") on May 15, 1998 on the basis of the conversion of each four shares of Common Stock then issued and outstanding into one share of Common Stock (the "Reverse Split") and directed that the Reverse Stock Split be placed on the agenda for consideration by shareholders at the Annual Meeting. The Board of Directors believed that the per share price of the Company's Common Stock prior to May 15, 1998, negatively impacted the marketability of the existing shares, the amount and percentage of transaction costs paid by individual shareholders and the potential ability of the Company to raise capital by issuing new shares. At the Annual Meeting held on October 15, 1998, the shareholders approved the Reverse Stock Split so that the number of issued and outstanding shares of Common Stock of the Company was reduced from 8,673,732 shares to approximately 2,168,433 shares, based upon the total number of issued and outstanding shares of the Company's Common Stock as of May 15, 1998. An affirmative vote of a majority of the shares of Common Stock present or represented by proxy and voting at the Annual Meeting was received for approval of the proposal with the following vote: For 1,588,397 Against 55,736 Abstain 10,147 The following members of the Board of Directors were re-elected at the Annual Meeting with the following vote: Vote For Withheld Albert E. Gosselin 1,617,689 36,591 Gary L. Dudley 1,618,399 35,881 Craig E. Gosselin 1,615,398 38,882 Barbara L. Gosselin 1,617,023 37,257 Marcia Smith 1,618,399 35,881 Barry Soltani 1,618,399 35,881 Additionally, the firm of AJ. Robbins, P.C. was elected as the Company's auditors for the fiscal year ending December 31, 1998 with the following vote: For 1,537,058 14 Against 107,673 Abstain 9,549 15 PART II Item 5. Market for Common Equity and Related Stockholder Matters The Company's Common Stock is traded over-the-counter in the NASDAQ System as NASDAQ Small Cap securities under the symbol "PRCC." Set forth below are the high and low closing bid quotations in the over-the-counter market for the Common Stock as reported by the relevant market makers for fiscal years 1998 and 1997. Quotations represent inter-dealer quotations, without adjustment for retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions. Fiscal 1998 Fiscal 1997 Quarter Ended High Bid Low Bid High Bid Low Bid - ------------- -------- ------- -------- ------- Common Stock: March 31 $4.52 $ 2.52 $5.12 $2.76 June 30 3.13 2.48 3.24 1.88 September 30 2.25 .26 2.76 1.36 December 31 1.25 .56 1.88 .64 As of March 19, 1999, the approximate number of shareholders of record of the Company's Common Stock was 1,100. The Company has never paid or declared any dividends on its Common Stock and does not anticipate paying dividends in the foreseeable future. A one for four reverse split was approved by shareholders during 1998 (See Item 4. "Submission of Matters to a Vote of Security Holders.") and all values pertaining to the Company's stock have been adjusted in this report. As of March 22, 1999, there are 3,277,438 shares of Common Stock outstanding, 541,708 warrants and 915,500 options. Item 6. Management's Discussion and Analysis or Plan of Operation The Company's operating profit for fiscal 1994, 1995, 1996, 1997, and 1998 decreased significantly as compared to fiscal 1993. These declines were principally because of significant competitive price pressure for the Company's air pollution monitoring instruments, thus forcing the Company to lower its domestic and foreign bids, reducing the number of the Company's bids awarded and reducing the profit margin on the bids awarded to the Company. In the middle of 1996 two companies were acquired in an attempt to diversify the Company's technology and to increase profit margins. The revenue increased in 1996 and 1997 due to these acquisitions, however the profit margin did not increase and the additional overhead continued the downward trend for the Company. Beginning in the third quarter of fiscal 1994, the Company implemented certain cost reduction measures in its operating expenses, suspended major new product development efforts and scaled back its efforts to improve or modify existing technologies in response to the competitive price pressures. Throughout 1995 and 1996 the Company shipped record numbers of instrumentation units, but continued competitive pricing pressure resulted in lowered gross margins. In July 1996 the above acquisitions were completed. The program to diversify was deemed unsuccessful and a reorganization was begun in early 1998 consisting of the 16 disposition of acquired subsidiary assets and a reduction of personnel. Management determined that the focus of its core business should be redirected to an attempt to achieve designated vendor status in the People's Republic of China. In June 1998 the Company was awarded the largest contract in its history, in excess of $5 million dollars, in a designated vendor's status. Due to banking factors outside of the control of the contractual parties no revenues were obtained during 1998. This banking delay has continued to the date of this report. Net revenues in 1998 were $2,808,000 compared to $6,793,000 in 1997, a 59% decrease. The decrease was entirely due to the discontinuance of subsidiary business. The revenues for the core business were essentially the same as the year before. Gross margin was 35% of consolidated net revenues in 1998 compared to 20% of the consolidated revenues of 1997. The increase in gross margin was due to the disposition of the subsidiary businesses. Selling, general and administrative expenses decreased from a consolidated $2,495,000 in 1997 to $1,584,000 in 1998. Research and development expense was essentially unchanged. Interest expense decreased from $233,000 in 1997 to $28,000 in 1998, primarily due to the elimination of subsidiary financing in 1997. Because of the disposition of subsidiary assets in 1998 the Company sustained a net loss from discontinued operations of $1,034,000. The core business sustained a loss of $527,000 from continuing operations primarily due to increased staffing and related expenses in anticipation of the China contract performance which failed to commence during 1998. As a result of the foregoing factors, net loss was $1,561,000 in 1998 compared to a net loss of $1,231,000 in 1997. Comprehensive loss is comprised of the foreign currency translation adjustment and the change in unrealized gain on marketable securities. Comprehensive loss was $27,837 in 1998 compared to a comprehensive loss of $117,988 in 1997. The Company initiated attempts to sell Nutek on February 16, 1998 which were unsuccessful and resulted in a Chapter XI filing with subsequent liquidation. Even though the 1997 liquidation appraisal of the subsidiary Nutek assets was indicated as approximately $1,200,000, the actual liquidation realized $160,000 in July 1998. These proceeds plus the Nutek receivables were approximatley $400,000 short of the amount due under a guaranty by the Company. A reserve of $350,000 has been established and is part of the indicated $1,034,000 loss from discontinued operations. 17 Liquidity and Capital Resources The Company has historically financed operations through bank borrowings and the issuance of common stock in both public and private offerings. Current market value of the Company's Common Stock does not preclude this approach as of this date. Since January 1998, the Company has raised $697,569 in private placements which have resulted in the issuance of 854,005 shares of Common Stock and 253,874 options and warrants. Working capital at December 31, 1998 was $1,376,000. Management believes that the anticipated cash flows from operations will be sufficient to meet the Company's short-term cash needs. As of March 19, 1999, the Company had no material commitments for capital expenditures. Cash decreased from $515,000 at the end of 1997 to $64,000 at the end of 1998. The inventory purchased in anticipation of performance of the contract with China was increased $333,000 and long-term liabilities were reduced $291,000 during 1998. Seasonality Management does not believe that the Company's business is seasonal. Year 2000 Compliance General. The Company believes it has completed all internal efforts to avoid the adverse effects of the Year 2000 issue. State of Readiness. The Company received certifications of compliance from all vendors deemed material to its business operations during the first quarter of 1999. Contingency Plans. The Company believes it should not rely completely on key vendor compliance certification. Therefore costs are being incurred to enable the Company to utilize alternative design procedures to allow alternate vendor supply. These design changes are on-going and the costs are not expected to be material. Risks. The Company presently does not anticipate any material business disruption will occur as a result of Year 2000 issues. The greatest potential risk appears to be with federal, state and local governments. Item 7. Financial Statements The Company's Financial Statements and the related Notes thereto are set forth at pages F-1 through F-23. 18 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None. 19 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Directors, Executive Officers and Key Employees Set forth below are the names, ages, positions and business experience of the directors, executive officers and key employees of the Company and Dasibi Environmental Corp. Name Age Position(s) With Company And Dasibi ---- --- ----------------------------------- Albert E. Gosselin, Jr. (1) 66 President, Chief Executive Officer and Chairman of the Board of Directors Cynthia L. Gosselin 37 Operations Manager of Dasibi Barbara L. Gosselin (1) 63 Secretary and Director Marcia A. Smith 60 Director of Pollution Research and Control Corp.; Manager of Administration of Dasibi Environmental Corp. Gary L. Dudley 61 Director Craig E. Gosselin (1) 39 Director Barry Soltani 42 Director (1) The individuals named above hold the identical positions indicated with Dasibi Environmental Corp. ("Dasibi") All directors hold office until the next annual meeting of the Company's shareholders and until their successors have been elected and qualify. Officers serve at the pleasure of the board of directors. Family Relationships Albert E. Gosselin, Jr., and Barbara L. Gosselin, husband and wife, are the parents of Craig E, and Cynthia L., Gosselin, both of whom are adults. All of the foregoing are presently serving as executive officers and/or directors of the Company. Except as set forth herein, no family relationship exists between or among any director or executive officer or the Company. Business Experience Albert E. Gosselin, Jr., has served as the President, Chief Executive Officer and Chairman of the Board of Directors of the Company (formerly "Dasibi Environmental Corp." and "A.E. Gosselin Engineering, Inc.") and Dasibi (formerly "Baral Engineering, Inc."), corporations which he co-founded with Barbara L. 20 Gosselin, since the organization of those corporations in December 1971 and July 1976, respectively. He also served as the President, Chief Executive Officer and Chairman of the Board of Directors of the Company's former parent corporation, a corporation also named "Pollution Research and Control Corp. ("PRCC") which he co-founded with Mrs. Gosselin under the name of "A.E. Gosselin Engineering Co.," from its inception date in 1966 through the date of its spin-off in October 1986. Mr. Gosselin also served as the President, Chief Executive Officer and Chairman of the Board of Directors of Applied Conservation Technology, Inc. ("ACT"), a former wholly-owned subsidiary of Pollution Research and Control Corp. engaged in the business of providing environmental impact reports to electric utilities, together with the Company, from 1980 through the date of the purchase of ACT by its management from PRCC in November 1986. ACT is presently a diversified environmental consulting firm owned and managed by Gary L. Dudley, a Company director, and other members of management. Mr. Gosselin received a Bachelor of Science in mechanical engineering from Loyola University, Los Angeles, California, in 1954. He has been a registered mechanical engineer in the State of California since 1959. Cynthia L. Gosselin served as the Chief Financial Officer of the Company and Dasibi from May 1990 to January 1998, when she resigned those positions and became Operations Manager of Dasibi and the Company. Additionally, she has acted as Dasibi's Purchasing Agent since May 1990. She was employed by Dasibi in various capacities, including Production Manager, from 1983 through April 1990. Ms. Gosselin received a B.S. in business from the University of California at Long Beach in 1982. Barbara L. Gosselin has served as an executive officer and a director of the Company, which she co-founded with Albert E. Gosselin, Jr., in December 1971, since its inception. Mrs. Gosselin has served in the office of Secretary of the Company since April 1990 and, from inception through April 1990, she served as the Company's Chief Financial Officer. Mrs. Gosselin, together with Mr. Gosselin, co-founded Dasibi in July 1976 and she has served as the Secretary and a director of Dasibi since its organization. Mrs. Gosselin was the co-founder in 1966, with Mr. Gosselin, of PRCC, the Company's former parent corporation, for which she served as an executive officer and a director until it was spun-off in October 1986. Marcia A. Smith has served as a director of the Company and Dasibi since May 1990. She has been employed as the Manager of Administration and in various other capacitities with Dasibi since 1979. Gary L. Dudley has served as a director of the Company during the periods since June 1991 and from 1980 through January 1991, and he served as the Company's Vice President from 1979 through November 1986. Mr. Dudley also served as an executive officer and a director of PRCC, the Company's former parent corporation, from 1984 through the date of the spin-off of PRCC in October 1986. Mr. Dudley has been the President and a principal shareholder of ACT, now located in Westminster, California, a diversified environmental consulting firm formerly wholly-owned, together with the Company, by PRCC, since the purchase of ACT by its management from PRCC in November 1986. He served as ACT's Vice President from 1980 through 1986. From 1962 through 1978, Mr. Dudley was employed in various engineering- related positions by Southern California Edison Company, TRW Systems, McDonnell Douglas Corporation and North American Rockwell Corporation. He received a Bachelor of Science in engineering from California State University in 1962 and a Masters Degree in Mechanical Engineering from the University of Southern California in 1966. Mr. Dudley is a registered mechanical engineer in the State of California and a member of the Association of Environmental Professionals. 21 Craig E. Gosselin has served as a director of the Company and Dasibi since October 1987. Mr. Gosselin is an attorney who has been licensed to practice law in the State of California since 1984. He has served as the Vice President and General Counsel of Vans, Inc., a publicly-held manufacturer, distributor and retailer of footwear, snowboard boots, apparel and related accessories located in Santa Fe Springs, California, since July 1992. He received a Bachelor of Business Administration from Loyola Marymount University in 1981 and a Juris Doctor from Southwestern University School of Law in 1984. Barry Soltani received a PhD in economics from the University of California, Riverside in 1989, his Master's from the University of California, Riverside in 1983, and graduated from San Diego State University in 1981 with a B.B.A. in economics. Dr. Soltani is directly involved in funding for industrial development projects in China and since 1993 has been an independent consultant in corporate finance for joint ventures in China. Dr. Soltani has served as a director of the Company since April 22, 1997. Since 1989, he has served as the President and a director of PIC Computers, Ltd., Macau, a Macau company owned 50% by him and Mr. Mehrdad Etemad, each of whom is the record owner of approximately 7% of the Company's outstanding shares of Common Stock, which is engaged in the marketing, resale and wholesale distribution of computers and computer-related equipment. The Company, Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board of Directors of the Company, and Cynthia L. Gosselin, Operations Manager of Dasibi and former Chief Financial Officer of the Company were named as defendants in Case Number 1.94CV01425 filed by the Securities and Exchange Commission in the United States District Court for the District of Columbia on June 28, 1994. The Commission alleged in the Complaint for Permanent Injunction and Other Relief, among other things, that the Company and Mr. Gosselin committed numerous violations of the federal securities laws in 1989, 1990 and 1991, including disseminating materially false and misleading information about the Company to the investing public through public announcements and filings with the Commission relating, primarily, to the Company's acquisition and subsequent disposition of two companies, Air Instruments and Measurements, Inc. and Environmental Information Systems. Additionally, the Complaint alleged that the Company's financial statements incorrectly reported inventory figures and failed to reflect timely write-offs of uncollectible accounts receivable and that the Company materially understated annual and quarterly losses during this period. The allegations against Ms. Gosselin were that she served as the Company's Chief Financial Officer and that she was responsible for the Company's inadequate books and records and internal controls during this period. The Commission also alleged that the Company violated the federal securities laws in connection with an unregistered public distribution of securities. The Commission sought to enjoin the defendants from engaging in the future in similar illegal acts and practices and to order defendant Albert E. Gosselin, Jr., to pay civil penalties. On July 14, 1994, the defendants, without admitting or denying any of the allegations of the Complaint, consented to the entry of Final Judgment of Permanent Injunction and Other Relief (the "Final Judgment"). The Final Judgment as to Mr. Gosselin required him to pay a civil penalty in the amount of $25,000. 22 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's executive officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of ownership, and reports of changes in ownership, of Common Stock and other equity securities of the Company. Executive officers, directors and greater than ten percent shareholders are required by Commission regulations to furnish the Company with copies of all Section 16(a) reports they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company, and representations that no other reports were required during the fiscal year ended December 31, 1998, the Company's executive officers, directors and greater than ten per cent beneficial owners of its Common Stock, complied with all Section 16(a) filing requirements applicable to them. Item 10. Executive Compensation Executive Compensation The following table sets forth the total cash and non-cash compensation paid by the Company for the fiscal years ended December 31, 1996, 1997, and 1998 to the Company's President and Chief Executive Officer who was the only executive officer of the Company whose aggregate cash compensation exceeded $100,000 for the 1998 fiscal year. SUMMARY COMPENSATION TABLE Annual Compensation Long Term Compensation Awards Securities Underlying Name and Principal Position Year Salary Options/SARs(#) - ---------------------------- ---- ------ -------------------- Albert E. Gosselin, Jr., President, 1998 $ 202,223 -- Chief Executive Officer and 1997 $ 151,000 -- Chairman of the Board 1996 $ 211,925 55,000 The Company does not provide officers or employees with pension, stock appreciation rights, long-term incentive or other plans. Compensation of Directors Directors do not receive compensation pursuant to any standard arrangement for their services as directors. 23 Employment Agreements The Company has employment agreements with Albert E. Gosselin, Jr., the President, Chief Executive Officer and Chairman of the Board of Directors of the Company, Cynthia L. Gosselin, and Marcia Smith. Mr. Gosselin's employment agreement (the "Agreement") was first approved by the Board of Directors on July 30, 1987, and has since been extended through August 31, 2003. The Agreement, as extended, provides for the payment to Mr. Gosselin of a base salary of $200,000, $210,000, 220,000, 230,000, 240,000 and $250,000 during the one-year periods ending August 31, 1998, 1999, 2000, 2001, 2002, and 2003 respectively. (See "Executive Compensation" under this Item 10. "Executive Compensation" hereinabove.) The Agreement further obligates the Company to permit Mr. Gosselin to participate in the Company's Employee's Incentive Stock Option Plan and Group Medical Plan and any other health, life insurance, group medical, disability income insurance and/or stock option plan adopted by the Company. Under the Agreement, Mr. Gosselin's salary continues in the event of his disability and for two years after his death. He is also entitled to a lump sum severance payment equivalent to 2.99 times his current salary in the event of his termination as President or Chief Executive Officer within eighteen months after a "change of control" of the Company, including, among other events, certain types of mergers and other business combinations, material changes in the composition of the Board of Directors or the beneficial ownership of the Common Stock, the sale of substantially all of the Company's assets or securities and the material downsizing or dissolution of the Company. If such an event occurs during fiscal 1999, Mr. Gosselin would be entitled to receive $627,900 as a severance payment. The Company's employment agreement with Cynthia L. Gosselin first commenced on July 20, 1994, was amended on February 9, 1998 and continues through August 31, 2003. Marcia Smith's employment agreement commenced on June 9, 1997 and continues through August 31, 2003 The agreements provide for the payment to them of a base salary of $75,000 during each one-year period ended July 20, 1997, through 2003 and annual increases in the discretion of the Board of Directors. Pursuant to the employment agreements, they are required to be reimbursed by the Company for their expenses incurred in connection with the performance of their responsibilities. In the event of their death or disability, the agreements provide for their salary to continue for six months thereafter. They are also entitled to participate in any Company health, life insurance, group medical, disability income insurance and/or stock option plan. The employment agreements provide that they are entitled to a lump sum severance payment equivalent to 2.99 times their current salary in the event of their termination within eighteen months after a "change in control" of the Company, as defined in the Company's Employment Agreement with Mr. Albert E. Gosselin, Jr., described hereinabove. They would each be entitled to receive a severance payment of $224,250 if a change in control of the Company occurs during fiscal 1999. Item 11. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information as of March 19, 1999, regarding the ownership of the Company's Common Stock by each shareholder known by the Company to be the beneficial owner of more than five percent of its outstanding shares of Common Stock, each of the named executive officers, each director, and 24 all executive officers and directors as a group. Except as otherwise indicated, each of the shareholders has sole voting and investment power with respect to the shares of Common Stock beneficially owned. Name and Address Amount Percent of of Beneficial Owner (1) Beneficially Owned Class (2) - ----------------------- ------------------ ----------- Ronald Patterson 358,666 (3) 10.5 % Albert E. and Barbara L. Gosselin, Jr. 284,057 (4) 8.5 % Barry Soltani 235,000 (5) 7.1 % Mehrdad Etemad 225,000 6.8 % Phillip Huss 183,332 (6) 5.4 % Lee N. Sion 164,125 (7) 4.9 % Gary L. Dudley 47,500 (8) 1.4 % Marcia A. Smith 30,320 (9) * Craig E. Gosselin 16,250 (10) * All Executive Officers and Directors as a Group (seven persons) 17.0 % * Less than one percent (1) The address of Mr. Lee Sion is P.O. Box 910, Glendale, California 91209. The addresses of the rest of the individuals named above is 506 Paula Avenue, Glendale, California 91201. (2) Assumes the exercise of outstanding options and warrants specific to the referenced party, the denominator of which is made up of the outstanding shares of Common Stock plus those specific warrants and options. (3) Includes 133,333 shares of Common Stock issuable upon the exercise of an option owned of record by Ronald Patterson. (4) Includes 73,250 shares of Common Stock issuable upon the exercise of options owned of record by Albert E. Gosselin, Jr. exercisable within 60 days. Does not include a total of 3,833 shares of Common Stock owned of 25 record collectively by Craig. E., Cynthia L., and Jennifer Gosselin, the adult children of Albert E. and Barbara Gosselin, Jr., as to which Mr. and Mrs. Gosselin disclaim any benefical ownership. Mr. & Mrs. Gosselin hold their shares of Common Stock as community property and exercise joint voting and investment power with respect to such shares. (5) Includes 10,000 shares of Common Stock issuable upon the exercise of an option owned of record by Barry Soltani and exercisable within 60 days. (6) Includes 116,666 shares of Common Stock issuable upon the exercise of options owned of record by Phillip Huss. (7) Includes 21,875 shares of Common Stock issuable upon the exercise of options owned of record by Lee N. Sion which is exercisable within 60 days. (8) Represents 27,500 shares of Common Stock issuable upon the exercise of options owned of record by Gary L. Dudley which is exercisable within 60 days. (9) Includes 28,750 shares of Common Stock issuable upon the exercise of an option owned of record by Marcia Smith, and exercisable within 60 days. (10) Craig E. Gosselin is the adult son of Albert E. and Barbara L. Gosselin, Jr., who disclaim any beneficial ownership of his shares and includes 15,000 shares of Common Stock issuable upon the exercise of options owned of record and exercisable within 60 days. Item 12. Certain Relationships and Related Transactions On May 8, 1998, the Company issued an aggregate of 100,000 and 20,000 shares of Series A Preferred Stock to each of Messrs. Albert E. Gosslein, Jr., and Gary L. Dudley, executive officers and/or directors of the Company, respectively, in consideration for the amounts of $50,000 and $10,000 in cash, respectively. Each share of Series A Convertible Preferred Stock was converted into and exchanged for one share of Common Stock on March 17, 1999. The Company issued a total of 225,000 shares of Series B Preferred Stock to each of Dr. Barry Soltani and Mr. Mehrdad Etemad on June 24, 1998 in consideration for the sale to the Company of a facility comprised of approximately 3000 square feet known as the "Macau Technician Service Office Center" located at Units E and F, Iau Luen Building, #15 Rua Ferreira, Do Amaral, Macau. The facility has been leased to PIC Computers, Ltd., a Macau corporation owned by Dr. Soltani and Mr. Etemad, pursuant to a "triple net" lease agreement for a period of five years at a rental rate of approximately $8,000 per month. Each share of Series B Preferred Stock was converted into one share of Common Stock on March 17, 1999. 26 Item 13. Exhibits and Reports on Form 8-KA (a) Exhibits The exhibits listed in the Exhibit Index located at Pages E-1 through E-155 are filed pursuant to Item 13(a) of this Report. (b) Reports on Form 8-KA The Company filed one report on Form 8-KA on August 28, 1998 disclosing that Turbodyne Technology, Inc. unilaterally terminated an agreement theCompany and Turbodyne had executed pursuant to which Turbodyne had agreed to acquire two of the Company's w holly-owned subsidiaries, Dasibi Environmental Corp. and Logan Medical Devices. 27 SIGNATURES In Accordance with Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 22, 1999 POLLUTION RESEARCH AND CONTROL CORP. (Registrant) By: /s/ Albert E. Gosselin, Jr. -------------------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board of Directors In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and on the dates indicated. Date: March 22, 1999 /s/ Albert E. Gosselin, Jr. ----------------------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) Date: March 22, 1999 /s/ Barbara L. Gosselin -------------------------------- Barbara L. Gosselin, Director Date: March 22, 1999 /s/ Gary L. Dudley -------------------------------- Gary L. Dudley, Director Date: March 22, 1999 /s/ Marcia A. Smith -------------------------------- Marcia A. Smith, Director Date: March 22, 1999 /s/ Craig E. Gosselin -------------------------------- Craig E. Gosselin, Director Date: March 22, 1999 /s/ Barry Soltani -------------------------------- Barry Soltani, Director 28 INDEX ----- Page ---- Independent Auditors' Report F-2 Consolidated Balance Sheet F-3 Consolidated Statements of Operations and Comprehensive Loss F-5 Consolidated Statements of Stockholders' Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 F-1 INDEPENDENT AUDITORS' REPORT Board of Directors Pollution Research and Control Corp. Glendale, California We have audited the accompanying consolidated balance sheet of Pollution Research and Control Corp. and Subsidiaries as of December 31, 1998, and the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for the years ended December 31, 1998 and 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pollution Research and Control Corp. and Subsidiaries as of December 31, 1998, and the consolidated results of their operations and their cash flows for the years ended December 31, 1998 and 1997 in conformity with generally accepted accounting principles. AJ. ROBBINS, P.C. CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS Denver, Colorado February 12, 1999 F-2 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 ----------------------- ASSETS ------ CURRENT ASSETS: Cash $ 63,951 Accounts receivable, trade, less allowance for doubtful accounts of $4,734 217,869 Accounts receivable, related party 227,938 Due from factor 55,164 Inventories 1,627,155 Other current assets 9,080 ---------- Total Current Assets 2,201,157 ---------- PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, less accumulated depreciation and amortization of $183,979 111,495 ---------- OTHER ASSETS: Technical Service Center 600,000 Patents 23,509 ---------- Total Other Assets 623,509 ---------- $2,936,161 ========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-3 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 ----------------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable, trade $ 256,693 Accrued liabilities 568,062 ----------- Total Current Liabilities 824,755 DEFERRED RENT 58,134 ----------- Total Liabilities 882,889 ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, 20,000,000 shares authorized: Series A, $.01 par value, 220,000 shares issued and outstanding, distribution upon liquidation equal to the offering price 2,200 Series B, $.01 par value, 450,000 shares issued and outstanding, distribution upon liquidation equal to the offering price 4,500 Common stock, no par value, 30,000,000 shares authorized, 2,368,439 issued and outstanding 6,704,195 Additional paid-in capital 928,831 Accumulated deficit (5,586,454) ----------- Total Stockholders' Equity 2,053,272 ----------- $ 2,936,161 =========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-4
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 1998 1997 ----------- ----------- NET REVENUES $ 2,807,511 $ 3,072,600 COST OF GOODS SOLD 1,816,350 2,246,712 ----------- ----------- GROSS PROFIT 991,161 825,888 ----------- ----------- OPERATING EXPENSES: Selling, general and administrative 1,583,679 1,695,889 Research and development 20,175 36,903 ----------- ----------- Total Operating Expenses 1,603,854 1,732,792 ----------- ----------- LOSS FROM OPERATIONS (612,693) (906,904) ----------- ----------- OTHER INCOME (EXPENSE): Gain on sale of marketable securities 6,428 82,896 Other income 101,000 -- Interest income 6,029 3,499 Interest expense (27,961) (16,097) ----------- ----------- Net Other Income (Expense) 85,496 70,298 ----------- ----------- LOSS FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES (BENEFIT) (527,197) (836,606) ----------- ----------- PROVISION (BENEFIT) FOR INCOME TAXES: Current -- (9,800) Deferred -- 335,000 ----------- ----------- Total Provision (Benefit) for Income Taxes -- 325,200 ----------- ----------- LOSS FROM CONTINUING OPERATIONS (527,197) (1,161,806) ----------- ----------- LOSS FROM DISCONTINUED OPERATIONS: Loss from operations, less applicable income tax benefit of $-0- and $390,000 (115,301) (69,166) Loss on disposal/abandonment, less applicable income tax benefit of $-0- (918,411) -- ----------- ----------- Total Loss From Discontinued Operations (1,033,712) (69,166) ----------- ----------- NET LOSS (1,560,909) (1,230,972) ----------- ----------- OTHER COMPREHENSIVE LOSS: Foreign currency translation adjustment (24,587) (22,238) Change in unrealized gain on marketable securities (3,250) (95,750) ----------- ----------- Total Other Comprehensive Loss (27,837) (117,988) ----------- ----------- COMPREHENSIVE LOSS $(1,588,746) $(1,348,960) =========== =========== NET LOSS PER SHARE - Basic and Diluted: Continuing operations $ (.23) $ (.54) Discontinued operations: Loss from operations (.05) (.03) Loss on disposal (.40) -- ----------- ----------- $ (.68) $ (.57) ----------- ----------- Weighted Average Shares 2,283,093 2,168,433 =========== =========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-5
