-----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, PI7l9qDlNFdLamm6dvqBAUas9dKHFKq3QC4WA9f9Lqob3rXy6rjDzDL1lnHMsttK uUOv4uf2NfcSm+82A6bgMg== 0001011438-02-000224.txt : 20020415 0001011438-02-000224.hdr.sgml : 20020415 ACCESSION NUMBER: 0001011438-02-000224 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020319 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020322 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09327 FILM NUMBER: 02583017 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 8-K 1 form8-k.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): March 19, 2002 POLLUTION RESEARCH AND CONTROL CORP. (Exact Name of Registrant as Specified in Charter) California 0-14266 95-2746949 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 9300 Wilshire Ave., Suite 308 Beverly Hills, California 90212 (Address of Principal Executive Offices) (310) 248-3655 (Registrant's Telephone Number) Item 5. OTHER EVENTS. In accordance with the provisions of Regulation FD, Pollution Research and Control Corp., doing business as Universal Detection Technology (the "Company," "us" or "we"), provides the following updates with regard to its business. In October 2001, we announced our decision to spin-off our wholly-owned subsidiary, Dasibi Environmental Corp., and to distribute the shares of Dasibi to our shareholders who were shareholders as of October 3, 2001. In light of further developments of the Company, and after a thorough analysis and careful deliberation, our board of directors concluded that it is in the best interests of the Company and our shareholders to terminate our plan to spin-off Dasibi. On March 19, 2002, upon approval by our board of directors, we entered into a binding letter of intent to sell all of the outstanding shares of Dasibi to an individual, whom we will refer to throughout this report as the "Buyer." The anticipated closing date of the sale is March 25, 2002. We have attached the binding letter of intent to this report as Exhibit 10.1. Our board of directors believes that the sale of Dasibi will assist us in pursuing our enhanced business strategy which emphasizes the bio-terrorism detection device and medical diagnostic equipment markets. In early February, we announced the launch of a pilot program geared towards early adopters of our bio-terrorism detection devices currently in development. Under this program, we will make available our current Model 7001 to select customers for installation and use while we continue our ongoing modification and reengineering of the device to enable real-time detection of airborne biological and chemical agents. We have completed the first sale of our Model 7001 device to Summit Sportswear and expect to obtain valuable performance data from that installation which will assist us in our continued efforts to develop the technology necessary to detect airborne chemical and biological agents. The following is a summary of the material terms of the letter of intent. This summary does not include all of the terms of the letter of intent and we urge you to read the letter of intent in its entirety. The letter of intent provides for the following: o an assumption by the Buyer of all liabilities of Dasibi as of the closing date of the transaction and all debt and other liabilities of the Company that exist as of the closing date which were incurred directly or indirectly on behalf of Dasibi; o the execution of one or more licensing agreements granting the Company a nonexclusive royalty-fee license to exploit all technology currently owned by Dasibi everywhere throughout the world other than the People's Republic of China; o the assignment by Dasibi of its inventory to the Company; o an obligation on the part of the Company commencing on the first anniversary of the closing to register for resale the shares of common stock acquired by the Buyer upon the exercise of the Buyer's options and other shares of common stock owned by the Buyer, subject to certain terms and conditions as set forth in the letter of intent; and o customary reciprocal indemnification provisions. Page 2 The transaction is subject to the satisfaction or waiver of closing conditions, including but not limited to, the following: o the Company's receipt of all third party consents that are required for the Company to consummate the transactions contemplated by the letter of intent; o that the transaction complies will all provisions of applicable federal, state and local law, and the rules and regulations of the National Association of Securities Dealers; o the receipt of releases of all obligations of the Company arising out of any debt or