-----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, BphoN7pP1bqc4FbZRBjs91qyz7AxVLA5P8zh+8fZjoWUg0Sv60eY03DjK/6l6vHP BnVPWGrBtgYIdpmTNQCrQg== 0001000096-99-000518.txt : 19991227 0001000096-99-000518.hdr.sgml : 19991227 ACCESSION NUMBER: 0001000096-99-000518 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 19990928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLLUTION RESEARCH & CONTROL CORP /CA/ CENTRAL INDEX KEY: 0000763950 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 952746949 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-87965 FILM NUMBER: 99718808 BUSINESS ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 BUSINESS PHONE: 8182477601 MAIL ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 FORMER COMPANY: FORMER CONFORMED NAME: DASIBI ENVIRONMENTAL CORP DATE OF NAME CHANGE: 19900529 S-3 1 FORM S-3 As filed with the Securities and Exchange Commission on September 28, 1999 Registration No. 33-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- Pollution Research and Control Corp. ------------------------------------ (Exact name of registrant as specified in its charter) California ------------------------------------------------------------ (State or other jurisdiction of incorporation or organization) 95-2746949 ---------------------------------- (I.R.S. Employer Identification No.) 506 Paula Avenue, Glendale, California 91201 (818) 247-7601 ----------------------------------------------------------------------- (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Albert E. Gosselin, Jr. 506 Paula Avenue, Glendale, California 91201 (818) 247-7601 -------------------------------------------------------- (Name, address, including zip code, and telephone number, including area code, of agent for service) Please send copies of all correspondence to: PATRICIA CUDD, ESQ. Cudd & Associates 1120 Lincoln Street, Suite #1310 Denver, Colorado 80203 Telephone: (303) 861-7273 Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE ====================================================================================================================== Proposed Proposed Maximum Title of Each Maximum Aggregate Amount of Class of Securities Amount to Offering Price Offering Registration To be Registered Be Registered Per Share (1) Price (1) Fee - ---------------------------------------------------------------------------------------------------------------------- Common Stock, no par value 742,673 $2.50 $1,856,682 $371.33 Common Stock, no par value, underlying units (2) 288,331 $2.50 $720,828 $144.17 Common Stock, no par value, underlying debenture 222,222 $2.50 $555,555 $111.11 Common Stock, no par value, underlying units (4) 150,000 $2.50 $375,000 $ 75.00 Common Stock, no par value, underlying debenture 133,334 $2.50 $333,335 $ 66.67 Common Stock, no par value, underlying units (6) 110,000 $2.50 $275,000 $ 55.00 - ------------------------------------------------------------------------------------------------------------------ TOTAL 1,646,560 $2.50 $4,116,400 $823.28 - ------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. Pursuant to Rule 457 (c), based upon 355,556 shares of Common Stock underlying debentures and 1,291,004 shares of Common Stock being offered by Selling Shareholders and the average of the high and low sales prices of the Common Stock on the NASDAQ SmallCap Market System on September 14, 1999, of $2.50. (2) Each unit consists of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $.75 per share on or prior to February 25, 2002. (3) Outstanding 18%-$500,000 face amount subordinated convertible debenture due December 1, 1999. Pursuant to Rule 416, the number of shares of Common Stock issuable upon conversion of the debenture is subject to adjustment in accordance with the anti-dilution provisions of such Debenture. (4) Each unit consists of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $2.40 per share on or prior to September 13, 2002. (5) Outstanding 12%-$300,000 face amount subordinated convertible debenture due June 1, 2000. Pursuant to Rule 416, the number of shares of Common Stock issuable upon conversion of the debenture is subject to adjustment in accordance with the anti-dilution provisions of such Debentures. (6) Each unit consists of one share of Common Stock and one warrant exercisable to purchase .682 share of Common Stock at an exercise price of $.75 per share on or prior to July 16, 2002. 2 -------------- The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. DOCUMENTS INCORPORATED BY REFERENCE: Certain exhibits to this Registration Statement on Form S-3 as set forth in the Exhibit Index located at page 31. 3 SUBJECT TO COMPLETION PROSPECTUS 1,646,560 Shares of Common Stock, no par value POLLUTION RESEARCH AND CONTROL CORP. -------------- This Prospectus relates to an aggregate of 1,646,560 shares of common stock, no par value per share (the "Common Stock"), of Pollution Research and Control Corp. (the "Company" or "PRCC"), including (i) 288,331 shares of Common Stock underlying outstanding units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $.75 per share on or prior to February 25, 2002; (ii) 222,222 shares of Common Stock underlying an outstanding 18%-$500,000 face amount subordinated convertible debenture due December 1, 1999; (iii) 150,000 shares of Common Stock underlying outstanding units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $2.40 per share on or prior to September 13, 2002; (iv) 133,334 shares of Common Stock underlying outstanding 12%-$300,000 face amount subordinated convertible debenture due June 1, 2000; and (v) 110,000 shares of Common Stock underlying outstanding units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase .682 share of Common Stock at an exercise price of $.75 per share on or prior to July 16, 2002. The outstanding units, including a total of 398,331 shares of Common Stock and warrants, a total of 363,331 shares of Common Stock underlying which warrants are not covered by the Registration Statement of which this Prospectus forms a part, are hereinafter referred to, collectively, as the "Units" and the outstanding debentures are, collectively, hereinafter referred to as the "Debentures." The shareholders of 1,291,004 shares of Common Stock, including 548,331 shares of Common Stock underlying Units, and the holders of Debentures who convert such Debentures into 355,556 shares of Common Stock (based upon a conversion price of $2.25), are hereinafter collectively referred to as the "Selling Shareholders." Information regarding the Selling Shareholders is set forth in this Prospectus under "Selling Security Holders." Information regarding the holders of the Debentures and the circumstances under which they may convert their respective Debentures into the underlying shares of Common Stock, are set forth herein under "Description of Securities." The shares of Common Stock, including the shares underlying the Units, were issued by the Company on various dates commencing on June 19, 1998, through September 13, 1999. The 18%-$500,000 face amount subordinated convertible debenture due December 1, 1999, and the 12%-$300,000 face amount subordinated convertible debenture due June 1, 2000, were issued by the Company on May and September 1, 1999, respectively. The Debentures are convertible in denominations of $50,000 at the conversion price per each share of Common Stock of the lesser of $2.25 or 80% of the market price of the Common Stock on the conversion date. Upon the conversion of the Debentures and with respect to the shares of Common Stock included in the Units and otherwise, said shares of Common Stock may be offered and sold to the public from time to time by the Selling Shareholders, or by pledgees, donees, transferees or other successors to the Selling Shareholders, in each case in open market transactions, in private or negotiated transactions or in a combination of such methods of sale, at fixed prices, at prices then prevailing on the NASDAQ SmallCap Market System at the time of sale, at prices related to such prevailing market prices or at negotiated prices. To the extent required at the time of a particular offer of Common Stock by the Selling Shareholders, a supplement to this Prospectus will be distributed which will set forth the number of shares of Common Stock being offered and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, the purchase price paid by any underwriter for shares of Common Stock purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed to dealers, including the proposed selling price to the public. 4 The Selling Shareholders reserve the sole right to accept and, together with any agent of the Selling Shareholders, to reject in whole or in part any proposed purchase of the shares of Common Stock. The Selling Shareholders will pay any sales commissions or other seller's compensation applicable to such transactions. The Selling Shareholders and agents who execute orders on their behalf may be deemed to be underwriters as that term is defined in Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act"), and a portion of any proceeds of sales and discounts, commissions or other seller's compensation may be deemed to be underwriting compensation for purposes of the Securities Act. (See "Plan of Distribution.") This Prospectus also covers such additional shares of Common Stock as may be issuable to the Selling Shareholders in the event of a stock dividend, stock split, recapitalization or other similar change in the Common Stock. The Company will not receive any of the proceeds from the sale of the shares of Common Stock by the Selling Shareholders. The Company has agreed to pay all costs of the registration of the shares of Common Stock underlying the Units and the Debentures and otherwise being offered by the Selling Shareholders. Such costs, fees and disbursements are estimated to be approximately $34,323. SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE SHARES OF COMMON STOCK. The Company's Common Stock is traded over-the-counter and is quoted on the NASDAQ National Market System under the symbol "PRCC." On September 14, 1999, the last sale price of the Common Stock on the NASDAQ National Market System was $2.50. -------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------- The date of this Prospectus is September __, 1999. 5 TABLE OF CONTENTS Page Available Information........................................... 6 Incorporation of Certain Documents by Reference................. 6 The Company..................................................... 7 The Offering.................................................... 8 Risk Factors.................................................... 8 Plan of Distribution............................................ 13 Market Information.............................................. 14 Selling Security Holders........................................ 15 Description of Securities....................................... 20 Legal Matters................................................... 24 Experts......................................................... 24 AVAILABLE INFORMATION The Company is subject to the informational and reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed with the Commission by the Company may be inspected and copied at the public reference facilities maintained by the Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048, and on the Commission's website at www.sec.gov. Copies of these materials can also be obtained at prescribed rates from the Public Reference Section of the Commission at its principal offices in Washington, D.C., set forth above. Additional information with respect to this offering may be provided in the future by means of supplements or "stickers" to the Prospectus. The Company has filed a Registration Statement on Form S-3 (including all amendments and supplements thereto, the "Registration Statement") with the Commission under the Securities Act with respect to the shares of Common Stock offered hereby. This Prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the Exhibits filed therewith, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. Statements contained herein concerning the provisions of such documents are not necessarily complete and, in each instance, reference is made to the Registration Statement or to the copy of such document filed as an Exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. Copies of the Registration Statement and the Exhibits thereto can be obtained upon payment of a fee prescribed by the Commission or may be inspected free of charge at the public reference facilities and regional offices referred to above. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998, and the Company's Quarterly Reports on Form 10-QSB for the quarters ended March 31 and June 30, 1999, which were previously filed with the Commission (File No. 0-14266), are incorporated by reference in this Prospectus and the Registration Statement of which it is a part. 6 All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the shares of Common Stock, shall be deemed to be incorporated by reference herein and to be part hereof from the respective dates of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus and the Registration Statement of which it is a part to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus or the Registration Statement of which it is a part. The Company will furnish without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon the written or verbal request of such person, a copy of any or all of the documents incorporated herein by reference, other than exhibits to such documents. Requests should be addressed to: Secretary, Pollution Research and Control Corp., 506 Paula Avenue, Glendale, California 91201; telephone number (818) 247-7601. THE COMPANY The Company has been engaged in the business of, primarily, designing, manufacturing and marketing electronic analytical instruments used to detect and measure various types of air pollution, such as "acid rain," "ozone depletion" and "smog episodes" through its wholly-owned subsidiary, Dasibi Environmental Corp. ("Dasibi"), for the past approximately twenty-eight years. Although it is the smallest competitor in the marketplace, management believes that the Company has the most complete "in-hous line of instrumentation. The Company's products are generally used to measure air pollution levels in geographic areas that range in size from small industrial sites to entire states or countries. 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. At the core of this instrumentation are three software systems, including a data logger system which permits the analysis of air samples at remote locations, a central station system which allows the compilation of data at a central site and a predictive pollutant monitoring model, which is currently under development and which management believes is useful for predicting future levels of pollutants across a geographic area and which is currently under development. The Company's instruments have been sold to over 300 customers worldwide, including industrial manufacturers; Federal, state, city, local and foreign governmental agencies; major industrial companies; and educational and research institutions in over thirty countries. These customers use the Company's products principally for environmental protection compliance programs. Dasibi has an installed base of equipment in over thirty countries. Since 1993, the Company has experienced intense price competition in its core business of air pollutant monitoring systems which has reduced both sales and operating margins. In response to these factors, the Company acquired two companies outside its core business, each of which businesses has been discontinued. The Company has begun to explore additional markets outside the United States in which it can sell its pollution monitoring and control devices. On June 10, 1998, Dasibi was awarded, on a designated vendor basis, an approximately $5.2 million contract (the "China Contract") to install air pollution monitoring systems in eleven cities in the People's Republic of China. Management believes, but cannot assure, that the Company's designated vendor 7 status will give the Company a competitive advantage in the award of future contracts with the Chinese government. The Company has commenced discussions with these eleven cities regarding additional monitoring stations in addition to those required by the China Contract. Performance of the China Contract is expected to be completed in 1999, with all payments to Dasibi made by letter of credit drawn on China Construction Bank. In order to finance these payments, Dasibi assisted the People's Republic of China in obtaining ten-year financing at a 3.9% interest rate from the U.S. Export-Import Bank, N.A. (the "Ex-Im Bank"). The Ex-Im Bank, in accordance with its customary practice, guaranteed, and Bank of America provided, 85% of the financing. Dasibi arranged the balance of the financing through Imperial Bank. Bank of America's loan application was approved by Ex/Im Bank in March 1999. The first shipment of instrumentation, with a value of approximately $2,009,568, was made, and payments totaling $1,622,727 have been received by Dasibi through August 25, 1999. The Company's principal executive offices are located at 506 Paula Avenue, Glendale, California 91201, and its telephone number is (818) 247-7601. The Company's Common Stock is traded in the over-the-counter market and reported on the NASDAQ National Market System under the symbol "PRCC." THE OFFERING Shares of Common Stock ...................... 742,673 shares of Common Stock Shares of Common Stock Underlying Units (1) .................................. 548,331 shares of Common Stock Shares of Common Stock Underlying Debentures (2) ............................. 355,556 shares of Common Stock (1) Includes (i) 288,331 shares of Common Stock underlying outstanding units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $.75 per share on or prior to February 25, 2002; (ii) 150,000 shares of Common Stock underlying outstanding units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $2.40 per share on or prior to September 13, 2002; and (iii) 110,000 shares of Common Stock underlying outstanding units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase .682 share of Common Stock at an exercise price of $.75 per share on or prior to July 16, 2002. (2) Includes (i) 222,222 shares of Common Stock issuable upon the conversion of an outstanding 18%-$500,000 face amount subordinated convertible debenture due December 1, 1999, assuming the conversion price of $2.25 per each share of Common Stock and (ii) 133,334 shares of Common Stock issuable upon the conversion of an outstanding 12%-$300,000 face amount subordinated convertible debenture due June 1, 2000, assuming the conversion price of $2.25 per each share of Common Stock. RISK FACTORS Prospective investors should consider carefully, in addition to the other information contained in and incorporated into this Prospectus and the Registration Statement of which it is a part, the following factors before purchasing the shares of Common Stock offered hereby. 1. Dependence Upon China Contract and Future China Business. The approximate $5.2 million price of the China Contract awarded, on a designated vendor basis, to Dasibi on June 10, 1998, to install air pollution monitoring 8 systems in eleven cities in the People's Republic of China, represents twice as much revenue than the Company realized in 1998. The Company has commenced discussions with these eleven cities regarding monitoring stations in addition to those required by the China Contract. Management believes, but cannot assure, that the Company's designated vendor status will give it a competitive advantage in the award of future contracts with the Chinese government. Failure to complete the China Contract to the satisfaction of the Chinese Environmental Protection Agency or failure to achieve significant future business in China for any reason whatsoever will have a material adverse effect on the Company and its prospects. 2. Liquidity. The Company has experienced cash shortages from time to time preventing it from paying its operating expenses on a timely basis and forcing management to raise funds from private sources for equity or debt financing and bank loans. However, the Company's bank line of credit was not renewed and the low market value of the Company's Common Stock combined with its unstable operating performance has restricted access to capital. During the year ended December 31, 1998, operations depleted the Company's cash by approximately $500,000 (partially offset by $362,000 in net proceeds from two private placements of the Company's securities). During the six months ended June 30, 1999, the Company's "net cash used for operating activities" was $1,294,905, primarily, because of increased receivables attributable to shipments under the China Contract. This increase was offset by, among other things, the Company's borrowing of $300,000 in the first quarter of 1999 (long-term debt) and its receipt in the six months ended June 30, 1999, of net proceeds from private placements of Common Stock aggregating $425,625 and the sum of $500,000 pursuant to a subordinated convertible debenture due December 1, 1999. While the Company believes that cash flow ($1,622,727 to date) from the China Contract together with funds received from securities sales (an additional $560,000 during the period from July 1, 1999, through the date hereof) will be sufficient to allow it to continue its operations in the foreseeable future, there can be no assurance that such funds will meet its cash needs and, if the Company requires additional financing, it will be available on acceptable terms, if at all. 3. Decline in Net Revenues/Substantial Losses. The Company has recognized a net loss in each of the fiscal years ended 1998, 1997 and 1996. During the last three fiscal years, revenue has decreased from approximately $8.8 million to less than $3 million as a result of the discontinued operations of two subsidiaries and significant competitive price pressure for the Company's instruments, thus forcing PRCC to lower its domestic and foreign bids, reducing the number of the Company's bid awards and reducing the profit margin on the bids awarded to the Company. The Company's gross profit has also steadily decreased from 46% and 41% of net revenue in fiscal 1996 and 1997, respectively, to approximately 35% of net revenue in fiscal 1998. As a result, the Company has suspended major new product development efforts and scaled back its efforts to improve or modify existing technologies in response to the competitive price pressures. Any substantial improvement in the results of operations will be substantially dependent on the Company's ability to complete the China Contract and generate future business in China and/or other countries which do not have substantial pollution air monitoring systems. While the Company's net revenues increased 239% to $2,941,897 during the six months ended June 30, 1999, as compared to $1,229,918 for the comparable six-month period of 1998 because of the initial product shipment under the China Contract, income from continuing operations increased to $211,109 from a loss of $(261,998) for these periods because of increased operating expenses attributable to the China Contract. There can be no assurance that the Company will successfully complete the China Contract; obtain other business in China and/or other countries; or be capable of sustaining a return to profitability. 4. Losses on Discontinuance of Operations and Disposition of Nutek and LRL. Nutek Corp. ("Nutek"), a wholly-owned subsidiary of the Company which filed for protection under Chapter 11 of the U.S. Bankruptcy Act in April 1998, ceased operations in July 1998 following a ruling that it was insolvent. The revenues 9 generated by Nutek accounted for approximately 48% of the Company's consolidated net revenues for the fiscal year ended December 31, 1997. The assets of Nutek were auctioned in July 1998 to satisfy amounts owed to a secured lender. The Company realized losses from the discontinuance ($115,301) and the disposition ($1,072,986) of Nutek during the fiscal year ended December 31, 1998. Further, a default judgment in the amount of approximately $766,709, which was subsequently reduced to $449,810, was entered against PRCC in an action by the secured lender in the U.S. District Court for the Northern District of Texas, Dallas Division, to recover the deficiency from the auction of Nutek's assets. The parties entered into that Compromise, Settlement and Release Agreement on August 12, 1999, pursuant to which the Company paid the secured lender $9,000 and agreed to pay the sum of $450,000, together with interest at the rate of twelve percent, on or before February 1, 2000. Additionally, the Company issued the secured lender 100,000 restricted shares of Common Stock which are covered by the Registration Statement of which this Prospectus forms a part and granted the lender a warrant exercisable to purchase 20,000 shares of Common Stock at an exercise price of $.75 per share during the three-year terminating on August 11, 2002. The parties agreed that the proceeds from the sale of the 100,000 shares, which are resaleable pursuant to an agreement with the Company, despite their inclusion in this Registration Statement, subject to the volume limitations described in paragraph (e) of Rule 144 of the General Rules and Regulations under the Act, would be applied to reduce or satisfy the Company's indebtedness, and any excess would be payable to the Company. The secured lender has agreed not to enforce the default judgment in the Texas action so long as the Company timely performs its obligations under the settlement agreement. There can be no assurance that PRCC will be successful in timely performing its obligations under the agreement and obtaining dismissal of the Texas action or setting aside of the default judgment. Effective February 28, 1998, Logan Medical Devices, Inc. ("LMD"), a wholly-owned subsidiary of the Company, returned all of the shares of common stock of Logan Research, Ltd. ("LRL"), a United Kingdom corporation engaged in the design, manufacture and marketing of medical instrumentation, owned by LMD and received in exchange all shares of LMD owned by LRL. In addition, the Company was released from liability on a promissory note payable to LRL in the principal amount of $300,000 that had accrued interest of $47,250. The Company had previously advanced funds in the amount of $160,000 to LRL that it is making no effort to recoup. The Company realized a gain in the amount of $154,575 on the disposition. The revenue generated by LRL accounted for 7% of the Company's consolidated net revenues for the 1997 fiscal year. 5. Governmental Approval. The Company is required to obtain approval by the U.S. Environmental Protection Agency of new air pollution monitoring instruments it produces before such instruments can be sold in the United States. Currently, all air pollution monitoring instruments that the Company sells in the United States have received EPA approval. If the EPA were to change its regulations or requirements, there could be no assurance that the Company's products would comply with such standards or that the Company would be able to comply with such modified requirements. With the exception of Germany, no foreign country requires governmental approval of air pollution monitoring instruments. There can be no assurance that additional regulations will not be adopted by other foreign governments. Failure to meet any future regulation could have a material adverse effect on the Company and render certain of the Company's products obsolete. 