POLLUTION RESEARCH AND CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998 Series A Series B Common Stock Preferred Stock Preferred Stock ----------------------- ---------------------- ------------------------ Shares Amount Shares Amount Shares Amount --------- ----------- --------- --------- --------- --------- Balances, 2,168,433 $ 6,588,980 -- $ -- -- $ -- December 31, 1996 Change in unrealized gain -- -- -- -- -- -- on marketable securities Change in unrealized -- -- -- -- -- -- foreign currency translation loss Net loss for the year -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Balances, 2,168,433 6,588,980 -- -- -- -- December 31, 1997 Sale of common stock, net 231,256 202,072 -- -- -- -- of offering costs of $49,997 Sale of preferred stock -- -- 220,000 2,200 -- -- Issuance of preferred -- -- -- -- 450,000 4,500 stock for the Technical Service Center Forgiveness of notes (31,250) (86,857) -- -- -- -- Stock-based compensation -- -- -- -- -- -- expense recognized Change in unrealized gain -- -- -- -- -- -- on marketable securities Change in unrealized -- -- -- -- -- -- foreign currency translation loss Net loss for the year -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Balances, 2,368,439 $ 6,704,195 220,000 $ 2,200 450,000 $ 4,500 =========== =========== =========== =========== =========== =========== December 31, 1998 F-6 (Continued on following page) POLLUTION RESEARCH AND CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued) FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998 Unrealized Unrealized Foreign Notes Due Additional Gain on Currency Total From Sale Paid-In Accumulated Marketable Translation Stockholders' Of Stock Capital Deficit Securities Gain Equity ------------ ---------- ----------- ---------- ------------ -------------- Balances, $ (86,857) $ 145,764 $(2,794,573 $ 99,000 $ 46,825 $ 3,999,139 December 31, 1996 Change in unrealized gain -- -- -- (95,750) -- (95,750) on marketable securities Change in unrealized -- -- -- -- (22,238) (22,238) foreign currency translation loss Net loss for the year -- -- (1,230,972) -- -- (1,230,972) ----------- ----------- ----------- ----------- ----------- ----------- Balances, (86,857) 145,764 (4,025,545) 3,250 24,587 2,650,179 December 31, 1997 Sale of common stock, net -- -- -- -- -- 202,072 of offering costs of $49,997 Sale of preferred stock -- 107,800 -- -- -- 110,000 Issuance of preferred -- 595,500 -- -- -- 600,000 stock for the Technical Service Center Forgiveness of notes 86,857 -- -- -- -- -- Stock-based compensation -- 79,767 -- -- -- 79,767 expense recognized Change in unrealized gain -- -- -- (3,250) -- (3,250) on marketable securities Change in unrealized -- -- -- -- (24,587) (24,587) foreign currency translation loss Net loss for the year -- -- (1,560,909) -- -- (1,560,909) ----------- ----------- ----------- ----------- ----------- ----------- Balances, $ -- $ 928,831 $(5,586,454) $ -- $ -- $ 2,053,272 December 31, 1998 =========== =========== =========== =========== =========== =========== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 1998 1997 ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Reconciliation of net income (loss) to net cash flows (used in) operating activities: Net income (loss) $(1,560,909) $(1,230,972) Loss on disposition/abandonment of operations 918,411 -- Depreciation and amortization 90,034 229,025 Deferred rent (11,534) 3,466 Deferred income taxes -- (55,000) Stock-based compensation expense 54,977 -- Changes in operating assets and liabilities: Accounts receivable, trade, net 8,384 1,064,863 Accounts receivable, related party (20,389) -- Inventories 123,717 62,191 Due from factor (55,164) -- Other current assets 4,769 4,242 Secured overdraft facility 22,794 58,021 Accounts payable, trade 96,708 (333,656) Accounts payable, officer (12,497) 176 Accrued liabilities (3,242) 58,091 Customer advances (143,695) 92,875 Income taxes payable -- (9,800) Other assets (14) 11,527 ----------- ----------- Net Cash Flows (Used in) Operating Activities (487,650) (44,951) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, equipment and (1,919) (9,838) leasehold improvements Other 515 -- ----------- ----------- Net Cash Flows (Used in) Investing Activities (1,404) (9,838) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 252,069 -- Payment of offering costs (25,207) Advances on notes payable -- 3,774,645 Payments on notes payable (267,674) (3,799,180) Additions to long term debt -- 100,000 Payments of long term debt (15,565) (221,368) Payments of long term debt - related parties (14,517) (5,413) Proceeds from issuance of preferred stock 110,000 -- ----------- ----------- Net Cash Flows (Used In) Provided by Financing Activities 39,106 (151,316) ----------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,323) (1,843) ----------- ----------- (DECREASE) IN CASH (451,271) (207,948) CASH, beginning of year 515,222 723,170 ----------- ----------- CASH, end of year $ 63,951 $ 515,222 =========== =========== Supplemental Cash Flow Information: See Note 17 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 1 - BUSINESS ACTIVITY AND MANAGEMENT'S PLANS Pollution Research and Control Corp., a California corporation, primarily designs, manufactures and markets air pollution monitoring instruments, through its wholly-owned subsidiary Dasibi Environmental Corporation ("Dasibi"). Pollution Research and Control Corp. also designed and manufactured electrical control panels and medical instrumentation through its wholly-owned subsidiaries Nutek, Inc. ("Nutek"), and Logan Medical Devices, Inc. ("LMD") and LMD's wholly owned subsidiary, Logan Research Limited ("LRL"), respectively. The operations of Nutek and LRL were discontinued in April 1998 and February 1998, respectively (Note 9). In 1998, Dasibi was awarded a $5.2 million contract to install an eleven city air monitoring network in the Peoples Republic of China. Dasibi's ability to perform under the terms of the agreement between Dasibi and China National Technical Import and Export Corporation and China Green Enterprises, is contingent upon Dasibi obtaining working capital to finance the cost of equipment, training and contingencies. Management is currently working on securing the working capital financing, which is expected to close in the near future. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation - ------------- The consolidated financial statements include the accounts of Pollution Research and Control Corp. and its wholly-owned subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Revenue Recognition - ------------------- Revenue is recognized upon shipment of products. Inventories - ----------- Inventories are stated at the lower of cost or market. Cost is determined on the first-in first-out (FIFO) basis. Property, Equipment and Leasehold Improvements and Depreciation - --------------------------------------------------------------- Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation is provided for on the straight-line method over the estimated useful lives of the assets, generally five to ten years. Amortization of leasehold improvements is over the shorter of the life of the lease or five years. Total depreciation expense was $79,427 and $190,047 for the years ended December 31, 1998 and 1997, respectively. F-8 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Goodwill - -------- Goodwill had been previously recorded in connection with the acquisition of Logan Medical Devices, Inc. and was being amortized on a straight-line basis over 40 years. Amortization of goodwill was $7,003 for the year ended December 31, 1997. The goodwill was eliminated upon the discontinuance of Logan's operation (Note 9). Stock-Based Compensation - ------------------------ The Company accounts for stock based compensation in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). This standard requires the Company to adopt the "fair value" method with respect to stock-based compensation of consultants and other non-employees. The Company did not change its method of accounting with respect to employee stock options; the Company continues to account for these under the "intrinsic value" method, and to furnish the proforma disclosures required by SFAS 123. See Notes 13 and 14 for additional information with respect to stock-based compensation. Earnings per Share - ------------------ In 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 128, "Earnings Per Share". Statement 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, to conform to Statement 128 requirements. Cash Equivalents - ---------------- For purposes of reporting cash flows, the Company considers all funds with original maturities of three months or less to be cash equivalents. Fair Value of Financial Instruments - ----------------------------------- The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these items. F-9 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments in Equity Securities - -------------------------------- Management determines the appropriate classification of its investments in equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. The Company has classified its investment portfolio as available for sale. Available for sale securities are stated at fair market value with unrealized gains and losses included as a separate component of stockholders' equity. Realized gains and losses are included in earnings and are derived using the specific identification method. Impairment Of Long-Lived Assets - ------------------------------- The Company evaluates its long-lived assets by measuring the carrying amounts of assets against the estimated undiscounted future cash flows associated with them. At the time such evaluations indicate the future undiscounted cash flows of certain long-lived assets are not sufficient to cover the carrying value of such assets, the assets are adjusted to their fair values. Research and Development Costs - ------------------------------ Research and development costs are charged to operations as incurred. Income Taxes - ------------ Deferred income taxes are recorded to reflect the tax consequences in future years of temporary differences between the tax basis of the assets and liabilities and their financial statement amounts at the end of each reporting period. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the current period and the change during the period in deferred tax assets and liabilities. The deferred tax assets and liabilities have been netted to reflect the tax impact of temporary differences. A valuation allowance has been established for the entire deferred tax asset as management believes that it is more likely than not that a tax benefit will not be realized. Use of Estimates in the Preparation of Financial Statements - ----------------------------------------------------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. F-10 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Reclassification - ---------------- Certain amounts reported in the Company's financial statements for the year ended December 31, 1997 have been reclassified to conform to the current year presentation. Comprehensive Income - -------------------- In 1998, the Company adopted FASB Statement No. 130, "Reporting Comprehensive Income". This statement establishes rules for reporting comprehensive income and its components, which include net income and all other changes in net assets from non-owner sources. The Company has changed the format of its statement of operations to present comprehensive income, and has restated prior periods to conform to the standard. Segment Reporting - ----------------- In 1997, the Company adopted FASB Statement No. 131, Disclosures About Segments of An Enterprise and Related Information. Information regarding the Company's reportable segments are disclosed in footnote 18. Year 2000 Issues - ---------------- Many computer systems and other equipment with embedded chips or microprocessors may not be able to appropriately interpret dates after December 31, 1999 because such systems use only two digits to indicate a year in the date field rather than four digits. If not corrected, many computers and computer applications could fail or create miscalulations, causing disruptions to the Company's operations. In addition, the failure of customer and supplier computer systems could result in interruption of sales and deliveries of key supplies or utilities. Because of the complexity of the issues and the number of parties involved, the Company cannot reasonably predict with certainty the nature or likelihood of such impacts. Using internal staff and outside consultants, the Company is actively addressing this situation and anticipates that it will not experience a material adverse impact to its operations, liquidity or financial condition related to systems under its control. The Company has addressed the Year 2000 issue by purchasing and installing Year 2000 compatible software and computers, assessing critical business relationships requiring modification prior to 2000 and developing contingency and business continuation plans to mitigate any disruption of the Company's operations arising from the Year 2000 issue. The Company is in the process of implementing a plan to obtain information from its external service providers, significant suppliers and customers, and financial institutions to confirm their plans and readiness to become Year 2000 compliant, in order to better understand and evaluate how their Year 2000 issues may affect the Company's operations. The Company currently is not in a position to assess this aspect of the Year 2000 issue, however, the Company plans to take the necessary steps to provide itself with reasonable assurance that its service providers, suppliers, customers and financial institutions are Year 2000 compliant. F-11 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) While the Company believes that its own internal assessment and planning efforts with respect to external service providers, suppliers, customers and financial institutions are and will be adequate to address its Year 2000 concerns, there can be no assurance that these efforts will be successful or will not have a material adverse effect on the Company's operations. NOTE 3 - MARKETABLE SECURITIES During 1997 the Company sold 86,000 of Atlanta Technology Group, Inc. (ATYG) shares, realizing net proceeds and a gain of $82,897 since the shares were carried at $-0-. The remaining 13,000 shares were sold during the year ended December 31, 1998, realizing net proceeds and a gain of $6,428. NOTE 4 - INVENTORIES Inventories at December 31, 1998 consisted of the following: Raw materials $ 836,157 Work in process 419,936 Finished goods 371,062 ----------------- Total $ 1,627,155 ================= Inventories at December 31, 1998 include overhead of $429,374. NOTE 5 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Property, equipment and leasehold improvements at December 31, 1998 consisted of the following: Machinery and equipment $ 79,728 Furniture and fixtures 28,555 Leasehold improvements 187,191 ----------------- 295,474 Less accumulated depreciation and amortization 183,979 $ 111,495 ================= F-12 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 6 - OTHER ASSETS In June 1998, the Company purchased a technical service center including two property units comprised of a modern office facility and a technical laboratory (The Tech Center), valued at $600,000. The Tech Center is to be used to provide technical and project management services in connection with the contract to install an eleven city air monitoring network in the Peoples Republic of China. See Notes 1 and 16. NOTE 7 - ACCRUED LIABILITIES Accrued liabilities at December 31, 1998 consisted of the following: Accrued settlement loss - Nutek $ 349,397 Accrued payroll and related taxes 161,834 Accrued vacation 25,013 Current portion of deferred rent 23,012 Other 8,806 ----------------- Total $ 568,062 ================= NOTE 8 - DEFERRED RENT Upon execution of a 10 year lease for its present facility in Glendale, California commencing July 1, 1994, the Company was granted 6 months "free" rent. As required by generally accepted accounting principles, rent expense is being recognized by amortizing the total minimum rentals payable under the lease over the terms of the lease on a straight-line basis. The deferred rent shown on the balance sheet as of December 31, 1998 represents the excess of the total amount charged to rent expense over the amounts actually due and payable under the lease as of such date, of which $23,012 has been classified as current and $58,135 as long term, respectively. F-13 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 9 - DISCONTINUED OPERATIONS Nutek - In April 1998, Nutek filed for protection under the Federal Bankruptcy Code. In June 1998, as a result of the major secured lender's opposition to the Bankruptcy Code's automatic stay, the Bankruptcy Court permitted the sale of Nutek's mortgaged property, to satisfy the working capital facility and term loan obligations to the major secured lender, based upon the major secured lenders assertion that the assets of Nutek were insufficient to cover the amount of the secured obligation. The assertion was supported by an appraisal of the assets, which differed significantly from the original appraisal obtained upon the purchase of Nutek in 1996. Management believes that there is the possibility of questionable activities in the 1996 purchase of Nutek and the financing with the secured lender and appraisal obtained and utilized, and is investigating the role of all parties involved in the acquisition and financing. Additionally, the unsecured notes payable to Nutek's former stockholders and to a family member of an employee were not repaid. The results of operations for Nutek for the respective periods are reported as a component of discontinued operations in the consolidated statements of operations. Additionally, the loss incurred on the disposition/abandonment of assets and liabilities is also presented separately as a component of discontinued operations. Logan Research, Ltd. - In February 1998, the Company disposed of LRL, through a return of 100% of LRL's stock to its original owner in exchange for release from a $300,000 note payable and $47,250 of related accrued interest. Unsecured advances from an officer of LRL were not repaid. The results of operations of LRL for the respective periods are reported as a component of discontinued operations in the consolidated statements of operations. Additionally, the gain (loss) incurred on the disposal of LRL is also presented separately as a component of discontinued operations. Summarized results of operations for Nutek for the years ended December 31, 1998 and 1997 are as follows: 1998 1997 ------------- ------------- Net sales $ 731,636 $ 3,299,687 ============= ============= Operating loss $ 61,778 $ 143,755 ============= ============= Loss (income) on discontinued operations $ 82,133 $ (58,752) ============= ============= Summarized results of operations for LRL for the years ended December 31, 1998 and 1997 are as follows: 1998 1997 ------------- ------------- Net sales $ 49,313 $ 420,480 ============= ============= Operating loss $ 25,741 $ 99,497 ============= ============= Loss (income) on discontinued operations $ 33,168 $ 127,918 ============= ============= F-14 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 10 - NOTES PAYABLE In May 1997, the Company entered into an extension of its line of credit agreement with a bank, which provided borrowings of up to $200,000 through June 3, 1998. Borrowings under this agreement bore interest at the bank's prime rate plus 2% and was collateralized by substantially all of the Company's assets. The agreement contained several restrictive covenants common to lines of credit, including certain tangible net worth and current ratio requirements. The balance outstanding at December 31, 1997 was $140,000. The line of credit agreement was not renewed and the outstanding balance was repaid during 1998. NOTE 11 - DUE FROM FACTOR In September 1998, the Company entered into a factor agreement with Tri Capital Finance Corp. to factor its accounts receivable up to $500,000. The Company will receive up to 80% of the receivables at the time of factoring. The Company assigns substantially all of its domestic accounts receivable to the factor without recourse under the terms of the agreement and the factor has a continuing security in the Company's receivables. A corporate guaranty has been given to the factor by the Company. NOTE 12 - INCOME TAXES The income tax provision (benefit) for the years ended December 31, 1998 and 1997 differs from the computed expected provision (benefit) at the federal statutory rate for the following reasons: 1998 1997 --------- --------- Computed expected income tax provision (benefit) $(165,000) $(291,000) Non-deductible meals and entertainment 3,000 2,000 Temporary differences for items deductible from (includible in) taxable income in future years: Depreciation 1,000 1,000 Inventory valuation allowance (5,000) 29,000 Bad debt allowance -- (2,000) State income taxes, net of federal income tax effect (23,000) (37,000) Net operating loss carryforward unutilized (utilized) 189,000 298,000 Alternative minimum tax -- (9,800) Increase to valuation allowance -- 335,000 --------- --------- Income tax provision $ -- $ 325,200 ========= ========= F-15 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 12 - INCOME TAXES (Continued) The components of the deferred tax assets and liabilities as of December 31, 1998 were as follows: 1998 Deferred tax assets: ----------- Temporary differences: Allowance for doubtful accounts $ 2,000 Inventory valuation allowance 31,000 Accrued expenses 14,000 Stock based compensation 70,000 Loss on joint venture investment 66,000 Tax depreciation in excess of book depreciation (13,000) Net operating loss carryforward 1,588,000 Less valuation allowance (1,758,000) ----------- Net long-term deferred tax liability $ -- =========== The components of the deferred tax expense were as follows: 1998 ----------- Allowance for doubtful accounts $ 1,000 Inventory valuation allowance 5,000 Accrued expenses (1,000) Stock-based compensation (22,000) Depreciation 13,000 (Unutilization) utilization of net operating loss carryforward (313,000) Change in valuation allowance 317,000 ----------- $ -- =========== F-16 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 12 - INCOME TAXES (Continued) As of December 31, 1998 the Company has net operating loss carryforwards available to offset future taxable income of approximately $4,000,000 expiring in 2005 through 2013. NOTE 13 - STOCKHOLDERS' EQUITY Issuance of Common Stock - ------------------------ On June 30, 1998, the Company sold 231,256 shares of common stock in a private placement, receiving net proceeds of $226,863 after paying a finders fee of $25,207. Reverse Stock Split - ------------------- During the year ended December 31, 1998, the Company affected a 4 to 1 reverse stock split. All shares within these financial statements have been adjusted to reflect this transaction. Issuance of Preferred Stock - --------------------------- The Company is authorized to issue up to 5,000,000 shares of preferred stock, $.01 par value per share in series to be designated by the Board of Directors. On May 8, 1998, the Company issued 220,000 shares of Series A Preferred Stock for a purchase price of $.50 per share, resulting in proceeds to the Company of $110,000. These shares are convertible into 220,000 shares of common stock after July 30, 1998. The Series A Preferred Stock have voting rights but no dividend rights. On June 24, 1998, the Company issued 450,000 shares of Series B Preferred Stock in connection with the purchase of a Technical Service Center in Macau (a foreign country located outside of China). These shares are convertible into 450,000 shares of the Company's common stock after December 31, 1998. The Series B Preferred Stock have voting rights but no dividend rights. Warrants - -------- During 1998, there were 15,000 warrants to purchase the Company's common stock at $6.80 per share which expired August 31, 1998, and 1,250 warrants at $8.00 per share which expired November 7, 1998. Options - ------- On May 30, 1996, the Company issued to a public relations firm options to purchase 250,000 shares at $3.76 per share and 75,000 shares at $5.00 per share. The options expire May 29, 2000. The Company believes the public relations firm has not performed under its contract and the options are presently in dispute. On May 31, 1996, in connection with the acquisition of Nutek, the Company issued options to purchase 85,000 shares at $4.40 per share to various consultants and employees of Nutek. The options may be exercised beginning January 7, 1998 and expire May 31, 2000. In 1997 8,750 options were cancelled due to employee departures. The Board of Directors approved a reduction in the exercise price in 1998 to $.75 per share in relation to 5,000 of these options. F-17 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 13 - STOCKHOLDERS' EQUITY (Continued) On June 1, 1996, in connection with the acquisition of LMD, the Company exchanged options to purchase 150,125 shares at $4.40 per share for the 1,201,000 shares of LMD it did not already own. The options may be exercised beginning January 7, 1998 and expire May 31, 2000. The 150,125 options include 30,750 issued to the Chief Executive Officer and a director of the Company, 5,000 shares each to four directors and 75,000 to the President of the Company's subsidiaries LMD and LRL. The Board of Directors approved a reduction in the exercise price in 1998 to $.75 per share in relation to 65,125 of these options. Also on June 1, 1996, the Company issued options to purchase 70,000 shares at $4.40, expiring May 31, 2000, to the officers and directors of the Company referred to in the previous paragraph, as follows: Chief Executive Officer 30,000, 10,000 each to four directors. The Board of Directors approved the reduction in the exercise price in 1998 to $.75 per share in relation to these options. Additionally, the Company granted options to purchase 10,000 shares at $4.40 per share to an unrelated individual. On March 3, 1997, the Company granted options to purchase 10,000 shares at $3.80 per share to a consultant/director. The options expire on January 6, 2002. The Board of Directors approved a reduction in the exercise price in 1998 to $.75 per share in relation to these options. On April 30, 1997, the Company granted options to purchase 12,500 shares at $3.00 to a consultant. The options expire on November 4, 2000. The Board of Directors approved a reduction in the exercise price in 1998 to $.75 per share in relation to these options. In May 1998, the Company granted options to purchase 50,000 shares at $2.20 per share to a public relations firm. The options expire May 15, 2000. In connection with the June 30, 1998 private placement, the Company granted options to purchase 23,125 shares at $2.20, the options expire June 19, 2001. On November 22, 1996, the Company granted options to purchase 100,000 shares at $4.48 per share to a consultant. The options expire November 4, 1999. In 1997, 58,250 options were cancelled due to non-performance. Additionally, the Company has outstanding options granted in 1991 to purchase 12,500 shares at $2.20 per share, expiring May 28, 2001, to the Chief Executive Office and a director of the Company, 12,500 to an owner of record of 6% of the Company's outstanding common stock and 11,250 to a director of the Company. The Board of Directors approved a reduction in the exercise price in 1998 to $.75 per share in relation to these options. Additionally, in 1997, 2,500 options to purchase the Company's common stock at $2.52 per share were cancelled due to an employees departure and 6,250 options at $5.52 per share expired. In 1998, 6,250 options to purchase the Company's common stock at $5.52 per share expired and 3,750 options at $2.52 per share were cancelled. F-18 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 13 - STOCKHOLDERS' EQUITY (Continued) The following table summarizes the activity of options and warrants for the two years ended December 31, 1998:
Weighted Average Number of Exercise Exercise Options Warrants Price Amount ------- -------- ----- ------ Outstanding, December 31, 1996 801,375 318,959 $ 4.32 $ 4,821,386 Granted 22,500 16,250 $ 4.16 156,750 Cancelled (69,500) (16,250) $ 4.52 (387,010) Expired (6,250) -- $ 5.52 (34,500) -------- ---------- ----------- Outstanding, December 31, 1997 748,125 318,959 $ 4.27 4,556,626 Granted 99,375 -- $ 1.82 180,563 Reduction to exercise price -- -- -- (622,644) Cancelled (3,750) -- $ 2.52 (9,450) Expired (6,250) (16,250) $ 6.51 (146,500) -------- ---------- ----------- Outstanding, December 31, 1998 837,500 302,709 $ 3.47 $ 3,958,595 ======== ========== ===========
At December 31, 1998 and 1997, the Company had a total of 1,140,209 and 1,067,084 options and warrants outstanding, respectively, at exercise prices ranging from $.75 to $8.00, with a weighted average remaining contractual term of 1.3 years. Notes Receivable - ---------------- In 1990, the Company issued 37,500 shares of its common stock for notes receivable totaling $86,587. The notes were originally due in 1994 with interest at 10% per year. The notes were amended to be due with no interest. The underlying shares were collateral for the note and were held by the Company. In December 1998, the notes were forgiven and the outstanding shares were returned to the Company and cancelled. In connection with the cancellation the Company granted options to purchase 26,250 shares at $.75 per share. The options expire December 14, 2002. F-19 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 14 - STOCK-BASED COMPENSATION The Company accounts for stock based compensation in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation". The standard requires the Company to adopt the "fair value" method with respect to stock-based compensation of consultants and other non-employees, which resulted in a charge to operations of $54,977 in 1998. Additionally, $24,790 was capitalized as offering costs in connection with the private placement. The Company did not adopt the fair value method with respect to employee stock options; the Company continues to account for these under the "intrinsic value" method. Had the Company adopted the fair value method with respect to options issued to employees as well, an additional $35,617 would have been charged to income in 1998; proforma net loss would have been $1,607,000 and net loss per share would have been $.70 on both a basic and diluted basis. In 1998 the Board approved a reduction in the exercise price for options granted to certain employees, consultants, and other non-employees. Because of this, it was necessary to calculate the difference between the fair value of the modified option and the value of the old option immediately before the terms were modified. NOTE 15 - COMMITMENTS AND CONTINGENCIES Operating Leases - ---------------- The Company leases its facilities under long-term non-cancelable operating leases. The lease terms provide for increases in future minimum rental payments based on the Consumer Price Index, and an option to purchase during the lease term. Future minimum lease commitments as of December 31, 1998 are as follows: Year Ended Total December 31, Commitments ------------ -------------- 1999 $ 368,966 2000 368,384 2001 347,585 2002 342,168 2003 336,864 Thereafter 196,504 -------------- Total $ 1,960,471 ============== Total rentals under all operating leases charged against income amounted to $404,475 and $474,500 for the years ended December 31, 1998 and 1997, respectively. F-20 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 15 - COMMITMENTS AND CONTINGENCIES (Continued) Employment Agreements The Company is obligated to make certain minimum salary payments to the Chief Executive Officer and other employee/directors. All contracts expire in 2003, as follows: Year Ended December 31, Total ------------ -------------- 1999 $ 344,600 2000 344,600 2001 344,600 2002 344,600 2003 229,733 -------------- Total $ 1,608,133 ============== Contingencies - ------------- In connection with the discontinued operations and bankruptcy proceedings of Nutek as discussed in Note 9, the Company is party to a lawsuit filed by the major secured lender. The Company has accrued a settlement loss of approximately $350,000 as the probable outcome of this lawsuit. The original claim filed was approximately $800,000, however, management does not feel the lawsuit will be settled for this amount. The Company has filed a breach of contract lawsuit. The complaint alleges that the defendant breached an agreement to purchase the Company's two subsidiaries. The Complaint alleges that the defendants actions constituted breach of contract, a breach of the covenant of good faith and fair dealing, intentional interference with prospective business advantage and negligent interference with prospective business advantage. The Complaint seeks compensatory damages, punitive damages and declaratory relief. In July 1998 the Company borrowed $101,000 from the defendant Company at 13% interest. Due to the legal proceedings above, the Company has written off the note payable to other income since it is probable that the funds will not be repaid upon settlement. NOTE 16 - RELATED PARTY TRANSACTIONS Prior to the disposal of LRL, the Company advanced $203,938 to this subsidiary. These advances are expected to be repaid from a joint venture relationship between the Company and LRL. F-21 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 16 - RELATED PARTY TRANSACTIONS (Continued) In June 1998, the Company purchased a Tech Center from PIC Computers Ltd. ("PIC"), a Macau corporation of which one of the owners is a director of the Company, through the issuance of 450,000 shares of its Series B Preferred Stock. In July 1998, PIC agreed to lease back the Tech Center for a period of five years for a monthly payment of $8,000, commencing when the following joint venture agreement becomes operational. In July 1998, the Company entered into a three year joint venture agreement with PIC, whereby PIC will provide technical and project management services in connection with the Company's contract to install an eleven city air monitoring network in the Peoples Republic of China. PIC will also develop new business opportunities to help expand the Company's market in the Peoples Republic of China. Fees for PIC services will be negotiated on a project by project basis. In December 1998, the Company loaned $24,000 to an officer/director in the form of a promissory note. The note bears no interest and is due January 31,1999. The note was subsequently repaid in January 1999. NOTE 17 - SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for income taxes was $-0- and $1,817 during the years ended December 31, 1998 and 1997, respectively. Cash paid for interest was $103,746 and $192,955 during the years ended December 31, 1998 and 1997, respectively. During the year ended December 31, 1998, the company issued Series B preferred stock of $600,000 in connection with the purchase of the Tech Center. During the year ended December 31, 1998 the Company issued options valued at $24,790 in connection with the private placement. F-22 POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 ---------------------------------------------- NOTE 18 - INDUSTRY SEGMENT AND EXPORT INFORMATION Beginning in 1996 with the acquisitions of Nutek and LMD, the Company operated in three business segments; air pollution monitoring equipment, electrical control panels, and medical instrumentation. Following is certain information related to each segment for 1997: 1997 Electrical Air Pollution Control Medical Instruments Panels Instruments Revenues $ 3,072,600 $ 3,299,687 $ 420,480 ============== =========== =========== Income (loss) from operations $ (906,904) $ (143,755) $ (99,497) ============== =========== =========== Identifiable assets $ 2,334,399 $ 2,608,459 $ 565,002 ============== =========== =========== Depreciation and amortization $ 33,128 $ 184,170 $ 11,727 ============== =========== =========== Capital expenditures $ -- $ 5,417 $ 4,421 ============== =========== =========== During 1998, operations of the electrical control panel and medical instruments divisions were discontinued. NOTE 19 - CONCENTRATION OF CREDIT RISK Concentrations of credit risk with respect to trade receivables exist due to large balances with a few customers. At December 31, 1998, accounts receivable balances from three significant customers were $158,019, or 71% of the total accounts receivable balance. Substantially all of the Company's domestic receivables at December 31, 1998 are factored (Note 11). Ongoing credit evaluations of customers' financial conditions are performed and generally no collateral is required. The Company maintains reserves for potential credit losses, and such losses in the aggregate have not exceeded management's expectations. Customers are located throughout the world. The Company maintains all cash in bank accounts, which at times may exceed federally insured limits. F-23 EXHIBIT INDEX Item Number Description - ------ ----------- 3.1 Articles of Incorporation of A. E. Gosselin Engineering, Inc. (now "Pollution Research and Control Corp.") (Incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation (now "Pollution Research and Control Corp.") 3.2 Certificate of Amendment of Articles of Incorporation of A. E. Gosselin Engineering, Inc. (now "Pollution Research and Control Corp.") (Incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation (now "Pollution Research and Control Corp.") 3.3 Certificate of Amendment of Articles of Incorporation of Dasibi Environmental Corp. (now "Pollution Research and Control Corp.")(Incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation (now "Pollution Research and Control Corp.") 3.4 By-laws of A. E. Gosselin Engineering, Inc. (now "Pollution Research and Control Corp.") (Incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation (now "Pollution Research and Control Corp.") 4.1 Form of Warrant Agreement. (Incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp., dated January 17, 1989.) 4.2 Form of Unit Purchase Warrant. (Incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp., dated January 17, 1989.) 4.3 Form of Stock Purchase Warrant. (Incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-1 (File No. 33-26558 of Pollution Research and Control Corp., dated January 17, 1989.) 10.1 Warrant to Purchase 7,500 shares of Common Stock issued to Frost & Company P.S. on February 10, 1987. (Incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (File No. 33-26558) of Pollution Research and Control Corp., dated January 17, 1989.) 10.2 Employment Agreement, dated July 31, 1987, between Pollution Research and Control Corp. and Albert E. Gosselin, Jr. (Incorporated herein by reference to Exhibit 10.3 to the Registration Statement on Form S-1 (File No. 33-26558) of Pollution Research and Control Corp., dated January 17, 1989.) 10.3 Employees' Incentive Stock Option Plan. (Incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-1 (File No. 33-26558) of Pollution Research and Control Corp., dated January 17, 1989.) E-1 10.4 Employment Agreement, as amended, dated August 19, 1989, between Pollution Research and Control Corp. and Albert E. Gosslein, Jr. (Incorporated herein by reference to Exhibit 10-28 to the Annual Report on Form 10-K for the fiscal year ended June 30, 1989.) 10.5 Lease, dated July 1, 1989, between Pollution Research and Control Corp. and Shahik Mardeross-ASL. (Incorporated herein by reference to Exhibit 10.30 to the Annual Report on Form 10-K for the fiscal year ended June 30, 1989.) 10.6 Stock Option Agreement, dated May 28, 1991, between Pollution Research and Control Corp. and Lee Sion. (Incorporated herein by reference to Exhibit 10.14 to the Transition Report on Form 10-K for the transition period ended June 30, 1991.) 10.7 Stock Option Agreement, dated May 28, 1991, between Pollution Research and Control Corp. and Albert E. Gosselin, Jr., (Incorporated herein by reference to Exhibit 10.15 to the Transition Report on Form 10-K for the transition period ended June 30, 1991.) 10.8 Stock Option Agreement, dated May 28, 1991, between Pollution Research and Control Corp. and Gary L. Dudley, (Incorporated herein by reference to Exhibit 10.13 to the Transition Report on Form 10-K for the transition period ended June 30, 1991.) 10.9 Agreement, dated November 1, 1991, between Pollution Research and Control Corp. and KVB, Inc. (Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1991.) 10.10 Purchase Agreement, dated as of December 2, 1991, between Pollution Research and Control Corp. and CSC Industries, Inc. and affiliated companies Pension Plans Trust. (Incorporated herein by reference to Exhibit 10.7 to the Amendment No. 1 to the Registration Statment on form S-1 (File No., 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.11 Warrant, dated as of December 2, 1991, issued to CSC Industries, Inc. and affiliated companies Pension Plans Trust. (Incorporated herein by reference to Exhibit 10.8 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.12 Purchase Agreement, dated as of December 9, 1991, between Pollution Research and Control Corp. and Richard M. Molinsky (Incorporated herein by reference to Exhibit 10.9 to the Amendment No. 1 to the Registration Statment on form S-1 (File No. 33- 43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.13 Warrant, dated as of December 9, 1991, issued to Richard M. Molinsky. (Incorporated herein by reference to Exhibit 10.10 to the Amendment No. 1 to the Registration Statment on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.14 Purchase Agreement, dated as of December 11, 1991, between Pollution Research and Control Corp. and Global Environment Fund. (Incorporated herein by reference to Exhibit 10.11 to the Amendment No. 1 to the Registration Statment on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) E-2 10.15 Warrant, dated as of December 11, 1991, issued to Global Enviroment Fund. (Incorporated herein by reference to Exhibit 10.7 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.16 Purchase Agreement, dated as of December 13, 1991, between Pollution Research and Control Corp. and Robert A. Tantleff (Incorporated herein by reference to Exhibit 10.13 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.17 Warrant, dated as of December 2, 1991, issued to Robert A. Tantleff. (Incorporated herein by reference to Exhibit 10.14 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.18 Purchase Agreement, dated as of December 16, 1991, between Pollution Research and Control Corp. and Stanley Baker. (Incorporated herein by reference to Exhibit 10.15 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33- 43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.19 Warrant, dated as of December 16, 1991, issued to Stanley Baker. (Incorporated herein by reference to Exhibit 10.16 to the Amendment No. 1 to the Registration Statment on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.20 Purchase Agreement, dated as of December 16, 1991, between Pollution Research and Control Corp. and Bruce Lynch. (Incorporated herein by reference to Exhibit 10.17 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33- 43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.21 Warrant, dated as of December 16, 1991, issued to Bruce Lynch. (Incorporated herein by reference to Exhibit 10.18 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.22 Purchase Agreement, dated as of December 16, 1991, between Pollution Research and Control Corp. and John Kilmartin. (Incorporated herein by reference to Exhibit 10.19 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33- 43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.23 Warrant, dated as of December 16, 1991, issued to John Kilmartin. (Incorporated herein by reference to Exhibit 10.20 to the Amendment No. 1 to the Registration Statement on form S-1 (File No. 33-43124) of Pollution Research and Control Corp. dated December 23, 1991.) 10.24 Consulting Agreement, dated January 3, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.24 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) 10.25 Option Agreement, dated January 3, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.25 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) E-3 10.26 Option Agreement, dated March 11, 1992 between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.26 to the Annual Report on Form 10-K for the fiscal year eneded December 31, 1992.) 10.27 Agreement, dated March 5, 1992, between Pollution Research and Control Corp. and Lee Sion. (Incorporated herein by reference to Exhibit 10.27 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) 10.28 Option Agreement, dated June 22, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.28 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) 10.29 Option Agreement, dated June 22, 1992, between Pollution Research and Control Corp. and Total Software, Inc. (Incorporated herein by reference to Exhibit 10.29 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992.) 10.30 Lease Agreement, dated June 1, 1992, between Dasibi Environmental Group. and Bernard C. Mills, Jr. (Incorporated herein by reference to Exhibit 10.30 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.31 Lease Agreement, dated January 6, 1994, between Dasibi Environmental Group. and the Prudential Insurance Company of America. (Incorporated herein by reference to Exhibit 10.31 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.32 Agreement, and Bill of Sale, dated February 18, 1994, between Pollution Research and Control Corp. and General Monitors, Inc. (Incorporated herein by reference to Exhibit 10.32 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.33 Stipulation of Settlement, dated February 1994, between Pollution Research and Control Corp. and Diversified Research Partners Limited Partnership. (Incorporated herein by reference to Exhibit 10.33 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.34 Requirements Contract dated March 10, 1994, between Pollution Research and Control Corp. and Logan Research, Ltd. (Incorporated herein by reference to Exhibit 10.34 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.35 Lease Agreement dated April 15, 1994, between Dasibi Environmental Corp. and Summit Park Associates. (Incorporated herein by reference to Exhibit 10.35 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.36 Amended Employment Agreement, effective August 31, 1993, between Pollution Research and Control Corp. and Albert E. Gosselin, Jr., (Incorporated herein by reference to Exhibit 10.36 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.37 Employment Agreement, dated July 20, 1994, between Pollution Research and Control Corp. and Cynthia L. Gosselin (Incorporated herein by reference to Exhibit 10.37 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) E-4 10.38 Final Judgment of Permanent Injunction and Other Relief as to Pollution Research and Control Corp. dated July 7, 1994 in Case Number 1.94CV01425, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.38 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.39 Final Judgment of Permanent Injunction and Other Relief as to Pollution Research and Contorl Corp. dated July 13, 1994 in Case Number 1.94CV01425, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.39 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.40 Consent of Albert E. Gosselin dated June 7, 1994, in Case Number 1.94CV01425, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.40 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.41 Final Judgment of Permanent Injunction and Other Relief as to Cynthia Gosselin,. dated July 13, 1994 in Case Number 1.94CV01425, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.41 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.42 Consent of Cynthia L.. Gosselin dated June 7, 1994, in Case Number 1.94CV01425, the Securities and Exchange Commission v. Pollution Research and Control Corp., Albert E. Gosselin and Cynthia Gosselin. (Incorporated herein by reference to Exhibit 10.41 to the Annual Report on form 10-KSB for the fiscal year ended December 31, 1994.) 10.43 Warrant to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp., dated January 22, 1990, issued to Marty Williams. ((Incorporated herein by reference to Exhibit 4.9 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.44 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp., of Marty Williams, dated effective June 6, 1994. ((Incorporated herein by reference to Exhibit 4.10 to the Registration Statement on form S-3 (Registration No., 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.45 Warrant to Purchase 202,500 Shares of Common Stock of Pollution Research and Control Corp., dated December 2, 1991, issued to CSC Industries, Inc. and affiliated companies. (Incorporated herein by reference to Exhibit 4.11 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.46 Amendment Warrant to Purchase Common Stock of Pollution Research and Control Corp., of CSC Industries, Inc. and affiliated companies Pension Plans Trust, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.12 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) E-5 10.47 Warrant to Purchase 67,500 Shares of Common Stock of Pollution Research and Control Corp., dated December 8, 1991, issued to Richard M. Molinsky. (Incorporated herein by reference to Exhibit 4.13 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.48 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp., of Richard M. Molinsky, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.14 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.49 Warrant to Purchase 135,000 Shares of Common Stock of Pollution Research and Control Corp., dated December 11, 1991, issued to Kingsley & Co. (formerly Global Environment Fund) (Incorporated herein by reference to Exhibit 4.15 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.50 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Kingsley & Co. (formerly Global Environment Fund), dated effective June 6, 194. (Incorporated herein by reference to Exhibit 4.16 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.51 Warrant to Purchase 67,500 Shares of Common Stock of Pollution Research and Control Corp., dated December 13, 1991, issued to A. Robert Tantleff. (Incorporated herein by reference to Exhibit 4.17 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.52 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of A. Robert Tantleff, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.18 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.53 Warrant to Purchase 101,250 Shares of Common Stock of Pollution Research and Control Corp., dated December 16, 1991, issued to Stanley Becker. (Incorporated herein by reference to Exhibit 4.19 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.54 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Stanley Becker, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.20 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.55 Warrant to Purchase 27,000 Shares of Common Stock of Pollution Research and Control Corp., dated December 16, 1991, issued to John Kilmartin. (Incorporated herein by reference to Exhibit 4.21 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.56 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of John Kilmartin, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.22 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) E-6 10.57 Warrant to Purchase 74,250 Shares of Common Stock of Pollution Research and Control Corp., dated December 16, 1991, issued to Bruce Lynch.. (Incorporated herein by reference to Exhibit 4.23 to the Registration Statement on form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.58 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Bruce Lynch, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.24 to the Registration Statement on form S-3 (Registration No. 33- 60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.59 Warrant to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. of Michael Young, dated May 24, 1991. (Incorporated herein by reference to Exhibit 4.25 to the Registration Statement on form S-3 (Regsistration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.60 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Michael Young, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.26 to the Registration Statement on form S-3 (Regsistration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.61 Warrant to Purchase 12,000 Shares of Common Stock of Pollution Research and Control Corp., dated December 16, 1991, of Kennedy Capital Management, dated November 26, 1991. (Incorporated herein by reference to Exhibit 4.27 to the Registration Statement on form S-3 (Regsistration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.62 Amendment to Warrant to purchase Common Stock of Pollution Research and Control Corp. of Kennedy Capital Management dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.28 to the Registration Statement on form S-3 (Regsistration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.63 Pollution Research and Control Corp. Common Stock Purchase Warrant for the purchase of 60,000 shares of the Equity Group Inc. dated August 31, 1993. (Incorporated herein by reference to Exhibit 4.29 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.64 Warrant to Purchase 7,500 Shares of Common Stock of Pollution Research and Control Corp. of Stanely Becker dated November 8, 1993. (Incorporated herein by reference to Exhibit 4.30 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.65 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Stanley Becker, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.31 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.66 Warrant to Purchase 5,500 Shares of Common Stock of Pollution Research and Control Corp. of Bruce Lynch dated November 8, 1993. (Incorporated herein by reference to Exhibit 4.32 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) E-7 10.67 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Bruce Lynch, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.33 to the Registration Statement on Form S-3 (Registration No. 33- 60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.68 Warrant to Purchase 7,500 Shares of Common Stock of Pollution Research and Control Corp. of Robert Tantleff dated November 8, 1993. (Incorporated herein by reference to Exhibit 4.34 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.69 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Robert Tantleff, dated effective June 6, 1994. (Incorporated herein by reference to Exhibit 4.35 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.70 Warrant to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. of Edward G. Lowell dated November 8, 1995. (Incorporated herein by reference to Exhibit 4.36 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.71 Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. of Randy Foy dated as of July 4, 1994. (Incorporated herein by reference to Exhibit 4.37 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.72 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Frost and Company P.S. dated effective February 9, 1992. (Incorporated herein by reference to Exhibit 4.38 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.73 Amendment to Warrant to Purchase Common Stock of Pollution Research and Control Corp. of Kial, Ltd., dated effective January 9, 1992. (Incorporated herein by reference to Exhibit 4.39 to the Registration Statement on Form S-3 (Registration No. 33- 60035) of Pollution Research and Control Corp. dated June 7, 1995.) 10.74 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. of Albert E. Gosselin, Jr., dated as of June 29, 1995 (Incorporated herein by reference to Exhibit 4.40 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.75 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Cindy Gosselin dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.41 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.76 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Barbara L. Gosselin dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.42 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) E-8 10.77 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Gary L. Dudley dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.43 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.78 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Marcia Smith dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.44 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.79 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Craig E. Gosselin dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.45 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.80 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. of Keith Gosselin dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.46 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.81 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. of Mike Chu dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.47 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.82 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. of Kimberly Chu dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.48 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.83 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. of Tolly Smith dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.49 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.84 Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. of Randy Foy dated as of June 29, 1995. (Incorporated herein by reference to Exhibit 4.50 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) 10.85 Option to Purchase 200,000 Shares of Common Stock of Pollution Research and Control Corp. of J. Paul Consulting Group dated effective July 18, 1995. (Incorporated herein by reference to Exhibit 4.51 to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-60035) of Pollution Research and Control Corp., dated January 17, 1996.) E-9 10.86 Agreement dated June 11, 1996, among Logan Medical Devices, Inc., party of the first part, Ronald Bruce Logan-Sinclair and Howard George Vincent Cooke, parties of the second part, and Pollution Research and Control Corp., party of the third part. (Incorporated herein by reference to Exhibit 10.86 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.87 Employment Agreement dated June 11, 1996, between Logan Medical Devices, Inc. and Logan Research Ltd., on the one hand, and Ronald Bruce Logan-Sinclair, on the other hand. (Incorporated herein by reference to Exhibit 10.87 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.88 Guarantee dated effective June 11, 1996, by Logan Medical Devices, Inc. in favor of Namulas Pension Trustees Limited. (Incorporated herein by reference to Exhibit 10.88 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.89 Loan and Security Agreement dated June 28, 1996, between Logan Medical Devices, Inc., on the one hand, and Ronald Bruce Logan-Sinclair and Howard George Vincent Cooke, on the other hand. (Incorporated herein by reference to Exhibit 10.89 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.90 Nine Per Cent Debenture due June 28, 2,006, in the face amount of $285,714.29, bearing interest quarterly commencing June 30, 1998. (Incorporated herein by reference to Exhibit 10.90 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.91 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Phil Huss. Option Agreement, datedas of April 1, 1996 between Pollution Research and Control Corp. and Phil Hull. (Incorporated herein by reference to Exhibit 4.11 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.92 Consulting Agreement dated as of May 30, 1996, between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. (Incorporated herein by reference to Exhibit 4.12 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.93 Non-Qualified Stock Option Agreement dated as of May 30, 1996, between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. (Incorporated herein by reference to Exhibit 4.13 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.94 Non-Qualified Stock Option Agreement dated as of May 30, 1996, between Pollution Research and Control Corp. and Robert B. Prag. (Incorporated herein by reference to Exhibit 4.14 to the Registration Statement on Form S-3 (Registration No. 33- 14133) of Pollution Research and Control Corp. dated October 15, 1996.) E-10 10.95 Amendment to Non-Qualified Stock Option Agreement dated July 31, 1996, between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. (Incorporated herein by reference to Exhibit 4.15 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.96 Amendment to Non-Qualified Stock Option Agreement dated July 31, 1996, between Pollution Research and Control Corp. and Robert B. Prag. (Incorporated herein by reference to Exhibit 4.16 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.97 Amendment to Consulting Agreement dated 5/30/96 between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc., dated July 31, 1996. (Incorporated herein by reference to Exhibit 4.17 to the Registration Statement on Form S-3 (Registration No.33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.98 Second Amendment to Consulting Agreement dated 5/30/96 between Pollution Research and Control Corp. and Liviakis Financial Communications, Inc. dated as of August 28, 1996. (Incorporated herein by reference to Exhibit 4.18 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.99 Option to Purchase 55,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Aubrey Hornsby; Option Agreement dated as of May 31, 1996, between Pollution Research and Control Corp. and Aubrey Hornsby. (Incorporated herein by reference to Exhibit 10.99 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.100 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Ernestine Taylor; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. Ernestine Taylor. (Incorporated herein by reference to Exhibit 10.100 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.101 Option to Purchase 30,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Debbie Kendrick; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Debbie Kendrick. (Incorporated herein by reference to Exhibit 10.101 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.102 Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Roland Fink; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Roland Fink. (Incorporated herein by reference to Exhibit 10.102 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.103 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Charles Conner; Option Agreement, dated as of May 31, 1996 between Pollution Research and Control Corp. and Charles Conner. (Incorporated herein by reference to Exhibit 10.103 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) E-11 10.104 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Patricia Cudd; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Patricia Cudd. (Incorporated herein by reference to Exhibit 10.104 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.105 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Jeffrey Harkey; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Jeffrey Harkey. (Incorporated herein by reference to Exhibit 10.105 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.106 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to James Bowers; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and James Bowers. (Incorporated herein by reference to Exhibit 10.106 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.107 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Michael Jones; Option greement, dated as of May 31, 1996, between Pollution Research Corp. and Michael Jones. (Incorporated herein by reference to Exhibit 10.107 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.108 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Charles McQuaig; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Charles McQuaig.(Incorported herein by reference to Exhibit 10.108 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.109 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Daniel Patanjo; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Daniel Patanjo. (Incorporated herein by reference to Exhibit 10.109 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.110 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Karen Perry; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Karen Perry. (Incorporated herein by reference to Exhibit 10.110 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.111 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Ricky Sonnier; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Ricky Sonnier. (Incorporated herein by reference to Exhibit 10.111 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.112 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Victor Valerio; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Victor Valerio. (Incorporated herein by reference to Exhibit 10.112 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) E-12 10.113 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Spencer Abrams; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Spencer Abrams. (Incorporated herein by reference to Exhibit 10.113 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.114 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Dan Busby; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Dan Busby. (Incorporated herein by reference to Exhibit 10.114 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.115 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Frank Getautas; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Frank Getautas. (Incorporated herein by reference to Exhibit 10.115 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.116 Option to Purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Mitzi Narramore; Option Agreement, dated as of May 31, 1996, between Pollution Research and Control Corp. and Mitzi Narramore. (Incorporated herein by reference to Exhibit 10.116 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.117 Option to Purchase 300,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Ron Logan-Sinclair; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Ron Logan-Sinclair. (Incorporated herein by reference to Exhibit 10.117 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.118 Option to Purchase 123,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Albert E. Gosselin; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Albert E. Gosselin. (Incorporated herein by reference to Exhibit 10.118 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.119 Option to Purchase 120,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Albert E. Gosselin; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Albert E. Gosslein. (Incorporated herein by reference to Exhibit 4.19 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.120 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Gary L. Dudley; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Gary L. Dudley. (Incorporated herein by reference to Exhibit 4.20 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp.dated October 15, 1996.) E-13 10.121 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Gary L. Dudley; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Gary L. Dudley. (Incorporated herein by reference to Exhibit 10.121 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.122 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Craig E. Gosselin; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Craig E. Gosselin. (Incorporated herein by reference to Exhibit 4.21 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.123 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Craig E. Gosselin; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Craig E. Gosselin. (Incorporated herein by reference to Exhibit 10.123 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.124 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Cynthia L. Gosselin; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Cynthia L. Gosselin. (Incorporated herein by reference to Exhibit 4.22 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996. 10.125 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Cynthia L. Gosslin; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Cynthia L. Gosselin. (Incorporated herein by reference to Exhibit 10.125 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.126 Option to Purchase 40,000 shares of Common Stock of Pollution Research and Control Corp. issued to Marcia Smith; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Marcia Smith. (Incorporated herein by reference to Exhibit 4.23 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.127 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Marcia Smith; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Marcia Smith. (Incorporated herehin by reference to Exhibit 10.127 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.128 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Margaret Jones; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Margaret Jones. (Incorporated herein by reference to Exhibit 4.24 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) E-14 10.129 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Margaret Jones; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Margaret Jones. (Incorporated herein by reference to Exhibit 10.129 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.130 Option to Purchase 37,500 Shares of Common Stock of Pollution Research Corp. issued to Lee Sion; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Lee Sion. (Incorporated herein by reference to Exhibit 10.130 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.131 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Patricia Cudd; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Patricia Cudd. (Incorporated herein by reference to Exhibit 10.131 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.132 Option to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Roland Fink; Option Agreement, dated as of June 1, 1996, between Pollution Research and Control Corp. and Roland Fink. (Incorporated herein by reference to Exhibit 10.132 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.133 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and John Ann Hotchkiss; Warrant to Purchase 291,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to John Ann Hotchkiss. (Incorporated herein by reference to Exhibits 4.25 and 4.26 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.134 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and David Firestone; Warrant to Purchase 166,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to David Firestone. (Incorporated herein by reference to Exhibits 4.27 and 4.28 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.135 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Irawan Onggara; Warrant to Purchase 166,667 Shares of Common Stock of Pollution Research and Control Corp., dated June 15, 1996, issued to Irawan Onggara.