other liability owed by the Company to Dasibi, by the Company and incurred on behalf of Dasibi, or owed by Dasibi to any third party to which the Company is a guarantor or is in any way liable; o the delivery to the Company of all original promissory notes or other similar instruments issued in favor of the Buyer; and o the Buyer's receipt of a financing commitment in the amount of at least $500,000. CAUTIONARY STATEMENTS AND RISK FACTORS The risks and uncertainties described below are only in connection with our proposed sale of Dasibi and are not the only risks and uncertainties we face. Moreover, additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks actually occur, our business, results of operations and financial condition could suffer. In that event the trading price of our common stock could decline, and our shareholders may lose all or part of their investment in our common stock. The risks discussed below also include forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements. IF WE DO NOT TIMELY CONSUMMATE THE SALE OF DASIBI, WE MAY NOT BE ABLE TO IDENTIFY ANOTHER BUYER AND WE MAY NEED TO CEASE OPERATIONS. The sale of Dasibi is subject to the satisfaction or waiver of a number of closing conditions, some of which are not within our control. Accordingly, we cannot assure you that we will complete the sale of Dasibi to the Buyer pursuant to the terms of the executed binding letter of intent, or at all. If we do not complete the sale of Dasibi to the Buyer, we will continue to be indebted to the Buyer under certain promissory notes that are to be extinguished in connection with this sale. If we do not sell Dasibi in a timely manner, we may be unable to repay the indebtedness owing to the Buyer and we may face litigation in connection with the collection of that debt. We do not have adequate capital to continue to fund the operations of Dasibi and, if we do not complete this sale, or do not rapidly identify an alternative buyer for Dasibi, we may cease operations. IF WE COMPLETE THE SALE OF DASIBI UNDER THE TERMS OF THE LETTER OF INTENT, WE WILL NOT BE ABLE TO PURSUE OUR CURRENT BUSINESS IN CHINA, AND AS A RESULT, OUR REVENUES AND PROFITABILITY MAY DECLINE. As part of the sale of Dasibi to the Buyer, we have obtained a nonexclusive license to exploit all of the technology currently owned by Dasibi anywhere in the universe outside of mainland China. In recent years, we focused substantially all of our marketing efforts towards, and substantially all of our Page 3 revenue was derived from, sales of our air pollution product in China. Our agreement not to compete in that market will cause our revenue to decline substantially. WE NEED ADDITIONAL CAPITAL TO FUND PRODUCT DEVELOPMENT, MARKETING ACTIVITIES AND SALES. IF WE CANNOT OBTAIN ADEQUATE FINANCING, WE MAY CEASE OPERATIONS. Recently we shifted our research and development, marketing and business development efforts away from the air pollution market in China towards the bio-medical and bio-terrorism arena and to other medical applications for our products. If we cannot raise additional capital, we will not be able to pursue these strategies as scheduled, or at all, and we may cease operations. If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our shareholders will be diluted. Any new securities could have rights, preferences and privileges senior to those of our common stock. Furthermore, we cannot be certain that additional financing will be available when and to the extent we require or that, if available, it will be on acceptable terms. If adequate funds are not available on acceptable terms, we may not be able to fund continued development and sales of our existing products, the expansion of our business into the bio-medical and bio-terrorism markets or markets for other medical applications of our products, which could cause us to cease operations. WE ARE NOT RETAINING ANY OF THE DASIBI EMPLOYEES WHO HAVE SIGNIFICANT EXPERIENCE AND KNOWLEDGE IN DEVELOPING, ENHANCING OR MARKETING DASIBI'S CURRENT PRODUCTS, AND AS A RESULT, WE MAY LOSE REVENUE AND MARKET SHARE. If we cannot effectively manage the design, development, manufacture and marketing of the various monitoring instruments previously manufactured by Dasibi, our revenue and profitability will decline and we may lose customers and market share. Our management team does not have substantial experience in the air pollution monitoring instruments business and may not be able to timely identify or anticipate all of the material risks associated with operating that business. We may not be able to retain a sufficient number of additional qualified employees on