6. Dependence On Legislation and Regulation. The products developed and manufactured by the Company monitor air pollutants in accordance with standards established generally by Federal, state, local and foreign governmental agencies. Changes in legislation or regulations or a relaxation of standards determined by such agencies could adversely affect the market for the Company's products or render certain of the Company's products obsolete. 10 7. Competition. The Company is the smallest competitor in the ambient air pollution instrumentation market. There are other established firms in the same field, both in the United States and in foreign countries, which have substantially greater experience and financial and personnel resources than the Company. Therefore, the Company is subject to the effects of better-financed competitors and their research and development efforts and price competition. Although the Company is not aware of any other company that competes with it in all of its product lines, 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. and Monitor Labs, Inc. In the foreign market, the Company's primary competitors are Thermo Instrument Systems, Monitor Labs, Environment S.A. of France and Horiba Instruments. All of the Company's competitors also offer a wider range of equipment, monitoring additional pollutants, than does PRCC. 8. Technological Obsolescence; Limited Research and Development. The Company's future success will depend on its ability to enhance its current products, reduce product costs and develop and introduce new products that keep pace with technological developments in response to evolving customer requirements and governmental regulations. Failure of the Company to anticipate or respond adequately to technological development or introduction could result in a loss of future revenue and impair the Company's competitiveness. The Company, since early 1994, has sharply limited its product development efforts. For the foreseeable future, management expects to limit research and development to software development and efforts to refine and improve its present products. 9. Risks of Foreign Sales. During the last three fiscal years, foreign sales have represented approximately 55% to 70% of the Company's total revenue and are expected to represent at least such amounts of the Company's future sales. Foreign sales are subject to numerous risks, including political and economic instability in foreign markets, restrictive trade policies of foreign governments, inconsistent product regulation by foreign agencies or governments, the imposition of product tariffs and other trade barriers and the burdens of complying with a wide variety of international and U.S. export laws and differing regulatory requirements. To the extent that foreign sales are transacted in a foreign currency, PRCC would be subject to the risk of losses due to foreign currency fluctuations and difficulties associated with accounts receivable collection. Because the Company is required to provide financing in connection with the China Contract, it bears the risk of realizing reduced margins from the China Contract if the financing is below market at closing. Further, PRCC may experience difficulties in managing or overseeing the technical and training operations required to be conducted in China. 10. Reliance on Certain Suppliers. While PRCC manufactures many components and subsystems used in its products, other components, including packaging materials, integrated circuits, microprocessors and minicomputers, are purchased on a non-contractual basis from unaffiliated suppliers. The Company is not dependent upon any one supplier for any raw material or component that it purchases, and the Company believes there are available alternative sources for such raw materials and components. The Company is currently dependent, however, on a limited number of vendors with respect to the availability and quality of certain key instrument components, such as printed circuit board designs and lamps. A vendor's inability to supply these components to PRCC in a timely fashion, or to the Company's satisfaction, would affect the Company's ability to deliver its instruments on time and could damage the Company's reputation. 11. Limited Marketing Capability and other Resources. The Company's success depends in large part upon its ability to identify and adequately penetrate the markets for its products. Most of the Company's competitors have much larger 11 budgets for marketing, advertising and promotion. The Company has historically lacked the financial, personnel and other resources required to compete with its larger, better-financed competitors in marketing products. In recent years, the Company's revenue has shrunk and the Company has reduced its staff and operated without a bank line of credit. There can be no assurance that the Company's declining net revenue and gross profit will be reversed. 12. Dependence on Key Personnel. The Company's success depends in part upon its ability to attract and/or retain highly skilled management, technical and marketing personnel. Loss of the services of Mr. Albert E. Gosselin, Jr., President and Chairman of the Board of Directors of PRCC, could adversely affect the development of the Company's business and its ability to realize or sustain profitable operations. The Company does not maintain key-man life insurance on any of its personnel and has no present plans to obtain such insurance. 13. Limited Protection of Intellectual Property and Proprietary Rights. The Company regards all or portions of the designs and technologies incorporated into its products as proprietary and attempts to protect them with a combination of trademark and trade secret laws. It has generally been the Company's policy to proceed without patent protection. It may be possible for unauthorized third parties to copy certain portions of the Company's products or to "reverse engineer" or otherwise obtain and use to the Company's detriment information which the Company regards as proprietary. Moreover, the laws of some foreign countries do not afford the same protection to the Company's proprietary rights as do U.S. laws. There can be no assurance that any of the Company's efforts to protect its proprietary technology will be adequate or that the Company's competitors will not independently develop technologies that are substantially equivalent or superior to the Company's technologies. 14. Absence of Products Liability Insurance. The Company does not maintain products liability insurance. In the event that PRCC experiences a material liability as a result of a products liability claim, such a liability could have a material adverse effect on the Company. 15. No Dividends. The Company has never paid dividends on the shares of its Common Stock and does not intend to pay any dividends in the foreseeable future. 16. Possible Volatility of Stock Price. The trading price of the Company's Common Stock has from time to time fluctuated widely and in the future may be subject to similar fluctuations in response to quarter-to-quarter variations in the Company's operating results, announcements of technological innovations or new products by the Company or its competitors, general conditions in the air pollution monitoring industry in which the Company competes and other events or factors. In addition, in recent years broad stock market indices, in general, and the securities of technology companies, in particular, have experienced substantial price fluctuations. Such broad market fluctuations also may adversely affect the future trading price of the Common Stock. In addition, sales of substantial amounts of shares of Common Stock in the public market following this offering could adversely affect the future trading price of the Common Stock. (See "MARKET INFORMATION.") 17. Possible Dilutive Effect and Other Disadvantages of Outstanding Warrants, Options and Debentures. As of the date hereof, there are an aggregate of 3,378,168 shares of Common Stock reserved for issuance upon the exercise of outstanding options and warrants currently exercisable at prices in a range from $.75 to $6.00. Additionally, the outstanding Debentures are convertible, based upon a conversion price per share of $2.25, into 355,556 shares of Common Stock. To the extent that the trading price of the Common Stock at the time of the exercise of any such options or warrants or the conversion of the Debentures exceeds the exercise or conversion price, such exercise or conversion will have a dilutive effect on the Company's shareholders. 12 18. Potential Anti-Takeover and Other Effects of Issuance of Preferred Stock Rights May Be Detrimental to Common Shareholders. The Company is authorized to issue up to 20,000,000 shares of preferred stock, $.01 par value per share (the "Preferred Stock"); of which none are currently issued and outstanding. The issuance of Preferred Stock does not require approval by the shareholders of the Company's Common Stock. The Board of Directors, in its sole discretion, has the power to issue Preferred Stock in one or more series and establish the dividend rates and preferences, liquidation preferences, voting rights, redemption and conversion terms and conditions and any other relative rights and preferences with respect to any series of Preferred Stock. Holders of Preferred Stock may have the right to receive dividends, certain preferences in liquidation and conversion and other rights, any of which rights and preferences may operate to the detriment of the shareholders of the Company's Common Stock. Further, the issuance of any Preferred Stock having rights superior to those of the Company's Common Stock may result in a decrease in the value or market price of the Common Stock and, additionally, could be used by the Board of Directors as an anti-takeover measure or device to prevent a change in control of the Company. (See "DESCRIPTION OF SECURITIES - Preferred Stock.") PLAN OF DISTRIBUTION The shares of Common Stock may be offered and sold from time to time by the Selling Shareholders or by pledgees, donees, transferees or other successors in interest. The Selling Shareholders will act independently of the Company in making determinations with respect to the timing, manner and size of each offer or sale. Such sales may be made on the over-the-counter market or otherwise at prices and at terms then prevailing or at prices related to the then current market prices, or in negotiated transactions. The Selling Shareholders may sell shares of Common Stock in any of the following ways: (i) through dealers; (ii) through agents; or (iii) directly to one or more purchasers. The distribution of the shares of Common Stock may be effected from time to time in one or more transactions (which may involve crosses or block transactions) in the over-the-counter market. Any such transaction may be effected at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices. The Selling Shareholders may effect such transactions by selling shares of Common Stock to or through broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions or commissions from Selling Shareholders and/or commissions from purchasers of shares of Common Stock for whom they may act as agent. The Selling Shareholders and any broker-dealers or agents which participate in the distribution of Common Stock by them might be deemed to be underwriters and any discounts, commissions or concessions received by any such broker-dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. In offering the shares of Common Stock, the Selling Shareholders and any broker-dealers and any other participating broker-dealers which execute sales for the Selling Shareholders may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales, and any profits realized by the Selling Shareholders and the compensation of such broker-dealers may be deemed to be underwriting discounts and commissions. In addition, any shares of Common Stock covered by this Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus. Rule 10b-2 under the Exchange Act prohibits persons who are participating in or financially interested in a distribution of securities from making payments to another person for the solicitation of a third party to purchase the securities that are the subject of the distribution, except that Rule 10b-2 does not apply, among other exceptions, to brokerage transactions not involving the solicitation of customer orders. Rule 10b-6 under the Exchange Act prohibits 13 participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Rule 10b-7 governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. The public offering of the Common Stock by the Selling Shareholders will terminate on the date on which all shares of Common Stock offered hereby have been sold by the Selling Shareholders, or on such earlier date on which the Company files a post-effective amendment which de-registers all shares of Common Stock then remaining unsold. The Company will pay certain expenses incidental to the offering and sale of the shares of Common Stock to the public estimated to be approximately $34,356. The Company will not pay for, among other expenses, selling expenses, underwriting discounts or fees and expenses of counsel for the Selling Shareholders. To the extent required at the time a particular offer of Common Stock by the Selling Shareholders is made, a supplement to this Prospectus will be distributed which will set forth the number of shares of Common Stock being offered and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, the purchase price paid by any underwriter for shares of Common Stock purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed to dealers, including the proposed selling price to the public. The Company will not receive any of the proceeds from the sale of shares of Common Stock by the Selling Shareholders. MARKET INFORMATION The Company's Common Stock is traded over-the-counter and reported on the NASDAQ National Market System under the symbol "PRCC." Set forth below are the high and low closing bid quotations in the over-the-counter market for the Common Stock as reported by the relevant market makers for fiscal years l998 and 1997 and the quarters ended March 31 and June 30, 1999. The high and low closing bid quotations in the over-the-counter market reported by the relevant market makers on September 14, 1999, were $2.50 and $2.375 for the Common Stock. Quotations represent inter-dealer quotations, without adjustment for retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions.
Fiscal 1999 Fiscal 1998 Fiscal 1997 Quarter Ended High Bid Low Bid High Bid Low Bid High Bid Low Bid - ------------- ------------------- ------------------- ------------------- Common Stock: March 31 $2.00 $ .88 $4.52 $2.52 $5.12 $2.76 June 30 $2.38 $1.06 3.13 2.48 3.24 1.88 September 30 N/A N/A 2.25 .26 2.76 1.35 December 31 N/A N/A 1.25 .56 1.88 .64
As of September 14, 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. The Company cannot predict the market price for the Common Stock upon the commencement or the completion of this offering. Since the market for the Company's Common Stock is thinly traded, sales of the shares of Common Stock could cause the Common Stock to trade at levels lower than would otherwise be anticipated. 14 SELLING SECURITY HOLDERS Of the 1,646,560 shares of Common Stock being offered hereby, 288,331 shares of Common Stock underlying outstanding units are being offered collectively by seven individuals, including Messrs. Ronald E. Patterson, Phillip T. Huss, William T. Richey and Alan Talesnick and Mesdames Maria Molinsky, Jennifer S. Jauregui and Cynthia L. Gosselin, who purchased units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $.75 per share on or prior to February 25, 2002; 110,000 shares of Common Stock underlying outstanding units are being offered by two individuals, Messrs. Patterson and Huss, who purchased units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase .682 share of Common Stock at an exercise price of $.75 per share on or prior to July 16, 2002; and 150,000 shares of Common Stock underlying outstanding units are being offered collectively by three individuals, including Messrs. Lee N. and Steven Sion and Ms. Maria Molinsky, who purchased units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $2.40 per share on or prior to September 13, 2002. A total of 438,331 shares of Common Stock underlying warrants included in the Units are not covered by the Registration Statement of which this Prospectus is a part. Of the balance of 1,098,299 shares, 742,673 shares of Common Stock are being offered collectively by eleven persons, including Mr. Patterson, The Investor Resource Services, Inc., Fidelity Funding, Inc., Mr. Blagoja Samakoski, Patricia Cudd, Esq., Trautman Wasserman & Company, Inc., Premier Equities, Inc., Mr. Richey, Mr. Talesnick, Mr. Gary L. Dudley and Mr. Frank T. Anaya. Mr. Dudley is a director of the Company and Ms. Cudd is the sole proprietor of Cudd & Associates, the law firm that passed upon certain legal matters in connection with the validity of the issuance of the shares of Common Stock being offered hereby. Ms Cudd owns, in addition to 100,000 shares of the Company's Common Stock, options exercisable to purchase a total of 10,000 shares of the Common Stock at an exercise price of $.75 per share through January 6, 2002. The shares of Common Stock underlying Ms. Cudd's options are not included in the shares of Common Stock covered by the Registration Statement of which this Prospectus forms a part. A total of 355,556 shares of Common Stock which may be issued upon the conversion of outstanding Debentures may be offered by the Venezuela Recovery Fund N.V. (the "Venezuela Fund") and Spiga Limited ("Spiga"). Of these shares, 222,222 shares of Common Stock are issuable upon the conversion by the Venezuela Fund of an outstanding 18%-$500,000 face amount subordinated convertible debenture due December 1, 1999, assuming the conversion price of $2.25 per each share of Common Stock, and a total of 133,334 shares of Common Stock are issuable upon the conversion by Spiga of two outstanding 12%-$150,000 face amount subordinated convertible debentures due June 1, 2000, assuming the conversion price per each share of Common Stock of $2.25. The table below indicates the name of Selling Shareholder, any material relationship he, she or it has had to the Company within the last three years, the number and percentage of shares of Common Stock owned by the Selling Shareholder prior to this offering, the number of shares being offered for sale by the shareholder and the number of shares of Common Stock and the percentage of the total shares of Common Stock outstanding that will be held if all shares offered are sold. (See "Description of Securities - Common Stock Offered by the Selling Shareholders" and "- Common Stock That May Be Offered by the Debenture Holders.") 15
Shares Shares Shares Owned Owned Owned Selling Relationship Prior to Being After Shareholders to Company Offering Percent Offered Offering Percent - ------------------------ ----------- -------- ------- ------- -------- ------- Ronald E. Patterson 11.61% 491,191(1) 11.61 303,333(2) 187,858(3) 4.44 shareholder The Investor Resource N/A 133,333(4) 3.30 133,333(4) -0- 0.00 Services, Inc. Phillip T. Huss 5.31% 219,307(5) 5.31 132,166(6) 87,141(7) 2.11 shareholder Fidelity Funding, Inc. N/A 120,000(8) 2.95 100,000(9) 20,000(10) * Blagoja Samakoski N/A 100,000(4) 2.47 100,000(4) -0- 0.00 Patricia Cudd N/A 110,000(11) 2.71 100,000(11) 10,000 * Trautman Wasserman N/A 66,667(4) 1.64 66,667(4) -0- 0.00 & Company, Inc. Lee N. Sion 5.85% 239,125(12) 5.85 50,000(13) 189,125(14) 4.62 shareholder Premier Equities, Inc. N/A 150,000(15) 3.62 50,000(16) 100,000(17) 2.41 Steven Sion N/A 75,000(18) 1.84 50,000(19) 25,000(20) .61 William T. Richey N/A 70,000(21) 1.72 45,000(22) 25,000(23) * Maria Molinsky N/A 141,666(24) 3.45 83,333(25) 58,333(26) 1.42 Alan Talesnick N/A 46,000(27) 1.13 32,000(28) 14,000(29) * Gary L. Dudley Director 20,000(11) * 20,000(11) -0- 0.00 Jennifer S. Jauregui N/A 18,666(30) * 9,333(31) 9,333(32) 0.00 Frank T. Anaya N/A 9,174(33) * 9,174(33) -0- 0.00 Cynthia L. Gosselin Operations 36,574(34) * 6,666(35) 29,908(36) * Manager of Dasibi
16
Shares Shares Shares Owned Owned Owned Debenture Relationship Prior to Being After Holders to Company Offering Percent Offered Offering Percent - --------------------------- ------------ -------- ------- ------- -------- ------- The Venezuela Recovery Fund N.V. 5.26% 222,222(37) 5.26 222,222(37) -0- 0.00 shareholder Spiga Limited N/A 178,334(38) 4.22 133,334(39) 45,000(40) 1.07 - ------------------
* Less than one percent. (1) Includes 90,000 shares of Common Stock purchased for cash in June 1998; 133,333 shares of Common Stock and 133,333 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through February 25, 2002, at an exercise price of $.75 per share; which shares and warrants were included in units purchased for cash in February 1999; and 80,000 shares of Common Stock and 54,525 shares of Common Stock underlying warrants exercisable to purchase .682 share of Common Stock each at an exercise price of $.75 per share through July 16, 2002; which shares and warrants were included in units purchased for cash in July 1999. (2) Includes 90,000 shares of Common Stock purchased for cash in June 1998 and 133,333 shares and 80,000 shares of Common Stock included in units purchased for cash in February and July 1999, respectively. (3) Includes 133,333 shares of Common Stock underlying warrants exercisable at an exercise price of $.75 per share through February 25, 2002, to purchase one share of Common Stock each and 54,525 shares of Common Stock underlying warrants exercisable through July 16, 2002, at an exercise price of $.75 per share to purchase .682 share of Common Stock each. (4) Includes shares of Common Stock purchased for cash in May 1999. (5) Includes 66,666 shares of Common Stock and 66,666 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through February 25, 2002, at an exercise price of $.75 per share; which shares and warrants were included in units purchased for cash in February 1999; 30,000 shares of Common Stock and 20,475 shares of Common Stock underlying warrants exercisable to purchase .682 share of Common Stock each at an exercise price of $.75 per share through July 16, 2002; which shares and warrants were included in units purchased for cash in July 1999; and options exercisable through May 15, 2001, to purchase 12,500 shares of Common Stock at an exercise price of $2.20 per share; and 23,000 shares of Common Stock acquired from Fred Zalokar which were purchased by him for cash in June 1998. (6) Includes 66,666 shares and 30,000 shares of Common Stock included in units purchased for cash in February and July 1999, respectively; 23,000 shares of Common Stock acquired from Fred Zalokar which were purchased by him for cash in June 1998; and options exercisable through May 15, 2001, to purchase 12,500 shares of Common Stock at an exercise price of $2.20 per share. (7) Includes 66,666 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each at an exercise price of $.75 per share through February 25, 2002, included in units purchased for cash in February 1999 and 20,475 shares of Common Stock underlying warrants exercisable through July 16, 2002, to purchase .682 share of Common Stock each at an exercise price of $.75 per share included in units purchased for cash in July 1999. 17 (8) Includes 100,000 shares of Common Stock and 20,000 shares of Common Stock underlying warrants exercisable through August 12, 2002, at an exercise price of $.75 per share; which shares and warrants were received pursuant to the Compromise, Settlement and Release Agreement dated August 12, 1999. (9) Includes 100,000 shares of Common Stock received pursuant to the Compromise, Settlement and Release Agreement dated August 12, 1999. (10) Includes 20,000 shares of Common Stock underlying warrants exercisable through August 12, 2002, at an exercise price of $.75 received pursuant to the Compromise, Settlement and Release Agreement dated August 12, 1999. (11) Includes shares of Common Stock received upon the conversion on June 8, 1999, of Series "A" Preferred Stock on the basis of one share of Common Stock for share of Series "A" Preferred Stock. (12) Includes 50,000 shares of Common Stock and 25,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through September 13, 1999, at an exercise price of $2.40 per share; which shares and warrants were included in units purchased for cash in September 1999; 12,500 shares of Common Stock underlying options exercisable to purchase one share of Common Stock each at an exercise price of $.75 per share through June 8, 2001, and 9,375 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through January 7, 2002, at an exercise price of $.75 per share. (13) Includes shares of Common Stock included in units purchased for cash in September 1999. (14) Includes 25,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through September 13, 1999, at an exercise price of $2.40 per share; which warrants were included in units purchased for cash in September 1999; 12,500 shares of Common Stock underlying options exercisable to purchase one share of Common Stock each at an exercise price of $.75 per share through June 8, 2001, and 9,375 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through January 7, 2002, at an exercise price of $.75 per share. (15) Includes 50,000 shares of Common Stock and 100,000 shares of Common Stock underlying warrants exercisable at an exercise price of $.75 through July 12, 2002; which shares and warrants were received for services performed pursuant to the Financial Consulting and Services Agreement dated May 20, 1999. (16) Includes 50,000 shares of Common Stock received for services performed pursuant to the Financial Consulting and Services Agreement dated May 20, 1999. (17) Includes 100,000 shares of Common Stock underlying warrants exercisable through July 12, 2002, at an exercise price of $.75 received for services performed pursuant to the Financial Consulting and Services Agreement dated May 20, 1999. (18) Includes 50,000 shares of Common Stock and 25,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through September 13, 1999, at an exercise price of $2.40 per share; which shares and warrants were included in units purchased for cash in September 1999. 