(Incorporated herein by reference to Exhibits 4.29 and 4.30 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.136 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and John M. Liviakis; Warranto to Purchase 66,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to John M. Liviakis. (Incorporated herein by reference to Exhibits 4.31 and 4.32 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) E-15 10.137 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Robert S. London; Warrant to Purchase 66,667 Shares of Common Stock of Pollution Research and Control Corp., dated June 15, 1996, issued to Robert S. London. (Incorporated herein by reference to Exhibits 4.33 and 4.34 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.138 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Robert B. Prag; Warranto to Purchase 66,667 Shares of Common Stock of Pollution Research and Control Corp., dated June 15, 1996, issued to Robert B. Prag. (Incorporated herein by reference to Exhibits 4.35 and 4.36 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.139 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Shawn Cady; Warrant to Purchase 41,667 Shares of Common Stock of Pollution Research and Control Corp., dated June 15, 1996, issued to Shawn Cady. (Incorporated herein by reference to Exhibits 4.37 and 4.38 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.140 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Donald Carstens; Warrant to Purchase 41,667 Shares of Common Stock of Pollution Research and Control Corp., dated June 15, 1996 issued to Donald Carstens. (Incorporated herein by reference to Exhibits 4.39 and 4.40 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.141 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Ling Nen Chuan; Warrant to Purchase 41,667 Shares of Common Stock of Pollution Research and Control Corp., dated June 15, 1996, issued to Ling Nen Chuan. (Incorporated herein by reference to Exhibits 4.41 and 4.42 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.142 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Sanibel Capital Corporation; Warrant to Purchase 41,667 Shares of Common Stock of Pollution Research and Control Corp. dated June 15, 1996, issued to Sanibel Capital Corporation. (Incorporated herein by reference to Exhibits 4.43 and 4.44 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.143 Purchase Agreement, dated as of June 14, 1996, between Pollution Research and Control Corp. and Donna Sizemore; Warrant to Purchase 8,333 Shares of Common Stock of Pollution Research and Control Corp., dated June 15, 1996, issued to Donna Sizemore. (Incorporated herein by reference to Exhibits 4.45 and 4.46 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.144 Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Randy Foy; Option Agreement, dated as of July 1, 1996, between Pollution Research and Control E-16 Corp. and Randy Foy. (Incorporated herein by reference to Exhibits 4.47 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.145 Option to Purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Paul Richardson; Option Agreement, dated as of August 6, 1996, between Pollution Research and Control Corp. and Paul Richardson. (Incorporated herein by reference to Exhibit 10.145 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.146 Letter Agreement, dated as of September 20, 1996, between Pollution Research and Control Corp. and Neil C. Sullivan; Warrant to Purchase 300,000 Shares of Common Stock of Pollution Research and Control Corp. dated September 20, 1996, issued to Neil C. Sullivan. (Incorporated herein by reference to Exhibits 4.48 and 4.49 to the Registration Statement on Form S-3 (Registration No. 33-14133) of Pollution Research and Control Corp. dated October 15, 1996.) 10.147 Consulting Agreement dated November 19, 1996, between Pollution Research and Control Corp. and Fenway Advisory Group. (Incorporated herein by reference to Exhibit 10.147 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) 10.148 Option to Purchase 400,000 Shares of Pollution Research and Control Corp. issued to Fenway Advisory Group; Option Agreement dated as of November 19, 1996, between Pollution Research and Control Corp. and Fenway Advisory Group. (Incorporated herein by reference to Exhibit 10.148 to the Annual Report on Form 10- K for the fiscal year ended December 31, 1996.) 10.149 Option to purchase 40,000 Shares of Common Stock of Pollution Research and Control Corp. dated as of March 3, 1997 issued to Barry Soltani. (Incorporated herein by reference to Exhibit 10.149 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) 10.150 Option to purchase 50,000 Shares of Common Stock of Pollution Research and Control Corp. dated as of April 30, 1997 issued to Jorel Management.(Incorporated herein by reference to Exhibit 10.150 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) 10.151 Employment Agreement, dated June 9, 1997, between Pollution Research and Control Corp. and Marcia Smith. (Incorporated herein by reference to Exhibit 10.151 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) 10.152 Amended Employment Agreement dated February 9, 1998 between Pollution Research and Control Corp. and Cindy Gosselin. (Incorporated herein by reference to Exhibit 10.152 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) 10.153 Letter Agreement dated 3-10-98 to annul the acquisition of Logan Research Limited (LRL) by Logan Medical Devices (LMD). (Incorporated herein by reference to Exhibit 10.153to the Annual Report on Form 10K for the fiscal year ended December 31, 1997.) E-17 10.154* Purchase Agreement dated May 8, 1998 between Pollution Research and Control Corp. and Albert E. Gosselin, Jr. to purchase 400,000 Shares of Preferred Convertible Stock. 10.155* Purchase Agreement dated May 8, 1998 between Pollution Research and Control Corp. and Patricia Cudd to purchase 400,000 Shares of Preferred Convertible Stock. 10.156* Purchase Agreement dated May 8, 1998 between Pollution Research and Control Corp. and Gary L. Dudley to purchase 80,000 Shares of Preferred Convertible Stock. 10.157* Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and William T. Richey to purchase 20,000 shares of Common Stock. 10.158* Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Ronald E. Patterson to purchase 23,190 shares of Common Stock. 10.159* Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Ronald E. Patterson to purchase 68,810 shares of Common Stock. 10.160* Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Mayer Zarchi to purchase 20,000 shares of Common Stock. 10.161* Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Fred J. Zalokar to purchase 23,000 shares of Common Stock. 10.162* Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Frank T. Anaya to purchase 9,174 shares of Common Stock. 10.163* Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Donald A. Carstens to purchase 9,082 shares of Common Stock. 10.164* Purchase Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Alan L. Talesnick to purchase 18,000 shares of Common Stock. 10.165* Option to purchase 23,125 Shares of Pollution Research and Control Corp. issued to Phoenix Alliance, Inc.; Option Agreement dated June 19, 1998 between Pollution Research and Control Corp. and Phoenix Alliance, Inc. 10.166* Agreement to purchase a technician service center in Macau from PIC Computers, Ltd. Agreement dated as of June 24, 1998 between Pollution Research and Control Corp. and PIC Computers, Ltd. 10.167* Option to purchase 13,750 Shares of Common Stock issued to Marcia Smith; Option Agreement dated as of December 14, 1998 between Pollution Research and Control Corp. and Marcia Smith. 10.168* Option to purchase 12,500 Shares of Common Stock issued to Cindy Gosselin; Option Agreement dated as of December 14, 1998 between Pollution Research and Control Corp. and Cindy Gosselin. 10.169* Promissory Note dated as of January 27, 1999 between Pollution Research and Control Corp. and Mark S. Rose. E-18 10.170* Option to purchase 48,000 Shares of Common Stock issued to Mark S. Rose; OptionAgreement dated as of January 27, 1999 between Pollution Research and Control Corp. and Mark S. Rose 10.171* Finder's Agreement dated January 27, 1999 between Pollution Research and Control Corp. and Rosemary Althaus. 10.172* Option to purchase 5,000 Shares of Common Stock of Pollution Research and Control Corp.; Option Agreement dated as of January 27, 1999 between Pollution Research and Control Corp. and Rosemary Althaus. 10.173* Purchase Agreement to purchase 25,000 units consisting of 25,000 shares of Common Stock and 25,000 Warrants to purchase Common Stock dated as of February 25, 1999 between Pollution Research and Control Corp. and William T. Richey. 10.174* Purchase Agreement to purchase 133,333 units consisting of 133,333 shares of Common Stock and 133,333 Warrants to purchase Common Stock dated as of February 25, 1999 between Pollution Research and Control Corp. and Ronald E. Patterson. 10.175* Purchase Agreement to purchase 66,666 units consisting of 66,666 shares of Common Stock and 66,666 Warrants to purchase Common Stock dated as of February 25, 1999 between Pollution Research and Control Corp. and Phillip Huss. 10.176* Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Anthony Reneau;Option Agreement dated as of February 25, 1999 between Pollution Research and Control Corp. and Anthony Reneau. 10.177* Purchase Agreement to purchase 14,000 units consisting of 14,000 shares of Common Stock and 14,000 Warrants to purchase Common Stock dated as of February 25, 1999 between Pollution Research and Control Corp and Alan L. Talesnick. 21* List of Subsidiaries. *Filed herewith. E-19 EX-10.154 2 PURCHASE AGREEMENT EXHIBIT 10.154 PURCHASE AGREEMENT POLLUTION RESEARCH AND CONTROL CORP. THIS PURCHASE AGREEMENT ("Agreement" herein) is entered into as of the 8th day of May, 1998 between POLLUTION RESEARCH AND CONTROL CORP., a California corporation with its principal offices at 506 Paula Avenue, Glendale, California 91201 (the "Company") and Albert E. Gosselin, Jr. whose address is 506 Paula Avenue, Glendale, Ca 91201 (the "Purchaser"). WHEREAS, the Company elects to issue and sell its Preferred Convertible Stock (the "Shares") and the Purchaser desires to acquire the Shares for a purchase price of $.125 cents per share. This new issue of shares has voting rights but no dividend rights and is convertible anytime after July 30, 1998.* NOW, THEREFORE, for and in consideration of the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows: I. PURCHASE OF SHARES AND REPRESENTATIONS BY SUBSCRIBER. 1.1 Subject to the terms and conditions hereinafter set forth, the Purchaser hereby purchases 400,000 Shares and the Company agrees to sell the Shares to the Purchaser for a purchase price of $50,000. The purchase price is payable by a cashier's check made payable to the Company, or by wire transfer to an account determined by the Company contemporaneously with the execution and delivery of this Agreement. The Shares will be delivered by the Company to the Purchaser within ten (10) days following the execution of the Agreement. 1.2 The Purchaser recognizes that the purchase of the Shares involves a high degree of risk in that an investment in the company is highly speculative and only an investor who can afford to lose its entire investment in the Company should purchase the Shares. 1.3 The Purchaser acknowledges that he is able to bear the economic risk of this investment. 1.4 The Purchaser represents that he is an "accredited investor," as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the "Act"). 1.5 The Purchaser acknowledges that he has prior investment experience, including investment in non-listed and non-registered securities, or he has employed the services of an investment advisor, attorney or accountant to read all of the documents furnished or made available by the Company to him and to evaluate the merits and risks of such an investment on his behalf. 1.6 The Purchaser hereby represents that he has been furnished by the Company during the course of this transaction with all information regarding the Company which he had requested or desired to know; that all documents which E-20 could be reasonably provided have been made available for his inspection and review; that he has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the terms and conditions of his investment in the Company, and any additional information which he had requested. 1.7 The Purchaser hereby acknowledges that this offering has not been reviewed by the Securities and Exchange Commission (the "Commission") since this offering is intended to be a non-public offering pursuant to Section 4 (2) of the Act. The Purchaser represents that the Shares are being purchased for his own account, for investment, and not for distribution or resale to others. The Purchaser agrees that he will not sell or otherwise transfer such securities unless they are registered under the Act or unless an exemption from such registration is available. 1.8 The Purchaser understands that the Shares have not been registered under the Act by reason of a claimed exemption under the provisions of the Act which depends, in part, upon its investment intention. In this connection, the Purchaser understands that it is the position of the Commission that the statutory basis for such exemption would not be present if his representations merely meant that its present intention was to hold such securities for a short period, for a deferred sale, for a market rise, assuming that a market develops, or for any other fixed period. The Purchaser realizes that, in the view of the Commission, a purchase now with an intent to resell would represent a purchase with an intent inconsistent with his representation to the Company, and the Commission might regard such a sale or disposition as a deferred sale to which the exemption is not available. 1.9 The Purchaser consents that the Company may, if he desires, permit the transfer of the Shares out of his name only when his request for transfer is accompanied by an opinion of council reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Act or any applicable state "blue sky" laws (collectively, the "Securities Laws"). The Purchaser agrees to hold the Company, its directors, officers and controlling persons and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation made by him contained herein or in the Confidential Purchaser Questionnaire completed by him or any sale or distribution by the Purchaser in violation of any Securities Laws. 1.10 The Purchaser consents to the placement of a legend on any certificate or other document evidencing the Shares stating that they have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale thereof. The Purchaser is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability of such securities. II. REPRESENTATIONS BY, AND COVENANTS OF, THE COMPANY. The Company represents and covenants to the Purchaser that: (a) The Company is a corporation duly organized, existing and in good standing under the laws of the State of California which has the corporate power to conduct the business which it conducts and proposes to conduct. E-21 (b) The execution, delivery and performance of this Agreement by the Company has been duly approved by the Board of Directors of the Company and all other actions required to authorize and effect the offer and sale of the Shares have been duly taken and approved. (c) The Shares have been duly and validly authorized and, when issued and paid for in accordance with the terms hereof, will be validly binding obligations of the Company enforceable in accordance with their respective terms except that the enforceability thereof may be limited by bankruptcy, insolvency, or other laws affecting the rights of creditors generally or by general equitable principles. (d) The Company has obtained all licenses, permits and other governmental authorizations necessary to the conduct of its business; such licenses, permits and other governmental authorizations obtained are in full force and effect; and the Company is in all material respects complying therewith. III. REGISTRATION OF SECURITIES. The Company acknowledges that it currently has no effective registration statement on Form S-3 on file with the Securities and Exchange Commission. IV. MISCELLANEOUS. 4.1 Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, address to the Company, at its principal office, 506 Paula Avenue, Glendale, California 91201, Attention: President, with a copy to Patricia Cudd & Associates, Attorney at Law, 1120 Lincoln Street, Suite 703, Denver, Colorado 80203, Attention: Patricia Cudd, and to the Purchaser at the address listed on the signature page hereof. Notices shall be deemed to have been given on the date of mailing, except notices of change of address, which shall be deemed to have been given when received. 4.2 This Agreement shall not be changed, modified or made except by a writing signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged. 4.3 This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. 4.4 This Agreement and its validity, construction and performance shall be governed in all respects by the laws of the State of California, without regard to principles of conflicts of law. E-22 4.5 This Agreement may be executed in counterparts. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. Purchaser: /s/ Albert E. Gosselin, Jr. The Company: --------------------------- POLLUTION RESEARCH AND CONTROL CORP., 506 Paula Ave a California corporation - ------------------------- (Address) Glendale, Ca 91201 By: /s/ Albert E. Gosselin, Jr. - ------------------------- --------------------------------- (City, State) Albert E. Gosselin, Jr., President and Chief Executive Officer Date: May 8, 1998 *Purchase price is based on closing bid May 8, 1998 of .31 cents, modified by dividend formula (based on .20 cents pre-dividend announcement with additional 40% lettered discount). E-23 EX-10.155 3 PURCHASE AGREEMENT EXHIBIT 10.155 PURCHASE AGREEMENT POLLUTION RESEARCH AND CONTROL CORP. THIS PURCHASE AGREEMENT ("Agreement" herein) is entered into as of the 8th day of May, 1998 between POLLUTION RESEARCH AND CONTROL CORP., a California corporation with its principal offices at 506 Paula Avenue, Glendale, California 91201 (the "Company") and Patricia Cudd whose address is 1120 Lincoln Street, #703, Denver, Co 80203 (the "Purchaser"). WHEREAS, the Company elects to issue and sell its Preferred Convertible Stock (the "Shares") and the Purchaser desires to acquire the Shares for a purchase price of $.125 cents per share. This new issue of shares has voting rights but no dividend rights and is convertible anytime after July 30, 1998.* NOW, THEREFORE, for and in consideration of the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows: I. PURCHASE OF SHARES AND REPRESENTATIONS BY SUBSCRIBER. 1.1 Subject to the terms and conditions hereinafter set forth, the Purchaser hereby purchases 400,000 Shares and the Company agrees to sell the Shares to the Purchaser for a purchase price of $50,000. The purchase price is payable by a cashier's check made payable to the Company, or by wire transfer to an account determined by the Company contemporaneously with the execution and delivery of this Agreement. The Shares will be delivered by the Company to the Purchaser within ten (10) days following the execution of the Agreement. 1.2 The Purchaser recognizes that the purchase of the Shares involves a high degree of risk in that an investment in the company is highly speculative and only an investor who can afford to lose its entire investment in the Company should purchase the Shares. 1.3 The Purchaser acknowledges that she is able to bear the economic risk of this investment. 1.4 The Purchaser represents that she is an "accredited investor," as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the "Act"). 1.5 The Purchaser acknowledges that she has prior investment experience, including investment in non-listed and non-registered securities, or she has employed the services of an investment advisor, attorney or accountant to read all of the documents furnished or made available by the Company to her and to evaluate the merits and risks of such an investment on her behalf. 1.6 The Purchaser hereby represents that she has been furnished by the Company during the course of this transaction with all information regarding the Company which she had requested or desired to know; that all documents which could be reasonably provided have been made available for his inspection and E-24 review; that she has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the terms and conditions of his investment in the Company, and any additional information which she had requested. 1.7 The Purchaser hereby acknowledges that this offering has not been reviewed by the Securities and Exchange Commission (the "Commission") since this offering is intended to be a non-public offering pursuant to Section 4 (2) of the Act. The Purchaser represents that the Shares are being purchased for her own account, for investment, and not for distribution or resale to others. The Purchaser agrees that she will not sell or otherwise transfer such securities unless they are registered under the Act or unless an exemption from such registration is available. 1.8 The Purchaser understands that the Shares have not been registered under the Act by reason of a claimed exemption under the provisions of the Act which depends, in part, upon its investment intention. In this connection, the Purchaser understands that it is the position of the Commission that the statutory basis for such exemption would not be present if her representations merely meant that its present intention was to hold such securities for a short period, for a deferred sale, for a market rise, assuming that a market develops, or for any other fixed period. The Purchaser realizes that, in the view of the Commission, a purchase now with an intent to resell would represent a purchase with an intent inconsistent with her representation to the Company, and the Commission might regard such a sale or disposition as a deferred sale to which the exemption is not available. 1.9 The Purchaser consents that the Company may, if she desires, permit the transfer of the Shares out of her name only when her request for transfer is accompanied by an opinion of council reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Act or any applicable state "blue sky" laws (collectively, the "Securities Laws"). The Purchaser agrees to hold the Company, its directors, officers and controlling persons and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation made by him contained herein or in the Confidential Purchaser Questionnaire completed by him or any sale or distribution by the Purchaser in violation of any Securities Laws. 1.10 The Purchaser consents to the placement of a legend on any certificate or other document evidencing the Shares stating that they have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale thereof. The Purchaser is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability of such securities. II. REPRESENTATIONS BY, AND COVENANTS OF, THE COMPANY. The Company represents and covenants to the Purchaser that: (a) The Company is a corporation duly organized, existing and in good standing under the laws of the State of California which has the corporate power to conduct the business which it conducts and proposes to conduct. E-25 (b) The execution, delivery and performance of this Agreement by the Company has been duly approved by the Board of Directors of the Company and all other actions required to authorize and effect the offer and sale of the Shares have been duly taken and approved. (c) The Shares have been duly and validly authorized and, when issued and paid for in accordance with the terms hereof, will be validly binding obligations of the Company enforceable in accordance with their respective terms except that the enforceability thereof may be limited by bankruptcy, insolvency, or other laws affecting the rights of creditors generally or by general equitable principles. (d) The Company has obtained all licenses, permits and other governmental authorizations necessary to the conduct of its business; such licenses, permits and other governmental authorizations obtained are in full force and effect; and the Company is in all material respects complying therewith. III. REGISTRATION OF SECURITIES. The Company acknowledges that it currently has no effective registration statement on Form S-3 on file with the Securities and Exchange Commission. IV. MISCELLANEOUS. 4.1 Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, address to the Company, at its principal office, 506 Paula Avenue, Glendale, California 91201, Attention: President, with a copy to Patricia Cudd & Associates, Attorney at Law, 1120 Lincoln Street, Suite 703, Denver, Colorado 80203, Attention: Patricia Cudd, and to the Purchaser at the address listed on the signature page hereof. Notices shall be deemed to have been given on the date of mailing, except notices of change of address, which shall be deemed to have been given when received. 4.2 This Agreement shall not be changed, modified or made except by a writing signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged. 4.3 This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. 4.4 This Agreement and its validity, construction and performance shall be governed in all respects by the laws of the State of California, without regard to principles of conflicts of law. E-26 4.5 This Agreement may be executed in counterparts. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. Purchaser: /s/ Patricia Cudd The Company: ------------------------- POLLUTION RESEARCH AND CONTROL CORP., 1120 Lincoln St. #703 a California corporation - ------------------------------------ (Address) Denver, Co 80203 By: /s/ Albert E. Gosselin, Jr. - ------------------------------------ --------------------------------- (City, State) Albert E. Gosselin, Jr., President and Chief Executive Officer Date: May 8, 1998 *Purchase price is based on closing bid May 8, 1998 of .31 cents, modified by dividend formula (based on .20 cents pre-dividend announcement with additional 40% lettered discount). E-27 EX-10.156 4 PURCHASE AGREEMENT EXHIBIT 10.156 PURCHASE AGREEMENT POLLUTION RESEARCH AND CONTROL CORP. THIS PURCHASE AGREEMENT ("Agreement" herein) is entered into as of the 8th day of May, 1998 between POLLUTION RESEARCH AND CONTROL CORP., a California corporation with its principal offices at 506 Paula Avenue, Glendale, California 91201 (the "Company") and Gary Dudley whose address is 2700 Panorama Drive, #304, Signal Hill, Ca 90806 (the "Purchaser"). WHEREAS, the Company elects to issue and sell its Preferred Convertible Stock (the "Shares") and the Purchaser desires to acquire the Shares for a purchase price of $.125 cents per share. This new issue of shares has voting rights but no dividend rights and is convertible anytime after July 30, 1998.* NOW, THEREFORE, for and in consideration of the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows: I. PURCHASE OF SHARES AND REPRESENTATIONS BY SUBSCRIBER. 1.1 Subject to the terms and conditions hereinafter set forth, the Purchaser hereby purchases 80,000 Shares and the Company agrees to sell the Shares to the Purchaser for a purchase price of $10,000. The purchase price is payable by a cashier's check made payable to the Company, or by wire transfer to an account determined by the Company contemporaneously with the execution and delivery of this Agreement. The Shares will be delivered by the Company to the Purchaser within ten (10) days following the execution of the Agreement. 1.2 The Purchaser recognizes that the purchase of the Shares involves a high degree of risk in that an investment in the company is highly speculative and only an investor who can afford to lose its entire investment in the Company should purchase the Shares. 1.3 The Purchaser acknowledges that he is able to bear the economic risk of this investment. 1.4 The Purchaser represents that he is an "accredited investor," as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the "Act"). 1.5 The Purchaser acknowledges that he has prior investment experience, including investment in non-listed and non-registered securities, or he has employed the services of an investment advisor, attorney or accountant to read all of the documents furnished or made available by the Company to him and to evaluate the merits and risks of such an investment on his behalf. 1.6 The Purchaser hereby represents that he has been furnished by the Company during the course of this transaction with all information regarding the Company which he had requested or desired to know; that all documents which could be reasonably provided have been made available for his inspection and E-28 review; that he has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the terms and conditions of his investment in the Company, and any additional information which he had requested. 1.7 The Purchaser hereby acknowledges that this offering has not been reviewed by the Securities and Exchange Commission (the "Commission") since this offering is intended to be a non-public offering pursuant to Section 4 (2) of the Act. The Purchaser represents that the Shares are being purchased for his own account, for investment, and not for distribution or resale to others. The Purchaser agrees that he will not sell or otherwise transfer such securities unless they are registered under the Act or unless an exemption from such registration is available. 1.8 The Purchaser understands that the Shares have not been registered under the Act by reason of a claimed exemption under the provisions of the Act which depends, in part, upon its investment intention. In this connection, the Purchaser understands that it is the position of the Commission that the statutory basis for such exemption would not be present if his representations merely meant that its present intention was to hold such securities for a short period, for a deferred sale, for a market rise, assuming that a market develops, or for any other fixed period. The Purchaser realizes that, in the view of the Commission, a purchase now with an intent to resell would represent a purchase with an intent inconsistent with his representation to the Company, and the Commission might regard such a sale or disposition as a deferred sale to which the exemption is not available. 1.9 The Purchaser consents that the Company may, if he desires, permit the transfer of the Shares out of his name only when his request for transfer is accompanied by an opinion of council reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Act or any applicable state "blue sky" laws (collectively, the "Securities Laws"). The Purchaser agrees to hold the Company, its directors, officers and controlling persons and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation made by him contained herein or in the Confidential Purchaser Questionnaire completed by him or any sale or distribution by the Purchaser in violation of any Securities Laws. 1.10 The Purchaser consents to the placement of a legend on any certificate or other document evidencing the Shares stating that they have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale thereof. The Purchaser is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability of such securities. II. REPRESENTATIONS BY, AND COVENANTS OF, THE COMPANY. The Company represents and covenants to the Purchaser that: (a) The Company is a corporation duly organized, existing and in good standing under the laws of the State of California which has the corporate power to conduct the business which it conducts and proposes to conduct. E-29 (b) The execution, delivery and performance of this Agreement by the Company has been duly approved by the Board of Directors of the Company and all other actions required to authorize and effect the offer and sale of the Shares have been duly taken and approved. (c) The Shares have been duly and validly authorized and, when issued and paid for in accordance with the terms hereof, will be validly binding obligations of the Company enforceable in accordance with their respective terms except that the enforceability thereof may be limited by bankruptcy, insolvency, or other laws affecting the rights of creditors generally or by general equitable principles. (d) The Company has obtained all licenses, permits and other governmental authorizations necessary to the conduct of its business; such licenses, permits and other governmental authorizations obtained are in full force and effect; and the Company is in all material respects complying therewith. III. REGISTRATION OF SECURITIES. The Company acknowledges that it currently has no effective registration statement on Form S-3 on file with the Securities and Exchange Commission. IV. MISCELLANEOUS. 4.1 Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, address to the Company, at its principal office, 506 Paula Avenue, Glendale, California 91201, Attention: President, with a copy to Patricia Cudd & Associates, Attorney at Law, 1120 Lincoln Street, Suite 703, Denver, Colorado 80203, Attention: Patricia Cudd, and to the Purchaser at the address listed on the signature page hereof. Notices shall be deemed to have been given on the date of mailing, except notices of change of address, which shall be deemed to have been given when received. 4.2 This Agreement shall not be changed, modified or made except by a writing signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged. 4.3 This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. 4.4 This Agreement and its validity, construction and performance shall be governed in all respects by the laws of the State of California, without regard to principles of conflicts of law. E-30 4.5 This Agreement may be executed in counterparts. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. Purchaser: /s/ Gary Dudley The Company: POLLUTION RESEARCH AND CONTROL CORP., 2700 Panorama Drive #304 a California corporation - ------------------------------ (Address) Signal Hill, Ca 90806 By: /s/ Albert E. Gosselin, Jr. - ------------------------------ ---------------------------------- (City, State) Albert E. Gosselin, Jr., President and Chief Executive Officer Date: May 8, 1998 *Purchase price is based on closing bid May 8, 1998 of .31 cents, modified by dividend formula (based on .20 cents pre-dividend announcement with additional 40% lettered discount). E-31 EX-10.157 5 INVESTMENT LETTER EXHIBIT 10.157 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT June 19, 1998 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 20,000 shares of common stock, no par value per share (the "Common Stock"), at a per share price of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $21,800.00 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. E-32 The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act if applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so or to take steps necessary to make Rule 144 available to him. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands E-33 and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x x ------ ------- ------------- ------ Occasionally ______ _______ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: Stock Broker Since 1970 ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him, E-34 Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 (x) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 ( ) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% (x) 1% - 10% ( ) 10% - 20% ( ) 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: (x) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: (x) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 E-35 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ William T. Richey ------------------------------ William T. Richey Current Residence Address: 4960 Lakeshore Dr. Littleton, Co 80123 Current Residence Telephone Number: 303-794-7411 SS. No. ###-##-#### Current Occupation and/or Business Position: Stock Broker Current Business Telephone Number: 303-629-5555 Current Name of Business with which Associated: Rocky Mtn. Securities Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Philip Huss, Phoenix Alliance Relationship, if any, with the above mentioned Co. Rep: None E-36 EX-10.158 6 INVESTMENT LETTER EXHIBIT 10.158 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT June 19, 1998 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 23,190 shares of common stock, no par value per share (the "Common Stock"), at a per share price of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $25,277.10 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. E-37 The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act if applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so or to take steps necessary to make Rule 144 available to him. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands E-38 and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x x ------ ------- ------------- ------ Occasionally ______ _______ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: Wharton School Graduate U of P Finance & Investments Major ----------------------------------------------------------------------- 35 years as a venture capitalist and active stock trader ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him. E-39 Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 ( ) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 (x) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% (x) 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 (x) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 E-40 ( ) $500,000-$1,000,000 (x) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Ronald E. Patterson ----------------------------------- Ronald E. Patterson Current Residence Address: 17 Prestile Place, Robbinsville, NJ 08691 Current Residence Telephone Number: 609-259-2662 SS. No. ###-##-#### Current Occupation and/or Business Position: Venture Capitalist Current Business Telephone Number: 609-259-2662 Current Name of Business with which Associated: N/A Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Philip Huss, Phoenix Alliance Relationship, if any, with the above mentioned Co. Rep: None E-41 EX-10.159 7 INVESTMENT LETTER EXHIBIT 10.159 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT June 19, 1998 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 68,810 shares of common stock, no par value per share (the "Common Stock"), at a per share price of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $75,002.90 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. E-42 The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act if applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so or to take steps necessary to make Rule 144 available to him. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands E-43 and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x x ------ ------- ------------ ------ Occasionally ______ _______ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: Wharton School Graduate U of P Finance & Investments Major ----------------------------------------------------------------------- 35 years as a venture capitalist and active stock trader ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him. E-44 Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 ( ) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 (x) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% (x) 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 (x) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 E-45 ( ) $500,000-$1,000,000 (x) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Ronald E. Patterson ----------------------------------- Ronald E. Patterson Current Residence Address: 17 Prestile Place, Robbinsville, NJ 08691 Current Residence Telephone Number: 609-259-2662 SS. No. ###-##-#### Current Occupation and/or Business Position: Venture Capitalist Current Business Telephone Number: 609-259-2662 Current Name of Business with which Associated: N/A Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Philip Huss, Phoenix Alliance Relationship, if any, with the above mentioned Co. Rep: None E-46 EX-10.160 8 INVESTMENT LETTER EXHIBIT 10.160 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT June 19, 1998 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 20,000 shares of common stock, no par value per share (the "Common Stock"), at a per share price of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $21,800.00 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. E-47 The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act if applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so or to take steps necessary to make Rule 144 available to him. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands E-48 and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x ------ ------- ------------- ------ Occasionally ______ _______ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: Medicl Equipment Stocks ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him. E-49 Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: (x) Less than $500,000 ( ) $500,000 - $1,000,000 ( ) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 ( ) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% ( ) 20% - 50% (x) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 (x) $100,000-$200,000 ( ) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 (x) $100,000-$200,000 ( ) $200,000-$500,000 E-50 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Mayer Zarchi -------------------------------- Mayer Zarchi Current Residence Address: 383 Kingston Ave, #110, Brooklyn, NY 11213 Current Residence Telephone Number: 718-467-8110 SS. No. ###-##-#### Current Occupation and/or Business Position: CEO Current Business Telephone Number: 718-266-5553 Current Name of Business with which Associated: Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Philip Huss, Phoenix Alliance Relationship, if any, with the above mentioned Co. Rep: N/A E-51 EX-10.161 9 INVESTMENT LETTER EXHIBIT 10.161 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT June 19, 1998 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 23,000 shares of common stock, no par value per share (the "Common Stock"), at a per share price of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $25,070.00 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. E-52 The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act if applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so or to take steps necessary to make Rule 144 available to him. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands E-53 and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x ------ -------- ------------- ------ Occasionally ______ ___x___ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: MBA - Real Estate Stock & Option InvestorInvestments Major ----------------------------------------------------------------------- Finance Manager ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him. E-54 Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 (x) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 (x) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% (x) 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 ( ) $100,000-$200,000 (x) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 ( ) $100,000-$200,000 (x) $200,000-$500,000 E-55 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Fred J. Zalokar -------------------------------- Fred J. Zalokar Current Residence Address: 310 N. Civic Dr #415, Walnut Creek, Ca 94596-3643 Current Residence Telephone Number: 925-947-6777 SS. No. ###-##-#### Current Occupation and/or Business Position: Finance Manager Current Business Telephone Number: 510-287-0201 Current Name of Business with which Associated: East Bay Municipal Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Philip Huss, Phoenix Alliance Relationship, if any, with the above mentioned Co. Rep: None E-56 EX-10.162 10 INVESTMENT LETTER EXHIBIT 10.162 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT June 19, 1998 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 9,174 shares of common stock, no par value per share (the "Common Stock"), at a per share price of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $9,999.66 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. E-57 The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act if applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so or to take steps necessary to make Rule 144 available to him. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands E-58 and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently ------ ------- ------------- ------ Occasionally X X X ______ ------ ------- ------------- Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: BS DEGREE IN METEOROLOGY AND GEOGRAPHY, BA IN SOCIOLOGY. ----------------------------------------------------------------------- EXTENSIVE BUSINESS EXPERIENCE. ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him, E-59 Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: (X) Less than $500,000 ( ) $500,000 - $1,000,000 ( ) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 ( ) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% (X) 10% - 20% () 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 (X) $100,000-$200,000 ( ) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 (X) $100,000-$200,000 ( ) $200,000-$500,000 E-60 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Frank T. Anaya ------------------------------- Frank T. Anaya Current Residence Address: 1330 Claremont Dr., Tracy, Ca 95376 Current Residence Telephone Number: 209-835-5750 SS. No. ###-##-#### Current Occupation and/or Business Position: Gen Sales Manager Current Business Telephone Number: 510-441-5500 Current Name of Business with which Associated: Chapel of Chimes Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Phil Huss Relationship, if any, with the above mentioned Co. Rep: Personal Length of relationship: 8 years E-61 EX-10.163 11 INVESTMENT LETTER EXHIBIT 10.163 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT June 19, 1998 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 9,082 shares of common stock, no par value per share (the "Common Stock"), at a per share price of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $9,900.00 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. E-62 The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act if applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so or to take steps necessary to make Rule 144 available to him. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands E-63 and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently ------ ------- --------------- ------- Occasionally X X ------ ------- --------------- ------- Never x x ------ ------- --------------- ------- The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: BS DEGREE IN METEOROLOGY AND GEOGRAPHY, BA IN SOCIOLOGY. ----------------------------------------------------------------------- EXTENSIVE BUSINESS EXPERIENCE. ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him. E-64 Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 (x) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 ( ) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% (X) 10% - 20% ( ) 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 (x) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 ( ) $100,000-$200,000 (x) $200,000-$500,000 E-65 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Donald A. Carstens ----------------------------------- Donald A. Carstens Current Residence Address: 3 Upper Newport Pl., Newport Beach, Ca 92660 Current Residence Telephone Number: 949-851-9611 SS. No. ###-##-#### Current Occupation and/or Business Position: Attorney Current Business Telephone Number: 949-851-9611 Current Name of Business with which Associated: None Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Phil Huss Relationship, if any, with the above mentioned Co. Rep: None Length of relationship: none E-66 EX-10.164 12 INVESTMENT LETTER EXHIBIT 10.164 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT June 19, 1998 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 18,000 shares of common stock, no par value per share (the "Common Stock"), at a per share price of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $19,260.00 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. E-67 The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act if applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so or to take steps necessary to make Rule 144 available to him. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands E-68 and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x x ------ ------- ------------- ------ Occasionally ______ _______ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: Attorney specializing in corporate, securities & business matters.. MBA Harvard - -------------------------------------------------------------------------------- Business School (1972). JD Harvard Law School (1972) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him. E-69 Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 ( ) $1,000,000 - $3,000,000 (x) $3,000,000 - $5,000,000 ( ) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% ( ) 20% - 50% (x) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 ( ) $100,000-$200,000 (x) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 ( ) $100,000-$200,000 (x) $200,000-$500,000 E-70 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Alan Talesnick ------------------------------------ Alan Talesnick Current Residence Address: 5030 Bow Mar Drive, Littleton, Co 80123 Current Residence Telephone Number: 303-795-5990 SS. No. ###-##-#### Current Occupation and/or Business Position: Attorney/President Current Business Telephone Number: 303-572-6500 Current Name of Business with which Associated: Bearman Talesnick & Clowdus P.C. Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: William Richey, Phil Huss Relationship, if any, with the above mentioned Co. Rep: William Richey, stockbroker, former client, Phil Huss, business relationship (former client) Length of relationship: William Richey 19 years, Phil Huss 2 years E-71 EX-10.165 13 OPTION TO PURCHASE EXHIBIT 10.165 THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE. OPTION TO PURCHASE 23,125 SHARES OF COMMON STOCK OF POLLUTION RESEARCH AND CONTROL CORP. FROM JUNE 19, 1998 VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON JUNE 19, 2001 This certifies that Phoenix Alliance, Inc. or registered assigns, is entitled, subject to the terms set forth below, to purchase from Pollution Research and Control Corp., a California corporation (the "Company"), the above number of fully paid and nonassessable shares of Common Stock of the Company ("Common Stock") at a purchase price of $.2.20 per share ("Purchase Price"). This Option is exercisable from June 19, 1998 to and including 5:00 p.m., Los Angeles time, on June 19, 2001. Registered Owner: Phoenix Alliance, Inc. Purchase Price: $2.20 per share E-72 OPTION AGREEMENT This Option Agreement (the "Agreement") is made and entered into effective as of June 19, 1998 by and between Pollution Research and Control Corp., a California corporation ("PRCC") and Phoenix Alliance, Inc. ("Optionee"). WHEREAS, Optionee has been providing valuable services as recognized by the Company's Board of Directors to PRCC and PRCC is desirous of having Optionee continue to provide such services to it; and WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an aggregate of 23,125 shares of the no par value common stock of PRCC (the "Common Stock") under the terms and conditions set forth below. NOW, THEREFORE, the parties agree as follows: 1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate agreement and not in lieu of other compensation for services, the right and option (the "Option") to purchase on the terms and conditions set forth in this Agreement all or any part of up to an aggregate of 23,125 shares of Common Stock (the "Option Shares"), for continuous, uninterrupted, employment service to PRCC or by specific acknowledgement of exception by the Company's Board of Directors. 2. Option Price. At any time when shares of Common Stock are to be purchased pursuant to the Option, the purchase price for each Option share shall be $2.20 ("Option Price"), and for purposes of record, the bid price of the Company's stock on this date was $1.94. 3. Option Period. The option period shall commence on June 19, 1998 (the "Date of Grant") and shall terminate June 19, 2001. 4. Exercise of Option. The Option may be exercised in whole or in part at any time after the date hereof by delivering to the Chief Financial Officer of PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form attached hereto as Exhibit "A," specifying the number of Option Shares with respect to which the Option is exercised, and (b) full payment of the Option Price for such Shares. E-73 5. Securities Laws Requirements. The Option Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and no Shares may be sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed of except in compliance with the Act and any other applicable federal and state securities laws. Additionally, the Option and the Option Shares have not been qualified under the California Securities Law of 1968, as amended (the "California Law"). PRCC has no obligation to register the Option shares under the Act or qualify the Option Shares under the California Law. Optionee acknowledges that he is aware that Rule 144 of the General Rules and Regulations under the Act ("Rule 144") affords a limited exemption from registration for the public resale of registered securities and under the terms of Rule 144 as currently in effect, the Shares received by Optionee may be sold to the public without registration only after a period of two (2) years has elapsed from the exercise date of the Option and then only in compliance with all other requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents, warrants and agrees as follows: (a) That the Option and the Option Shares are not registered under the Act or qualified under the California Law, and the Option Shares shall be, acquired solely for the account of Optionee for investment purposes only and with no view to their resale or other distribution of any kind; (b) Neither the Option nor any Option Share shall be sold or otherwise distributed in violation of the Act, the California Law or any other applicable federal or state securities law; (c) His overall commitment to investments that are not readily marketable is not disproportionate to his net worth, and his investment in PRCC will not cause such overall commitment to become excessive; (d) He has the financial ability to bear the economic risk of his investment, has adequate means of providing for his current needs and personal contingencies, and has no need for liquidity in his investment in PRCC; (e) He either: (i) has a preexisting personal or business relationship with PRCC or its officers, directors or controlling persons, or (ii) has evaluated the business of PRCC and the high risks of investing in PRCC, the competitive nature of the business in which PRCC is engaged, and hs the business E-74 or financial experience or has business or financial advisors who are unaffiliated with, and not compensated by, PRCC and protect him interests in connection with the transaction; (f) He has been given the opportunity to review all books, records and documents of PRCC and to ask questions and receive answers from PRCC concerning PRCC's business, to obtain additional information necessary to verify the accuracy of the information he has desired in order to evaluate his investment, and to consult with such attorneys, accountants and other advisors as he has desired; (g) His residence set forth below is his true and correct residence, and he has no present intention of becoming a resident or domiciliary of any other state of jurisdiction; (h) In making the decision to accept the Option and/or purchase the Option Shares, he has relied solely upon independent investigations made by or on behalf of him; (i) No federal or state agency has made any finding or determination as to the fairness of an investment in PRCC; and (j) He understands that all the representations and warranties made by him herein, and all information furnished by him to PRCC, is true, correct and complete in all respects. 6. Optionee hereby acknowledges that he understands the meaning and legal consequences of the representations, warranties and covenants contained herein and that PRCC has relied on the representations made by Optionee in paragraph 5 hereof in granting this Option, and Optionee agrees to indemnify and hold harmless PRCC and its officers, directors, controlling persons, attorneys, agents and employees from and against any and all loss, damage or liability, together with all costs and expenses (including attorneys' fees and disbursements) which any of them may incur by reason of any breach and any representation, warranty, covenant or agreement contained herein. All representations, warranties, covenants and agreements, and the indemnification contained herein shall survive the grant of the Option and the issuance of the Option Shares by PRCC. 7. Legend of Certificates. All Option Shares issued pursuant to this Agreement shall be subject to the provisions of this Agreement and the certificates representing such Option Shares shall bear the following legend or language substantially equivalent thereto: E-75 "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY." 8. Transferability of Option. The Option shall not be transferable except by the laws of descent and distribution and any attempt to do so shall void the Option. 9. Adjustment. The Option Price and the number and kind of Option Shares shall be subject to corresponding adjustment in the event of any change in the Common stock by reason of any reclassification, recapitalization, split-up, combination, exchange of shares, readjustment or stock dividend, in like manner as if such Option Shares had been issued and outstanding, fully paid and non-assessable at the time of such occurrence. 10. Privilege of Ownership. Optionee shall not have any of the rights of a shareholder with respect to the shares covered by the Option except to the extent that one or more certificates for such Shares shall be delivered to him upon on e (1) or more exercises of the Option. 11. Notices. Any notices required or permitted to be given under this Agreement shall be in writing and they shall be deemed to have been given upon personal delivery or two (2) business days after mailing the notice by postage, registered or certified mail. Such notice shall be addressed to the party to be notified as shown below: PRCC: POLLUTION RESEARCH AND CONTROL CORP. 506 Paula Avenue Glendale, CA 91201 Attn: President OPTIONEE: Phoenix Alliance 22 Cedar Court Durango, CO 81301 Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. E-76 12. General Provisions. This Agreement: (a) Contains the entire agreement between PRCC and Optionee regarding options of PRCC to Optionee and supersedes all prior communications, oral or written; (b) Shall not be construed to give Optionee any rights as to PRCC or the Common Stock, except as specifically provided herein; (c) May not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver; (d) Shall be construed in accordance with, and governed by, the laws of the State of California; and (e) Shall be binding upon and shall inure to the benefit of PRCC and Optionee, and their respective successors and assigns, except that Optionee shall not have the right to assign or otherwise transfer his rights hereunder to any person. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. PRCC: POLLUTION RESEARCH AND CONTROL CORP., a California corporation By: /s/ Albert E. Gosselin, Jr. ------------------------------------ Albert E. Gosselin, Jr., President and Chief Executive Officer OPTIONEE: PHOENIX ALLIANCE, INC. By: /s/ Phil Huss -------------------------------------- Phil Huss E-77 EXHIBIT A To Pollution Research and Control Corp. NOTICE AND AGREEMENT OF EXERCISE OF OPTION I hereby exercise the Option granted to me by POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("PRCC"), dated as of ................. as to .......................... shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 4 of my Agreement regarding the Option. - -------------------------- ------------------------------ (Print Your Name) Signature E-78 EX-10.166 14 AGREEMENT EXHIBIT 10.166 AGREEMENT Pursuant to certain discussions between PIC Computers, Ltd. (PIC) a Macau Corporation, and Pollution Research and Control Corporation (PRCC) a California Corporation, the parties have reached the following definitive agreement: Whereas PIC is a company expert in system integration and project management, with substantial China project management expertise, and is located in Macau, a gateway to the China market, and is desirous to sell its technician service center office. Whereas PRCC is a company that through its wholly owned subsidiary, Dasibi Environmental Corporation (Dasibi) has been actively seeking projects in China, and is desirous to purchase PIC's technician service center office. Now therefore in consideration of mutual covenants and benefits the parties agree as follows: Party A: PIC Computers, Ltd. Party A's owners: Mehrdad Etemad and Barry Soltani, and Hopetown Trading (100% owned by Etemad and Soltani). Party B: Pollution Research and Control Corporation Party B's owners: PRCC is a public corporation 1. In consideration for issuance of 450,000 (current post-split) Series B voting, non dividend, preferred, common stock shares of PRCC, by PRCC. PIC agrees to sell its technician service center office to PRCC. The shares shall be issued by June 26th and registered with best effort. The property is located at Iau Luen Building, Units E and F, No 15 Rua Ferreira do Amaral, Macau. The net usable area is 2,320 sq. ft. 2. PIC agrees to lease back the service center back from PRCC basxed on triple net lease for a period of 5 years and a monthly payment of $8,000. A separate lease agreement (Attachment 1 to this Agreement) shall be signed. 3. Dasibi shall pay the Macau government transfer tax (i.e. Sisa). 4. Dasibi and PIC shall sign a Joint Venture Agreement (Attachment 2 to this Agreement) for project management services to be rendered by PIC for Dasibi's China projects. E-79 Agreed: On behalf of Pollution Research and Control Corporation /s/ Albert E. Gosselin, Jr., Date: 6/24/98 - -------------------------------------- Albert E. Gosselin, Jr., Chairman and CEO On Behalf of PIC Computers, Ltd. /s/ Mehrdad Etemad Date: 6/24/98 - -------------------------------------- Mehrdad Etemad, Managing Director On behalf of Hopetown Trading /s/ Mehrdad Etemad Date: 6/24/98 - -------------------------------------- Mehrdad Etemad, Managing Director /s/ Barry Soltani Date: 6/24/98 - -------------------------------------- Barry Soltani E-80 Lease Agreement Attachment 1 Pursuant to an Agreement signed by and between Pollution Research and Control Corporation (PRCC) a California Corporation and PIC Computers, Ltd. (PIC) a Macau Corporation on June 24, 1998 where PRCC purchased a technician service center in Macau from PIC and its principals, now PRCC and its wholly owned subsidiary Dasibi Environmental Corporation, a California Corporaiton (Dasibi) and PIC agree on the following Lease Agreement: Whereas PIC is a company expert in system integration and project management, with substantial China project management expertise, and is located in Macau, a gateway to the China market, and is desirous to cooperate with, Dasibi and PRCC regarding certain project implementation services in China. Whereas PRCC is a company that through its wholly owned subsidiary, Dasibi has been awarded a project to supply certain air pollution monitoring equipment in China, and is desirous to cooperate with PIC in certain project implementation services in China. Now therefore in consideration of mutual covenants and benefits herein under the parties agree as follows: 1. Premise: PIC agrees to lease the Technician Service Center office located at Iau Luen Building, Units E and F (with net usable area of 2,320 sq. ft.), No. 15 Rua Ferreira do Amaral, Macau from PRCC. 2. Rent: The lease agreement is a triple net, with a monthly payment of $8,000 payable beginning at the beginning of each month. Utilities and management fees and other operational charges are the responsibilities of the tenant. 3. Term: The term of the lease is for a period of 5 years starting from the date the "Technical and Project Management Service Agreement" signed between the two parties is in effect and operational. Should the China related jobs be completed the lease is cancelable after one year. 4. Use of premise: The premises shall be used for technical and other related business of PIC or its affiliates and shall not be used for entertainment and related purposes. 5. Maintenance: The tenant is responsible for normal maintenance of the property. 6. Alterations: The tenantagrees to inform PRCC of any intended alterations to the premises and any such alterations shall be agreed to by PRCC in regards to costs and improvements in advance. E-81 7. Possession: Should the tenant vacate the premises the landlord is free to terminate this agreement and regain lawful possession. 8. Attorney's Fees. If an action or proceeding out of this agreement the prevailing party shall be entitled to reasonable attorney's fees and costs. 9. Waiver: The waiver of any breach shall not be construed to be a continuing waiver of any subsequent breach. 10. Notice: Notice to the landlord may be served at: Pollution Research and Control Corporation, 506 Paula Avenue, Glendale, CA, USA. 11. Entire Contract: The terms agreed to in this agreement is the final expression of their agreement by the parties. The parties intend that this agreement is the complete and exclusive statement of its terms and no extrinsic evidence whatsoever may be introduced involving this agreement. 12. Acknowledgement: The undersigned have read the foregoing prior to execution and acknowledge receipt of a copy. On behalf of Pollution Research and Control Corporation /s/ Albert E. Gosselin, Jr. Date: 7/9/98 - -------------------------------- -------------- Albert E. Gosselin, Jr., Chairman and CEO On behalf of Dasibi Environmental Corporation /s/ Albert E. Gosselin, Jr. Date: 7/9/98 - -------------------------------- -------------- Albert E. Gosselin, Jr. President On Behalf of PIC Computers, Ltd. /s/ Mehrdad Etemad Date: 7/9/98 - -------------------------------- -------------- Mehrdad Etemad, Managing Director E-82 JOINT VENTURE AGREEMENT ATTACHMENT 2 Pursuant to certain discussions between Pollution Research and Control Corporation (PRCC) and Dasibi Environmental Corporation (Dasibi) a subsidiary of PRCC, California Corporation and PIC Computers Ltd. (PIC), a company registered in Macau, the parties have reached the following Agreement. Whereas Dasibi has been awarded a project to supply ambient air monitoring equipment through the Chinese Environmental Protection Administration (SEPA) to 11 Chinese Cities, and is desirous to cooperate with and hire PIC for the implementation of certain technical and project management services for the above project in China. Whereas PIC is a leading IT company in Macau with expertise in networking technology, software development, IT training as well as industrial project management services and implementation and set up of joint ventures with substantial China project management experience, and are desirous to cooperate with Dasibi for the implementation of certain technical and project management services as well as promotion of future business for Dasibi in China. Whereas, Barry Soltani, Director of PIC has been instrumental in concluding the above project for Dasibi. Now therefore the parties agree as follows: 1. To develop new business opportunities for PRCC/Dasibi to further expand its market in China through direct sales and/or joint venture cooperation for its current products and/or new products. 2. To identify the appropriate partner for joint venture cooperation. 3. To formulate and discuss the joint venture cooperation with the Chinese party. 4. To set up and manage equipment maintenance programs for the PRCC/Dasibi installations in China. 5. The fee for these tasks shall be negotiated between the two parties in advance of performing the tasks and payments shall be made in US Dollars. For the Technical and Project Management Services regarding the current China project, PIC shall perform the following tasks for PRCC/Dasibi on exclusive gasis: 1. Dasibi shall hire PIC to perform installation, system configuration, software implementation, customization and start-up, in addition to warranty services for Dasibi's current Urban Air Quality Auto-Monitoring System project in 11 Chinese Cities. 2. The scope of services to be performed by PIC and or its affiliates include: o Computer systems support, installation, configuration, and installation service for the 11 cities. 2.1 China Training E-83 o PIC shall provide 3 dedicated engineers to help implement this project. o PIC shall send the engineers to Dasibi for an intensive training program. o The Training Program shall be for 33 Chinese trainees for a duration of 12 weeks total in Wenzhou, or Macau. 2.2 Equipment Installation and Calibration |X| PIC shall provide 2 dedicated engineers to perform start-up of the equipment (both hardware and software) at each city for two weeks. 2.3 Handover of the project to the Chinese |X| PIC shall assist in the handover of the project to the Chinese. |X| PIC shall coordinae the performance of the tasks and the Handover program in full consultation with Dasibi and per recommendation of the California Air Resources Board. 2.4 Warranty services |X| PIC shall perform all warranty related labor and management services for the 11 Chinese cities in accordance with warranty terms. 3. The fee for each task shall be negotiated between the two parties in advance of performing the task and payments shall be made in US Dollars. Other terms and conditions: 1. Duration: The duration of this agreement shall be three years from the signing of this agreement. The agreement shall automatically be renewed for another year unless terminated by either party 90 days prior to expiration of the agreement. 2. Exclusivity and non-circumvention. The Parties agree to deal with each other on an exclusive basis. The Parties agree not to circumvent or bypass the other, either directly or indirectly, to avoid payment of fees and commissions. Neither party nor its agents/employees shall attempt to deal directly with companies introduced by the other. 3. Confidentiality of information. The Parties herein agree to treat as confidential all information and documentation obtained and exchanged by and from each other (the "Confidential Information"). The Parties shall not disclose the confidential information to any third party, nor shall the Parties use the confidential information except for the purposes of fulfilling its obligations under this agreement. 