a timely business, or at all. If we cannot timely and cost-effectively manage the air pollution monitoring instruments business, we will lose revenue, customers and market share, and our results of operations will be materially adversely affected. Item 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements. None. (b) Pro Forma Financial Information. None. (c) Exhibits. Exhibit 10.1 Binding Letter of Intent executed on March 19, 2002. Exhibit 99.1 Press Release issued on March 21, 2002. Page 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. March 22, 2002 POLLUTION RESEARCH AND CONTROL CORP. By: /S/ JACQUES TIZABI ------------------------------------- Jacques Tizabi President and Chief Executive Officer Page 5 EXHIBIT INDEX EXHIBIT 10.1 Binding Letter of Intent executed on March 19, 2002. 99.1 Press Release issued March 21, 2002. Page 6 EX-10 3 exhibit10-1.txt EXHIBIT 10.1 Pollution Research and Control Corp. 9300 Wilshire Ave., Suite 308 Beverly Hills, CA 90212 March 18, 2002 CONFIDENTIAL Mr. Steven Sion 9913 Robins Oaks Drive Las Vegas, Nevada 89117 RE: LETTER OF INTENT SALE OF STOCK OF DASIBI ENVIRONMENTAL CORP. Dear Steven: Following up on our recent discussions, this letter (this "LETTER OF INTENT") sets forth our mutual understanding regarding the principal terms on which you (the "BUYER") propose to purchase (the "TRANSACTION") all of the issued and outstanding stock of Dasibi Environmental Corp. (the "COMPANY"), a California corporation and wholly-owned subsidiary of Pollution Research and Control Corp., a California corporation (the "SELLER"). Based on our discussions, we are prepared to proceed rapidly to complete the Transaction, and look forward to working with you to accomplish our mutual objective. The following paragraphs of this letter (the "BINDING PROVISIONS") are the legally binding and enforceable agreements of the Seller, the Company and the Buyer. The parties intend to execute a written acquisition agreement providing for the Transaction (the "DEFINITIVE PURCHASE AGREEMENT"). In the event that the Transaction is consummated without the parties executing a Definitive Purchase Agreement, the Binding Provisions shall govern the terms and conditions of the Transaction. 1. THE TRANSACTION. The Buyer will purchase all of the issued and outstanding stock of the Company (the "STOCK") for an aggregate purchase price of $1,500,000 (the "PURCHASE Price"). The Buyer may assign the right to receive the Stock to another entity at the Closing. The Purchase Price shall be payable in the form and subject to the adjustments, each as set forth below: (a) FORM OF PURCHASE PRICE All outstanding indebtedness of whatever nature or form owing from the Seller to Lee Sion and/or Steven Sion, including the principal amounts together with all accrued and unpaid interest, late charges, penalties, and any other costs or charges arising directly or indirectly from the indebtedness as of the date of the Closing (as defined herein) (the "Debt") shall be deemed paid in full and fully and finally discharged as of the Closing. The parties acknowledge that a disagreement exists with respect to the amount of the Debt and nothing contained in this Letter Page 1 of Intent shall serve as an acknowledgement, admission or any similar action by any of the parties with respect to the amount of the Debt. (b) ADJUSTMENTS TO PURCHASE PRICE: VALUATION Seller intends to retain an independent valuation analyst to determine a reasonable valuation (the "VALUATION") of the Company. If the analyst values the Company at a price in excess of 110% of the Purchase Price, then the parties hereto shall work cooperatively to revise the terms of the Transaction to provide additional consideration to Seller to adequately reflect the value of the Stock as assessed by the analyst. 2. TECHNOLOGY LICENSE AGREEMENTS. Concurrent with the Closing, the Company and the Seller will enter into one or more licensing agreements (the "TECHNOLOGY LICENSE Agreements") containing the terms set forth in EXHIBIT A and otherwise in customary form and substance. 3. CLOSING. If all conditions to the closing of the Transaction (the "CLOSING") are then satisfied or waived, the Closing shall take place on or before March 25, 2002, at 5:00 p.m. (Pacific Standard Time) automatically and without any further action by any party (the "CLOSING DATE"). If all conditions to the Closing are not then satisfied or waived, either party has the right to terminate this Letter of Intent. 4. ASSIGNMENT OF ASSETS. Immediately prior to the Closing, the Company shall assign to the Seller all of the Company's inventory (the "INVENTORY") as such term is defined by U.S. Generally Accepted Accounting Principles. The inventory shall be valued by an independent valuation analyst. 5. OPTIONS TO PURCHASE COMMON STOCK OF SELLER. The Buyer hereby acknowledges that notwithstanding any agreement or document to the contrary, as of the Closing, the following individuals shall have no rights to purchase the common stock of the Seller other than the options listed below, and at the Closing, Seller will deliver to the Buyer an option agreement reflecting each option listed below and the Buyer will surrender each previously granted option:
NUMBER OF SHARES OPTIONEE STRIKE PRICE EXPIRATION DATE - ---------------- ------------ ------------ --------------- 25,000 Steven Sion $0.25 3/25/05 528,571 Steven Sion $0.875 3/25/05
For purposes of this Letter of Intent, the options identified in this Paragraph 5 collectively are referred to as, the OPTIONS, and the shares of common stock underlying the Options collectively are referred to as, the OPTION SHARES. Notwithstanding any agreement or document to the Page 2 contrary, the Seller has no obligation to register for resale the Option Shares other than as provided in this Letter of Intent: (a) PIGGY-BACK REGISTRATION RIGHTS. If (but without any obligation to do so) the Seller proposes to register any of its common stock under the Securities Act of 1933, as amended (the "SECURITIES ACT") in connection with the public offering of such securities solely for cash (other than a registration (i) with respect to an employee benefit plan, or (ii) solely in connection with a Rule 145 transaction under the Securities Act), the Seller shall give the Buyer at least ten (10) days written notice of such registration prior to filing a registration statement to effect any such registration. Upon the written request of the Buyer given within five (5) days after delivery of such written notice by the Seller, the Seller shall use its reasonable efforts to cause to be registered under the Securities Act all of the Option Shares and the Common Shares (as defined in Paragraph 15), the resale of which is not then exempt from the registration requirements of the Securities Act pursuant to Rule 144 of the Securities Act. The Seller shall be obligated to register the Option Shares and the Common Shares pursuant to this Paragraph 5(a) on one occasion only; provided, however, that if the registration statement under this Paragraph 5(a) is on a delayed or continuous basis, the Seller shall not withdraw the registration statement prior to the sale or other disposition of all the Option Shares and the Common Shares included by the Buyer under such registration statement. If any registration under this Paragraph 5(a) is, in whole or in part, an underwritten public offering of common stock, the number of Option Shares and Common Shares to be included in such underwriting may be reduced in whole or in part if and to the extent that the managing underwriter shall be of the opinion that such inclusion would adversely affect the marketing of the securities to be sold by the Seller. Notwithstanding the foregoing provisions, the Seller may withdraw any registration statement referred to in this Paragraph 5(a) without incurring any liability to the Buyer. (b) S-3 REGISTRATION STATEMENT. If requested by the Buyer and the Buyer then owns (i) that number of Options which are then exercisable into in excess of 50% of the Option Shares, and owns in excess of 50% of the Common Shares, or (ii) in excess of 50% of the Option Shares and in excess of 50% of the Common Shares, then at such time that the Seller is eligible to file a registration statement on Form S-3 for the resale of the Option Shares and the Common Shares, the Seller shall use its reasonable efforts to register the resale of the Option Shares and the Common Shares and keep such registration effective until all the Options Shares and Common Shares have been sold or otherwise disposed; provided however, the Seller shall have no obligation under this Paragraph 5(b) to file a registration statement: (a) with respect to the Option Shares, if the resale of the Option Shares is then exempt from the registration requirements of the Securities Act pursuant to Rule 144 of the Securities Act; and (b) with respect to the Common Shares, if the resale of the Common Shares is then exempt from the registration requirements of the Securities Act pursuant to Rule 144 of the Securities Act. (c) LOCK-UP. Notwithstanding the registration rights contained in this Letter of Intent, the Buyer shall not sell or otherwise dispose of any of the Option Shares or the Common Shares before March 25, 2003. The Buyer acknowledges that the certificates representing the Page 3 Options, the Option Shares, and the Common Shares will bear restrictive legends reflecting the terms of this Paragraph 5(c) and the restrictions on transfer imposed by applicable law. 6. PUBLICITY. Without the prior written consent of Seller, Buyer will not, and will direct its representatives not to, make, directly or indirectly, any public comment, statement, or communication with respect to, or otherwise to disclose or to permit the disclosure of the existence of discussions regarding, a possible transaction between the parties or any of the terms, conditions, or other aspects of the Transaction. 