18 (19) Includes shares of Common Stock included in units purchased for cash in September 1999. (20) Includes 25,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through September 13, 1999, at an exercise price of $2.40 per share; which warrants were included in units purchased for cash in September 1999. (21) Includes 20,000 shares of Common Stock purchased for cash in June 1998 and 25,000 shares of Common Stock and 25,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each at an exercise price of $.75 per share through February 25, 2002; which shares and warrants were included in units purchased for cash in February 1999. (22) Includes 20,000 shares of Common Stock purchased for cash in June 1998 and 25,000 shares of Common Stock included in units purchased for cash in February 1999. (23) Includes 25,000 shares of Common Stock underlying warrants exercisable at an exercise price of $.75 per share to purchase one share of Common Stock each through February 25, 2002, included in units purchased for cash in February 1999. (24) Includes 50,000 shares of Common Stock and 25,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through September 13, 1999, at an exercise price of $2.40 per share; which shares and warrants were included in units purchased for cash in September 1999; 33,000 shares of Common Stock and 33,000 shares of Common Stock underlying warrants exercisable at an exercise price of $.75 per share through February 25, 2002; which shares and warrants were included in units purchased for cash in March 1999. (25) Includes 50,000 shares of Common Stock included in units purchased for cash in September 1999 and 33,000 shares of Common Stock included in units purchased for cash in March 1999. (26) Includes 25,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through September 13, 1999, at an exercise price of $2.40 per share included in units purchased for cash in September 1999; and 33,000 shares of Common Stock underlying warrants exercisable at an exercise price of $.75 per share through February 25, 2002, included in units purchased for cash in March 1999. (27) Includes 18,000 shares of Common Stock purchased for cash in June 1998 and 14,000 shares of Common Stock and 14,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through February 25, 2002, at an exercise price of $.75 per share; which shares and warrants were included in units purchased for cash in February 1999. (28) Includes 18,000 shares of Common Stock purchased for cash in June 1998 and 14,000 shares of Common Stock included in units purchased for cash in February 1999. (29) Includes 14,000 shares of Common Stock underlying warrants exercisable to purchase one share of Common Stock each through February 25, 2002, at an exercise price of $.75 per share included in units purchased for cash in February 1999. 19 (30) Includes 9,333 shares of Common Stock and 9,333 shares of Common Stock underlying warrants exercisable at an exercise price of $.75 per share through February 25, 2002; which shares and warrants were included in units purchased for cash in March 1999. (31) Includes 9,333 shares of Common Stock included in units purchased for cash in March 1999. (32) Includes 9,333 shares of Common Stock underlying warrants exercisable at an exercise price of $.75 per share through February 25, 2002, included in units purchased for cash in March 1999. (33) Includes shares of Common Stock purchased for cash in June 1998. (34) Includes 6,666 shares of Common Stock and 6,666 shares of Common Stock underlying warrants exercisable through February 25, 2002, at an exercise price of $.75 per share; which shares and warrants were included in units purchased for cash in February 1999; and 10,000 shares and 5,000 shares of Common Stock underlying options exercisable at an exercise price of $.75 per share through May 31, 2000, and January 6, 2002, respectively. (35) Includes 6,666 shares of Common Stock included in units purchased for cash in February 1999. (36) Includes 6,666 shares of Common Stock underlying warrants exercisable at an exercise price of $.75 per share through February 25, 2002, included in units purchased for cash in February 1999 and 10,000 shares and 5,000 shares of Common Stock underlying options exercisable through May 31, 2000, and January 6, 2002, respectively, at an exercise price of $.75 per share. (37) Includes shares of Common Stock issuable upon the conversion of an 18%-$500,000 face amount subordinated convertible debenture due December 1, 1999. (38) Includes a total of 133,334 shares of Common Stock issuable upon the conversion of two 12%-$150,000 face amount subordinated convertible debentures due June 1, 2000, and 45,000 shares of Common Stock underlying warrants exercisable at an exercise price of $2.25 per share through September 1, 2002. (39) Includes a total of 133,334 shares of Common Stock issuable upon the conversion of two 12%-$150,000 face amount subordinated convertible debentures due June 1, 2000. (40) Includes 45,000 shares of Common Stock underlying warrants exercisable at an exercise price of $2.25 per share through September 1, 2002. DESCRIPTION OF SECURITIES Capital Stock - ------------- The Company's authorized capital stock consists of 30,000,000 shares of Common Stock, no par value per share (the "Common Stock") and 20,000,000 shares of preferred stock, $.01 par value per share (the "Preferred Stock"). Common Stock. All shares of Common Stock have equal voting rights and, when validly issued and outstanding, are entitled to one vote per share in all matters to be voted upon by shareholders. The shares of Common Stock have no preemptive, subscription, conversion or redemption rights and may be issued only 20 as fully-paid and nonassessable shares of Common Stock. Cumulative voting in the election of directors is permitted; however, cumulative voting may occur only if a shareholder announces his intention to cumulate his votes prior to the voting, in which case all shareholders may cumulate their votes. In the event of liquidation of the Company, each shareholder is entitled to receive a proportionate share of the Company's assets available for distribution to shareholders after the payment of liabilities. All shares of the Company's Common Stock issued and outstanding are fully-paid and nonassessable. Holders of the shares of Common Stock are entitled to share pro rata in dividends and distributions with respect to the Common Stock, as may be declared by the Board of Directors out of funds legally available therefor. As of September 7, 1999, there were 3,894,487 shares of Common Stock issued and outstanding held of record by approximately 1,100 shareholders. The Common Stock is traded over-the-counter and reported on the NASDAQ National Market System under the symbol "PRCC." Holders of shares of Common Stock are entitled to share pro rata in dividends and distributions with respect to the Common Stock when, as and if declared by the Board of Directors out of funds legally available therefor. The Company has not paid any dividends on its Common Stock and currently intends to retain earnings, if any, to finance the development and expansion of its business. Future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, capital requirements and the financial condition of the Company. Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series as may be determined by the Board of Directors. The voting powers and preferences, the relative rights of each such series and the qualifications, limitations and restrictions thereof shall be established by the Board of Directors, except that no holder of Preferred Stock shall have preemptive rights. The Company has no outstanding Preferred Stock, and the Board of Directors does not plan to issue any for the foreseeable future unless the issuance thereof shall be in the best interests of the Company. Common Stock Offered by the Selling Shareholders - ------------------------------------------------ On May 8, 1998, the Company issued an aggregate of 20,000 shares and 100,000 shares of Series "A" Convertible Preferred Stock to Gary L. Dudley, a director of the Company, and Patricia Cudd, Esq., the sole proprietor of the law firm that passed upon certain legal matters in connection with the validity of the issuance of the shares of Common Stock being offered hereby, in consideration for cash. Each share of Series "A" Convertible Preferred Stock (the "Series "A" Preferred Stock) was converted on June 8, 1999, into one share of Common Stock. The terms of the transactions involving the sale of the Series A Preferred Stock are more fully described in the Investment Letters and Memorandum of Subscription/Purchase Agreements dated May 9, 1998, with Mr. Dudley and Ms. Cudd, copies of which are incorporated herein by reference to Exhibits 10.156 and 10.155, respectively, to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998. In addition to 100,000 shares of the Company's Common Stock, Ms. Cudd owns options exercisable to purchase a total of 10,000 shares of the Common Stock at an exercise price of $.75 per share through January 6, 2002. The shares of Common Stock underlying Ms. Cudd's options are not included in the shares of Common Stock covered by the Registration Statement of which this Prospectus is a part. On June 19, 1998, PRCC issued a total of 20,000 shares, 18,000 shares and 9,174 shares of Common Stock to William T. Richey, Alan L. Talesnick and Frank T. Anaya, respectively, in consideration for cash. The terms of the transactions are more fully described in the Investment Letters and Memorandum of Subscription/Purchase Agreements dated June 19, 1998, with Messrs. Richey, Talesnick and Anaya, copies of which are incorporated herein by reference to Exhibits 10.157, 10.164 and 10.162, respectively, to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998. 21 During the period from February 25 through March 24, 1999, the Company completed a private placement to a total of seven purchasers of an aggregate of 288,331 units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase one share of Common Stock at an exercise price of $.75 per share during the approximate three-year period terminating on February 25, 2002. The seven holders of the units, together with the number of shares of the Company's Common Stock included in each unit, include the following: (i) Ronald E. Patterson - 133,333 shares; (ii) Phillip T. Huss - 66,666 shares; (iii) Maria Molinsky - 33,333 shares; (iv) William T. Richey - 25,000 shares; (v) Alan Talesnick - 14,000 shares; (vi) Jennifer S. Jauregui - 9,333 shares; and (vii) Cynthia L. Gosselin - 6,666 shares. A total of 288,331 shares of Common Stock underlying warrants included in the units are not covered by the Registration Statement of which this Prospectus is a part. The terms of the transactions involving the purchases of units by Messrs. Patterson, Huss and Richey are more fully described in the Investment Letters and Memorandum of Subscription/Purchase Agreements dated February 25, 1999, with Messrs. Patterson, Huss and Richey, copies of which are incorporated herein by reference to Exhibits 10.174, 10.175 and 10.173, respectively, to the Annual Report on Form 10-KSB of PRCC for the fiscal year ended December 31, 1998. The terms of the transactions involving the sales of units to Mesdames Molinsky, Jauregui and Gosselin and Mr. Talesnick are described in more detail in Exhibits 4.11, 4.14, 4.15 and 4.13, respectively, to the Company's Registration Statement on Form S-3 of which this Prospectus forms a part. On May 19, 1999, PRCC issued a total of 133,333 shares, 100,000 shares and 66,667 shares of Common Stock to The Investor Resource Services, Inc. ("Investor Services"), Blagoja Samakoski and Trautman Wasserman & Company, Inc. ("Trautman Wasserman"), respectively, in consideration for cash. The terms of the sales are more fully described in the Investment Letters and Memorandum of Subscription/Purchase Agreements dated May 19, 27 and 19, 1999, respectively, with Investor Services, Mr. Samakoski and Trautman Wasserman, copies of which are incorporated herein by reference to Exhibits 4.16, 4.21 and 4.18, respectively, to the Form S-3 Registration Statement of PRCC of which this Prospectus is a part. The Company, on May 20, 1999, entered into that certain Financial Consulting and Services Agreement (the "Consulting Agreement") with Premier Equities, Inc. ("Premier"), pursuant to which the Company issued Premier 50,000 shares of its Common Stock and granted warrants dated July 12, 1999, to Premier exercisable to purchase 100,000 shares of Common Stock at an exercise price of $.75 per share during the three-year period terminating on July 12, 2002. In addition to the foregoing compensation, the Company agreed to pay Premier a fee in the amount of $75,000 in cash per annum during the three-year term of the Consulting Agreement in consideration for the performance by Premier of certain consulting services for the Company, including advice regarding short- and long-term business plans and assistance with shareholder relations. The Consulting Agreement is terminable by either party upon sixty days' prior written notice. The provisions of the Consulting Agreement are set forth in their entirety in the Financial Consulting and Services Agreement dated July 12, 1999, a copy of which is incorporated herein by reference to Exhibit 4.20 to the Form S-3 Registration Statement of which this Prospectus forms a part. The foregoing brief description of the Consulting Agreement is qualified in its entirety by the more detailed provisions thereof. On July 16, 1999, the Company issued and sold 80,000 and 30,000 units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase approximately .68 share of Common Stock at an exercise price of $.75 per share on or prior to the expiration date thereof on July 16, 2002, to Ronald E. Patterson and Phillip T. Huss, respectively. A total of 75,000 shares of Common Stock underlying warrants included in the Units are not covered by the Registration Statement on Form S-3 of which this Prospectus is a part. The terms 22 of the transactions with Messrs. Patterson and Huss are described in more detail in Exhibits 4.22 and 4.23, respectively, to the Company's Registration Statement on Form S-3 of which this Prospectus is a part. The Company, on August 12, 1999, issued 100,000 shares of Common Stock and granted a warrant exercisable to purchase 20,000 shares of Common Stock at an exercise price of $.75 per share during the three-year period terminating on August 12, 2002, to Fidelity Funding, Inc. ("Fidelity"), pursuant to the Compromise, Settlement and Release Agreement dated August 12, 1999 (the "Settlement Agreement"). The Settlement Agreement obligates the Company to pay Fidelity the amount of $450,000 on or before February 1, 2000, together with interest monthly on the unpaid portion of said sum at the rate of twelve percent per annum in satisfaction of a default judgment in the amount of $449,810, together with attorneys' fees in the amount of approximately $10,323, prejudgment interest after June 9, 1998, at a per diem rate of approximately $362 and costs and post-judgment interest at the rate of fifteen percent per annum, entered in favor of Fidelity in that certain civil action styled Fidelity Funding, Inc. v. Pollution Research and Control Corporation, No. 98-02820-B, filed on or about April 7, 1998, in the 44th District Court, Dallas County, Texas. The Settlement Agreement provides for the proceeds of the sale of Fidelity's 100,000 shares of Common Stock in an amount up to $450,000, together with the amount of any accrued and unpaid interest thereon, to be paid to Fidelity and any sale proceeds in excess thereof to be paid to the Company. Any amount realized by Fidelity as a result of the exercise of the warrants is in addition to the amount of the Company's indebtedness to Fidelity as provided in the Settlement Agreement. The terms and conditions of the Settlement Agreement are set forth in their entirety in the Compromise, Settlement and Release Agreement dated August 12, 1999, a copy of which is incorporated herein by reference to Exhibit 4.25 to the Company's Form S-3 Registration Statement of which this Prospectus forms a part. The foregoing brief description of certain provisions of the Settlement Agreement is qualified in its entirety by the more detailed provisions thereof. On September 13, 1999, the Company issued and sold, in consideration for cash, 50,000 units, each unit consisting of one share of Common Stock and one warrant exercisable to purchase .5 share of Common Stock at an exercise price of $2.40 per share on or prior to the expiration date thereof on September 13, 2002, to Messrs. Lee N. and Steven Sion and Ms. Maria Molinsky, respectively. A total of 75,000 shares of Common Stock underlying warrants included in the Units are not covered by the Registration Statement on Form S-3 of which this Prospectus is a part. The terms of the unit sales are more fully described in the Investment Letters and Memorandum of Subscription/Purchase Agreements dated September 13, 1998, with Messrs. Lee N. and Steven Sion and Ms. Molinsky, copies of which are attached hereto as Exhibits 4.29, 4.30 and 4.28, respectively, to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998. Common Stock That May Be Offered by the Debenture Holders - --------------------------------------------------------- On May 19, 1999, the Company issued a $500,000 face amount subordinated convertible debenture, bearing interest at the rate of 18% per annum commencing June 1, 1999, due December 1, 1999, to The Venezuela Recovery Fund N.V. The debenture is convertible in denominations of $50,000 at the conversion price per each share of Common Stock of the lesser of $2.25 (115% of the market price of the Common Stock on May 28, 1999) or 80% of the market price of the Common Stock on the conversion date. The provisions of the debenture are set forth in their entirety in the 18% Subordinated Convertible Debenture Due December 1, 1999, dated May 19, 1999, a copy of which is incorporated herein by reference to Exhibit 4.19 to the Company's Form S-3 Registration Statement of which this Prospectus forms a part. The more detailed provisions of the debenture qualify this brief description thereof in its entirety. 23 The Company issued, on September 1, 1999, two $150,000 face amount subordinated convertible debentures, bearing interest at the rate of 12% per annum, due June 1, 2000, to Spiga Limited. The Debentures are convertible in denominations of $50,000 at the conversion price per each share of Common Stock of the lesser of $2.25 or 80% of the market price of the Common Stock on the conversion date. The provisions of the debentures are set forth in their entirety in each of the 12% Subordinated Convertible Debentures Due June 1, 2000, dated September 1, 1999, copies of which are incorporated herein by reference to Exhibits 4.26 and 4.27 to the Company's Form S-3 Registration Statement of which this Prospectus forms a part. The foregoing brief description of certain provisions of the debenture is qualified in its entirety by the more detailed provisions thereof. On September 1, 1999, PRCC also issued Spiga warrants exercisable through September 1, 2002, to purchase an aggregate of 45,000 shares of Common Stock at an exercise price of $2.25 per share. The shares of Common Stock underlying Spiga's warrants are not included in the shares of Common Stock covered by the Form S-3 Registration Statement of which this Prospectus forms a part. Transfer Agent and Registrar - ---------------------------- OTR, Inc., 1130 Southwest Morrison, Suite #250, Portland, Oregon 97205, is the Transfer Agent and Registrar for the Common Stock. LEGAL MATTERS Certain legal matters in connection with the validity of the issuance of the shares of Common Stock being offered hereby will be passed upon for the Company by Cudd & Associates, 1120 Lincoln Street, Suite #1310, Denver, Colorado 80203. Patricia Cudd, Esq., the sole proprietor of Cudd & Associates, owns of record and beneficially 100,000 shares of the Company's Common Stock and options exercisable to purchase a total of 10,000 shares of the Common Stock at an exercise price of $.75 per share during the period of four years from January 7, 1998, through January 6, 2002. The shares of Common Stock underlying Ms. Cudd's options are not included in the shares of Common Stock covered by the Registration Statement of which this Prospectus forms a part. The shares of Common Stock, including the shares underlying the options, owned of record and beneficially by Ms. Cudd represent approximately 2.8% of the issued and outstanding shares of the Company's Common Stock. EXPERTS The financial statements of the Company are incorporated herein by reference to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998. Such financial statements have been audited by A.J. Robbins, P.C., Certified Public Accountants and Consultants, independent auditors, as stated in their report that is incorporated herein by reference. 24 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. -------------------------------------------- The following is an itemized statement of the expenses incurred in connection with this Registration Statement and the issuance and distribution of the shares of Common Stock being registered hereby. All such expenses will be paid by the Company. Securities and Exchange Commission registration fee ............ $ 823 Legal fees and expenses ........................................ 20,000 Accounting fees and expenses.................................... 1,500 Blue sky fees and expenses ..................................... 4,000 Transfer agent fees and expenses................................ 3,000 Printing, electronic filing and engraving expenses.............. 3,000 Miscellaneous expenses.......................................... 2,000 ------- TOTAL........................................................... $34,323 All of the above items except the Securities and Exchange Commission registration and NASD fees are estimates. Item 15. Indemnification of Directors and Officers. ------------------------------------------ The Company's Articles of Incorporation, as amended, provide for (i) the elimination of directors' liability for monetary damages for certain breaches of their fiduciary duties to the Company and its shareholders as permitted by California law; and (ii) permit the indemnification by the Company to the fullest extent under California law. At present, there is no pending litigation or proceeding involving a director or officer of the Company as to which indemnification is being sought. Section 317 of the California Corporations Code, as amended, provides for the indemnification of the officers, directors and controlling persons of a corporation as follows: "(a) For the purposes of this section, "agent" means any person who is or was a director officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and "expenses" includes without limitation attorneys' fees and any expenses of establishing a right to indemnification under subdivision (d) or paragraph (3) of subdivision (e). (b) A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor, an action brought under Section 9243, or an action brought by the Attorney General pursuant to Section 9230) by reason of the fact that such person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if such person acted in good faith and in a manner such person believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such 25 person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person believed to be in the best interests of the corporation or that the person had reasonable cause to believe that the person's conduct was unlawful. (c) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the corporation, or brought under Section 9243, or brought by the Attorney General pursuant to Section 9230, to procure a judgment in its favor by reason of the fact that such person is or was an agent of the corporation, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if the person acted in good faith, in a manner in which such person believed to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances. No indemnification shall be made under this subdivision: (1) In respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation in the performance of such person's duty to the corporation, unless and only to the extent that the court in which such proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for the expenses which such court shall determine; (2) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; or (3) Of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval unless it is settled with the approval of the Attorney General. (d) To the extent that an agent of a corporation has been successful on the merits in defense or any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith. (e) Except as provided in subdivision (d), any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in either subdivision (b) or (c) by: (l) A majority vote of a quorum consisting of directors who are not parties to such proceedings; (2) Approval of the members (Section 5034), with the persons to be indemnified not being entitled to vote thereon; or (3) The court in which such proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not such application by the agent, attorney or other person is approved by the corporation. 26 (f) Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of the agent to repay such amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this section. (g) No provision made by a corporation to indemnify its or its subsidiary's directors or officers for the defense of any proceeding, whether contained in the articles, bylaws, a resolution of members or directors, an agreement or otherwise, shall be valid unless consistent with this section. Nothing contained in this section shall affect any right to indemnification to which persons other than such directors and officers may be entitled by contract or otherwise. (h) No indemnification or advance shall be made under this section, except as provided in subdivision (d) or paragraph (3) of subdivision (e), in any circumstances where it appears that: (1) It would be inconsistent with a provision of the articles, bylaws, a resolution or the members or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (2) It would be inconsistent with any condition expressly imposed by a court in approving a settlement. (i) A corporation shall have power to purchase and maintain insurance on behalf of any agent of the corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agent's status as such whether or not the corporation would have the power to indemnify the agent against such liability under the provisions of this section; provided, however, that a corporation shall have no power to purchase and maintain such insurance to indemnify any agent of the corporation for a violation of Section 9243. (j) This section does not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in such person's capacity as such, even though such person may also be an agent as defined in subdivision (a) of the employer corporation. A corporation shall have power to indemnify such trustee, investment manager or other fiduciary to the extent permitted by subdivision (f) or Section 207." Item 16. Exhibits. --------- The Exhibit Index commences on page 31. Item 17. Undertakings. ------------- (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; 27 (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. 28 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Glendale, State of California, on September 23, 1999. Date: September 23, 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 Directors POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Albert E. Gosselin, Jr., and Marcia A. Smith, or either one of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all pre- or post-effective amendments to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Date: September 23, 1999 /s/ Albert E. Gosselin, Jr. ------------------------------------ Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board Directors (Principal Executive Officer) Date: September 23, 1999 /s/ Gary L. Dudley ------------------------------------- Gary L. Dudley, Director Date: September 23, 1999 /s/ Marcia A. Smith ------------------------------------ Marcia A. Smith, Director 29 Date: September 23, 1999 /s/ Craig E. Gosselin ------------------------------------ Craig E. Gosselin, Director Date: September 23, 1999 /s/ Barry Soltani ------------------------------------ Barry Soltani, Director 30 EXHIBIT INDEX The following Exhibits are filed as part of this Registration Statement on Form S-3 or are incorporated herein by reference.