4. LAWS The parties shall attempt to settle any and all disputes amicably through friendly discussions and consultations. If the dispute cannot be so resolved, it will be settled by arbitration in accordance with the rules of the American Arbitration Association, in effect as at the date of E-84 this Agreement. It is mutually agreed taht all arbitration proceedings shall be held in Los Angeles, California, U.S.A. and the number of arbitrators shall be three. On behalf of Pollution Research and Control Corporation: /s/ Albert E. Gosselin, Jr. Date: 7/9/98 - ---------------------------------- Chairman and CEO On behalf of PIC Computers Ltd. /s/ Mehrdad Etemad Date: 7/9/98 - ---------------------------------- Mehrdad Etemad, Managing Director E-85 EX-10.167 15 OPTION TO PURCHASE EXHIBIT 10.167 THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE. OPTION TO PURCHASE 13,750 SHARES OF COMMON STOCK OF POLLUTION RESEARCH AND CONTROL CORP. FROM DECEMBER 14, 1998 VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON DECEMBER 14, 2002 This certifies that Marcia Smith or registered assigns, is entitled, subject to the terms set forth below, to purchase from Pollution Research and Control Corp., a California corporation (the "Company"), the above number of fully paid and nonassessable shares of Common Stock of the Company ("Common Stock") at a purchase price of $.75 per share ("Purchase Price"). This Option is exercisable from December 14, 1998 to and including 5:00 p.m., Los Angeles time, on December 14, 2002. Registered Owner: Marcia Smith Purchase Price: $ .75 per share E-86 OPTION AGREEMENT This Option Agreement (the "Agreement") is made and entered into effective as of December 14, 1998 by and between Pollution Research and Control Corp., a California corporation ("PRCC") and Marcia Smith ("Optionee"). WHEREAS, Optionee has been providing valuable services as recognized by the Company's Board of Directors to PRCC and PRCC is desirous of having Optionee continue to provide such services to it; and WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an aggregate of 13,750 shares of the no par value common stock of PRCC (the "Common Stock") under the terms and conditions set forth below. NOW, THEREFORE, the parties agree as follows: 1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate agreement and not in lieu of other compensation for services, the right and option (the "Option") to purchase on the terms and conditions set forth in this Agreement all or any part of up to an aggregate of 13,750 shares of Common Stock (the "Option Shares"), for continuous, uninterrupted, employment service to PRCC or by specific acknowledgement of exception by the Company's Board of Directors. 2. Option Price. At any time when shares of Common Stock are to be purchased pursuant to the Option, the purchase price for each Option share shall be $ .75 ("Option Price"), and for purposes of record, the bid price of the Company's stock on this date was $.69. 3. Option Period. The option period shall commence on December 14, 1998 (the "Date of Grant") and shall terminate December 14, 2002. 4. Exercise of Option. The Option may be exercised in whole or in part at any time after the date hereof by delivering to the Chief Financial Officer of PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form attached hereto as Exhibit "A," specifying the number of Option Shares with respect to which the Option is exercised, and (b) full payment of the Option Price for such Shares. E-87 5. Securities Laws Requirements. The Option Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and no Shares may be sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed of except in compliance with the Act and any other applicable federal and state securities laws. Additionally, the Option and the Option Shares have not been qualified under the California Securities Law of 1968, as amended (the "California Law"). PRCC has no obligation to register the Option shares under the Act or qualify the Option Shares under the California Law. Optionee acknowledges that he is aware that Rule 144 of the General Rules and Regulations under the Act ("Rule 144") affords a limited exemption from registration for the public resale of registered securities and under the terms of Rule 144 as currently in effect, the Shares received by Optionee may be sold to the public without registration only after a period of two (2) years has elapsed from the exercise date of the Option and then only in compliance with all other requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents, warrants and agrees as follows: (a) That the Option and the Option Shares are not registered under the Act or qualified under the California Law, and the Option Shares shall be, acquired solely for the account of Optionee for investment purposes only and with no view to their resale or other distribution of any kind; (b) Neither the Option nor any Option Share shall be sold or otherwise distributed in violation of the Act, the California Law or any other applicable federal or state securities law; (c) Her overall commitment to investments that are not readily marketable is not disproportionate to her net worth, and her investment in PRCC will not cause such overall commitment to become excessive; (d) She has the financial ability to bear the economic risk of her investment, has adequate means of providing for her current needs and personal contingencies, and has no need for liquidity in her investment in PRCC; (e) She either: (i) has a preexisting personal or business relationship with PRCC or its officers, directors or controlling persons, or (ii) has evaluated the business of PRCC and the high risks of investing in PRCC, the competitive nature of the business in which PRCC is engaged, and has the E-88 business or financial experience or has business or financial advisors who are unaffiliated with, and not compensated by, PRCC and protect her interests in connection with the transaction; (f) She has been given the opportunity to review all books, records and documents of PRCC and to ask questions and receive answers from PRCC concerning PRCC's business, to obtain additional information necessary to verify the accuracy of the information she has desired in order to evaluate her investment, and to consult with such attorneys, accountants and other advisors as she has desired; (g) Her residence set forth below is her true and correct residence, and she has no present intention of becoming a resident or domiciliary of any other state of jurisdiction; (h) In making the decision to accept the Option and/or purchase the Option Shares, she has relied solely upon independent investigations made by or on behalf of him; (i) No federal or state agency has made any finding or determination as to the fairness of an investment in PRCC; and (j) She understands that all the representations and warranties made by him herein, and all information furnished by him to PRCC, is true, correct and complete in all respects. 6. Optionee hereby acknowledges that she understands the meaning and legal consequences of the representations, warranties and covenants contained herein and that PRCC has relied on the representations made by Optionee in paragraph 5 hereof in granting this Option, and Optionee agrees to indemnify and hold harmless PRCC and its officers, directors, controlling persons, attorneys, agents and employees from and against any and all loss, damage or liability, together with all costs and expenses (including attorneys' fees and disbursements) which any of them may incur by reason of any breach and any representation, warranty, covenant or agreement contained herein. All representations, warranties, covenants and agreements, and the indemnification contained herein shall survive the grant of the Option and the issuance of the Option Shares by PRCC. 7. Legend of Certificates. All Option Shares issued pursuant to this Agreement shall be subject to the provisions of this Agreement and the certificates representing such Option Shares shall bear the following legend or language substantially equivalent thereto: E-89 "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY." 8. Transferability of Option. The Option shall not be transferable except by the laws of descent and distribution and any attempt to do so shall void the Option. 9. Adjustment. The Option Price and the number and kind of Option Shares shall be subject to corresponding adjustment in the event of any change in the Common stock by reason of any reclassification, recapitalization, split-up, combination, exchange of shares, readjustment or stock dividend, in like manner as if such Option Shares had been issued and outstanding, fully paid and non-assessable at the time of such occurrence. 10. Privilege of Ownership. Optionee shall not have any of the rights of a shareholder with respect to the shares covered by the Option except to the extent that one or more certificates for such Shares shall be delivered to him upon on e (1) or more exercises of the Option. 11. Notices. Any notices required or permitted to be given under this Agreement shall be in writing and they shall be deemed to have been given upon personal delivery or two (2) business days after mailing the notice by postage, registered or certified mail. Such notice shall be addressed to the party to be notified as shown below: PRCC: POLLUTION RESEARCH AND CONTROL CORP. 506 Paula Avenue Glendale, CA 91201 Attn: President OPTIONEE: Marcia Smith E-90 Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. 12. General Provisions. This Agreement: (a) Contains the entire agreement between PRCC and Optionee regarding options of PRCC to Optionee and supersedes all prior communications, oral or written; (b) Shall not be construed to give Optionee any rights as to PRCC or the Common Stock, except as specifically provided herein; (c) May not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver; (d) Shall be construed in accordance with, and governed by, the laws of the State of California; and (e) Shall be binding upon and shall inure to the benefit of PRCC and Optionee, and their respective successors and assigns, except that Optionee shall not have the right to assign or otherwise transfer her rights hereunder to any person. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. PRCC: POLLUTION RESEARCH AND CONTROL CORP., a California corporation By: /s/ Albert E. Gosselin, Jr. ---------------------------------- Albert E. Gosselin, Jr., President and Chief Executive Officer OPTIONEE: By: /s/ Marcia Smith ----------------------------------- Marcia Smith E-91 EXHIBIT A To Pollution Research and Control Corp. NOTICE AND AGREEMENT OF EXERCISE OF OPTION I hereby exercise the Option granted to me by POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("PRCC"), dated as of ..................as to ...................... shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 4 of my Agreement regarding the Option. - ---------------------------- ------------------------- (Print Your Name) Signature E-92 EX-10.168 16 OPTION TO PURCHASE EXHIBIT 10.168 THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE. OPTION TO PURCHASE 12,500 SHARES OF COMMON STOCK OF POLLUTION RESEARCH AND CONTROL CORP. FROM DECEMBER 14, 1998 VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON DECEMBER 14, 2002 This certifies that Cindy Gosselin or registered assigns, is entitled, subject to the terms set forth below, to purchase from Pollution Research and Control Corp., a California corporation (the "Company"), the above number of fully paid and nonassessable shares of Common Stock of the Company ("Common Stock") at a purchase price of $.75 per share ("Purchase Price"). This Option is exercisable from December 14, 1998 to and including 5:00 p.m., Los Angeles time, on December 14, 2002. Registered Owner: Cindy Gosselin Purchase Price: $ .75 per share E-93 OPTION AGREEMENT This Option Agreement (the "Agreement") is made and entered into effective as of December 14, 1998 by and between Pollution Research and Control Corp., a California corporation ("PRCC") and Cindy Gosselin ("Optionee"). WHEREAS, Optionee has been providing valuable services as recognized by the Company's Board of Directors to PRCC and PRCC is desirous of having Optionee continue to provide such services to it; and WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an aggregate of 12,500 shares of the no par value common stock of PRCC (the "Common Stock") under the terms and conditions set forth below. NOW, THEREFORE, the parties agree as follows: 1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate agreement and not in lieu of other compensation for services, the right and option (the "Option") to purchase on the terms and conditions set forth in this Agreement all or any part of up to an aggregate of 12,500 shares of Common Stock (the "Option Shares"), for continuous, uninterrupted, employment service to PRCC or by specific acknowledgement of exception by the Company's Board of Directors. 2. Option Price. At any time when shares of Common Stock are to be purchased pursuant to the Option, the purchase price for each Option share shall be $ .75 ("Option Price"), and for purposes of record, the bid price of the Company's stock on this date was $.69. 3. Option Period. The option period shall commence on December 14, 1998 (the "Date of Grant") and shall terminate December 14, 2002. 4. Exercise of Option. The Option may be exercised in whole or in part at any time after the date hereof by delivering to the Chief Financial Officer of PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form attached hereto as Exhibit "A," specifying the number of Option Shares with respect to which the Option is exercised, and (b) full payment of the Option Price for such Shares. E-94 5. Securities Laws Requirements. The Option Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and no Shares may be sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed of except in compliance with the Act and any other applicable federal and state securities laws. Additionally, the Option and the Option Shares have not been qualified under the California Securities Law of 1968, as amended (the "California Law"). PRCC has no obligation to register the Option shares under the Act or qualify the Option Shares under the California Law. Optionee acknowledges that he is aware that Rule 144 of the General Rules and Regulations under the Act ("Rule 144") affords a limited exemption from registration for the public resale of registered securities and under the terms of Rule 144 as currently in effect, the Shares received by Optionee may be sold to the public without registration only after a period of two (2) years has elapsed from the exercise date of the Option and then only in compliance with all other requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents, warrants and agrees as follows: (a) That the Option and the Option Shares are not registered under the Act or qualified under the California Law, and the Option Shares shall be, acquired solely for the account of Optionee for investment purposes only and with no view to their resale or other distribution of any kind; (b) Neither the Option nor any Option Share shall be sold or otherwise distributed in violation of the Act, the California Law or any other applicable federal or state securities law; (c) Her overall commitment to investments that are not readily marketable is not disproportionate to her net worth, and her investment in PRCC will not cause such overall commitment to become excessive; (d) She has the financial ability to bear the economic risk of her investment, has adequate means of providing for her current needs and personal contingencies, and has no need for liquidity in her investment in PRCC; (e) She either: (i) has a preexisting personal or business relationship with PRCC or its officers, directors or controlling persons, or (ii) has evaluated the business of PRCC and the high risks of investing in PRCC, the competitive nature of the business in which PRCC is engaged, and has the E-95 business or financial experience or has business or financial advisors who are unaffiliated with, and not compensated by, PRCC and protect her interests in connection with the transaction; (f) She has been given the opportunity to review all books, records and documents of PRCC and to ask questions and receive answers from PRCC concerning PRCC's business, to obtain additional information necessary to verify the accuracy of the information she has desired in order to evaluate her investment, and to consult with such attorneys, accountants and other advisors as she has desired; (g) Her residence set forth below is her true and correct residence, and she has no present intention of becoming a resident or domiciliary of any other state of jurisdiction; (h) In making the decision to accept the Option and/or purchase the Option Shares, she has relied solely upon independent investigations made by or on behalf of him; (i) No federal or state agency has made any finding or determination as to the fairness of an investment in PRCC; and (j) She understands that all the representations and warranties made by him herein, and all information furnished by him to PRCC, is true, correct and complete in all respects. 6. Optionee hereby acknowledges that she understands the meaning and legal consequences of the representations, warranties and covenants contained herein and that PRCC has relied on the representations made by Optionee in paragraph 5 hereof in granting this Option, and Optionee agrees to indemnify and hold harmless PRCC and its officers, directors, controlling persons, attorneys, agents and employees from and against any and all loss, damage or liability, together with all costs and expenses (including attorneys' fees and disbursements) which any of them may incur by reason of any breach and any representation, warranty, covenant or agreement contained herein. All representations, warranties, covenants and agreements, and the indemnification contained herein shall survive the grant of the Option and the issuance of the Option Shares by PRCC. 7. Legend of Certificates. All Option Shares issued pursuant to this Agreement shall be subject to the provisions of this Agreement and the certificates representing such Option Shares shall bear the following legend or language substantially equivalent thereto: E-96 "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY." 8. Transferability of Option. The Option shall not be transferable except by the laws of descent and distribution and any attempt to do so shall void the Option. 9. Adjustment. The Option Price and the number and kind of Option Shares shall be subject to corresponding adjustment in the event of any change in the Common stock by reason of any reclassification, recapitalization, split-up, combination, exchange of shares, readjustment or stock dividend, in like manner as if such Option Shares had been issued and outstanding, fully paid and non-assessable at the time of such occurrence. 10. Privilege of Ownership. Optionee shall not have any of the rights of a shareholder with respect to the shares covered by the Option except to the extent that one or more certificates for such Shares shall be delivered to him upon on e (1) or more exercises of the Option. 11. Notices. Any notices required or permitted to be given under this Agreement shall be in writing and they shall be deemed to have been given upon personal delivery or two (2) business days after mailing the notice by postage, registered or certified mail. Such notice shall be addressed to the party to be notified as shown below: PRCC: POLLUTION RESEARCH AND CONTROL CORP. 506 Paula Avenue Glendale, CA 91201 Attn: President OPTIONEE: Cindy Gosselin E-97 Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. 12. General Provisions. This Agreement: (a) Contains the entire agreement between PRCC and Optionee regarding options of PRCC to Optionee and supersedes all prior communications, oral or written; (b) Shall not be construed to give Optionee any rights as to PRCC or the Common Stock, except as specifically provided herein; (c) May not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver; (d) Shall be construed in accordance with, and governed by, the laws of the State of California; and (e) Shall be binding upon and shall inure to the benefit of PRCC and Optionee, and their respective successors and assigns, except that Optionee shall not have the right to assign or otherwise transfer her rights hereunder to any person. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. PRCC: POLLUTION RESEARCH AND CONTROL CORP., a California corporation By: /s/ Albert E. Gosselin, Jr. ------------------------------------ Albert E. Gosselin, Jr., President and Chief Executive Officer OPTIONEE: By: /s/ Cindy Gosselin ---------------------------------- Cindy Gosselin E-98 EXHIBIT A To Pollution Research and Control Corp. NOTICE AND AGREEMENT OF EXERCISE OF OPTION I hereby exercise the Option granted to me by POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("PRCC"), dated as of .................. as to .......................... shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 4 of my Agreement regarding the Option. - ------------------------- ------------------------------ (Print Your Name) Signature E-99 EX-10.169 17 PROMISSORY NOTE EXHIBIT 10.169 PROMISSORY NOTE $100,000 Glendale, California January 27, 1999 FOR VALUE RECEIVED, the undersigned, Pollution Research and Control Corp., a California corporation (hereinafter referred to as the "Maker"), with its address at 506 Paula Avenue, Glendale, California 91201, agrees and promises to pay to the order of Mark S. Rose (hereinafter referred to as the "Holder"), at 72 West Avenue, Patchogue, New York 11772, or such other place as the Holder may designate in writing, in coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, the principal sum of one hundred thousand dollars ($100,000), together with interest thereon at the rate of eleven per cent (11%) per annum, from the date hereof until maturity, as hereinafter provided. The principal balance of this Promissory Note (hereinafter referred to as the "Note"), together with all interest then accrued and unpaid, shall be due and payable on May 27, 1999. The Maker may prepay any part or all of this Note at any time without penalty. Each payment or pre-payment made by the Maker hereunder shall be applied first to the payment or pre-payment of accrued interest, if any, due on the unpaid principal balance of this Note and the remainder of each payment or pre-payment made by the Maker shall be applied to the reduction of the unpaid principal balance hereof. If default is made in the payment of this Note, as and when the same is or becomes due, the Holder may, after notice and failure to cure as hereinafter provided, without additional notice or demand, declare the entire unpaid principal balance hereof and accrued and unpaid interest, if any, at once due and payable. Except as otherwise specifically set out herein, the Maker waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of acceleration of the indebtedness due hereunder, bringing of suit and diligence in taking any action to collect amounts called for hereunder, and agrees that the time of payments hereof may be extended without notice at any time and from time-to-time, and for periods of time for a term or terms in excess of the original term without notice or consideration to, or consent from the Maker, without same constituting a waiver of the Holder's rights under this Note. If payment is not received by the tenth day after it is due, then the Holder agrees to give written notice of such to the Maker. If payment is not received within five days of said notice, then the Holder may at his election accelerate this Note. The Holder may charge a late charge of two per cent (2%) of the amount of the payment received after the tenth day such payment is due. E-100 If the entire outstanding principal balance becomes due, the Maker agrees to pay the Holder's reasonable costs (including reasonable attorney's fees and court costs) in collecting on this Note, including the reasonable costs of obtaining and enforcing a judgment for any balance due on this Note. This Note has been executed in the City identified in the heading and delivered to the Holder at the address stated herein. It is to be performed, in whole or in part, in the State of California, and the laws of such state shall govern the validity, construction, enforcement and interpretation of this Note. Jurisdiction and venue for any action hereunder shall be in the County of the City identified in the heading. The Maker represents that it is duly authorized and empowered to enter into, deliver, perform and be fully bound by all of the terms, provisions and conditions of this Note. The Maker also represents that the making and delivery of this Note, and the performance of any agreement or instrument made in connection herewith, does not conflict with or violate any other agreement to which the Maker is a party. No provision of this Note shall require the payment or permit the collection of interest in excess of the maximum permitted by law, and in the event of any such excess, neither the Maker nor its successors or assigns shall be obligated to pay any such excess to the extent that it is more than the amount permitted by law. If an excess amount is received, charged, collected or applied as interest, it shall automatically be made so as to reduce the rate to that permitted by law and any excess interest then received, charged or collected shall be applied to reduce the amount of any collateral to which the Holder is entitled. In the event that any word, phrase, clause, sentence or other provision hereof shall violate any applicable statute, ordinance or rule of law in any jurisdiction in which it is used, such provision shall be ineffective to the extent of such violation without invalidating any other provision hereof. IN WITNESS HEREOF, this Note is executed on the date and year above written. POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. ------------------------------------------ Albert E. Gosselin, Jr., President E-101 EX-10.170 18 STOCK OPTION AGREEMENT EXHIBIT 10.170 POLLUTION RESEARCH AND CONTROL CORP. STOCK OPTION AGREEMENT THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into effective as of the 27th day of January, 1999, by and between Pollution Research and Control Corp., a California corporation (the "Company"), 506 Paula Avenue, Glendale, California 91201, and Mark S. Rose (the "Optionee"), 72 West Avenue, Patchogue, New York 11772. The Company desires to provide the Optionee an opportunity to purchase shares of its common stock, no par value (the "Common Stock"), as hereinafter provided. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms shall mean: (a) "Board" - the Board of Directors of the Company. (b) "Common Stock" - the Common Stock, no par value, of the Company. (c) "Company" - Pollution Research and Control Corp., a California corporation, 506 Paula Avenue, Glendale, California 91201. (d) "Effective Date" - January 27, 1999. (e) "Optionee" - Mark S. Rose (f) "Exercise Period" - from January 27, 1999, through and including January 27, 2002. (g) "Expiration Date" - January 27, 2002. (h) "Option" - The right to purchase shares of Common Stock of the Company as provided herein, and any options delivered in substitution or exchange therefor, as provided herein. (i) "Purchase Price" - $.75 per share. (j) "Shares" - 48,000 shares of Common Stock of the Company. (k) "Subscription and Acknowledgement Form" - The form attached to this Agreement as Exhibit "A". E-102 2. Grant of Option. Subject to the terms and conditions of this Agreement, the Company hereby grants to the Optionee the right to purchase all or any part of an aggregate of 48,000 shares of Common Stock of the Company at the Purchase Price set forth in Section 3 hereof and in accordance with the schedule set forth in Section 5 hereof. This right to purchase Shares is hereinafter referred to as the "Option." 3. Purchase Price. The purchase price of the shares of Common Stock of the Company issuable pursuant to the exercise of this Option shall be $.75 per Share (the "Purchase Price.") 4. Term of Option. Notwithstanding anything to the contrary contained in this Agreement, no option granted hereunder shall be exercisable after the expiration of the Expiration Date. 5. Exercise. (a) Time of Exercise. This Option may be exercised commencing on the Effective Date, in whole or in part (but not as to a fractional share) at the principal executive offices of the Company, at any time or from time to time, through and including January 27, 2002; provided, however, that this Option shall expire and be null and void if not exercised in the manner herein provided by 5:00 p.m., Pacific Standard Time, on January 27, 2002. (b) Manner of Exercise. This Option is exercisable at the Purchase Price, payable in cash or by cashier's check payable to the order of the Company, subject to adjustment as provided in Section 6 hereof. Upon surrender of this Option to the Company at its principal executive offices with the annexed Subscription and Acknowledgment Form duly executed, together with payment of the Purchase Price for the Shares purchased (and any applicable transfer taxes) at the Company's principal executive offices, the Optionee shall be entitled to receive a certificate or certificates for the Shares so purchased. The Optionee hereby acknowledges and agrees to the taxable nature of the event of the exercise of the Option and that the Optionee will not hold the Company responsible for the reporting or payment of such taxes. (c) Delivery of Stock Certificates. As soon as practicable, but not exceeding five days after complete or partial exercise of this Option, the Company, at its expense, shall cause to be issued in the name of the Optionee (or upon payment by the Optionee of any applicable transfer taxes, the Optionee's assigns) a certificate or certificates for the number of fully-paid and nonassessable Shares to which the Optionee shall be entitled upon such exercise, together with such other stock or securities or property or combination thereof to which the Optionee shall be entitled upon such exercise, determined in accordance with Section 6 hereof. (d) Record Date of Transfer of Shares. Irrespective of the date of issuance and delivery of certificates for any stock or securities issuable upon the exercise of this Option, each person (including a corporation or E-103 partnership) in whose name any such certificate is to be issued shall for all purposes be deemed to have become the owner of record of the stock or other securities represented thereby immediately prior to the close of business on the date on which a duly executed Subscription Form containing notice of exercise of this Option and payment of the Purchase Price is received by the Company. 6. Adjustment of Purchase Price. The Purchase Price shall be subject to adjustment as follows: (a) In case the Company shall (i) pay a dividend in shares of its capital stock (other than an issuance of shares of capital stock to holders of Common Stock who have elected to receive a dividend in shares in lieu of cash), (ii) subdivide its outstanding shares of Common Stock, (iii) reduce, consolidate or combine its outstanding shares of Common Stock into a smaller number of shares or (iv) issue by reclassification of its shares of Common Stock any shares of the Company, the Purchase Price in effect immediately prior thereto shall be adjusted to that amount determined by multiplying the Purchase Price in effect immediately prior to such date by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on such date before giving effect to such division, subdivision, reduction, combination, consolidation or stock dividend and of which the denominator shall be the number of shares of Common Stock after giving effect thereto. Such adjustment shall be made successively whenever any such effective date or record date shall occur. An adjustment made pursuant to this subsection (a) shall become effective retroactively to the Effective Date immediately after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of a subdivision, reduction, consolidation, combination or reclassification. (b) In case the Company shall issue rights or options to all or substantially all holders of its Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price per share (the "Offering Price") less than the Purchase Price at the record date mentioned below, the Purchase Price shall be determined by dividing the Purchase Price in effect immediately prior to such issuance by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or options plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or options plus the number of shares which the aggregate Offering Price of the total number of shares so offered would purchase at such fair market value. Such adjustment shall be made whenever such rights or options are issued, and shall become effective retroactively, immediately after the record date for the determination of shareholders entitled to receive such rights or options. (c) In case the Company shall distribute to all or substantially all holders of its Common Stock evidence of its indebtedness, shares of any class of the Company's stock other than Common Stock or assets (excluding cash dividends) or rights or options to subscribe for or purchase shares of Common Stock or E-104 securities convertible into Common Stock (excluding those referred to in subsection (b) above), then in each such case the Purchase Price shall be determined by dividing the Purchase Price in effect immediately prior to such issuance by a fraction, of which the numerator shall be the Purchase Price on the date of such distribution and of which the denominator shall be such fair market value per share of the Common Stock, less the then fair market value (as determined by the Committee, whose determination shall be conclusive, and described in a statement, which will have the applicable resolutions of the Board of Directors attached thereto, filed with the Company) of the portion of the assets or evidences of indebtedness or shares so distributed or of such subscription rights or options applicable to one share of the Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective retroactively immediately after the record date for the determination of stockholders entitled to receive such distribution. (d) If the Common Stock issuable upon the conversion of the Option shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation or sale of assets provided for in this Section 6), then, and in each such event, the Optionee shall have the right thereafter to convert such Option into the kind and amount of shares of Common Stock and other securities and property receivable upon such reorganization, reclassification or other change by the holders of the number of shares of Common Stock into which such Option might have been converted, as reasonably determined by the Committee, immediately prior to such reorganization, reclassification or change, all subject to further adjustment as provided herein. (e) If at any time or from time to time there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section 6) or a merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all of the Company's properties and assets to any other person (except as provided for in Section 6(f)), then, as a part of such reorganization, merger, consolidation or sale, provision shall be made as reasonably determined by the Committee so that the Optionee shall thereafter be entitled to receive upon conversion of such Option, the number of shares of stock or other securities or property of the Company or of the successor corporation resulting from such merger or consolidation or sale, to which a holder of Common Stock deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation or sale. (f) The adjustments provided for in this Section 6 are cumulative and shall apply to successive divisions, subdivisions, reductions, combinations, consolidations, issue, distributions or other events contemplated herein resulting in any adjustment under the provisions of this Section; provided that, notwithstanding any other provision of this Section, no adjustment of the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price then in effect; provided, however, that any adjustments which by reason of this subsection (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. E-105 (g) Notwithstanding Sections 6(b) and (c) above, no adjustment shall be made in the Purchase Price if provision is made for the Optionee to participate in such distribution as if the Optionee had converted all of the principal balance of the Option into shares of Common Stock at the Purchase Price in effect immediately prior to such distribution. (h) Upon each adjustment of the Purchase Price, the Company shall give prompt written notice thereof addressed to the Optionee at the Optionee's address as shown on the records of the Company, which notice shall state the Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares issuable upon the conversion of such Optionee's Option, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is bases. (i) In the event of any question arising with respect to the adjustments provided for in Section 6, such question shall be conclusively determined by an opinion of independent certified public accountants appointed by the Company (who may be the auditors of the Company) and acceptable to the Optionee. Such accountants shall have access to all necessary records of the Company, and such determination shall be binding upon the Company and the Optionee. (j) The Company may, in its sole discretion and without any obligation to do so, reduce the Purchase Price then in effect by giving fifteen days' written notice to the Optionee. The Company may limit such reduction as to its temporal duration or may impose other conditions thereto in its sole discretion. 