7. COVENANTS. (a) ACTIONS OF COMPANY PRIOR TO CLOSING. Until the earlier of the Closing or the Termination Date (as defined in paragraph 10), the Company, except as contemplated by this Letter of Intent, will: (a) carry on its business as presently conducted and only in the usual and ordinary course; (b) use its reasonable efforts to preserve its business organization intact; (c) not declare or pay any dividends or distributions on its capital stock; (d) not make any changes in its capital structure or issue any shares of its capital stock or other securities or rights or options to purchase its capital stock or other securities; (e) not make any payments to its officers, directors or employees except in the usual and ordinary course of business; and (f) operate, incur obligations and transfer or dispose of assets only in the ordinary course of business, consistent with past practices. (b) ACTIONS OF BUYER PRIOR TO CLOSING. The Buyer shall use its best efforts to obtain the Qualified Financing (as defined in Paragraph 14(a)) and shall update the Company regarding the status of the Qualified Financing at least five (5) days before the Closing Date. (c) ACTIONS OF BUYER POST CLOSING. (i) The Buyer agrees to and will cause the officers, directors, employees and consultants of the Company to fully cooperate and use their best efforts assist, make available, and provide all such information as the Seller may require in connection with any obligations of the Seller pursuant to any local, state, federal or foreign law. (ii) The Company agrees to timely pay all debt and any other liabilities of the Seller that exist as of the Closing Date which were incurred directly or indirectly on behalf of the Company. 8. FEES AND EXPENSES. The Buyer and the Seller each shall be responsible for their own fees and expenses incurred in the Transaction, including, but not limited to, any and all attorney fees, investment banker fees, commissions and accounting fees. 9. CONFIDENTIALITY. Except as and to the extent required by applicable law, rule, or regulation, each party will not disclose or use, and will direct its representatives not to disclose or use, for a period ending on the first anniversary of the date of this Letter of Intent, any Page 4 confidential information with respect to the Company or the Seller, furnished, or to be furnished, by any party or their respective representatives to any other party or its representatives at any time or in any manner other than in connection with its evaluation of the Transaction. For purpose of this paragraph, "confidential information" means any information about the Company or the Seller stamped "confidential" or identified in writing as such to the parties promptly following its disclosure unless (i) such information is already known to the other party or its representatives or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such other party or its representatives, (ii) the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the Transaction, or (iii) the furnishing or use of such information is required, necessary, or appropriate in legal proceedings. Upon the request of any party, the other parties will promptly return to the requesting party or destroy any confidential information in its possession and certify in writing to the requesting party that it has done so. 10. TERMINATION. This binding Letter of Intent shall expire on the earliest to occur of: (i) the written agreement of the Seller and the Buyer or (ii) 5:01 p.m. on March 25, 2002, if the Closing shall not have occurred (the "TERMINATION DATE"). The Binding Provisions (other than Paragraphs 6, 8 and 9, which will continue in effect beyond the Termination Date) will automatically terminate on the Termination Date; provided, however, that the termination of the Binding Provisions will not affect the liability of a party for breach of any of the Binding Provisions prior to the termination. 