Item Number Description - ------ ----------- 4.1 Investment Letter and Memorandum of Subscription/Purchase Agreement to Purchase 40,000 shares of Class "A" Convertible Preferred Stock, dated May 8, 1998, between Pollution Research and Control Corp. and Gary L. Dudley. (Incorporated herein by reference to Exhibit 10.156 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.2 Investment Letter and Memorandum of Subscription/Purchase Agreement to Purchase 400,000 shares of Class "A" Convertible Preferred Stock, dated May 8, 1998, between Pollution Research and Control Corp. and Patricia Cudd. (Incorporated herein by reference to Exhibit 10.155 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.3 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 68,810 shares of Common Stock, dated as of June 19, 1998, between Pollution Research and Control Corp. and Ronald E. Patterson. (Incorporated herein by reference to Exhibit 10.159 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.4 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 23,190 shares of Common Stock, dated as of June 19, 1998, between Pollution Research and Control Corp. and Ronald E. Patterson. (Incorporated herein by reference to Exhibit 10.158 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.5 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 23,000 shares of Common Stock, dated as of June 19, 1998, between Pollution Research and Control Corp. and Fred J. Zalokar. (Incorporated herein by reference to Exhibit 10.161 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.6 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 20,000 shares of Common Stock, dated June 19, 1998, between Pollution Research and Control Corp. and William T. Richey. (Incorporated herein by reference to Exhibit 10.157 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.7 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 18,000 shares of Common Stock, dated June 19, 1998, between Pollution Research and Control Corp. and Alan L. Talesnick. (Incorporated herein by reference to Exhibit 10.164 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 31 Item Number Description - ------ ----------- 4.8 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 9,174 shares of Common Stock, dated June 19, 1998, between Pollution Research and Control Corp. and Frank T. Anaya. (Incorporated herein by reference to Exhibit 10.162 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.9 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 133,333 units consisting of 133,333 shares of Common Stock and 133,333 warrants to purchase Common Stock, dated as of February 25, 1999, between Pollution Research and Control Corp. and Ronald E. Patterson. (Incorporated herein by reference to Exhibit 10.174 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.10 Investment Letter and Memorandum of Subscription/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 T. Huss. (Incorporated herein by reference to Exhibit 10.175 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.11 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 33,333 units consisting of 33,333 shares of Common Stock and 33,333 warrants to purchase Common Stock, dated as of February 25, 1999, between Pollution Research and Control Corp. and Maria Molinsky. 4.12 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 25,000 units consisting of 25,000 shares of Common Stock and 25,000 warrants to purchase Common Stock, dated as of February 25, 1999, between Pollution Research and Control Corp. and William T. Richey. (Incorporated herein by reference to Exhibit 10.173 to the Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.) 4.13 Investment Letter and Memorandum of Subscription/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. 4.14 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 9,333 units consisting of 9,333 shares of Common Stock and 9,333 warrants to purchase Common Stock, dated as of February 25, 1999, between Pollution Research and Control Corp. and Jennifer S. Jauregui. 32 4.15 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 6,666 units consisting of 6,666 shares of Common Stock and 6,666 warrants to purchase Common Stock, dated as of February 25, 1999, between Pollution Research and Control Corp. and Cynthia L. Gosselin. 4.16 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 133,333 shares of Common Stock, dated May 19, 1999, between Pollution Research and Control Corp. and The Investor Resource Services, Inc. 4.17 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 66,667 shares of Common Stock, dated May 19, 1999, between Pollution Research and Control Corp. and Trautman Wasserman & Company, Inc. 4.18 18% Subordinated Convertible Debenture Due December 1, 1999, dated May 19, 1999, between Pollution Research and Control Corp. and The Venezuela Recovery Fund, N.V. 4.19 Financial Consulting and Services Agreement dated May 20, 1999, between Pollution Research and Control Corp. and Premiere Equities, Inc. 4.20 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 100,000 shares of Common Stock, dated May 27, 1999, between Pollution Research and Control Corp. and Blagoja Samakoski. 4.21 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 80,000 shares of Common Stock, dated July 16, 1999, between Pollution Research and Control Corp. and Ronald E. Patterson. 4.22 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 30,000 shares of Common Stock, dated July 16, 1999, between Pollution Research and Control Corp. and Phillip T. Huss. 4.23 Lock-up Agreement, dated August 12, 1999, between Pollution Research and Control Corp. and Mr. Albert E. Gosselin, Jr. 4.24 Compromise, Settlement and Release Agreement dated August 12, 1999, between Pollution Research and Control Corp. and Fidelity Funding, Inc. 4.25 Escrow Agreement dated August 12, 1999, among Pollution Research and Control Corp., Fidelity Funding, Inc., and American Escrow Company. 33 4.26 12% Subordinated Convertible Debenture Due June 1, 2000, dated September 1, 1999, between Pollution Research and Control Corp. and Spiga Limited. 4.27 12% Subordinated Convertible Debenture Due June 1, 2000, dated September 1, 1999, between Pollution Research and Control Corp. and Spiga Limited. 4.28 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 50,000 shares of Common Stock, dated September 13, 1999, between Pollution Research and Control Corp. and Maria Molinsky. 4.29 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 50,000 shares of Common Stock, dated September 13, 1999, between Pollution Research and Control Corp. and Lee Sion. 4.30 Investment Letter and Memorandum of Subscription/Purchase Agreement to purchase 50,000 shares of Common Stock, dated September 13, 1999, between Pollution Research and Control Corp. and Steven Sion. 5.0* Opinion and Consent of Cudd & Associates. 23.1* Consent of Cudd & Associates (included in Exhibit 5.0 hereto). 23.2 Consent of A.J. Robbins, P.C., Certified Public Accountants and Consultants, independent auditors. 25.0 Power of Attorney (included on the signature page hereto). - ------------------ * To be filed by amendment.
34 EX-4.11 2 INVESTMENT LETTER Exhibit 4.11 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 33,333 units consisting of 33,333 shares of common stock, no par value per share (the "Common Stock"), and 33,333 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 $25,000 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 ss.4(1) or ss. 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 Pollution Research and Control Corp. February 25, 1999 Page 2 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. 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 Pollution Research and Control Corp. February 25, 1999 Page 3 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) 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 of 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 Pollution Research and Control Corp. February 25, 1999 Page 4 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 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 ----- ----- ----- ----- 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 is as follows: Pollution Research and Control Corp. February 25, 1999 Page 5 B.S. Degree University of Hartford - graduated 1984 --------------------------------------------------------------------------- --------------------------------------------------------------------------- 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. 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: Pollution Research and Control Corp. February 25, 1999 Page 6 ( ) 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 ( ) $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. Pollution Research and Control Corp. February 25, 1999 Page 7 The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Maria Molinsky - ------------------------------------- Maria Molinsky 303 Silver Creek Lane, Norwalk, Connecticut 06850 - -------------------------------------------------------------------------------- Current residence address ###-##-#### (203) 846-8675 - ---------------------------------- ----------------------------------------- Social security number Current residence telephone number Housewife & mother Al Gosselin - ---------------------------------- ----------------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment None - ---------------------------------- ----------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative - ----------------------------------- ----------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Pollution Research and Control Corp. February 25, 1999 Page 8 Agreed and accepted this 22nd day of March, 1999 on behalf of Pollution Research and Control Corp. /s/ Albert E. Gosselin, Jr. - ------------------------------------------ Albert E. Gosselin, Jr., President and CEO 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. EX-4.13 3 INVESTMENT LETTER Exhibit 4.13 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 ss.4(1) or ss.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. Pollution Research and Control Corp. February 25, 1999 Page 2 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) 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 of 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. Pollution Research and Control Corp. February 25, 1999 Page 3 (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 than 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 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): Pollution Research and Control Corp. February 25, 1999 Page 4 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 is as follows: M.B.A. 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. 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. Pollution Research and Control Corp. February 25, 1999 Page 5 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 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 Pollution Research and Control Corp. February 25, 1999 Page 6 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 the intent, understanding and acknowledgements of the undersigned. /s/ Alan Talesnick - ------------------------------------ 5030 Bow Mar Drive, Littleton, Colorado 80123 - -------------------------------------------------------------------------------- Current residence address ###-##-#### (303) 795-5990 - ---------------------------------- ---------------------------------------- Social security number Current residence telephone number Securities Attorney Phillip Huss - ---------------------------------- ---------------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment (303) 830-1776 - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative Patton Boggs LLP 2 years - ----------------------------------- ---------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Agreed and accepted this 18th day of March, 1999 on behalf of Pollution Research and Control Corp. /s/ Albert E. Gosselin, Jr. - ----------------------------------------- Albert E. Gosselin, Jr., President and CEO 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. EX-4.14 4 INVESTMENT LETTER Exhibit 4.14 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 9,333 units consisting of 9,333 shares of common stock, no par value per share (the "Common Stock") and 9,333 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 $7,000.00 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 ss.4(1) or ss.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. Pollution Research and Control Corp. February 25, 1999 Page 2 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) 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 of 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. Pollution Research and Control Corp. February 25, 1999 Page 3 (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 than 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 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): Pollution Research and Control Corp. February 25, 1999 Page 4 Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently ----- ----- ----- ----- 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 is as follows: --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- 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. 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. Pollution Research and Control Corp. February 25, 1999 Page 5 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: (x) Less than 1% ( ) 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 ( ) $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, Pollution Research and Control Corp. February 25, 1999 Page 6 the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses the intent, understanding and acknowledgements of the undersigned. /s/ Jennifer Jauregui - ----------------------------------- 2658 Mayfield Avenue, La Crescenta, California 91214 - -------------------------------------------------------------------------------- Current residence address ###-##-#### (818) 957-1323 - ----------------------------------- ---------------------------------------- Social security number Current residence telephone number Accountant Phil Huss - ----------------------------------- ---------------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment (323) 938-6000 - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- (currently on maternity leave) mentioned Company representative Sutton Barth & Vennari - ----------------------------------- ---------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Agreed and accepted this 24th day of March, 1999 on behalf of Pollution Research and Control Corp. /s/ Albert E. Gosselin, Jr. - ------------------------------------------ Albert E. Gosselin, Jr., President and CEO 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. EX-4.15 5 INVESTMENT LETTER Exhibit 4.15 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 6,666 units consisting of 6,666 shares of common stock, no par value per share (the "Common Stock") and 6,666 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 $5,000.00 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 ss.4(1) or ss.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. Pollution Research and Control Corp. February 25, 1999 Page 2 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) 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 of 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. Pollution Research and Control Corp. February 25, 1999 Page 3 (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 than 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 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): Pollution Research and Control Corp. February 25, 1999 Page 4 Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently ----- ----- ----- ----- 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 is as follows: --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- 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. 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. Pollution Research and Control Corp. February 25, 1999 Page 5 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 -- ( ) 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% -- ( ) 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 -- ( ) 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 -- ( ) 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, Pollution Research and Control Corp. February 25, 1999 Page 6 the undersigned hereby reaffirms his acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses the intent, understanding and acknowledgements of the undersigned. /s/ Cynthia L. Gosselin - ----------------------------------- 5604 Ocean View Boulevard, La Canada, California 91011 - -------------------------------------------------------------------------------- Current residence address ###-##-#### (818) 957-5911 - ----------------------------------- ---------------------------------------- Social security number Current residence telephone number Controller - ----------------------------------- ---------------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment (818) 247-7601 - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative Dasibi Environmental 7 years - ----------------------------------- ---------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Agreed and accepted this 23rd day of March, 1999 on behalf of Pollution Research and Control Corp. /s/ Albert E. Gosselin, Jr. - ------------------------------------------ Albert E. Gosselin, Jr., President and CEO 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. EX-4.16 6 INVESTMENT LETTER Exhibit 4.16 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT May 19, 1999 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned, The Investor Resources Services, Inc., of 133,333 shares of common stock, no par value per share (the "Common Stock"), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $100,000.00 in cash, the undersigned wishes to advise you of its 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 ss.4(1) or ss.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 it is acquiring such securities for investment for its own account, with no present intention of dividing its 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 it 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. The undersigned further acknowledges that it 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 Pollution Research and Control Corp. February 25, 1999 Page 2 Company that this Rule will be applicable), then it 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 it understands that, if Rule 144 is applicable (no assurance of which can be made), it may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if it 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 it 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 it. The undersigned also has been advised and acknowledges that it understands that, in the event Rule 144 is not available, the circumstances under which it can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that it is purchasing the securities for its own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are its own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to it which would preclude its acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that it 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 it 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 it may lose its entire investment in the Company. The undersigned further acknowledges and represents to the Company that it is able to bear the economic risk of losing its entire investment. The undersigned further acknowledges and warrants that its overall commitment to investments which are not readily marketable is not disproportionate to its net worth and its investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that it has adequate means of providing for its current needs and personal contingencies and that it has no need for liquidity in connection with its investment in the securities. The undersigned further acknowledges that it fully understands and agrees that the price of the Company's securities acquired by it 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 it for the securities. The undersigned further acknowledges and represents to the Company that it 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): Pollution Research and Control Corp. February 25, 1999 Page 3 Restricted High Technology Stocks Stocks Companies Other ------ ------ --------- ----- Frequently x x x ----- ----- ----- ----- Occasionally x ----- ----- ----- ----- Never ----- ----- ----- ----- The undersigned further acknowledges that it is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Company; that it has been advised by the Company to consult with counsel regarding this investment; and that it has relied upon the advice of such counsel, accountants or other consultants as it deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders it capable of evaluating the merits and risks of this investment is as follows: Partner in accounting & tax practice. ----------------------------------------------------------------------- President of 4 consulting companies that have stock investments. ----------------------------------------------------------------------- ----------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as it considers necessary and appropriate to enable it to make an informed decision regarding its investment. Prior to making its 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 it. Prior to making its investment, the undersigned made arrangements to conduct such inspection as it 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 its 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 its shares is for investment purposes only. Pollution Research and Control Corp. February 25, 1999 Page 4 On the date the undersigned acquired the securities, it had a net worth 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 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 ( ) $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 it 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 it has fully satisfied itself with respect to the nature of this investment. The undersigned further warrants and represents that it 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 it. The undersigned hereby represents and warrants that it 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 it has made other investments in speculative businesses and is generally familiar with "restricted" securities and it is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms its acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. Pollution Research and Control Corp. February 25, 1999 Page 5 The foregoing correctly expresses the intent, understanding and acknowledgements of the undersigned. THE INVESTOR RESOURCE SERVICES, INC. By: /s/ Dan Starczewski ---------------------------------------- Dan Starczewski, President 932 Burke Street, Winston-Salem, North Carolina 27101 - -------------------------------------------------------------------------------- Current address 59-3152101 (336) 918-0509 - ----------------------------------- ---------------------------------------- Tax identification number Current business telephone number President - ----------------------------------- ---------------------------------------- Current business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment - ----------------------------------- ---------------------------------------- Length of relationship, if any, Relationship, if any, with the above- with the Above-mentioned Company mentioned Company representative representative 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. EX-4.17 7 INVESTMENT LETTER Exhibit 4.17 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT May 19, 1999 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned, Trautman Wasserman & Company, Inc., of 66,667 shares of common stock, no par value per share (the "Common Stock"), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $50,000.00 in cash, the undersigned wishes to advise you of its 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 ss.4(1) or ss.