7. Acceleration of Right to Exercise Options. Notwithstanding anything to the contrary contained herein regarding the time for exercise of this Option, the following provisions shall apply: (a) Mergers and Reorganizations. If the Company or its shareholder enter into an agreement to dispose of all or substantially all of the assets of the Company by means of a sale, merger or other reorganization of liquidation, or otherwise in a transaction in which the Company is not the surviving corporation, this Option shall become immediately exercisable with respect to the full number of Shares subject to the Option during the period commencing as of the date of the agreement to dispose of all or substantially all of the assets or stock of the Company and ending when the disposition of assets or stock contemplated by the agreement is consummated or this Option is otherwise terminated in accordance with its provisions, whichever occurs first. This Option shall not become immediately exercisable, however, if the transaction contemplated in the agreement is a merger or reorganization in which the Company will survive. (b) Change in Control. In the event of a change in control or threatened change in control of the Company, this Option shall become immediately exercisable. The term "change in control," for purposes of this Section, shall refer to the acquisition of 20 per cent or more of the voting securities of the Company by any person or by persons acting as a group within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; provided that no change in control or threatened change in control shall be deemed to have occurred if, prior to the acquisition of, or offer to E-106 acquire, 20 per cent or more of the voting securities of the Company, the full Board of Directors shall have adopted by not less than two-thirds vote a resolution specifically approving such acquisition or offer. The term "person" refers, for purposes of this Section, to an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein. Whether a change in control is threatened shall be determined solely by the Committee. 8. Restrictions on Transfer. (a) This option may not be sold, assigned, transferred, pledged or otherwise disposed of or encumbered in any manner otherwise than by will, the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Code; provided, however, that the Optionee may assign or transfer this Option to members of his immediate family or to a trust for the benefit of such members of his immediate family and, during the lifetime of the Optionee, this Option may be exercised only by the Optionee or assignee, as the case may be, or his legally authorized representative. The Optionee shall not have any right to sell, assign, transfer, pledge or otherwise dispose of or encumber this Option, and any attempted transfer, sale, assignment, pledge or encumbrance shall have no effect on the Company. The Company may also require a Optionee to furnish evidence satisfactory to the Company, including a written and signed representation letter and consent to be bound by any transfer restrictions imposed by law, legend, condition or otherwise. The Shares shall not be issued with respect to any Option unless the exercise of the Option shall comply with the terms and conditions of the Consulting Agreement and all relevant provisions of federal and state law, including without limitation the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. (b) The Optionee, by its acceptance hereof, represents, opines, covenants and agrees that (i) the Optionee has knowledge of the business and affairs of the Company, and (ii) this Option is being acquired for investment and not with a view to the distribution hereof and that, absent an effective registration statement under the Securities Act of 1933, as amended (the "Act"), covering the disposition of this Option, it will not be sold, transferred, assigned, hypothecated or otherwise disposed of without first providing the Company with an opinion of counsel (which may be counsel for the Company) or other evidence, reasonably acceptable to the Company, to the effect that such sale, transfer, assignment, hypothecation or other disposal will be exempt from the registration and prospectus delivery requirements of the Act, as amended, and the registration or qualification requirements of any applicable state securities laws. The Optionee consents to the making of a notation in the Company's records or giving to any transfer agent of the Option an order to implement such restriction on transferability. This Option shall bear the following legend or a legend of similar import; provided, however, that such legend shall be removed, or not placed upon the Option if such legend is no longer necessary to assure compliance with the Act: E-107 THIS OPTION HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE BECAUSE IT IS BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER THE ACT. THIS OPTION IS "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. 9. Information to Optionee. The Company shall furnish to the Optionee a copy of the annual report, proxy statements and all other reports sent to the Company's shareholders. Upon written request, the Company shall furnish to the Optionee a copy of its most recent Annual Report on Form 10-K and each quarterly report to shareholders issued since the end of the Company's most recent fiscal year. 10. Payment of Taxes. All Shares issued upon the exercise of this Option shall be validly issued, fully-paid and nonassessable and the Company shall pay all taxes and other governmental charges (other than income tax) that may be imposed in respect of the issue or delivery thereof. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for Shares in any name other than that of the Optionee surrendered in connection with the purchase of such Shares, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the Company's satisfaction that no tax or other charge is due. 11. Reservation of Common Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the exercise of this Option, such number of shares of Common Stock as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of this Option and payment of the Purchase Price thereof, all Shares of Common Stock issuable upon such exercise shall be duly and validly issued, fully-paid and nonassessable. 12. Notices to Optionee. Nothing contained in this Option shall be construed as conferring upon the Optionee hereof the right to vote or to consent or to receive notice as a share- Optionee in respect of any meetings of share-Optionees for the election of directors or any other matter or as having any rights whatsoever as a share-Optionee of the Company. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered or mailed by registered or certified mail, postage prepaid, return receipt requested: (a) If to the Optionee, to the address of such Optionee as shown on the books of the Company; or (b) If to the Company, to the address set forth in Section 1(b) hereof. E-108 13. Replacement of Option. Upon receipt of evidence reasonably satisfactory to the Company of the ownership of and the loss, theft, destruction or mutilation of this Option and (in case of loss, theft or destruction) upon delivery of an indemnity agreement in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of the mutilated Option, the Company will execute and deliver, in lieu thereof, a new Option of like tenor. 14. Successors. All the covenants, agreements, representations and warranties contained in this Option shall bind the parties hereto and their respective heirs, executors, administrators, distributees, successors and assigns. 15. Change; Waiver. Neither this Option nor any term hereof may be changed, waived, discharged or terminated verbally but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. 16. Headings. The section headings in this Option are inserted for purposes of convenience only and shall have no substantive effect. 17. Law Governing. This Option shall for all purposes be construed and enforced in accordance with, and governed by, the internal laws of the State of California, without giving effect to principles of conflict of laws. IN WITNESS WHEREOF, the Company has caused this Option to be signed by its duly authorized officer and this Option to be dated as of the date first above written. POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. ---------------------------------------- Albert E. Gosselin, Jr., President E-109 EX-10.171 19 FINDER'S AGREEMENT EXHIBIT 10.171 FINDER'S AGREEMENT THIS FINDER'S AGREEMENT (the "Agreement") is made and entered into this 27th day of January, 1999, by and between Pollution Research and Control Corp., a California corporation (hereinafter referred to as the "Company"), with its address at 506 Paula Avenue, Glendale, California 91201, and Rosemary Althaus (hereinafter referred to as the "Finder"), 78 B Yaphank Avenue, Yaphank, New York 11980. WHEREAS, the Company desires to compensate the Finder in the event that an investor(s), including but not limited to Mark S. Rose who is contemplating an investment in the Company in the amount of $100,000, referred to the Company by the Finder invests funds in the Company via a debt and/or equity instrument; and WHEREAS, the Finder desires to be compensated by the Company as provided herein for referring an investor(s) who invest funds in the Company.. NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Services. The Finder hereby agrees to employ her best efforts to arrange an investment in the Company in the amount of approximately $100,000 by introducing the Company to a potential investor(s). 2. Compensation. Upon the receipt by the Company of the proceeds of the investment(s) via a debt and/or equity instrument made by an investor(s) referred to the Company by the Finder, the Company will: (a) Pay to the Finder by cashier's check an amount equivalent to ten per cent (10%) of the gross amount(s) of the investment(s); and, in addition thereto (b) Issue to the Finder an option (hereinafter referred to as the "Option") exercisable to purchase a total of 5,000 shares of common stock, no par value per share (hereinafter referred to as the "Common Stock"), of the Company at an exercise price of $.75 per share during the exercise period commencing on the date hereof through January 27, 2002. 3. Restricted Nature of Option and Underlying Shares of Common Stock. The Option and the underlying shares of Common Stock to be issued to the Finder in accordance with the provisions of paragraph 2 hereinabove will be "restricted" as that term is defined under the Securities Act of 1933, as amended; shall bear a restrictive legend; and shall be issued for investment only and not with a view to distribution. 4. Other Documents. Both parties hereto shall execute and deliver such other and further documents and instruments, and take such other and further E-110 actions, as may be reasonably requested of them for the implementation and consummation of this Agreement and the transactions herein contemplated. 5. Waiver of Breach. Waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 6. Assignment. This Agreement and the rights and obligations of the Company hereunder shall inure to the benefit of and shall be binding upon its successors and assigns. This Agreement and the duties and responsibilities created hereby shall not be assigned, transferred or delegated by the Finder without the prior written consent of the Company. 7. Governing Law. This Agreement is made and shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of California. 8. Notices. All notices, requests or demands and other communications hereunder must be in writing and shall be deemed to have been duly made if personally delivered or mailed, postage prepaid, to the parties as follows: a. If to the Finder: Rosemary Althaus 78 B Yaphank Avenue Yaphank, New York 11980 b. If to the Company: Albert E. Gosselin, Jr., President Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Any party may change his, her or its address by written notice to the other party. 9. Entire Agreement. This Agreement contains the entire agreement between the parties and supersedes all prior agreements, understandings and writings between the parties with respect to the subject matter hereof. All parties acknowledge that no representations, inducements, promises or agreements, oral or otherwise, have been made by either party which are not embodied herein. This Agreement may be amended only in writing signed by bother parties. 10. Attorneys' Fees. In the event of any litigation among the parties, the non-prevailing party or parties shall pay the reasonable expenses, including the attorneys' fees, of the prevailing party or parties in connection therewith. 11. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which taken together shall constitute but one and the same document. E-111 IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written. FINDER: COMPANY: POLLUTION RESEARCH AND CONTROL CORP. /S/ Rosemary Althaus By: /s/ Albert E. Gosselin, Jr. - ---------------------- ------------------------------------- Rosemary Althaus Albert E. Gosselin, Jr., President E-112 EX-10.172 20 OPTION TO PURCHASE EXHIBIT 10.172 THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE. OPTION TO PURCHASE 5,000 SHARES OF COMMON STOCK OF POLLUTION RESEARCH AND CONTROL CORP. FROM JANUARY 27, 1999 VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON JANUARY 27, 2002 This certifies that Rosemary Althaus or registered assigns, is entitled, subject to the terms set forth below, to purchase from Pollution Research and Control Corp., a California corporation (the "Company"), the above number of fully paid and nonassessable shares of Common Stock of the Company ("Common Stock") at a purchase price of $.75 per share ("Purchase Price"). This Option is exercisable from January 27, 1999 to and including 5:00 p.m., Los Angeles time, on January 27, 2002. Registered Owner: Rosemary Althaus Purchase Price: $.75 per share E-113 OPTION AGREEMENT This Option Agreement (the "Agreement") is made and entered into effective as of January 27, 1999 by and between Pollution Research and Control Corp., a California corporation ("PRCC") and Rosemary Althaus ("Optionee"). WHEREAS, Optionee has been providing valuable services as recognized by the Company's Board of Directors to PRCC and PRCC is desirous of having Optionee continue to provide such services to it; and WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an aggregate of 5,000 shares of the no par value common stock of PRCC (the "Common Stock") under the terms and conditions set forth below. NOW, THEREFORE, the parties agree as follows: 1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate agreement and not in lieu of other compensation for services, the right and option (the "Option") to purchase on the terms and conditions set forth in this Agreement all or any part of up to an aggregate of 5,000 shares of Common Stock (the "Option Shares"), for continuous, uninterrupted, employment service to PRCC or by specific acknowledgement of exception by the Company's Board of Directors. 2. Option Price. At any time when shares of Common Stock are to be purchased pursuant to the Option, the purchase price for each Option share shall be $.75 ("Option Price"), and for purposes of record, the bid price of the Company's stock on this date was $1.00. 3. Option Period. The option period shall commence on January 27, 1999 (the "Date of Grant") and shall terminate January 27, 2002. 4. Exercise of Option. The Option may be exercised in whole or in part at any time after the date hereof by delivering to the Chief Financial Officer of PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form attached hereto as Exhibit "A," specifying the number of Option Shares with respect to which the Option is exercised, and (b) full payment of the Option Price for such Shares. 5. Securities Laws Requirements. The Option Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and no Shares may be E-114 sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed of except in compliance with the Act and any other applicable federal and state securities laws. Additionally, the Option and the Option Shares have not been qualified under the California Securities Law of 1968, as amended (the "California Law"). PRCC has no obligation to register the Option shares under the Act or qualify the Option Shares under the California Law. Optionee acknowledges that she is aware that Rule 144 of the General Rules and Regulations under the Act ("Rule 144") affords a limited exemption from registration for the public resale of registered securities and under the terms of Rule 144 as currently in effect, the Shares received by Optionee may be sold to the public without registration only after a period of two (2) years has elapsed from the exercise date of the Option and then only in compliance with all other requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents, warrants and agrees as follows: (a) That the Option and the Option Shares are not registered under the Act or qualified under the California Law, and the Option Shares shall be, acquired solely for the account of Optionee for investment purposes only and with no view to their resale or other distribution of any kind; (b) Neither the Option nor any Option Share shall be sold or otherwise distributed in violation of the Act, the California Law or any other applicable federal or state securities law; (c) Her overall commitment to investments that are not readily marketable is not disproportionate to her net worth, and her investment in PRCC will not cause such overall commitment to become excessive; (d) She has the financial ability to bear the economic risk of her investment, has adequate means of providing for her current needs and personal contingencies, and has no need for liquidity in her investment in PRCC; (e) She either: (i) has a preexisting personal or business relationship with PRCC or its officers, directors or controlling persons, or (ii) has evaluated the business of PRCC and the high risks of investing in PRCC, the competitive nature of the business in which PRCC is engaged, and has the business or financial experience or has business or financial advisors who are E-115 unaffiliated with, and not compensated by, PRCC and protect her interests in connection with the transaction; (f) She has been given the opportunity to review all books, records and documents of PRCC and to ask questions and receive answers from PRCC concerning PRCC's business, to obtain additional information necessary to verify the accuracy of the information she has desired in order to evaluate her investment, and to consult with such attorneys, accountants and other advisors as she has desired; (g) Her residence set forth below is her true and correct residence, and she has no present intention of becoming a resident or domiciliary of any other state of jurisdiction; (h) In making the decision to accept the Option and/or purchase the Option Shares, she has relied solely upon independent investigations made by or on behalf of him; (i) No federal or state agency has made any finding or determination as to the fairness of an investment in PRCC; and (j) She understands that all the representations and warranties made by him herein, and all information furnished by him to PRCC, is true, correct and complete in all respects. 6. Optionee hereby acknowledges that she understands the meaning and legal consequences of the representations, warranties and covenants contained herein and that PRCC has relied on the representations made by Optionee in paragraph 5 hereof in granting this Option, and Optionee agrees to indemnify and hold harmless PRCC and its officers, directors, controlling persons, attorneys, agents and employees from and against any and all loss, damage or liability, together with all costs and expenses (including attorneys' fees and disbursements) which any of them may incur by reason of any breach and any representation, warranty, covenant or agreement contained herein. All representations, warranties, covenants and agreements, and the indemnification contained herein shall survive the grant of the Option and the issuance of the Option Shares by PRCC. 7. Legend of Certificates. All Option Shares issued pursuant to this Agreement shall be subject to the provisions of this Agreement and the certificates representing such Option Shares shall bear the following legend or language substantially equivalent thereto: E-116 "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY." 8. Transferability of Option. The Option shall not be transferable except by the laws of descent and distribution and any attempt to do so shall void the Option. 9. Adjustment. The Option Price and the number and kind of Option Shares shall be subject to corresponding adjustment in the event of any change in the Common stock by reason of any reclassification, recapitalization, split-up, combination, exchange of shares, readjustment or stock dividend, in like manner as if such Option Shares had been issued and outstanding, fully paid and non-assessable at the time of such occurrence. 10. Privilege of Ownership. Optionee shall not have any of the rights of a shareholder with respect to the shares covered by the Option except to the extent that one or more certificates for such Shares shall be delivered to her upon one (1) or more exercises of the Option. 11. Notices. Any notices required or permitted to be given under this Agreement shall be in writing and they shall be deemed to have been given upon personal delivery or two (2) business days after mailing the notice by postage, registered or certified mail. Such notice shall be addressed to the party to be notified as shown below: PRCC: POLLUTION RESEARCH AND CONTROL CORP. 506 Paula Avenue Glendale, CA 91201 Attn: President OPTIONEE: Rosemary Althaus 78B Yaphank Avenue Yaphank, NY 11980 Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. E-117 12. General Provisions. This Agreement: (a) Contains the entire agreement between PRCC and Optionee regarding options of PRCC to Optionee and supersedes all prior communications, oral or written; (b) Shall not be construed to give Optionee any rights as to PRCC or the Common Stock, except as specifically provided herein; (c) May not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver; (d) Shall be construed in accordance with, and governed by, the laws of the State of California; and (e) Shall be binding upon and shall inure to the benefit of PRCC and Optionee, and their respective successors and assigns, except that Optionee shall not have the right to assign or otherwise transfer her rights hereunder to any person. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. PRCC: POLLUTION RESEARCH AND CONTROL CORP., a California corporation By: /s/ Albert E. Gosselin, Jr. --------------------------------- Albert E. Gosselin, Jr., President and Chief Executive Officer OPTIONEE: /s/ Rosemary Althaus ------------------------------------- E-118 EXHIBIT A To Pollution Research and Control Corp. NOTICE AND AGREEMENT OF EXERCISE OF OPTION I hereby exercise the Option granted to me by POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("PRCC"), dated as of ..............as to .......................... shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 4 of my Agreement regarding the Option. - -------------------------------- -------------------------- (Print Your Name) Signature E-119 EX-10.173 21 INVESTMENT LETTER EXHIBIT 10.173 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT February 25, 1999 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 25,000 units consisting of 25,000 shares of common stock, no par value per share (the "Common Stock") and 25,000 common stock purchase warrants ("Warrants") exercisable at $0.75 per share, at a combined per unit price of $0.75 (75% of the bid price per share of Common Stock as of February 25, 1999), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $18,750.00 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or Paragraph 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. E-120 The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act is applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so, other than via the registration rights referred to in the following paragraphs. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. In the event, during the period commencing on the date hereof and expiring three years from the date hereof (February 25, 2002), the Company shall register any private, primary or secondary offering of any debt or equity security issued or to be issued by it pursuant to a registration statement under the Securities Act of 1933, as amended, pursuant to which the common stock and the securities underlying the common stock purchase warrants can be registered, the Company shall in each such event notify the undersigned in writing not less than thirty (30) days prior to filing such registration statement with the Commission, and the undersigned will have the right to register all of the aforementioned securities therewith by notifying the Company in writing within fifteen (15) days of receipt of the Company's notice, requesting registration of the securities and setting forth the intended method of distribution and such other data or information as the Company or its counsel reasonably shall require. Any registration costs shall be borne by the Company, except for sales commissions and related fees and/or transfer taxes incurred if the securities are subsequently sold. Warrants: The purchase rights evidenced by the common stock purchase warrants may be exercised in whole or in part at any time, and from time to time, on or after the date hereof but before February 25, 2002, by the undersigned through the presentation and surrender of the warrant to the Company at its principal office or at the office of the Company's stock transfer agent, if any, accompanied by a duly executed Notice of Exercise, in the form attached hereto as Exhibit A. Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution Provisions. (a) If the Company increases or decreases the number of its issued and outstanding shares of Common Stock, or changes in any way the rights and privileges of such shares, by means of (i) the Common Stock, (ii) E-121 a forward or reverse stock split or other subdivision of shares, (iii) a consolidation or combination involving its Common Stock, or (iv) a reclassification or recapitalization involving its Common Stock, then the Warrant Exercise Price in effect at the time of such action and the number os Shares shall be proportionately adjusted so that the numbers, rights, and privileges relating to the Securities shall be increased, decreased or changed in like manner. (b) If at any time or from time to time the Company should issue or sell any shares of Common Stock, including shares held in the Company's Treasury, without consideration or for a per share consideration less that the Warrant Exercise price of $0.75 per share, then the Warrant Exercise price of $0.75 shall be adjusted downward accordingly to equal the per share consideration received by the Company upon the issuance or sale of its Common Stock. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment E-122 in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x ------ ------- --------- ------ Occasionally ______ x _________ ______ ------- Never ______ _______ _________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: 29 years as broker & investment banker ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him, Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. E-123 The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 (x) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 ( ) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% (x) 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: (x) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 (x) $100,000-$200,000 (x) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants an represents that he has received no assurances of any kind E-124 relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ William T. Richey ---------------------------------- William T. Richey Current Residence Address: 4960 Lakeshore Drive, Littleton, Co 80123 Current Residence Telephone Number: 303-794-7411 SS. No. ###-##-#### Current Occupation and/or Business Position: Stock Broker Current Business Telephone Number: 303-629-5555 Current Name of Business with which Associated: Rocky Mtn. Securities Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Al Gosselin Relationship, if any, with the above mentioned Co. Rep: None Agreed and accepted this 11th day of March, 1999, on behalf of Pollution Research and Control Corporation. /s/ Albert E. Gosselin, Jr. - --------------------------- Albert E. Gosselin, Jr., President and CEO E-125 NOTICE OF EXERCISE To: POLLUTION RESEARCH AND CONTROL CORP. The undersigned, the holder of the attached warrant, hereby irrevocably elects to exercise the purchase right represented by that warrant for, and to purchase under that warrant, ___________ shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP. and herewith makes payment of and requests that the certificates for those shares be issued in the name of, and delivered to __________________________________________, whose address is __________________________________________ and if said number of shares shall not be all the shares now purchasable under the attached warrant, the undersigned hereby requests that a new certificate be registered in the name of and delivered to the undersigned for the balance of the shares purchasable under the attached warrant. DATED:___________________ ------------------------------------------------ (signature) ------------------------------------------------ Note: the above signature must correspond with the name written upon the face of the attached warrant certificate unless the warrant has been properly and lawfully assigned. E-126 EX-10.174 22 INVESTMENT LETTER EXHIBIT 10.174 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT February 25, 1999 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 133,333 units consisting of 133,333 shares of common stock, no par value per share (the "Common Stock") and 133,333 common stock purchase warrants ("Warrants") exercisable at $0.75 per share, at a combined per unit price of $0.75 (75% of the bid price per share of Common Stock as of February 25, 1999), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $99,999.75 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or Paragraph 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. E-127 The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act is applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so, other than via the registration rights referred to in the following paragraphs. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. In the event, during the period commencing on the date hereof and expiring three years from the date hereof (February 25, 2002), the Company shall register any private, primary or secondary offering of any debt or equity security issued or to be issued by it pursuant to a registration statement under the Securities Act of 1933, as amended, pursuant to which the common stock and the securities underlying the common stock purchase warrants can be registered, the Company shall in each such event notify the undersigned in writing not less than thirty (30) days prior to filing such registration statement with the Commission, and the undersigned will have the right to register all of the aforementioned securities therewith by notifying the Company in writing within fifteen (15) days of receipt of the Company's notice, requesting registration of the securities and setting forth the intended method of distribution and such other data or information as the Company or its counsel reasonably shall require. Any registration costs shall be borne by the Company, except for sales commissions and related fees and/or transfer taxes incurred if the securities are subsequently sold. Warrants: The purchase rights evidenced by the common stock purchase warrants may be exercised in whole or in part at any time, and from time to time, on or after the date hereof but before February 25, 2002, by the undersigned through the presentation and surrender of the warrant to the Company at its principal office or at the office of the Company's stock transfer agent, if any, accompanied by a duly executed Notice of Exercise, in the form attached hereto as Exhibit A. Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution Provisions. (a) If the Company increases or decreases the number of its issued and outstanding shares of Common Stock, or changes in any way the rights and privileges of such shares, by means of (i) the Common Stock, (ii) E-128 a forward or reverse stock split or other subdivision of shares, (iii) a consolidation or combination involving its Common Stock, or (iv) a reclassification or recapitalization involving its Common Stock, then the Warrant Exercise Price in effect at the time of such action and the number os Shares shall be proportionately adjusted so that the numbers, rights, and privileges relating to the Securities shall be increased, decreased or changed in like manner. (b) If at any time or from time to time the Company should issue or sell any shares of Common Stock, including shares held in the Company's Treasury, without consideration or for a per share consideration less that the Warrant Exercise price of $0.75 per share, then the Warrant Exercise price of $0.75 shall be adjusted downward accordingly to equal the per share consideration received by the Company upon the issuance or sale of its Common Stock. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment E-129 in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x x ------ ------- ------------- ------ Occasionally ______ _______ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: Wharton School Graduate U of P Finance & Investments Major ----------------------------------------------------------------------- 35 years as a venture capitalist and active stock trader ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him, Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. E-130 The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 ( ) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 (x) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% (x) 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 ( ) $500,000-$1,000,000 (x) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 ( ) $100,000-$200,000 ( ) $200,000-$500,000 ( ) $500,000-$1,000,000 (x) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this E-131 investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Ronald E. Patterson ------------------------------- Ronald E. Patterson Current Residence Address: 17 Prestile Place, Robbinsville, NJ 08691 Current Residence Telephone Number: 609-259-2662 SS. No. ###-##-#### Current Occupation and/or Business Position: Venture Capitalist Current Business Telephone Number: 609-259-2662 Current Name of Business with which Associated: N/A Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Philip Huss, Phoenix Alliance Relationship, if any, with the above mentioned Co. Rep: None Agreed and accepted this 4th day of March, 1999, on behalf of Pollution Research and Control Corporation. /s/ Albert E. Gosselin, Jr. - --------------------------- Albert E. Gosselin, Jr., President and CEO E-132 NOTICE OF EXERCISE To: POLLUTION RESEARCH AND CONTROL CORP. The undersigned, the holder of the attached warrant, hereby irrevocably elects to exercise the purchase right represented by that warrant for, and to purchase under that warrant, ___________ shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP. and herewith makes payment of and requests that the certificates for those shares be issued in the name of, and delivered to __________________________________________, whose address is __________________________________________ and if said number of shares shall not be all the shares now purchasable under the attached warrant, the undersigned hereby requests that a new certificate be registered in the name of and delivered to the undersigned for the balance of the shares purchasable under the attached warrant. DATED:___________________ ------------------------------------------------ (signature) ------------------------------------------------ Note: the above signature must correspond with the name written upon the face of the attached warrant certificate unless the warrant has been properly and lawfully assigned. E-133 EX-10.175 23 INVESTMENT LETTER EXHIBIT 10.175 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT February 25, 1999 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 66,666 units consisting of 66,666 shares of common stock, no par value per share (the "Common Stock") and 66,666 common stock purchase warrants ("Warrants") exercisable at $0.75 per share, at a combined per unit price of $0.75 (75% of the bid price per share of Common Stock as of February 25, 1999), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $49,999.50 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or Paragraph 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. E-134 The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act is applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so, other than via the registration rights referred to in the following paragraphs. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. In the event, during the period commencing on the date hereof and expiring three years from the date hereof (February 25, 2002), the Company shall register any private, primary or secondary offering of any debt or equity security issued or to be issued by it pursuant to a registration statement under the Securities Act of 1933, as amended, pursuant to which the common stock and the securities underlying the common stock purchase warrants can be registered, the Company shall in each such event notify the undersigned in writing not less than thirty (30) days prior to filing such registration statement with the Commission, and the undersigned will have the right to register all of the aforementioned securities therewith by notifying the Company in writing within fifteen (15) days of receipt of the Company's notice, requesting registration of the securities and setting forth the intended method of distribution and such other data or information as the Company or its counsel reasonably shall require. Any registration costs shall be borne by the Company, except for sales commissions and related fees and/or transfer taxes incurred if the securities are subsequently sold. Warrants: The purchase rights evidenced by the common stock purchase warrants may be exercised in whole or in part at any time, and from time to time, on or after the date hereof but before February 25, 2002, by the undersigned through the presentation and surrender of the warrant to the Company at its principal office or at the office of the Company's stock transfer agent, if any, accompanied by a duly executed Notice of Exercise, in the form attached hereto as Exhibit A. Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution Provisions. (a) If the Company increases or decreases the number of its issued and outstanding shares of Common Stock, or changes in any way the rights and privileges of such shares, by means of (i) the Common Stock, (ii) E-135 a forward or reverse stock split or other subdivision of shares, (iii) a consolidation or combination involving its Common Stock, or (iv) a reclassification or recapitalization involving its Common Stock, then the Warrant Exercise Price in effect at the time of such action and the number os Shares shall be proportionately adjusted so that the numbers, rights, and privileges relating to the Securities shall be increased, decreased or changed in like manner. (b) If at any time or from time to time the Company should issue or sell any shares of Common Stock, including shares held in the Company's Treasury, without consideration or for a per share consideration less that the Warrant Exercise price of $0.75 per share, then the Warrant Exercise price of $0.75 shall be adjusted downward accordingly to equal the per share consideration received by the Company upon the issuance or sale of its Common Stock. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment E-136 in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x ------ ------- ------------- ------ Occasionally ______ _______ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: Investment Relations Professional - University of Mn ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him. Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. E-137 The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: (x) Less than $500,000 ( ) $500,000 - $1,000,000 ( ) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 ( ) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% (x) 20% - 50% ( ) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 (x) $100,000-$200,000 ( ) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 ( ) $100,000-$200,000 (x) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind E-138 relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Phillip T. Huss ------------------------------ Phillip T. Huss Current Residence Address: 22 Cedar Ct. Durango, Co 81301 Current Residence Telephone Number: 970-259-7263 SS. No. ###-##-#### Current Occupation and/or Business Position: Investor Relations Consultant Current Business Telephone Number: 970-259-7241 Current Name of Business with which Associated: Phoenix Alliance, Inc. Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: N/A Relationship, if any, with the above mentioned Co. Rep: Agreed and accepted this 4th day of March, 1999, on behalf of Pollution Research and Control Corporation. /s/ Albert E. Gosselin, Jr. - --------------------------- Albert E. Gosselin, Jr., President and CEO E-139 NOTICE OF EXERCISE To: POLLUTION RESEARCH AND CONTROL CORP. The undersigned, the holder of the attached warrant, hereby irrevocably elects to exercise the purchase right represented by that warrant for, and to purchase under that warrant, ___________ shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP. and herewith makes payment of and requests that the certificates for those shares be issued in the name of, and delivered to __________________________________________, whose address is __________________________________________ and if said number of shares shall not be all the shares now purchasable under the attached warrant, the undersigned hereby requests that a new certificate be registered in the name of and delivered to the undersigned for the balance of the shares purchasable under the attached warrant. DATED:___________________ ------------------------------------------------ (signature) ------------------------------------------------ Note: the above signature must correspond with the name written upon the face of the attached warrant certificate unless the warrant has been properly and lawfully assigned. E-140 EX-10.176 24 OPTION TO PURCHASE EXHIBIT 10.176 THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE. OPTION TO PURCHASE 25,000 SHARES OF COMMON STOCK OF POLLUTION RESEARCH AND CONTROL CORP. FROM NOVEMBER 1, 1999 VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON FEBRUARY 25, 2002 This certifies that Anthony Reneau or registered assigns, is entitled, subject to the terms set forth below, to purchase from Pollution Research and Control Corp., a California corporation (the "Company"), the above number of fully paid and nonassessable shares of Common Stock of the Company ("Common Stock") at a purchase price of $1.00 per share ("Purchase Price"). This Option is exercisable from November 1, 1999 to and including 5:00 p.m., Los Angeles time, on February 25, 2002. Registered Owner: Anthony Reneau Purchase Price: $1.00 per share E-141 OPTION AGREEMENT This Option Agreement (the "Agreement") is made and entered into effective as of February 26, 1999 by and between Pollution Research and Control Corp., a California corporation ("PRCC") and Anthony Reneau ("Optionee"). WHEREAS, Optionee has been providing valuable services as recognized by the Company's Board of Directors to PRCC and PRCC is desirous of having Optionee continue to provide such services to it; and WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an aggregate of 25,000 shares of the no par value common stock of PRCC (the "Common Stock") under the terms and conditions set forth below. NOW, THEREFORE, the parties agree as follows: 1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate agreement and not in lieu of other compensation for services, the right and option (the "Option") to purchase on the terms and conditions set forth in this Agreement all or any part of up to an aggregate of 25,000 shares of Common Stock (the "Option Shares"), for continuous, uninterrupted, employment service to PRCC or by specific acknowledgement of exception by the Company's Board of Directors. 2. Option Price. At any time when shares of Common Stock are to be purchased pursuant to the Option, the purchase price for each Option share shall be $1.00 ("Option Price"), and for purposes of record, the bid price of the Company's stock on this date was $1.38. 3. Option Period. The option period shall commence on November 1, 1999 (the "Date of Grant") and shall terminate February 25, 2002. 4. Exercise of Option. The Option may be exercised in whole or in part at any time after the date hereof by delivering to the Chief Financial Officer of PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form attached hereto as Exhibit "A," specifying the number of Option Shares with respect to which the Option is exercised, and (b) full payment of the Option Price for such Shares. E-142 5. Securities Laws Requirements. The Option Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and no Shares may be sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed of except in compliance with the Act and any other applicable federal and state securities laws. Additionally, the Option and the Option Shares have not been qualified under the California Securities Law of 1968, as amended (the "California Law"). PRCC has no obligation to register the Option shares under the Act or qualify the Option Shares under the California Law. Optionee acknowledges that he is aware that Rule 144 of the General Rules and Regulations under the Act ("Rule 144") affords a limited exemption from registration for the public resale of registered securities and under the terms of Rule 144 as currently in effect, the Shares received by Optionee may be sold to the public without registration only after a period of two (2) years has elapsed from the exercise date of the Option and then only in compliance with all other requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents, warrants and agrees as follows: (a) That the Option and the Option Shares are not registered under the Act or qualified under the California Law, and the Option Shares shall be, acquired solely for the account of Optionee for investment purposes only and with no view to their resale or other distribution of any kind; (b) Neither the Option nor any Option Share shall be sold or otherwise distributed in violation of the Act, the California Law or any other applicable federal or state securities law; (c) His overall commitment to investments that are not readily marketable is not disproportionate to his net worth, and his investment in PRCC will not cause such overall commitment to become excessive; (d) He has the financial ability to bear the economic risk of his investment, has adequate means of providing for his current needs and personal contingencies, and has no need for liquidity in his investment in PRCC; (e) He either: (i) has a preexisting personal or business relationship with PRCC or its officers, directors or controlling persons, or (ii) has evaluated the business of PRCC and the high risks of investing in PRCC, the competitive nature of the business in which PRCC is engaged, and has the business or financial experience or has business or financial advisors who are unaffiliated with, and not compensated by, PRCC and protect his interests in connection with the transaction; E-143 (f) He has been given the opportunity to review all books, records and documents of PRCC and to ask questions and receive answers from PRCC concerning PRCC's business, to obtain additional information necessary to verify the accuracy of the information he has desired in order to evaluate his investment, and to consult with such attorneys, accountants and other advisors as he has desired; (g) His residence set forth below is his true and correct residence, and he has no present intention of becoming a resident or domiciliary of any other state of jurisdiction; (h) In making the decision to accept the Option and/or purchase the Option Shares, he has relied solely upon independent investigations made by or on behalf of him; (i) No federal or state agency has made any finding or determination as to the fairness of an investment in PRCC; and (j) He understands that all the representations and warranties made by him herein, and all information furnished by him to PRCC, is true, correct and complete in all respects. 6. Optionee hereby acknowledges that he understands the meaning and legal consequences of the representations, warranties and covenants contained herein and that PRCC has relied on the representations made by Optionee in paragraph 5 hereof in granting this Option, and Optionee agrees to indemnify and hold harmless PRCC and its officers, directors, controlling persons, attorneys, agents and employees from and against any and all loss, damage or liability, together with all costs and expenses (including attorneys' fees and disbursements) which any of them may incur by reason of any breach and any representation, warranty, covenant or agreement contained herein. All representations, warranties, covenants and agreements, and the indemnification contained herein shall survive the grant of the Option and the issuance of the Option Shares by PRCC. 7. Legend of Certificates. All Option Shares issued pursuant to this Agreement shall be subject to the provisions of this Agreement and the certificates representing such Option Shares shall bear the following legend or language substantially equivalent thereto: E-144 "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY." 8. Transferability of Option. The Option shall not be transferable except by the laws of descent and distribution and any attempt to do so shall void the Option. 9. Adjustment. The Option Price and the number and kind of Option Shares shall be subject to corresponding adjustment in the event of any change in the Common stock by reason of any reclassification, recapitalization, split-up, combination, exchange of shares, readjustment or stock dividend, in like manner as if such Option Shares had been issued and outstanding, fully paid and non-assessable at the time of such occurrence. 10. Privilege of Ownership. Optionee shall not have any of the rights of a shareholder with respect to the shares covered by the Option except to the extent that one or more certificates for such Shares shall be delivered to him upon one (1) or more exercises of the Option. 11. Notices. Any notices required or permitted to be given under this Agreement shall be in writing and they shall be deemed to have been given upon personal delivery or two (2) business days after mailing the notice by postage, registered or certified mail. Such notice shall be addressed to the party to be notified as shown below: PRCC: POLLUTION RESEARCH AND CONTROL CORP. 506 Paula Avenue Glendale, CA 91201 Attn: President OPTIONEE: Anthony Reneau 506 Paula Avenue Glendale, Ca 91201 Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. E-145 12. General Provisions. This Agreement: (a) Contains the entire agreement between PRCC and Optionee regarding options of PRCC to Optionee and supersedes all prior communications, oral or written; (b) Shall not be construed to give Optionee any rights as to PRCC or the Common Stock, except as specifically provided herein; (c) May not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver; (d) Shall be construed in accordance with, and governed by, the laws of the State of California; and (e) Shall be binding upon and shall inure to the benefit of PRCC and Optionee, and their respective successors and assigns, except that Optionee shall not have the right to assign or otherwise transfer her rights hereunder to any person. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. PRCC: POLLUTION RESEARCH AND CONTROL CORP., a California corporation By: /s/ Albert E. Gosselin, Jr. ---------------------------------- Albert E. Gosselin, Jr., President and Chief Executive Officer OPTIONEE: /s/ Anthony Reneau -------------------------------------- Anthony Reneau E-146 EXHIBIT A To Pollution Research and Control Corp. NOTICE AND AGREEMENT OF EXERCISE OF OPTION I hereby exercise the Option granted to me by POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("PRCC"), dated as of ............................. as to ..................................... shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 4 of my Agreement regarding the Option. - -------------------------- ---------------------------- (Print Your Name) Signature E-147 EX-10.177 25 INVESTMENT LETTER EXHIBIT 10.177 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT February 25, 1999 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 14,000 units consisting of 14,000 shares of common stock, no par value per share (the "Common Stock") and 14,000 common stock purchase warrants ("Warrants") exercisable at $0.75 per share, at a combined per unit price of $0.75 (75% of the bid price per share of Common Stock as of February 25, 1999), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $10,500.00 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: These securities are not being registered under the Securities Act of 1933, as amended (the "Act"), on the ground that this sale is exempt from registration under Paragraph 4(1) or Paragraph 4(2) of the Act and the Rules and Regulations promulgated thereunder as not involving any public offering. The Company's reliance on such exemption is predicated in part on the representation of the undersigned that he is acquiring such securities for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing the same. These securities which the undersigned is acquiring are "restricted securities" as that term is defined in Rule 144 of the General Rules and Regulations under the Act. The undersigned acknowledges that he understands that the securities covered hereby are unregistered and must be held indefinitely, unless they are subsequently registered under the Act or an exemption from such registration is available. The undersigned agrees that any and all certificates, which may be issued representing the securities acquired hereunder, shall contain substantially the following legend, which the undersigned has read and understands: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act"), and are "restricted securities" as the term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. E-148 The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. The undersigned further acknowledges that he understands that, if the securities have been held for a period of at least one year and if Rule 144 adopted under the Act is applicable (there being no representation by the Company that this Rule will be applicable), then he may make only routine sales of the securities in limited amounts in a specified manner in accordance with the terms and conditions of the Rule. The undersigned further acknowledges that he understands that, if Rule 144 is applicable (no assurance of which can be made), he may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if he has held the securities for at least two years. In case the Rule is not applicable, any sales made by the undersigned may be made only pursuant to other available exemption from registration under the Act, or an effective registration statement. The undersigned further acknowledges that he is aware that only the Company can file a registration statement or an offering statement pursuant to Regulation A under the Act and that the Company has no obligation to do so, other than via the registration rights referred to in the following paragraphs. The undersigned also has been advised and acknowledges that he understands that, in the event Rule 144 is not available, the circumstances under which he can sell the securities, absent registration or compliance with Regulation A, are extremely limited. In the event, during the period commencing on the date hereof and expiring three years from the date hereof (February 25, 2002), the Company shall register any private, primary or secondary offering of any debt or equity security issued or to be issued by it pursuant to a registration statement under the Securities Act of 1933, as amended, pursuant to which the common stock and the securities underlying the common stock purchase warrants can be registered, the Company shall in each such event notify the undersigned in writing not less than thirty (30) days prior to filing such registration statement with the Commission, and the undersigned will have the right to register all of the aforementioned securities therewith by notifying the Company in writing within fifteen (15) days of receipt of the Company's notice, requesting registration of the securities and setting forth the intended method of distribution and such other data or information as the Company or its counsel reasonably shall require. Any registration costs shall be borne by the Company, except for sales commissions and related fees and/or transfer taxes incurred if the securities are subsequently sold. Warrants: The purchase rights evidenced by the common stock purchase warrants may be exercised in whole or in part at any time, and from time to time, on or after the date hereof but before February 25, 2002, by the undersigned through the presentation and surrender of the warrant to the Company at its principal office or at the office of the Company's stock transfer agent, if any, accompanied by a duly executed Notice of Exercise, in the form attached hereto as Exhibit A. Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution Provisions. (a) If the Company increases or decreases the number of its issued and outstanding shares of Common Stock, or changes in any way the rights and privileges of such shares, by means of (i) the Common Stock, (ii) E-149 a forward or reverse stock split or other subdivision of shares, (iii) a consolidation or combination involving its Common Stock, or (iv) a reclassification or recapitalization involving its Common Stock, then the Warrant Exercise Price in effect at the time of such action and the number os Shares shall be proportionately adjusted so that the numbers, rights, and privileges relating to the Securities shall be increased, decreased or changed in like manner. (b) If at any time or from time to time the Company should issue or sell any shares of Common Stock, including shares held in the Company's Treasury, without consideration or for a per share consideration less that the Warrant Exercise price of $0.75 per share, then the Warrant Exercise price of $0.75 shall be adjusted downward accordingly to equal the per share consideration received by the Company upon the issuance or sale of its Common Stock. The undersigned further acknowledges and represents to the Company that he is purchasing the securities for his own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are his own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to him which would preclude his acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that he has no present plans to enter into any contract, undertaking, agreement or arrangement for resale, distribution, subdivision or fractionalization of the securities purchased hereby. The undersigned further acknowledges that he understands that an investment in the Company is extremely speculative and subject to a high degree of risk. In this connection, the undersigned understands that he may lose his entire investment in the Company. The undersigned further acknowledges and represents to the Company that he is able to bear the economic risk of losing his entire investment. The undersigned further acknowledges and warrants that his overall commitment to investments which are not readily marketable is not disproportionate to his net worth and his investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that he has adequate means of providing for his current needs and personal contingencies and that he has no need for liquidity in connection with his investment in the securities. The undersigned further acknowledges that he fully understands and agrees that the price of the Company's securities acquired by him was arbitrarily determined without regard to any value of the securities. The undersigned understands, additionally, that the price of the securities bears no relation to the value of the assets or net worth of the Company or any other criteria of value. The undersigned is aware that no independent evaluation has been made with respect to the value of the securities. The undersigned further understands and agrees that shares of the common stock of the Company have been or may in the future be issued to certain other persons for a consideration which may be less than the price paid by him for the securities. The undersigned further acknowledges and represents to the Company that he is knowledgeable and experienced in venture capital investments in general and, in particular, with respect to investments similar in nature to an investment E-150 in the Company. The frequency of the undersigned's prior investments in stocks (including restricted stocks), in general, and in high technology companies, in particular, and other investments, of whatever kind, is as follows (check one in each column): Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x x ------ ------- ------------ ------ Occasionally ______ _______ _____________ ______ Never ______ _______ _____________ ______ The undersigned further acknowledges that he is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company; that he has been advised by the Company to consult with counsel regarding this investment; and that he has relied upon the advice of such counsel, accountants or other consultants as he deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders him capable of evaluating the merits and risks of this investment as follows: MBA 1972 Harvard Business School ----------------------------------------------------------------------- J.D. 1972 Harvard Law School ----------------------------------------------------------------------- Securities and Corporate Attorney 1972 - Present ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as he considers necessary and appropriate to enable him to make an informed decision regarding his investment. Prior to making his investment, the undersigned was presented with and acted upon the opportunity to ask questions of and receive answers from the Company and its management relating to the Company and to obtain any additional information necessary to verify the accuracy of the information made available to him, Prior to making his investment, the undersigned made arrangements to conduct such inspection as he deems necessary of the books, records, contracts, instruments and other data relating to the Company. Before acquiring these securities, the undersigned was presented with and understood the Company's business plan, including, among other things, the nature of the Company, financial reports and management. E-151 The undersigned agrees that, upon the delivery of certificates for his shares, the undersigned will execute and deliver to and for the benefit of the Company any instruments the Company may require to evidence that the purchase of his shares is for investment purposes only. On the date the undersigned acquired the securities, he had a net worth (exclusive of home, furnishings and personal automobile) of: ( ) Less than $500,000 ( ) $500,000 - $1,000,000 (x) $1,000,000 - $3,000,000 ( ) $3,000,000 - $5,000,000 ( ) More than $5,000,000 Liquid assets constituted the following percentage of the undersigned's net worth, or his joint net worth with his spouse, on the date of acquisition of the securities: ( ) Less than 1% ( ) 1% - 10% ( ) 10% - 20% ( ) 20% - 50% (x) More than 50% The undersigned's approximate net taxable income (after regular deductions) in each of the two most recent calendar years was: ( ) Less than $100,000 ( ) $100,000-$200,000 (x) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 The undersigned's approximate net taxable income in the current year is expected to be: ( ) Less than $100,000 ( ) $100,000-$200,000 (x) $200,000-$500,000 ( ) $500,000-$1,000,000 ( ) More than $1,000,000 Based upon the foregoing, the undersigned hereby acknowledges and understands the high risk and speculative nature of the shares of common stock of the Company which he is acquiring and the nature of the management, financial condition, and all other pertinent factors regarding the Company and this investment. The undersigned further represents and warrants that he has fully satisfied himself with respect to the nature of this investment. The undersigned further warrants and represents that he has received no assurances of any kind E-152 relative to, nor have there been any representations made by the Company or any of its principals or affiliates regarding, any potential appreciation in value of the securities being acquired by him. The undersigned hereby represents and warrants that he has sufficient knowledge and experience in business and financial matters to evaluate the merits and risks of an investment of this type. The undersigned further represents and acknowledges that he has made other investments in speculative businesses and is generally familiar with "restricted" securities and he is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Alan Talesnick -------------------------------- Alan Talesnick Current Residence Address: 5030 Bow Mar Drive, Littleton,Co 80123 Current Residence Telephone Number: 303-795-5990 SS. No. 314-830-1776 Current Occupation and/or Business Position: Securities Attorney Current Business Telephone Number: 303-830-1776 Current Name of Business with which Associated: Patton Boggs LLP Name of Person connected with Pollution Research And Control Corp., with whom conferred Concerning this investment: Phillip Huss Relationship, if any, with the above mentioned Co. Rep: Agreed and accepted this18th day of March, 1999, on behalf of Pollution Research and Control Corporation. /s/ Albert E. Gosselin, Jr. - --------------------------- Albert E. Gosselin, Jr., President and CEO E-153 NOTICE OF EXERCISE To: POLLUTION RESEARCH AND CONTROL CORP. The undersigned, the holder of the attached warrant, hereby irrevocably elects to exercise the purchase right represented by that warrant for, and to purchase under that warrant, ___________ shares of Common Stock of POLLUTION RESEARCH AND CONTROL CORP. and herewith makes payment of and requests that the certificates for those shares be issued in the name of, and delivered to __________________________________________, whose address is __________________________________________ and if said number of shares shall not be all the shares now purchasable under the attached warrant, the undersigned hereby requests that a new certificate be registered in the name of and delivered to the undersigned for the balance of the shares purchasable under the attached warrant. DATED:___________________ ------------------------------------------------ (signature) ------------------------------------------------ Note: the above signature must correspond with the name written upon the face of the attached warrant certificate unless the warrant has been properly and lawfully assigned. E-154 EX-21 26 LIST OF SUBSIDIARIES EXHIBIT 21 LIST OF SUBSIDIARIES Dasibi Environmental Corp. 506 Paula Avenue Glendale, Ca 91201 Logan Medical Devices 506 Paula Avenue Glendale, Ca 91201 E-155 EX-27 27 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1998 MAR-31-1998 216 3 680 (19) 2,076 2,967 1,837 418 4,643 1,690 0 0 0 0 0 4,643 1,271 0 723 0 538 0 0 0 0 (19) 128 0 0 109 .01 0
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