11. REPRESENTATIONS OF BUYER. (a) ACCREDITED INVESTORS. The Buyer is an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act. The Buyer is acquiring the Stock for his own account and not with a view to its distribution with the meaning of Section 2(11) of the Securities Act. (b) OWNERSHIP OF DEBT; POWER AND AUTHORITY. The Buyer is the sole lawful owner, beneficially and of record, of the Debt, free and clear of any security interest, claim, lien, pledge, option, encumbrance or restriction of any kind or nature. Buyer has not assigned the Debt, in whole or in part, to any other individual or entity. Buyer has the full power and authority to enter into this Letter of Intent, and to consummate the transactions contemplated herein. (c) ASSIGNMENT OF DEBT. All outstanding indebtedness of whatever nature or form owing from the Seller and/or the Company to Michael Franzese and/or Lee Sion, including the principal amounts together with all accrued and unpaid interest, late charges, penalties, and any other costs or charges arising directly or indirectly from the indebtedness as of the date of the Closing has been assigned to Steven Sion. (d) DISCLOSURE OF INFORMATION. The Buyer has received and reviewed all the information it considers necessary or appropriate for deciding whether to purchase the Stock. The Buyer further represents that the Buyer is relying solely on its own expertise and that of its Page 5 consultants, and not on any representation of the Seller or the Company not expressly contained in this Agreement. The Buyer has had an opportunity to ask questions and receive answers from Seller and/or the Company regarding the terms and conditions of the offering of the Stock. 12. RESTRICTED SECURITIES. The Buyer understands that the Stock constitutes "restricted securities" under the federal securities laws because it is being acquired from the Seller in a transaction not involving a public offering and that under such laws the Stock may be resold without registration under the Securities Act and applicable state securities laws only in certain limited circumstances. In this regard, the Buyer represents that the Buyer is familiar with Rule 144, as promulgated under the Securities Act, and understands the resale limitations imposed thereby and by the Securities Act. 13. CONDITIONS PRECEDENT OF SELLER AND COMPANY. The obligations of the Seller and the Company to effect the Closing are further subject to the satisfaction or waiver, on or prior to the Closing Date, of the following conditions: (a) The Seller has obtained third party consents to the Transaction from any person or entity from whom such consent is required to be obtained by the Seller; (b) The Transaction complies with all provisions of applicable federal, state and local law and the rules and regulations of the National Association of Securities Dealers; (c) No governmental entity or other party shall have threatened to, or initiated proceedings to, restrain or prohibit the Transaction or force a rescission of the Transaction; (d) No law or order shall have been enacted, entered, issued or promulgated by any governmental entity that prohibits the consummation of the Transaction; (e) If the Valuation exceeds 110% of the Purchase Price, the parties have agreed upon revised terms of the Transaction pursuant to Paragraph 1(b) hereof; (f) The receipt of releases of all obligations of the Seller arising out of any debt or other liability owed by the Seller to the Company, by the Seller and incurred on behalf of the Company, or owed by the Company to any third party to which the Seller is a guarantor or in any way liable; to the extent the Seller cannot obtain the release of any such other debt or other liabilities (the "REMAINING LIABILITIES"), the receipt of the assumption by the Buyer of all Remaining Liabilities. (g) The Company shall have assigned the Inventory to the Seller; (h) The Company shall have executed and delivered to the Seller the Technology License Agreements; (i) Buyer shall have delivered to Seller all original promissory notes and other documents evidencing the Debt; and Page 6 (j) Each representation and warranty set forth herein on behalf the Buyer must have been accurate and complete as of the date of this Letter of Intent, and must be accurate and complete as of the Closing Date, as if made on the Closing Date. 14. CONDITIONS PRECEDENT OF BUYER. The obligations of the Buyer to effect the Closing are further subject to the satisfaction or waiver, on or prior to the Closing Date, of the following conditions: (a) The Buyer shall have entered into an agreement to obtain financing in an amount not less than $500,000 (the "QUALIFIED FINANCING"); (b) If