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 it is acquiring such securities for investment for its own account, with no present intention of dividing its 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 it 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. The undersigned further acknowledges that it 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 Pollution Research and Control Corp. May 19, 1999 Page 2 Company that this Rule will be applicable), then it 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 it understands that, if Rule 144 is applicable (no assurance of which can be made), it may sell the securities without quantity limitation in sales not involving a market maker or through brokerage transactions only if it 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 it 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 it. The undersigned also has been advised and acknowledges that it understands that, in the event Rule 144 is not available, the circumstances under which it can sell the securities, absent registration or compliance with Regulation A, are extremely limited. The undersigned further acknowledges and represents to the Company that it is purchasing the securities for its own account and not as a trustee or nominee for any other person or persons, and that the funds or consideration invested are its own. The undersigned further acknowledges and represents that there are no existing legal restrictions applicable to it which would preclude its acquisition of the securities for investment purposes, as described hereinabove. The undersigned further represents that it 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 it 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 it may lose its entire investment in the Company. The undersigned further acknowledges and represents to the Company that it is able to bear the economic risk of losing its entire investment. The undersigned further acknowledges and warrants that its overall commitment to investments which are not readily marketable is not disproportionate to its net worth and its investment in the securities will not cause such overall commitment to become excessive. The undersigned further represents that it has adequate means of providing for its current needs and personal contingencies and that it has no need for liquidity in connection with its investment in the securities. The undersigned further acknowledges that it fully understands and agrees that the price of the Company's securities acquired by it 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 it for the securities. The undersigned further acknowledges and represents to the Company that it 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 Pollution Research and Control Corp. May 19, 1999 Page 3 (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 it is capable of evaluating the merits and risks of the Company. The undersigned further acknowledges that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Company; that it has been advised by the Company to consult with counsel regarding this investment; and that it has relied upon the advice of such counsel, accountants or other consultants as it deems necessary with regard to tax aspects, risks and other considerations involved in the investment. The undersigned's educational and occupational background which renders it capable of evaluating the merits and risks of this investment is as follows: Registered B/D --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- The undersigned has made, or caused to be made, such investigation of the Company, its management and its operations as it considers necessary and appropriate to enable it to make an informed decision regarding its investment. Prior to making its 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 it. Prior to making its investment, the undersigned made arrangements to conduct such inspection as it 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 its 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 its shares is for investment purposes only. Pollution Research and Control Corp. May 19, 1999 Page 4 On the date the undersigned acquired the securities, it had a net worth 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 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 it is acquiring and the nature of the management, financial condition and all other pertinent factors regarding the Company and this investment. The undersigned further represent and warrants that it has fully satisfied itself with respect to the nature of this investment. The undersigned further warrants and represents that it 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 it. The undersigned hereby represents and warrants that it 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 it has made other investments in speculative businesses and is generally familiar with "restricted" securities and it is otherwise knowledgeable with respect to the Company and its proposed operations. Based upon the foregoing understandings, the undersigned hereby reaffirms its acquisition of the securities described in this Investment Letter and Memorandum of Subscription/Purchase Agreement. The foregoing correctly expresses the intent, understanding and acknowledgements of the undersigned. TRAUTMAN WASSERMAN & COMPANY, INC. By: /s/ Gregory Trautman ------------------------------------ Gregory Trautman, President 500 Fifth Avenue, Suite 1440, New York, New York 10110 - -------------------------------------------------------------------------------- Current address 13-3713783 (212) 575-5500 - ----------------------------------- ---------------------------------------- Tax identification number Current business telephone number - ----------------------------------- ---------------------------------------- Current business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment - ----------------------------------- ---------------------------------------- Length of relationship, if any, Relationship, if any, with the above- with the Above-mentioned Company mentioned Company representative representative EX-4.18 8 DEBENTURE Exhibit 4.18 DEBENTURE NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS DEBENTURE (COLLECTIVELY, THE "SECURITIES") HAS BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT) OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR ARE PERMITTED UNDER THE ACT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQU1REMENTS OF THOSE LAWS. $500,000 POLLUTION RESEARCH AND CONTROL CORP. 18% SUBORDINATED CONVERTIBLE DEBENTURE DUE DECEMBER 1, 1999 THIS DEBENTURE is the only one of a duly authorized issue of $500,000 in Debentures of Pollution Research and Control Corp., a corporation duly organized and existing under the laws of California (the "Company"), designated as its 18% Subordinated Convertible Debenture Due December 1, 1999 (the "Debenture"). FOR VALUE RECEIVED, the Company promises to pay to The Venezuela Recovery Fund N.V., the registered holder hereof (the "Holder"), the principal sum of Five Hundred Thousand Dollars (US $500,000) Dollars on December 1, 1999 (the "Maturity Date") and to pay interest on a monthly basis on the principal sum outstanding, at the rate of 18% per annum commencing June 1, 1999. Subject to the provisions of Section 4 below, the principal of, and interest on, this Debenture are payable at the option of the Holder, in shares of Common Stock $.01 par value per share of the Company ("Common Stock"), or in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time. The Company will pay the outstanding principal due upon this Debenture before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Debenture by check if paid more than ten days prior to the Maturity Date or by wire transfer and addressed to such Holder at the last address appearing on the Debenture Register. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Debenture to the extent of the sum represented by such check or wire transfer. 453480-2 6/1/99 This Debenture is subject to the following additional provisions: 1. The Debenture is issuable in denominations of Fifty Thousand Dollars (US$50,000) and integral multiples thereof. The Debenture is exchangeable for an equal aggregate principal amount of debentures of different authorized denominations (the "Debentures"), as requested by the Holder(s) surrendering the same, but not less than US$50,000. No service charge will be made for such registration, transfer or exchange, except that the Holder shall pay any tax or other governmental charges payable in connection therewith. 2. The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith. 3. This Debenture may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Act"), and applicable state securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. 4. The Holder of this Debenture is entitled, at its option, at any time immediately following execution of this Agreement and delivery of the Debenture, to convert all or any amount over $50,000 of the principal face amount of this Debenture then outstanding (provided that the principal amount is at least US$50,000, unless if at the time of such election to convert the aggregate principal amount of all Debentures registered to the Holder is less than US$50,000, then the whole amount thereof) into shares of Common Stock. The conversion price (the "Conversion Price") for each share of Common Stock shall be equal to the lesser of (a) 80% of the Market Price of the Common Stock on the Conversion Date; or (b) 115% of the Market Price of the Common Stock on May 28, 1999. The shares of the Company's Common Stock issued upon conversion of this Debenture shall hereinafter be referred to as the "Conversion Shares." If the number of resultant Conversion Shares would as a matter of law or pursuant to regulatory authority require the Company to seek shareholder approval of such issuance, the Company shall, as soon as practicable, take the necessary steps to seek such approval. For purposes of this Section 4, the Market Price of the Common Stock shall be the closing bid price of the Common Stock on the Conversion Date as reported by Nasdaq, or the closing bid price on the over-the-counter market on such date or, in the event the Common Stock is listed on a stock exchange, the closing bid price shall be the closing price on the exchange on such date as reported in the Wall Street Journal. Conversion shall be effectuated by surrendering the Debentures to be converted to the Company with the form of conversion notice attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing such Holder's intention to convert this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Interest accrued or accruing from the date of 453480-2 -2- 6/1/99 issuance to the date of conversion shall, at the option of the Holder, be paid in cash or Common Stock upon conversion at the Conversion Rate. No fraction of Shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The date on which notice of conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder has delivered this Debenture, with the conversion notice duly executed, to the Company or, the date set forth in such facsimile delivery of the notice of conversion if the Debenture is received by the Company within two (2) business days therefrom. Facsimile delivery of the conversion notice shall be accepted by the Company at (818-247-7614); ATTN: Albert Gosselin). Certificates representing Common Stock upon conversion will be delivered within three (3) business days from the date the notice of conversion with the original Debenture is delivered to the Company. 5. No provision of the Debenture shall alter or impair the obligation of the Company, which is direct, absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the form, herein prescribed. 6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto. 7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees, which may be incurred by the Holder in collecting any amount due under this Debenture. 8. The following shall constitute an "Event of Default": (a) The Company shall default in the payment of principal or interest on this Debenture and such default shall remain unremedied for five (5) business days after the Company has been notified of the default in writing by a Holder; or (b) Any of the representations or warranties made by the Company herein, and in the Registration Rights Agreement or in any certificate or financial or other written statements furnished by or on behalf of the Company in connection with the execution and delivery of this Debenture and the Registration Rights Agreement shall be false or misleading in any material respect at the time made; or (c) The Company fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock 453480-2 -3- 6/1/99 upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Debenture, fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to the Holder upon conversion of this Debenture and when required by this Debenture or the Registration Rights Agreement, or fails to remove any restrictive legend or to cause its Transfer Agent to transfer on any certificate or any shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture, the Securities Purchase Agreement or the Registration Rights Agreement and any such failure shall continue uncured for five (5) business days after the Company has been notified of such failure in writing by Holder. (d) The Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of the Company under his Debenture and such failure shall continue uncured for a period of thirty (30) days after notice from the Holder or such failure; or (e) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for it dissolution; or (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or (f) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or (g) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days thereafter; or 453480-2 -4- 6/1/99 (h) Any money judgment, writ warrant of attachment, or similar process, in excess of One Hundred Thousand ($100,000) Dollars in the aggregate shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (i) Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (30) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; or (j) The Company shall have its Common Stock suspended or delisted from an exchange or over-the-counter market from trading for in excess of five trading days. Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein and any other rights or remedies afforded by law. 9. The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities. 10. Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof. 453480-2 -5- 6/1/99 11. This Debenture represents a prioritized obligation of the Company. However, no recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 12. If the Company merges or consolidates with another corporation or sells or transfers all or substantially all of its assets to another person and the holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock, then as a condition of such merger, consolidation, sale or transfer, the Company and any such successor, purchaser or transferee agree that the Debenture may thereafter be converted on the terms and subject to the conditions set forth above into the kind and amount of stock, securities or property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall be as nearly equivalent as may be practicable. In the event of any proposed merger, consolidation or sale or transfer of all or substantially all of the assets of the Company (a "Sale"), the Holder hereof shall have the right to convert by delivering a Notice of Conversion to the Company within fifteen (15) days of receipt of notice of such Sale from the Company. In the event the Holder hereof shall elect not to convert, the Company may prepay all outstanding principal and accrued interest on this Debenture, less all amounts required by law to be deducted, upon which tender of payment following such notice, the right of conversion shall terminate. 13. Concurrently with the execution and delivery of this Debenture, the parties hereto will execute and deliver a Registration Rights Agreement in which the Company will undertake to register the Conversion Shares under the Securities Act of 1933. 14. In case any provision of this Debenture is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Debenture will not in any way be affected or impaired thereby. 15. This Debenture and the agreements referred to in this Debenture constitute the full and entire understanding and agreement between the Company and the Holder with respect to the subject hereof. Neither this Debenture nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder. 453480-2 -6- 6-1/99 16. This Debenture shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non coveniens, to the bringing of any such proceeding in such jurisdictions. At Holder's election, any dispute between the parties may be arbitrated rather than litigated in the courts, before the arbitration board of the American Arbitrators Association in New York City and pursuant to its rules. Upon demand made by the Holder to the Company, the Company agrees to submit to and participate in such arbitration. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by an officer thereunto duly authorized. Dated: May 19, 1999 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. ---------------------------------------- Albert E. Gosselin, President 453480-2 -7- 6/1/99 EXHIBIT I NOTICE OF CONVERSION (To be Executed by the Registered Holder in order to Convert the Debenture) The undersigned hereby irrevocably elects to convert $________ of the above Debenture No. _____________________into shares of Common Stock of Pollution Research and Control Corp. (the "Company") according, to the conditions set forth in such Debenture, as of the date written below. If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other Taxes and charges payable with respect thereto. Date of Conversion______________________________________________________________ Applicable Conversion Price_____________________________________________________ Signature_______________________________________________________________________ Print Name Holder and Title of Signer___________________________________________ Address_________________________________________________________________________ _________________________________________________________________________ SSN or EIN______________________________________________________________________ Shares are to be registered in the following name: Name____________________________________________________________________________ Address_________________________________________________________________________ Tel.____________________________________________________________________________ Fax_____________________________________________________________________________ SSN or EIN______________________________________________________________________ Shares are to be sent or delivered to following account: Account Name____________________________________________________________________ Address_________________________________________________________________________ 453480-2 -8- 6/1/99 EX-4.19 9 FINANCIAL CONSULTING AND SERVICES AGREEMENT Exhibit 4.19 FINANCIAL CONSULTING AND SERVICES AGREEMENT ------------------------------------------- THIS AGREEMENT is dated May 20, 1999, by and between Premiere Equities, Inc., a Florida corporation of 6278 N. Federal Highway, Suite 385, Ft. Lauderdale Florida 33308 ("Consultant"), and Pollution Research and Control Corp. having its principal address at 506 Paula Avenue, Glendale, California. WITNESSETH: ----------- Consultant is engaged in the business of, among other things, providing financial consulting, and business advisory services, and the Company seeks these services for the Company; and NOW, THEREFORE, the parties hereto agree as follows: 1. Services. Consultant shall, during the term of this Agreement, provide the following services to the Company: a). Consultant shall analyze and provide advice as to both short and long term business plans and assist with respect to shareholder relations; b). Consultant shall provide all the consulting services described herein directly to management of the Company (while the Consultant is authorized to speak to and consult with others, the Consultant does not have any right or power to bind the Company to any matter whatsoever or to make any representation pertaining to the Company whatsoever); and c). Consultant shall provide such general consulting services as may be reasonably requested by the Company, from time to time, during the term. The Consultant is not authorized or empowered to commit the Company to any recommendations or course of action, or any agreement, promise, or representation. Consultant shall be available, included by receiving telephone calls. Consultants shall also be available to review and receive information concerning the Company, by fax or telephone during normal business hours. Consultant shall be fully responsible for complying with all applicable laws and regulations concerning the activities of the Consultant, including the business and operations of the Consultant. 2. Consulting compensation. In consideration for the services to be provided by the Consultant pursuant to Section 1 above, the Consultant shall be paid by the Company a fee of $75,000 annually, ($40,000 upon execution of contract, due immediately), monthly payments on the 1st day of each month for 3181.81 (11 monthly payments totaling $35,000 for the first year), 50,000 free trading, non-legend shares of stock of the Company, and 85,500 free trading non-legend warrants, to be delivered to Consultant immediately. (All shares being the "Shares" and "Warrants" herein). Consultant hereby directs the Company to issue all Shares and Warrants in the name of Premiere Equities, Inc. 1 3. Indemnification. The Company shall indemnify and hold harmless the Consultant as to and, against all losses, claims, damages, liabilities, and expenses (including reasonable attorney's fees) caused by any untrue or alleged fact required to be stated therein or necessary to make the statements therein not misleading as to the public filings of the Company; provided, however, that the Company will not be liable in any such case to the extent that such item arises out of or is based upon an untrue statement or alleged untrue statement, prospectus or preliminary prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in reliance upon, and in conformity with, information furnished to the Company by Consultant, and/or in any case Consultant is aware of the problem. 4. Term. The term of this Agreement shall be for an initial term (the "Initial Term") of twelve (12) months commencing on the date first set forth above. For the second and third years, annual compensation of $75,000 ($40,000 the first month and 11 monthly payments of 3181.81). Either party upon at least 60 days' prior written notice may terminate this Agreement, but no termination shall eliminate the Consultant's right to the Shares herein. 5. Non-Exclusive. Consultant shall devote such of its time and effort as Consultant deems necessary or desirable to the discharge of its duties hereunder. The Company acknowledges that Consultant is engaged in other business activities and that it will continue such activities during the term of this Agreement. Consultant shall not be restricted from engaging in other business activities during the term of this Agreement. This is a non-exclusive Agreement. 6. Confidentiality. Consultant shall, and shall cause officers, directors, employees and agents of Consultant to, hold confidential and not publish, disclose or make accessible to any other person not bound by an obligation of confidentiality, all confidential information, if any, which Consultant or any of its officers, directors, employees, or agents may, from time-to-time, possess relating to financial condition, results of operation, business, property, assets or liabilities of the Company, provided, however, the restrictions of this sentence shall not apply to information that (I) is publicly available, (II) already is known to Consultant at the time of disclosure, or (III) is received from a third party not under any obligation of confidentiality to the Company. 7. Benefit, Burden, and Assignment. The provisions herein shall enure to the benefit of, and be binding upon, the parties hereto and their permitted assigns and successors. This Agreement may be assigned without the prior written consent of all parties hereto. 8. Severability. If any provision of this Agreement shall be deemed by any court of competent jurisdiction invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision in any other circumstance shall not be affected thereby and each provision shall otherwise be valid and shall be enforced to the fullest extent permitted by applicable law. 9. Governing Law. The laws of the State of Florida, U.S.A. shall govern this Agreement, and the venue for any action, claim or proceeding in connection with this Agreement shall be a court of competent jurisdiction in Broward County, Florida. 2 10. Entire Agreement. This Agreement sets forth all of the promises, agreements, conditions, understandings, warranties and representations among the parties with respect to the subject matter hereof. This Agreement is, and is intended by the parties to be, an integration of any and all prior agreements and understandings, oral, written, express or implied with respect to the subject matter hereof. 11. Captions. Captions in this Agreement are for convenience of reference only and shall not be used in the interpretation. 12. Independent Legal Counsel. The parties agree and acknowledge that they have been represented by independent legal counsel, or have had the opportunity to obtain independent legal counsel, have been advised that it is in their best interests to do so, and by execution of this Agreement have waived the right. 13. Amendment and Modification. No amendment or modification to this Agreement shall be valid unless in writing and signed by the parties hereto. 14. Ambiguities. The parties hereby acknowledge that the normal rule of construction to the effect that ambiguities in an agreement are constructed against the drafting party shall not apply to this Agreement. 15. Cooperation. Each party hereby agrees to provide such reasonable cooperation and execute such reasonable documents as shall be reasonably required or requested by the other party hereto to perform the Agreement. 16. Written Provisions. Hand-written provisions hereto initiated by the parties hereto shall control to the extent of any conflict with the typed provisions herein. 17. Execution. This Agreement may be executed via facsimile and in counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. PREMIERE EQUITIES, INC. POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Stephen F. Larkin By: /s/ Albert E. Gosselin, Jr. ------------------------------- ---------------------------------------- PRESIDENT PRESIDENT 3 EX-4.20 10 INVESTMENT LETTER Exhibit 4.20 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned, 100,000 shares of common stock, no par value per share (the "Common Stock"), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $105,000 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 ss.4(1) or ss.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. 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 Pollution Research and Control Corp. Page 2 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 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 Pollution Research and Control Corp. Page 3 (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 ----- ----- ----- ----- Never x x 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 is as follows: In my career I have been several years a General Manager for a big ------------------------------------------------------------------------ enterprise ($50M turnover), Manager of the company, Mikrosam, Macedonia ----------------------------------------------------------------------- and a Professor at university. ------------------------------------------------------------------------ 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. 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. Pollution Research and Control Corp. Page 4 On the date the undersigned acquired the securities, he had a net worth 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 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 (x) $100,000 - $200,000 ( ) $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 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. Pollution Research and Control Corp. Page 5 The foregoing correctly expresses the intent, understanding and acknowledgements of the undersigned. /s/ Blagoja Samakoski ---------------------------------------- Blagoja Samakoski Henry Budge S7R 65, 60320 Frankfurt, Germany - -------------------------------------------------------------------------------- Current address - ----------------------------------- ---------------------------------------- Social security number Current business telephone number Manager Barry Soltani - ----------------------------------- ---------------------------------------- Current business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment 389-98-400-100 - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative Mikrosam - ----------------------------------- ---------------------------------------- Current name of business which Length of relationship, if any with the Associated above-mentioned Company representative EX-4.21 11 INVESTMENT LETTER Exhibit 4.21 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT July 16, 1999 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 80,000 units consisting of 80,000 shares of common stock, no par value per share (the "Common Stock") and 54,525 common stock purchase warrants ("Warrants") exercisable at $0.75 per share, at a combined per unit price of $1.00, of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $80,000.00 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 ss.4(l) or ss.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. Pollution Research and Control Corp. July 16, 1999 Page 2 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 (July 16, 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 July 16, 2002, by the undersigned through the presentation and surrender of the warrant to the Company at its Pollution Research and Control Corp. July 16, 1999 Page 3 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) 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 of 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. (c) The Company will not at any time in the future conduct any equity offering consisting of the sale or issuance of any class of common stock or any class of stock purchase warrant at a price of $1.00 per share or below, without first providing the undersigned with first right of refusal to participate in all or any portion of the offering. 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. Pollution Research and Control Corp. July 16, 1999 Page 4 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 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 Pollution Research and Control Corp. July 16, 1999 Page 5 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 is as follows: Wharton Graduate U of P - Finance and Investment Major --------------------------------------------------------------------------- 35 years as 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. 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 Pollution Research and Control Corp. July 16, 1999 Page 6 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 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, Pollution Research and Control Corp. July 16, 1999 Page 7 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 17 Prestile Place, Robbinsville, New Jersey 08691 - -------------------------------------------------------------------------------- Current residence address ###-##-#### (609) 259-2662 - ----------------------------------- ---------------------------------------- Social security number Current residence telephone number Venture Capitalist Phillip Huss Phoenix Alliance - ----------------------------------- ---------------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment (609) 259-2662 None - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative N/A N/A - ----------------------------------- ---------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Pollution Research and Control Corp. July 16, 1999 Page 8 Agreed and accepted this 16th day of July, 1999 on behalf of Pollution Research and Control Corp. /s/ Albert E. Gosselin, Jr. - --------------------------------------- Albert E. Gosselin, Jr., President, CEO 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. EX-4.22 12 INVESTMENT LETTER Exhibit 4.22 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT July 16, 1999 Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 30,000 units consisting of 30,000 shares of common stock, no par value per share (the "Common Stock") and 20,475 common stock purchase warrants ("Warrants") exercisable at $0.75 per share, at a combined per unit price of $1.00, of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $30,000 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 ss.4(l) or ss.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. Pollution Research and Control Corp. July 16, 1999 Page 2 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 (July 16, 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 July 16, 2002, by the undersigned through the presentation and surrender of the warrant to the Company at its Pollution Research and Control Corp. July 16, 1999 Page 3 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) 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 of 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. (c) The Company will not at any time in the future conduct any equity offering consisting of the sale or issuance of any class of common stock or any class of stock purchase warrant at a price of $1.00 per share or below without first providing the undersigned with first right of refusal to participate in all or any portion of the offering. 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. Pollution Research and Control Corp. July 16, 1999 Page 4 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 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 Pollution Research and Control Corp. July 16, 1999 Page 5 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: University of Minnesota - Finance --------------------------------------------------------------------------- Financial P.R. Consultant --------------------------------------------------------------------------- --------------------------------------------------------------------------- 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. 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 (x) $500,000-$1,000,000 ( ) $1,000,000-$3,000,000 ( ) $3,000,000-$5,000,000 ( ) More than $5,000,000 Pollution Research and Control Corp. July 16, 1999 Page 6 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 ( ) $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 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. Pollution Research and Control Corp. July 16, 1999 Page 7 The foregoing correctly expresses this intent, understanding and acknowledgements of the undersigned. /s/ Philip T. Huss - ----------------------------------- Philip T. Huss 22 Cedar Court, Durango, Colorado 81301 - -------------------------------------------------------------------------------- Current residence address ###-##-#### (970) 259-7263 - ----------------------------------- ---------------------------------------- Social security number Current residence telephone number Financial Public Relations - ----------------------------------- ---------------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment (970) 259-7241 - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative Phoenix Alliance, Inc. - ----------------------------------- ---------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Pollution Research and Control Corp. July 16, 1999 Page 8 Agreed and accepted this 16th day of July, 1999 on behalf of Pollution Research and Control Corp. /s/ Albert E. Gosselin, Jr. - ------------------------------------------ Albert E. Gosselin, Jr., President and CEO 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. EX-4.23 13 LOCK-UP AGREEMENT Exhibit 4.23 LOCK-UP AGREEMENT THIS LOCK-UP AGREEMENT (the "Agreement") is made and entered into this 12th day of August, 1999, by and between Pollution Research and Control Corp. (the "Company"), a California corporation whose offices are located at 506 Paula Avenue, Glendale, California 91201, and Mr. Albert E. Gosselin, Jr. ("Gosselin"). R E C I T A L S : WHEREAS, Gosselin was granted the right by Fidelity Funding, Inc. ("Fidelity"), the shareholder of 100,000 shares (the "Shares") of common stock, no par value per share (the "Common Stock"), of the Company, pursuant to that certain Compromise, Settlement and Release Agreement entered into between the Company and Fidelity on August 12, 1999 (the "Settlement Agreement"), to cause the sale of the Shares, provided that the proceeds from the sale thereof shall be applied in accordance with the terms and conditions of the Settlement Agreement; and WHEREAS, in order to facilitate the consummation of the transactions contemplated by the Agreement, the parties hereto desire, notwithstanding the provisions of paragraph 3 of the Settlement Agreement pursuant to which the Company agreed to use its best efforts to register the Shares for sale, that the Shares be sold by Gosselin in accordance with the volume limitations of paragraph (e) of Rule 144 of the General Rules and Regulations under the Securities Act of 1933, as amended (the "Act"), even if they become registered for sale under the Act. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, agreements, representations and warranties contained herein, Gosselin hereby agrees not to cause the sale, assignment, transfer, conveyance or other alienation of the Shares owned of record by Fidelity except in accordance with the volume limitations of paragraph (e) of Rule 144 of the General Rules and Regulations under the Act, regardless of whether the Shares become registered for sale under the Act. IN WITNESS WHEREOF, the Company and Gosselin have duly executed and delivered this Agreement as of the day and year first above written. POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin Jr /s/ Albert E. Gosselin, Jr. ------------------------------- ---------------------------------------- Albert E. Gosselin, Jr., Albert E. Gosselin, Jr. President EX-4.24 14 COMPROMISE, SETTLEMENT AND RELEASE AGREEMENT Exhibit 4.24 COMPROMISE, SETTLEMENT AND RELEASE AGREEMENT -------------------------------------------- This Compromise, Settlement and Release Agreement (the "Agreement") is made and entered into by and between Fidelity Funding, Inc. ("Fidelity") and Pollution Research and Control Corp. ("Pollution Research") and is as follows: R E C I T A L S: WHEREAS, on or about June 28, 1996, Fidelity agreed to provide financing to Nutek, Inc. ("Nutek") pursuant to that certain Loan and Security Agreement ("Loan Agreement"), of even date by and between Fidelity and Nutek; WHEREAS, Nutek's obligations under the Loan Agreement, including its obligation to repay the advances made by Fidelity were secured by, among other things, a General Continuing Guaranty dated June 28, 1996 (the "Guaranty") executed by Pollution Research; WHEREAS, Nutek defaulted under the terms of the Loan Agreement by, among other things, (a) failing to pay when due certain payments pursuant to the terms of the Loan Agreement; (b) failing to achieve for 1997 the net profits requirements, such requirements established by the Loan Agreement; (c) allowing the outstanding balance of advances to exceed the borrowing base established by the Loan Agreement; and (d) suspending operations resulting in a material adverse change, in violation of the Loan Agreement; WHEREAS, by letter dated March 12 1998, Nutek and Pollution Research were provided with formal notice of such defaults and of Fidelity's declaration that all amounts due and owing by Nutek under the Loan Agreement had been declared immediately due and payable, and in such letter Fidelity made demand for immediate payment of all such amounts; WHEREAS, by letter dated March 25, 1998, Fidelity, by and through its counsel, once again advised Nutek of acceleration of its obligations under the Loan Agreement and once again made demand upon Nutek, and by copy of such letter demand upon Pollution Research, for payment of amounts then due and owing; WHEREAS, on April 1, 1998, Nutek filed a bankruptcy case in the United States Bankruptcy Court for the Northern District of Florida, Pensacola Division; WHEREAS, as a result of certain alleged defaults under the Guaranty a lawsuit was filed on or about April 7, 1998, as amended on or about May 8, 1998, in the 44th District Court, Dallas County, Texas (the "State Court"), styled Fidelity Funding, Inc. v. Pollution Research and Control Corporation; No. 98-02820-B (the "Lawsuit"), wherein Fidelity is Plaintiff and Pollution Research is Defendant; -1- WHEREAS, Fidelity has asserted that pursuant to the Guaranty, Pollution Research is obligated to pay all sums due and owing under the Loan Agreement, together with attorneys' fees; WHEREAS, on or about June 22, 1998, a Default Judgment was entered in favor of Fidelity in the amount of $766,708.77, together with attorneys' fees in the amount of $10,322.50, prejudgment interest after June 9, 1998, at a per diem rate of $326.42, and costs and post-judgment interest at the rate of fifteen percent per annum; WHEREAS, on or about July 21, 1998, Pollution Research removed the Lawsuit to the United States District Court for the Northern District of Texas and filed Defendant's Motion to (1) Dismiss and/or Quash Service of Process Pursuant to Fed. R. Civ. P. 12(b)(2)(4)(5) and (II) Set Aside Default Judgment Pursuant to Fed. R. Civ. P. 55(c) and 60(b); WHEREAS, on or about August 10, 1998, Fidelity filed Plaintiff's Motion for Remand; WHEREAS, on or about January 7, 1999, the Lawsuit was remanded to the State Court for further proceedings; WHEREAS, on or about January 11, 1999, Pollution Research filed Defendant's Motion to Quash Service, and, Subject Thereto, to Set Aside Default Judgment and for New Trial; WHEREAS, Defendant's Motion to Quash Service, and, Subject Thereto, to Set Aside Default Judgment and for New Trial was denied by operation of law; WHEREAS, on or about March 8, 1999, Pollution Research filed Defendant's Second Motion to Quash Service, and, Subject Thereto, to Set Aside Default Judgment and for New Trial; WHEREAS, the State Court took Defendant's Second Motion to Quash Service, and, Subject Thereto, to Set Aside Default Judgment and for New Trial under advisement; WHEREAS, on or about March 9, 1999, Pollution Research filed its Notice of Appeal seeking review of the Default Judgment; WHEREAS, the parties to the Lawsuit, acting through their duly authorized agents, desire and have agreed to fully and finally compromise and settle all claims and all disputes between them, including all claim asserted in the Lawsuit which could have been asserted in the Lawsuit; NOW, THEREFORE, for and in consideration of the mutual promises and undertakings herein contained, and such good and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged and confessed by each of the parties hereto, the parties hereto agree as follows: -2- 1. Contemporaneously with the execution of this Agreement, Pollution Research shall pay to Fidelity the sum of Nine Thousand Dollars ($9,000.00) (the "Initial Payment"). 2. In addition to the Initial Payment, on or before February 1, 2000, Pollution Research shall pay to Fidelity the aggregate of the sum of Four Hundred Fifty Thousand Dollars ($450,000.00) (the "Settlement Payment"). The unpaid portion of the Settlement Payment shall bear interest at the rate of twelve percent (12%) per annum. All accrued but unpaid interest shall be payable monthly on the first (1st) day of each month next following the expiration of one (1) full month after the date of the execution of this Agreement. In addition to the Settlement Payment, as an additional consideration to Fidelity, Pollution Research shall issue to Fidelity a warrant for twenty thousand (20,000) shares of common stock of Pollution Research (the "Warrants"), exercisable for three (3) years at the price of seventy-five cents ($0.75) per share, contemporaneously with the execution and delivery of this Agreement. Any amount realized or received by Fidelity as a result of any exercise of the Warrants shall not apply toward Pollution Research's payment of the Settlement Payment, but shall be in addition to such payment. 3. In order to induce Fidelity to enter into this Agreement, Pollution Research shall use its best efforts to register for sale one hundred thousand (100,000) shares of common stock of Pollution Research (the "Settlement Consideration Shares"), the Settlement Consideration Shares to be (a) issued in the name of Fidelity, (b) endorsed by Fidelity and (c) placed in escrow with a brokerage designated by Pollution Research, in accordance with the Escrow Agreement attached hereto as Exhibit A and incorporated herein by reference for all purposes. Pollution Research shall have the right under such escrow to cause such Settlement Consideration Shares to be sold provided, however, that proceeds from such sale shall be applied to Pollution Research's obligation to pay the Settlement Payment as set forth in paragraph (2) above. Such proceeds shall be applied first to any accrued but unpaid interest, and thereafter to the Settlement Payment. Upon the full and timely payment to Fidelity of the Settlement Payment, and any accrued but unpaid interest thereon, Fidelity shall have no further rights in the Settlement Consideration Shares or the proceeds of sale thereof. In the event that the proceeds of the sale of such Settlement Consideration Shares exceed the amount of the Settlement Payment and any accrued but unpaid interest thereon, after payment to Fidelity of the Settlement Payment and any accrued but unpaid interest, any excess shall be paid to Pollution Research. -3- 4. Pollution Research agrees to dismiss the pending appeal from the Default Judgment within three (3) days of the date of execution of this Agreement. The parties agree that the dismissal order shall provide that all costs incurred in the appeal shall be taxed against Pollution Research. Pollution Research hereby acknowledges that the Default Judgment is a valid and binding judgment and hereby agrees not to initiate any action to set aside the Default Judgment, provided, however, that in the event Fidelity take steps to enforce the Default Judgment, in accordance with the terms of this Agreement, nothing contained herein shall preclude Pollution Research from claiming credit for consideration paid pursuant to this Agreement, or otherwise challenging the amount then outstanding on said Judgment. 5. The parties hereto agree that as of the date of this Agreement, the outstanding balance of the Default Judgment is $468,000.00. Fidelity agrees to take no steps to execute upon the Default Judgment entered by the Court unless and until Pollution Research defaults under this Agreement by failing to timely pay any amount due or otherwise. In the event that Pollution Research timely performs its obligations under this Agreement, Fidelity shall execute a Release of the Default Judgment. In the event that Pollution Research fails to pay any payments when due, fails to deliver the Warrants or otherwise defaults under this Agreement, Fidelity shall immediately be entitled to enforce the Default Judgment, provided, however, that all consideration received pursuant to this Agreement shall be applied to the Default Judgment. 6. Subject to the terms and provisions of this Agreement, Fidelity hereby releases, remises and forever discharges Pollution Research, its shareholders, representatives, officers, directors, employees, attorneys, agents, subsidiaries, servants and successors-in-interest, hereinafter referred to as the "Pollution Research Released Parties" from any and all rights, claims, demands, actions, causes of action, judgments, whether known or unknown, suspected or unsuspected, which Fidelity has, may have, or may claim to have against Pollution Research and the Pollution Research Released Parties, and, without limiting the generality of the foregoing release, specifically releases, remises and forever discharges the Pollution Research Released Parties from all claims or allegations asserted or which -4- could have been asserted by Fidelity or on its behalf in the Lawsuit, arising from or relating to execution of and performance under the Guaranty; provided, however, that Fidelity does not hereby waive, relinquish or release any of its rights, or any of the obligations of Pollution Research arising out of this Agreement. Provided, however, that Fidelity does not hereby waive, relinquish or release any of its rights, including the right to enforce the Default Judgment upon any event of default by Pollution Research under this Agreement, or any of the obligations of Pollution Research, arising out of this Agreement. 7. Subject to the terms and provisions of this Agreement, Pollution Research hereby releases, remises and forever discharges Fidelity, its shareholders, representatives, officers, directors, employees, attorneys, agents, subsidiaries, servants and successors-in-interest, hereinafter referred to as the "Fidelity Released Parties," from any and all rights, claims, demands, actions, causes of actions, judgments, whether known or unknown, suspected or unsuspected, which Pollution Research has, may have or may claim to have against Fidelity and the Fidelity Released Parties and, without limiting the generality of the foregoing release, specifically releases, remises and forever discharges Fidelity and the Fidelity Released Parties from all claims or allegations asserted or which could have been asserted by Pollution Research or on its behalf in the Lawsuit, arising from or relating to execution of the Guaranty or performance thereunder; provided, however, that Pollution Research does not hereby waive, relinquish or release any of its rights, or any of the obligations of Fidelity or the Fidelity Released Parties, arising out of this Agreement. 7. The parties hereby agree that except as set forth herein this Agreement does not constitute an admission of liability; does not constitute any factual or legal precedent or finding whatsoever; and may not be used as evidence in any subsequent proceeding of any kind, except in an action alleging breach of this Agreement or to enforce the Default Judgment. 8. The parties further agree and acknowledge that the terms of this Agreement are contractual, and not merely a recital. Further, except as otherwise provided in the releases contained herein, this Agreement shall be binding upon, and inure to the benefit of, each party and their heirs, successors, subsidiaries, partners, assigns, agents, servants, employees and attorneys. 9. The parties hereto warrant that they own all claims asserted or assertable in the Lawsuit, and that they have not assigned any part of such claims to any person, business or entity. -5- 10. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 11. This Agreement, in conjunction with the exhibits attached hereto, contains the full and complete agreements of the parties hereto, and all prior negotiations and agreements pertaining to the subject matter hereof were merged into this Agreement. Each party hereto expressly disclaims reliance upon any facts, promises, undertakings or representations made by any other party, or agents or attorneys, prior to the execution of this Agreement. 12. All parties to this Agreement have had the benefit of counsel of their choice and have been afforded an opportunity to review this Agreement with their chosen counsel. 13. This Agreement is one which cannot be modified, irrespective of what might take place or occur, unless each of the parties hereto expressly agrees to such modification in writing. 14. This Agreement shall be in full force and effect as of the date executed by all parties. 15. To the extent necessary, the parties hereby acknowledge that the terms of this Agreement have been presented to and approved by the parties' respective board of directors. 16. Notwithstanding the foregoing, each of the parties hereto represents and warrants that the person executing this Agreement is duly authorized to enter into and execute this Agreement for and on behalf of the party each person purports to represent. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date set forth in the acknowledgements below: [SIGNATURES TO FOLLOW ON SEPARATE PAGES] -6- POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. ------------------------------------ Name: Albert E. Gosselin Title: President STATE OF CALIFORNIA ) ) COUNTY OF LOS ANGELES ) BEFORE ME, the undersigned authority, on this day personally appeared ALBERT E. GOSSELIN, President of Pollution Research and Control Corp., a California corporation, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, on behalf of said corporation. GIVEN UNDER MY HAND AND SEAL OF OFFICE this 12th day of August, 1999. /s/ Marcia Smith ---------------------------------------- /s/ Marcia Smith Notary Public in and for the State of California MARCIA SMITH ---------------------------------------- Printed name of Notary My commission expires: Feb 21, 2003 ---------------------------------------- [SEAL] -7- FIDELITY FUNDING, INC. By: /s/ Edward Henkel ------------------------------------ Name: Edward Henkel ---------------------------------- Title: Agent for Fidelity Funding, Inc. STATE OF TEXAS ) ) COUNTY OF DALLAS ) BEFORE ME, the undersigned authority, on this day personally appeared Edward Henkel , Sr. Vice President of Fidelity Funding, Inc., a Agent for Fidelity Funding, Inc. , known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, on behalf of said corporation . GIVEN UNDER MY HAND AND SEAL OF OFFICE this 19th day of August, 1999. /S/ Mary A. Sterner ---------------------------------------- Notary Public in and for the [SEAL] State of Texas Mary A. Sterner ---------------------------------------- Printed Name of Notary My commission expires: July 30, 2001 ---------------------------------------- -8- EX-4.25 15 ESCROW AGREEMENT Exhibit 4.25 ESCROW AGREEMENT ---------------- THIS ESCROW AGREEMENT (the "Agreement") is made and entered into this 12th day of August, 1999, by and among POLLUTION RESEARCH AND CONTROL CORP., a California corporation (the "Company"), 506 Paula Avenue, Glendale, California 91201, FIDELITY FUNDING, INC., a Texas corporation ("Fidelity"), 8333 Douglas Avenue, Suite 530, Dallas, Texas 75225, and AMERICAN ESCROW COMPANY, a Texas corporation, as escrow agent (the "Escrow Agent"). WHEREAS, the Company and Fidelity have entered into that certain Compromise, Settlement and Release Agreement (the "Settlement Agreement") of even date herewith, a copy of which is attached hereto and incorporated herein by this reference, which provides, among other things, for the Company to issue 100,000 shares of common stock of the Company, no par value per share, to Fidelity; which shares are referred to hereinafter and in the Settlement Agreement as the "Settlement Consideration Shares"; and WHEREAS, Paragraph 2 of the Settlement Agreement further provides for the Settlement Consideration Shares to be sold; provided, however, that proceeds from such sale shall be applied to the Company's obligation to pay to Fidelity the aggregate sum of Four Hundred Fifty Thousand Dollars ($450,000.00), which sum is referred to hereinafter and in the Settlement Agreement as the "Settlement Payment", together with any accrued but unpaid interest thereon; and WHEREAS, the parties desire to enter into this Agreement pursuant to which the Settlement Consideration Shares shall be delivered in escrow and released only in accordance with instructions received from the Company to a licensed broker-dealer for purposes of the sale thereof (including short sale, on margin or otherwise) in the over-the-counter stock market or to a purchaser, assignee, transferee or pledgee thereof in a purchaser transaction in consideration for cash, as provided in Section 4.2.B. below, within the time period set forth herein and, otherwise, the Settlement Consideration Shares are to be returned to the Company. NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants contained herein, IT IS HEREBY AGREED as follows: ARTICLE I APPOINTMENT AND AGREEMENT OF ESCROW AGENT ----------------------------------------- American Escrow Company is hereby appointed as, and hereby agrees to perform the duties of, the Escrow Agent in accordance with the terms and conditions of this Agreement. This Agreement shall be