the Valuation exceeds 110% of the Purchase Price, the parties have agreed upon revised terms of the Transaction pursuant to Paragraph 1(b) hereof; and (c) Each representation and warranty set forth herein on behalf the Seller and the Company must have been accurate and complete as of the date of this Letter of Intent, and must be accurate and complete as of the Closing Date, as if made on the Closing Date. 15. ISSUANCE OF COMMON STOCK. The Seller agrees to instruct its transfer agent at the Closing to issue, immediately following the Closing, 100,000 shares of restricted common stock of Seller (the "COMMON SHARES") to the Buyer in connection with a promissory note by and between the Seller and the Buyer dated December 22, 2000. The Buyer agrees not to sell or otherwise dispose of the Common Shares before the earlier to occur of: (i) an effective registration statement of Seller pursuant to Paragraphs 5(a) or 5(b); or (ii) March 25, 2003. The Buyer acknowledges that the certificate evidencing the Common Shares will bear restrictive legends reflecting the terms of this Paragraph 15 and the restrictions on transfer imposed by applicable law. The Buyer hereby acknowledges that, notwithstanding any agreement or document to the contrary, no other securities of the Seller are owed to the Buyer as of the date hereof other than as provided in this Letter of Intent. 16. INDEMNIFICATION. (a) The Buyer shall indemnify, save and keep the Seller, its officers, directors, employees, partners and shareholders (each a "SELLER INDEMNITEE" and collectively, the "SELLER INDEMNITEES") harmless against and from all liabilities and damages sustained or incurred by any Seller Indemnitee as a result of or arising out of or by virtue of (i) any inaccuracy in or breach of any representation and warranty made by the Buyer to the Seller in this Letter of Intent; and (ii) the breach by the Buyer, or the failure of the Buyer to comply with, any covenants or obligations under this Letter of Intent to be performed by the Buyer. (b) The Company shall indemnify, save and keep any Seller Indemnitee harmless against and from all liabilities and damages sustained or incurred by any Seller Indemnitee as a result of or arising out of or by virtue of any failure of the Company to obtain any consents required in connection with the consummation of the Transaction. Page 7 (c) The Seller shall indemnify, save and keep the Buyer harmless against and from all liabilities and damages sustained or incurred by the Buyer as a result of or arising out of or by virtue of (i) any inaccuracy in or breach of any representation and warranty made by the Seller to the Buyer in this Letter of Intent and (ii) the breach by the Seller, or the failure of the Seller to comply with, any covenants or obligations under this Letter of Intent to be performed by the Seller. (d) The Seller shall indemnify, save and keep the Buyer harmless against and from all liabilities and damages sustained or incurred by the Buyer as a result of or arising out of or by virtue of any failure of the Seller to obtain any consents required in connection with the consummation of the Transaction. 17. ENTIRE AGREEMENT. This Letter of Intent constitutes the entire agreement between the parties, and supersedes all prior oral or written agreements, understandings, representations and warranties, and course of conduct and dealing between the parties on the subject matter hereof. Except as otherwise provided herein, this Letter of Intent may be amended or modified only by a writing executed by all of the parties. 18. GOVERNING LAW. The Binding Provisions will be governed by and construed under the laws of the State of California without regard to the choice of all law rules that may direct the application of the laws of another jurisdiction. 19. COMPLIANCE WITH CALIFORNIA LAW. If, in the reasonable determination of Seller's counsel, the Transaction is subject to a vote of the shareholders of Seller under applicable law, including Section 1001 of the California Corporations Code, then the parties hereto shall either (i) use their reasonable best efforts to obtain a vote of the shareholders with respect to the Transaction as soon as practicable following the date of this Letter of Intent, or (ii) to restructure the Transaction in a manner that, in the reasonable determination of counsel to the Seller, does not require a vote of the shareholders of Seller. 