administered, and the certificates representing the Settlement Consideration Shares shall be held, by the Escrow Agent at its office located at 300 Crescent Court, Suite 100, Dallas, Texas 75201. ARTICLE II DEPOSIT OF SETTLEMENT CONSIDERATION SHARES ------------------------------------------ Fidelity hereby delivers to the Escrow Agent, and the Escrow Agent hereby acknowledges receipt of, ten (10) original stock certificates in the name of Fidelity, each evidencing 10,000 shares of common stock, no par value per share, of the Company, duly executed, endorsed and/or authenticated for transfer, to be held in escrow by the Escrow Agent pursuant to the terms and conditions of this Agreement and the Settlement Agreement. ARTICLE III NATURE OF ESCROW ACCOUNT ------------------------ During the Escrow Period (as hereinafter defined), none of the Settlement Consideration Shares shall become the property of the Company, Fidelity or any other person, or be subject to the debts of the Company, Fidelity or any other person, and except as expressly provided herein with respect to disbursement and delivery of the Settlement Consideration Shares by the Escrow Agent, pursuant to one or more written instructions provided herein, Escrow Agent shall make or permit no disbursement from the Escrow Account. Neither Fidelity nor the Company (nor Escrow Agent) shall have any voting or investment rights with respect to the Settlement Consideration Shares during the Escrow Period. ARTICLE IV TERM OF ESCROW PERIOD; DISBURSEMENT OF SETTLEMENT CONSIDERATION SHARES AND/OR PAYMENT OF CASH FROM PRIVATE DISPOSITION -------------------------------- 4.1 Termination Date. The Escrow Period shall begin on the date of the deposit of the Settlement Consideration Shares with the Escrow Agent and shall terminate on the first to occur on the following dates: A. The one hundred eightieth (180th) day following the date of this Agreement or February 1, 2000, whichever comes first. The termination date in the preceding sentence may be extended upon mutual agreement of Fidelity and the Company, with a copy of such notice of extension provided to the Escrow Agent. B. The date on which the Escrow Agent receives written instructions from the Company directing the disbursement and delivery of the last of the Settlement Consideration Shares held by Escrow Agent to a licensed broker-dealer for purposes of the sale thereof (including short sale, on margin or otherwise) in the over-the-counter stock market or to a purchaser, assignee, transferee or pledgee thereof in a private transaction in consideration for cash. -2- 4.2 Disbursement and Delivery of Settlement Consideration Shares. ------------------------------------------------------------- A. In the event that the Escrow Period terminates pursuant to Section 4.1.A. hereinabove, the Escrow Agent, as promptly as possible, but in no event later than thirty (30) days after such termination, shall disburse and deliver the remaining Settlement Consideration Shares and any proceeds from the sale of a portion of the Settlement Consideration Shares to Fidelity. B. In the event that the Escrow Period terminates pursuant to Section 4.1.B. hereinabove, the Escrow Agent as promptly as possible, but in no event later than thirty (30) days after such termination, shall disburse and deliver the last of the Settlement Consideration Shares in accordance with the final written instructions received from the Company, which shall specify the name and address of the person to be the recipient of the Settlement Consideration Shares. If said instructions are to disburse and deliver the Settlement Consideration Shares to a broker-dealer, and in that event, the Company agrees that the proceeds of the sale thereof in the event the over-the-counter stock market shall be paid to Fidelity, and Fidelity agrees to pay the amount of sale proceeds in excess of the Settlement Consideration Payment to the Company. If said instructions are to disburse and deliver the last of the Settlement Consideration Shares to a purchaser, assignee, transferee or pledgee thereof in a private transaction in consideration for cash, then, and in that event, the Escrow Agent shall pay the amount of cash received in consideration for said sale, assignment, transfer or pledge (together with any proceeds from prior disbursements, if any), as promptly as possible, but in no event later than thirty (30) days thereafter, as follows: (i) In the event that the amount of cash received is less than or equal to the Settlement Consideration Payment, then, and in that event, the Escrow Agent shall pay said cash sum to Fidelity. (ii) In the event that the amount of cash received is in excess of the Settlement Consideration Payment, then, and in that event, the Escrow Agent shall pay said cash sum in the amount of the Settlement Consideration Payment to Fidelity and the amount of cash in excess thereof to the Company. The parties contemplate that the Company may deliver written instructions to disburse a portion of the Settlement Consideration Shares on more than one (1) occasion during the Escrow Period. If the written instructions to disburse a portion of the Settlement Consideration Shares will not result in the disbursement of all of the remaining Settlement Consideration Shares, then all proceeds from such disbursement shall be held by Escrow Agent until the termination of the Escrow Period. Escrow Agent shall deposit any such cash proceeds in an interest-bearing account, but Escrow Agent shall have no investment liability for any level of return on such proceeds whatsoever or for failure of the institution maintaining such account. -3- At such time as the Escrow Agent shall have made the disbursement and/or payment(s) provided for in the above paragraphs 4.2.B.(i) and (ii), the Escrow Agent shall be completely discharged and released of any and all further liabilities and responsibilities hereunder. The Escrow Agent shall be required to make disbursement and delivery of the Settlement Consideration Shares only to the person(s) named in the written instructions to be furnished by the Company pursuant to Section 4.2.B. hereinabove at the address given in such written instructions. With regard to any Settlement Consideration Shares or funds which the Escrow Agent cannot, for any reason, disburse or pay, the Escrow Agent shall, at its option and sole discretion, deposit said Settlement Consideration Shares or funds with the Clerk of the District Court, Dallas County, State of Texas and interplead the parties hereto. Upon so filing its complaint in interpleader or upon making disbursement and/or payment(s) under this Article IV, the Escrow Agent shall be completely discharged and released from all further liability under the terms hereof. If the Escrow Agent elects to file a complaint in interpleader, the parties hereto, for themselves and their successors and assigns, do hereby summit themselves to the jurisdiction of said Court and do hereby appoint the Clerk of said Court as their agent for service of all process in connection with the proceeding described in this paragraph. ARTICLE V LIABILITY: REMEDIES AND EXCULPATION OF ESCROW AGENT --------------------------------------------------- 5.1 Liability. ---------- A. The Escrow Agent, in its actions pursuant to this Agreement, shall be fully protected in every reasonable exercise of its discretion and shall have no obligations hereunder to the Company or Fidelity, except as expressly set forth herein. Fidelity and/or the Company, as the case may be, shall provide to the Escrow Agent all information necessary to facilitate the administration of this Agreement, and the Escrow Agent shall not incur any liability for any claims, damages, losses, costs or expenses, except for willful misconduct or gross negligence, and it shall, accordingly, not incur any such liability with respect to (i) any action taken or omitted in good faith upon advice of its counsel given with respect any questions relating to the duties and responsibilities of the Escrow Agent under this Agreement, or (ii) any action taken or omitted in reliance upon any instrument, including the written advises provided for herein, not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained herein, which the Escrow Agent shall in good faith believe to be genuine, to have been signed or presented by a proper person or persons and to conform with the provisions of this Agreement. The Escrow Agent shall not be responsible for fees in conjunction with the issuance or transfer of the Settlement Consideration Shares. B. The Escrow Agent is hereby expressly authorized and directed to disregard any and all notices or warnings given by either of the other parties hereto, other than those notices and warnings specifically called for in this Agreement or the Settlement Agreement, or by any other person, excepting only orders or process of court, and is hereby expressly authorized to comply with and obey any and all orders, judgments or decrees of any court, and in case the Escrow Agent obeys or complies with any such order, judgment or decree of any court, it shall not be liable to either of the other parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding that any such order, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated or found to have been entered without jurisdiction. -4- 5.2 Remedies. --------- A. If the Escrow Agent is unable to disburse the Settlement Consideration Shares in accordance with the provisions of Section 4.2.B. hereinabove or pay the cash in accordance with the provisions of Section 4.2.B.(i) or (ii) hereinabove for any reason, the Escrow Agent shall, at its election and sole discretion, deposit the Settlement Consideration Shares or funds with the Clerk of the District Court, County of Dallas, State of Texas, and interplead the parties hereto. Upon so depositing said Settlement Consideration Shares or funds and filing its complaint in interpleader under this Section 5.2, the Escrow Agent shall be completely discharged and released from all further liability under the terms hereof. If the Escrow Agent elects to invoke this Section 5.2, the parties hereto, for themselves and their successors and assigns, do hereby submit themselves to the jurisdiction of said Court and do hereby appoint the Clerk of said Court as their agent for service of all process in connection with the proceeding described in this paragraph. B. If at any time a dispute shall exist as to the duties of the Escrow Agent or the terms hereof or if the Escrow Agent fails to receive the instructions from the Company required in Article IV within fifteen days after the termination of the Escrow Period under Section 4.1, the Escrow Agent may, in its sole discretion, deposit said Settlement Consideration Shares with the Clerk of the District Court, County of Dallas, State of Texas, and may interplead the parties hereto. The parties hereto, for themselves and their successors and assigns, do hereby submit themselves to the jurisdiction, of said Court and do hereby appoint the Clerk of said Court as their agent for service of all process in connection with the proceeding described in this paragraph. 5.3 Exculpation of Escrow Agent. ---------------------------- A. Escrow Agent is not a party to, or bound by any instrument, agreement or document which may be deposited under, evidenced by or which arises out of this Agreement. B. Escrow Agent acts hereunder as a depository only and is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of any instrument deposited with Escrow Agent hereunder, or with respect to the form or execution of the same, or the identity, authority or rights of any person executing or depositing the same. C. Escrow Agent shall not be required to take or be bound by any notice of any default of any person or to take any action with respect to such default involving any expense or liability, unless notice in writing is given to an officer of Escrow Agent of such default and unless Escrow Agent is indemnified in a manner satisfactory to Escrow Agent against any such expense or liability. -5- D. Escrow Agent shall be protected in acting upon any notice, request, waiver, consent, receipt or other instrument or document believed by Escrow Agent to be genuine and to be signed by the proper party or parties. Escrow Agent shall not be liable for any error of judgment or for any act done or step taken or omitted by it in good faith, or for any mistake in fact or law, or for anything which it may do or refrain from doing in connection herewith, except its own gross negligence or willful misconduct, and Escrow Agent shall have no duties to any party except those parties to this Agreement. E. Escrow Agent may consult with legal counsel in the event of any dispute of or questions asked to the construction of this Agreement, or Escrow Agent's duties hereunder, and Escrow Agent shall incur no liability and shall be fully protected in acting in accordance with the opinion and instructions of such counsel. F. For its services hereunder, Escrow Agent shall be entitled to an initial fee of $400.00, payable concurrently with its acceptance hereof, plus a fee of $200.00 for every sale of a portion of the Settlement Consideration Shares after the first such sale, and to additional compensation of $400.00 for each year thereafter the Settlement Consideration Shares shall remain on deposit with the Escrow Agent. All fees to Escrow Agent hereunder shall be paid by the Company. G. In the event Escrow Agent is made a party to, or intervenes in, any litigation pertaining to this Agreement or the subject matter hereof, including, without limitation, an interpleader pursuant to Section 5.2 hereof, Escrow Agent shall be reimbursed for all costs and expenses occasioned thereby, including, without limitation, attorney's fees and costs and expenses, and the parties hereto agree that the Settlement Consideration Shares, or the proceeds thereof, shall be utilized to satisfy any such costs or expenses. ARTICLE VI [Intentionally left blank] ARTICLE VII MISCELLANEOUS PROVISIONS ------------------------ 7.1 Parties in Interest. This Agreement shall be binding upon and insure to the benefit of the parties hereto, and the successors and assigns of each of them, but shall not confer, expressly or by implication, any rights or remedies upon any other party. 7.2 Governing Law. This Agreement is made and shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of California. 7.3 Notices. All notices, requests or demands and other communications hereunder shall be deemed given sufficiently if in writing and sent by registered or certified mail, return receipt requested and postage prepaid, or sent telex, telegram or cable to: -6- A. If to the Company, to: Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Attention: Albert E. Gosselin, Jr. With a copy to: Dana M. Campbell, Esq. Owens, Clary & Aiken, L.L.P. 1717 Main Street, Suite 2400 Dallas, Texas 75201 B. If to Fidelity, to: Fidelity Funding, Inc. 8333 Douglas Avenue, Suite 530 Dallas, Texas 75251 Attention: Ed Henkel With a copy to: Brian Morris, Esq. Winstead, Sechrest & Minick, P.C. 5400 Renaissance Tower 1201 Elm Street Dallas, Texas 75270 C. If to the Escrow Agent, to: American Escrow Company 300 Crescent Court, Suite 100 Dallas, Texas 75201 Attention: William Kramer, Esq. Any party hereto may change its address by written notice to the other party given in accordance with this Section 7.3. 7.4 Entire Agreement. This Agreement contains the entire agreement between and among the parties and supersedes all prior agreements, understandings and writings between and among the parties with respect to the subject matter hereof. Each party hereto acknowledges that no representations, inducements, promises or agreements, verbal or otherwise, have been made by any party, or anyone acting with authority on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise may be relied upon or shall be valid or binding. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated verbally. This Agreement may be amended or any term hereof my be changed, waived, discharged or terminated by an agreement in writing signed by each of the parties hereto. 7.5 Captions and Headings. The article and section headings throughout this Agreement are for convenience and reference only, and shall in no way be deemed to define, limit or add to the meaning of any provision of this Agreement. -7- 7.6 Attorneys' Fees. In the event of any litigation between or among the parties hereto, the non-prevailing party(s) shall pay the reasonable expenses, including the attorneys' fees, of the prevailing party(s) in connection therewith. IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement on the day and year first above written. COMPANY: POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. ------------------------------------ Albert E. Gosselin, Jr., President FIDELITY: FIDELITY FUNDING, INC. By: /s/ Edward Henkel ------------------------------------ (Authorized Officer) ESCROW AGENT: AMERICAN ESCROW COMPANY By: /s/ William S. Kramer ------------------------------------ Chairman (Authorized Officer) -8- EX-4.26 16 DEBENTURE Exhibit 4.26 DEBENTURE NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS DEBENTURE (COLLECTIVELY, THE "SECURITIES") HAS BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT) OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR ARE PERMITTED UNDER THE ACT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQU1REMENTS OF THOSE LAWS. $150,000 POLLUTION RESEARCH AND CONTROL CORP. 12% SUBORDINATED CONVERTIBLE DEBENTURE DUE JUNE 1, 2000 THIS DEBENTURE is the only one of a duly authorized issue of $150,000 in Debentures of Pollution Research and Control Corp., a corporation duly organized and existing under the laws of California (the "Company"), designated as its 12% Subordinated Convertible Debenture Due June 1, 2000 (the "Debenture"). FOR VALUE RECEIVED, the Company promises to pay to Spiga Limited, the registered holder hereof (the "Holder"), the principal sum of One Hundred Fifty Thousand Dollars (US$150,000) Dollars on June 1, 2000 (the "Maturity Date") and to pay interest on a monthly basis on the principal sum outstanding, at the rate of 12% per annum commencing October 1, 1999. Subject to the provisions of Section 4 below, the principal of, and interest on, this Debenture are payable at the option of the Holder, in shares of Common Stock $.01 par value per share of the Company ("Common Stock"), or in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time. The Company will pay the outstanding principal due upon this Debenture before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Debenture by check if paid more than ten days prior to the Maturity Date or by wire transfer and addressed to such Holder at the last address appearing on the Debenture Register. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy any discharge the liability for principal on this Debenture to the extent of the sum represented by such check or wire transfer. 453480-2 8/24/99 This Debenture is subject to the following additional provisions: 1. The Debenture is issuable in denominations of Fifty Thousand Dollars (US$50,000) and integral multiples thereof. The Debenture is exchangeable for an equal aggregate principal amount of debentures of different authorized denominations (the "Debentures"), as requested by the Holder(s) surrendering the same, but not less than US$50,000. No service charge will be made for such registration, transfer or exchange, except that the Holder shall pay any tax or other governmental charges payable in connection therewith. 2. The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith. 3. This Debenture may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Act"), and applicable state securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. 4. The Holder of this Debenture is entitled, at its option, at any time immediately following execution of this Agreement and delivery of the Debenture, to convert all or any amount over $50,000 of the principal face amount of this Debenture then outstanding (provided that the principal amount is at least US$50,000, unless if at the time of such election to convert the aggregate principal amount of all Debentures registered to the Holder is less than US$50,000, then the whole amount thereof) into shares of Common Stock. The conversion price (the "Conversion Price") for each share of Common Stock shall be equal to the lesser of (a) 80% of the Market Price of the Common Stock on the Conversion Date; or (b) $2.25. The shares of the Company's Common Stock issued upon conversion of this Debenture shall hereinafter be referred to as the "Conversion Shares." If the number of resultant Conversion Shares would as a matter of law or pursuant to regulatory authority require the Company to seek shareholder approval of such issuance, the Company shall, as soon as practicable, take the necessary steps to seek such approval. For purposes of this Section 4, the Market Price of the Common Stock shall be the closing bid price of the Common Stock on the Conversion Date as reported by Nasdaq, or the closing bid price on the over-the-counter market on such date or, in the event the Common Stock is listed on a stock exchange, the closing bid price shall be the closing price on the exchange on such date as reported in the Wall Street Journal. Conversion shall be effectuated by surrendering the Debentures to be converted to the Company with the form of conversion notice 453480-2 -2- 8/24/99 attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing such Holder's intention to convert this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Interest accrued or accruing from the date of issuance to the date of conversion shall, at the option of the Holder, be paid in cash or Common Stock upon conversion at the Conversion Rate. No fraction of Shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The date on which notice of conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder has delivered this Debenture, with the conversion notice duly executed, to the Company or the date set forth in such facsimile delivery of the notice of conversion if the Debenture is received by the Company within two (2) business days therefrom. Facsimile delivery of the conversion notice shall be accepted by the Company at (818-247-7614); ATTN: Albert Gosselin). Certificates representing Common Stock upon conversion will be delivered within three (3) business days from the date the notice of conversion with the original Debenture is delivered to the Company. 5. No provision of the Debenture shall alter or impair the obligation of the Company, which is direct, absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the form, herein prescribed. 6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto. 7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees, which may be incurred by the Holder in collecting any amount due under this Debenture. 8. The following shall constitute an "Event of Default": (a) The Company shall default in the payment of principal or interest on this Debenture and such default shall remain unremedied for five (5) business days after the Company has been notified of the default in writing by a Holder; or (b) Any of the representations or warranties made by the Company herein, and in the Registration Rights Agreement or in any certificate or financial or other written statements furnished by or on behalf of the Company in connection with the execution and delivery of this Debenture and the Registration Rights Agreement shall be false or misleading in any material respect at the time made; or 453480-2 -3- 8/24/99 (c) The Company fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Debenture, fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to the Holder upon conversion of this Debenture and when required by this Debenture or the Registration Rights Agreement, or fails to remove any restrictive legend or to cause its Transfer Agent to transfer on any certificate or any shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture, the Securities Purchase Agreement or the Registration Rights Agreement and any such failure shall continue uncured for five (5) business days after the Company has been notified of such failure in writing by Holder. (d) The Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of the Company under this Debenture and such failure shall continue uncured for a period of thirty (30) days after notice from the Holder or such failure; or (e) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for it dissolution; or (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or (f) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or (g) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days thereafter; or 453480-2 -4- 8/24/99 (h) Any money judgment, writ warrant of attachment, or similar process, in excess of One Hundred Thousand ($100,000) Dollars in the aggregate shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (i) Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (30) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; or (j) The Company shall have its Common Stock suspended or delisted from an exchange or over-the-counter market from trading for in excess of five trading days. Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event or Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein and any other rights or remedies afforded by law. 9. The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities. 10. Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof. 453480-2 -5- 8/24/99 11. This Debenture represents a prioritized obligation of the Company. However, no recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue or any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or other wise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 12. If the Company merges or consolidates with another corporation or sells or transfers all or substantially all of its assets to another person and the holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock, then as a condition of such merger, consolidation, sale or transfer, the Company and any such successor, purchaser or transferee agree that the Debenture may thereafter be converted on the terms and subject to the conditions set forth above into the kind and amount of stock, securities or property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall be as nearly equivalent as may be practicable. In the event of any proposed merger, consolidation or sale or transfer of all or substantially all of the assets of the Company (a "Sale"), the Holder hereof shall have the right to convert by delivering a Notice of Conversion to the Company within fifteen (15) days of receipt of notice of such Sale from the Company. In the event the Holder hereof shall elect not to convert, the Company may prepay all outstanding principal and accrued interest on this Debenture, less all amounts required by law to be deducted, upon which tender of payment following such notice, the right of conversion shall terminate. 13. Concurrently with the execution and delivery of this Debenture, the parties hereto will execute and deliver a Registration Rights Agreement in which the Company will undertake to register the Conversion Shares under the Securities Act of 1933. 14. A. Notwithstanding any other provision hereof to the contrary, at any time prior to the Conversion Date, the Company shall have the right to redeem all or any portion of the then outstanding principal amount of the Debentures then held by the Holder for an amount (the "Redemption Payment") equal to the sum of (a) such outstanding principal of the Debentures plus all accrued but unpaid interest thereon through the date the Redemption Amount is paid to the Holder (the "Redemption Payment Date"), multiplied by (b) 1.25. The Company shall give at least ten (10) business days' written notice of such redemption to the Holder (the "Notice of Redemption"). B. Anything in the preceding provisions of this Section 14 to the contrary notwithstanding, the Redemption Payment shall, unless otherwise agreed to in writing by the Holder after receiving the Notice of Redemption, be paid to the Holder at least ten (10) business days from the date of the Notice of Redemption. Upon the Holder's receipt of the Notice of Redemption, the Holder 453480-2 -6- 8/24/99 shall have the right, exercisable within ten (10) business days of the Holder's receipt of the Notice of Redemption, to give a Notice of Conversion to the Company for any or all of the principal amount of the Debenture covered by the Notice of Redemption (such Notice of Conversion, a "Redemption Notice of Conversion"). The Redemption Notice of Conversion shall take precedence over the Notice of Redemption and such Debentures shall be converted in accordance with the terms hereof. The Redemption Payment for any portion of the Debentures covered by the Notice of Redemption but not by a Redemption Notice of Conversion shall be paid no later than on the date ( the "Redemption Payment Date") which is ten (10) business days after the date the Notice of Redemption. 15. In case any provision of this Debenture is held by a court of competent Jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Debenture will not in any way be affected or impaired thereby. 16. This Debenture and the agreements referred to in this Debenture constitute the full and entire understanding and agreement between the Company and the Holder with respect to the subject hereof. Neither this Debenture nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder. 17. This Debenture shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non coveniens, to the bringing of any such proceeding in such jurisdictions. At Holder's election, any dispute between the parties may be arbitrated rather than litigated in the courts, before the arbitration board of the American Arbitrators Association in New York City and pursuant to its rules. Upon demand made by the Holder to the Company, the Company agrees to submit to and participate in such arbitration. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by an officer thereunto duly authorized. Dated: September 1, 1999 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. ------------------------------------ Albert E. Gosselin, President 453480-2 -7- 8/24/99 EXHIBIT I NOTICE OF CONVERSION (To be Executed by the Registered Holder in order to Convert the Debenture) The undersigned hereby irrevocably elects to convert $ _____________ of the above Debenture No.____________ into shares of Common Stock of Pollution Research and Control Corp. (the "Company") according to the conditions set forth in such Debenture, as of the date written below. If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other Taxes and charges payable with respect thereto. Date of Conversion______________________________________________________________ Applicable Conversion Price_____________________________________________________ Signature_______________________________________________________________________ Print Name Holder and Title of Signer___________________________________________ Address_________________________________________________________________________ ________________________________________________________________________________ SSN or EIN______________________________________________________________________ Shares are to be registered in the following name: Name____________________________________________________________________________ Address_________________________________________________________________________ Tel.____________________________________________________________________________ Fax_____________________________________________________________________________ SSN or EIN______________________________________________________________________ Shares are to be sent or delivered to following account: Account Name____________________________________________________________________ Address_________________________________________________________________________ 453480-2 -8- 8/24/99 EX-4.27 17 DEBENTURE Exhibit 4.27 DEBENTURE NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS DEBENTURE (COLLECTIVELY, THE "SECURITIES") HAS BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT) OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR ARE PERMITTED UNDER THE ACT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQU1REMENTS OF THOSE LAWS. $150,000 POLLUTION RESEARCH AND CONTROL CORP. 12% SUBORDINATED CONVERTIBLE DEBENTURE DUE JUNE 1, 2000 THIS DEBENTURE is the only one of a duly authorized issue of $150,000 in Debentures of Pollution Research and Control Corp., a corporation duly organized and existing under the laws of California (the "Company"), designated as its 12% Subordinated Convertible Debenture Due June 1, 2000 (the "Debenture"). FOR VALUE RECEIVED, the Company promises to pay to Spiga Limited, the registered holder hereof (the "Holder"), the principal sum of One Hundred Fifty Thousand Dollars (US$150,000) Dollars on June 1, 2000 (the "Maturity Date") and to pay interest on a monthly basis on the principal sum outstanding, at the rate of 12% per annum commencing October 1, 1999. Subject to the provisions of Section 4 below, the principal of, and interest on, this Debenture are payable at the option of the Holder, in shares of Common Stock $.01 par value per share of the Company ("Common Stock"), or in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time. The Company will pay the outstanding principal due upon this Debenture before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Debenture by check if paid more than ten days prior to the Maturity Date or by wire transfer and addressed to such Holder at the last address appearing on the Debenture Register. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy any discharge the liability for principal on this Debenture to the extent of the sum represented by such check or wire transfer. 453480-2 8/24/99 This Debenture is subject to the following additional provisions: 1. The Debenture is issuable in denominations of Fifty Thousand Dollars (US$50,000) and integral multiples thereof. The Debenture is exchangeable for an equal aggregate principal amount of debentures of different authorized denominations (the "Debentures"), as requested by the Holder(s) surrendering the same, but not less than US$50,000. No service charge will be made for such registration, transfer or exchange, except that the Holder shall pay any tax or other governmental charges payable in connection therewith. 2. The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith. 3. This Debenture may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Act"), and applicable state securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. 4. The Holder of this Debenture is entitled, at its option, at any time immediately following execution of this Agreement and delivery of the Debenture, to convert all or any amount over $50,000 of the principal face amount of this Debenture then outstanding (provided that the principal amount is at least US$50,000, unless if at the time of such election to convert the aggregate principal amount of all Debentures registered to the Holder is less than US$50,000, then the whole amount thereof) into shares of Common Stock. The conversion price (the "Conversion Price") for each share of Common Stock shall be equal to the lesser of (a) 80% of the Market Price of the Common Stock on the Conversion Date; or (b) $2.25. The shares of the Company's Common Stock issued upon conversion of this Debenture shall hereinafter be referred to as the "Conversion Shares." If the number of resultant Conversion Shares would as a matter of law or pursuant to regulatory authority require the Company to seek shareholder approval of such issuance, the Company shall, as soon as practicable, take the necessary steps to seek such approval. For purposes of this Section 4, the Market Price of the Common Stock shall be the closing bid price of the Common Stock on the Conversion Date as reported by Nasdaq, or the closing bid price on the over-the-counter market on such date or, in the event the Common Stock is listed on a stock exchange, the closing bid price shall be the closing price on the exchange on such date as reported in the Wall Street Journal. Conversion shall be effectuated by surrendering the Debentures to be converted to the Company with the form of conversion notice -2- attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing such Holder's intention to convert this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Interest accrued or accruing from the date of issuance to the date of conversion shall, at the option of the Holder, be paid in cash or Common Stock upon conversion at the Conversion Rate. No fraction of Shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The date on which notice of conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder has delivered this Debenture, with the conversion notice duly executed, to the Company or the date set forth in such facsimile delivery of the notice of conversion if the Debenture is received by the Company within two (2) business days therefrom. Facsimile delivery of the conversion notice shall be accepted by the Company at (818-247-7614); ATTN: Albert Gosselin). Certificates representing Common Stock upon conversion will be delivered within three (3) business days from the date the notice of conversion with the original Debenture is delivered to the Company. 5. No provision of the Debenture shall alter or impair the obligation of the Company, which is direct, absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the form, herein prescribed. 6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto. 7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees, which may be incurred by the Holder in collecting any amount due under this Debenture. 8. The following shall constitute an "Event of Default": (a) The Company shall default in the payment of principal or interest on this Debenture and such default shall remain unremedied for five (5) business days after the Company has been notified of the default in writing by a Holder; or (b) Any of the representations or warranties made by the Company herein, and in the Registration Rights Agreement or in any certificate or financial or other written statements furnished by or on behalf of the Company in connection with the execution and delivery of this Debenture and the Registration Rights Agreement shall be false or misleading in any material respect at the time made; or -3- (c) The Company fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Debenture, fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to the Holder upon conversion of this Debenture and when required by this Debenture or the Registration Rights Agreement, or fails to remove any restrictive legend or to cause its Transfer Agent to transfer on any certificate or any shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture, the Securities Purchase Agreement or the Registration Rights Agreement and any such failure shall continue uncured for five (5) business days after the Company has been notified of such failure in writing by Holder. (d) The Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of the Company under this Debenture and such failure shall continue uncured for a period of thirty (30) days after notice from the Holder or such failure; or (e) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for it dissolution; or (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or (f) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or (g) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days thereafter; or -4- (h) Any money judgment, writ warrant of attachment, or similar process, in excess of One Hundred Thousand ($100,000) Dollars in the aggregate shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or (i) Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (30) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; or (j) The Company shall have its Common Stock suspended or delisted from an exchange or over-the-counter market from trading for in excess of five trading days. Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event or Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein and any other rights or remedies afforded by law. 9. The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities. 10. Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof. -5- 11. This Debenture represents a prioritized obligation of the Company. However, no recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue or any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or other wise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 12. If the Company merges or consolidates with another corporation or sells or transfers all or substantially all of its assets to another person and the holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock, then as a condition of such merger, consolidation, sale or transfer, the Company and any such successor, purchaser or transferee agree that the Debenture may thereafter be converted on the terms and subject to the conditions set forth above into the kind and amount of stock, securities or property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall be as nearly equivalent as may be practicable. In the event of any proposed merger, consolidation or sale or transfer of all or substantially all of the assets of the Company (a "Sale"), the Holder hereof shall have the right to convert by delivering a Notice of Conversion to the Company within fifteen (15) days of receipt of notice of such Sale from the Company. In the event the Holder hereof shall elect not to convert, the Company may prepay all outstanding principal and accrued interest on this Debenture, less all amounts required by law to be deducted, upon which tender of payment following such notice, the right of conversion shall terminate. 13. Concurrently with the execution and delivery of this Debenture, the parties hereto will execute and deliver a Registration Rights Agreement in which the Company will undertake to register the Conversion Shares under the Securities Act of 1933. 14. A. Notwithstanding any other provision hereof to the contrary, at any time prior to the Conversion Date, the Company shall have the right to redeem all or any portion of the then outstanding principal amount of the Debentures then held by the Holder for an amount (the "Redemption Payment") equal to the sum of (a) such outstanding principal of the Debentures plus all accrued but unpaid interest thereon through the date the Redemption Amount is paid to the Holder (the "Redemption Payment Date"), multiplied by (b) 1.25. The Company shall give at least ten (10) business days' written notice of such redemption to the Holder (the "Notice of Redemption"). B. Anything in the preceding provisions of this Section 14 to the contrary notwithstanding, the Redemption Payment shall, unless otherwise agreed to in writing by the Holder after receiving the Notice of Redemption, be paid to the Holder at least ten (10) business days from the date of the Notice of Redemption. Upon the Holder's receipt of the Notice of Redemption, the Holder shall have the right, exercisable within ten (10) business days of the Holder's receipt of the Notice of Redemption, to give a Notice of Conversion to the -6- Company for any or all of the principal amount of the Debenture covered by the Notice of Redemption (such Notice of Conversion, a "Redemption Notice of Conversion"). The Redemption Notice of Conversion shall take precedence over the Notice of Redemption and such Debentures shall be converted in accordance with the terms hereof. The Redemption Payment for any portion of the Debentures covered by the Notice of Redemption but not by a Redemption Notice of Conversion shall be paid no later than on the date ( the "Redemption Payment Date") which is ten (10) business days after the date the Notice of Redemption. 15. In case any provision of this Debenture is held by a court of competent Jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Debenture will not in any way be affected or impaired thereby. 16. This Debenture and the agreements referred to in this Debenture constitute the full and entire understanding and agreement between the Company and the Holder with respect to the subject hereof. Neither this Debenture nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder. 17. This Debenture shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non coveniens, to the bringing of any such proceeding in such jurisdictions. At Holder's election, any dispute between the parties may be arbitrated rather than litigated in the courts, before the arbitration board of the American Arbitrators Association in New York City and pursuant to its rules. Upon demand made by the Holder to the Company, the Company agrees to submit to and participate in such arbitration. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by an officer thereunto duly authorized. Dated: September 1, 1999 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. ------------------------------------- Albert E. Gosselin, President -7- EXHIBIT I NOTICE OF CONVERSION (To be Executed by the Registered Holder in order to Convert the Debenture) The undersigned hereby irrevocably elects to convert $ _____________ of the above Debenture No.____________ into shares of Common Stock of Pollution Research and Control Corp. (the "Company") according to the conditions set forth in such Debenture, as of the date written below. If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other Taxes and charges payable with respect thereto. Date of Conversion______________________________________________________________ Applicable Conversion Price_____________________________________________________ Signature_______________________________________________________________________ Print Name Holder and Title of Signer___________________________________________ Address_________________________________________________________________________ ________________________________________________________________________________ SSN or EIN______________________________________________________________________ Shares are to be registered in the following name: Name____________________________________________________________________________ Address_________________________________________________________________________ Tel.____________________________________________________________________________ Fax_____________________________________________________________________________ SSN or EIN______________________________________________________________________ Shares are to be sent or delivered to following account: Account Name____________________________________________________________________ Address_________________________________________________________________________ -8- EX-4.28 18 INVESTMENT LETTER Exhibit 4.28 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned, 50,000 shares of common stock, no par value per share (the "Common Stock"), of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $75,000 in cash, the undersigned wishes to advise you of his understanding of, agreement with and/or representation of, the following: + 25,000 warrants exercisable at $2.40 for three years. 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 ss.4(1) or ss.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. Pollution Research and Control Corp. Page 2 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 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 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. Pollution Research and Control Corp. Page 3 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: 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. Pollution Research and Control Corp. Page 4 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. 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: Pollution Research and Control Corp. Page 5 ( ) 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 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/ Maria Molinsky ---------------------------------------- Maria Molinsky Pollution Research and Control Corp. Page 6 51 Lord's Highway East, Weston, Connecticut 06883 - -------------------------------------------------------------------------------- Current residence address ###-##-#### (203) 222-7153 - ----------------------------------- ---------------------------------------- Social security number Current residence telephone number Investor - Housewife & mother - ----------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative - ----------------------------------- ---------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Agreed and accepted this 13th day of September, 1999, on behalf of Pollution Research and Control Corporation. /s/ Albert E. Gosselin, Jr. - ------------------------------------------ Albert E. Gosselin, Jr., President and CEO EX-4.29 19 INVESTMENT LETTER Exhibit 4.29 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 50,000 shares of common stock, no par value per share (the "Common Stock") and 25,000 warrants to purchase common stock at an exercise price of $2.40 per share of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $75,000 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. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. Pollution Research and Control Corp. Page 2 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. 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. Pollution Research and Control Corp. Page 3 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 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: 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. Pollution Research and Control Corp. Page 4 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. 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% ( ) 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: Pollution Research and Control Corp. Page 5 ( ) 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 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/ Lee Sion ---------------------------------------- Lee Sion P.O. Box 910, Glendale, California 91209 - -------------------------------------------------------------------------------- Current residence address ###-##-#### Social security number Current residence telephone number Psychologist Al Gosselin - ----------------------------------- ---------------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment (626) 308-4521 - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative - ----------------------------------- ---------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Agreed and accepted this 13th day of September, 1999, on behalf of Pollution Research and Control Corporation. /s/ Albert E. Gosselin, Jr. - ------------------------------------------ Albert E. Gosselin, Jr., President and CEO 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. EX-4.30 20 INVESTMENT LETTER Exhibit 4.30 INVESTMENT LETTER AND MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: In connection with the acquisition by the undersigned of 50,000 shares of common stock, no par value per share (the "Common Stock") and 25,000 warrants to purchase common stock at an exercise price of $2.40 per share of Pollution Research and Control Corp. (the "Company"), in consideration for the sum of $75,000 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. The undersigned understands that the above legend on the certificates would limit their value, including their value as collateral. Pollution Research and Control Corp. Page 2 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. 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. Pollution Research and Control Corp. Page 3 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: 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. Pollution Research and Control Corp. Page 4 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. 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% ( ) 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: Pollution Research and Control Corp. Page 5 ( ) 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 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/ Steven Sion ---------------------------------------- Steven Sion Pollution Research and Control Corp. Page 6 c/o Lee Sion, P.O. Box 910, Glendale, California 91209 - -------------------------------------------------------------------------------- Current residence address ###-##-#### Social security number Current residence telephone number Businessman Lee Sion - ----------------------------------- ---------------------------------------- Current occupation and/or business Name of person connected with Pollution position Research and Control Corp., with whom conferred concerning this investment (626) 308-4521 Brother - ----------------------------------- ---------------------------------------- Current business telephone number Relationship, if any, with the above- mentioned Company representative - ----------------------------------- ---------------------------------------- Current name of business with which Length of relationship, if any, with the associated above-mentioned Company representative Agreed and accepted this 13th day of September, 1999, on behalf of Pollution Research and Control Corporation. /s/ Albert E. Gosselin, Jr. - ----------------------------------------- Albert E. Gosselin, Jr., President and CEO 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. EX-23.2 21 CONSENT Exhibit 23.2 AJ. ROBBINS, P.C. CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 3033 EAST 1ST AVENUE, SUITE 201 DENVER, COLORADO 80206 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-3 of Pollution Research and Control Corp. of our report dated February 12, 1999 relating to the consolidated financial statements of Pollution Research and Control Corp. and to the reference made to our firm under the caption "Experts" which appear in such documents. /s/ AJ.Robbins, P.C. ---------------------------------------- AJ. ROBBINS, P.C. CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS Denver, Colorado September 27, 1999 -----END PRIVACY-ENHANCED MESSAGE-----