20. EFFECT OF LETTER OF INTENT. Except as expressly provided in the Binding Provisions (or as expressly provided in any binding written agreement that the parties may enter into in the future), no past or future action, course of conduct, or failure to act relating to the Transaction, or relating to the negotiation of the terms of the Transaction or any Definitive Purchase Agreement, will give rise to or serve as a basis for any obligation or other liability on the part of the parties. 21. NOTICE. All notices, requests, demands, claims and other communications hereunder will be in writing. Any notice, request, demand, claim or other communication hereunder will be deemed duly given if (and then three business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: Page 8 If to the Seller: Jacques Tizabi 9300 Wilshire Blvd., Suite 308 Beverly Hills, CA 90212 Tel: (310) 273-2661 Fax: (310) 273-2662 Copy to (which will not constitute notice): Akin, Gump, Strauss, Hauer & Feld, L.L.P. Attn: Julie Kaufer, Esq. 2029 Century Park East, 24th Floor Los Angeles, CA 90067 Tel: (310) 229-1000 Fax: (310) 229-1001 If to the Buyer: Attn: Steven Sion 9913 Robin Oaks Drive Las Vegas, Nevada 89117 Tel: (702) 255-3696 Fax: (702) 255-2373 Copy to (which will not constitute notice): Morrison & Foerster LLP Attn: Allen Sussman 555 West Fifth Street Los Angeles, CA 90013 Tel: (213) 892-5200 Fax: (213) 892-5454 Any party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth. Page 9 If you wish to proceed on the basis outlined above, please execute this binding Letter of Intent in the space provided below and return it to me by 5:00 p.m., Pacific Daylight Time, on March 19, 2002. Sincerely yours, POLLUTION RESEARCH AND CONTROL CORP. By: /S/ JACQUES TIZABI --------------------------------- Its: CEO ----------------------------- ACCEPTED AND AGREED TO THIS 18TH DAY OF MARCH, 2002 By: /S/ STEVEN SION ---------------------------- Steven Sion Page 10 EXHIBIT A MATERIAL TERMS TO BE INCLUDED IN TECHNOLOGY LICENSE AGREEMENTS: Dasibi Environmental Corp. ("LICENSOR") hereby irrevocably grants to Pollution Research and Control Corp. ("LICENSEE") and its successors and assigns, a nonexclusive, sublicensable, transferable, assignable, perpetual and royalty-free license throughout the universe, but expressly excluding mainland China, to (1) make, use, develop, practice and otherwise exploit (collectively, "EXPLOIT" and words of similar import) all products, inventions, devices, software, methods, processes, formulas or other technologies owned by Licensor or which Licensor has a license to Exploit and all intellectual property rights inherent therein or related thereto (the "PROPERTIES") as of the date hereof, and (2) to manufacture, market, distribute, sell and license products or services resulting from such Exploitation of the Properties. Page 11 EX-99 4 exhibit99-1.txt EXHIBIT 99.1 UNIVERSAL DETECTION TECHNOLOGY ANNOUNCES SALE OF SUBSIDIARY LOS ANGELES--(BUSINESS WIRE)--March 21, 2002--Universal Detection Technology (Nasdaq: UDET - news), a provider of environmental monitoring technologies, including bio-terrorism detection devices, air monitoring systems, and medical diagnostic equipment ("UDT"), today announced that it has entered into a binding letter of intent to sell its Dasibi Environmental Corp. subsidiary ("DEC"). The sale is scheduled to close on March 25, 2002 and is subject to conditions, including receipt of necessary consents, compliance with all applicable laws and receipt of financing by the buyer. UDT originally planned to spin-off DEC. Under the terms of the letter of intent, UDT will sell the unit for the cancellation of debt of approximately one and a half million dollars. UDT will retain licenses to intellectual property enabling it to continue its strategy of product development in the bio-chemical and medical technology fields except for the People's Republic of China, in which territory Dasibi has exclusive rights to exploit the technology. UDT will also retain all inventory owned by DEC. UDT continues its ongoing modification and reengineering of the 7001 to enable real-time detection of airborne biological and chemical agents and is continuing its pilot program of the device as well. "The sale is in line with the company's strategy and will significantly strengthen its balance sheet and allow the company to leverage its technology base and resources moving forward," said CEO Jacques Tizabi. He added, "This transaction goes a long way in accomplishing these goals." ABOUT UNIVERSAL DETECTION TECHNOLOGY Universal Detection Technology (UDT) was founded in 1973 and is a leading provider of environmental monitoring technologies, including bio-terrorism detection devices, air monitoring systems, and medical diagnostic equipment. UDT's proprietary technology, together with its R & D expertise, exclusive licenses of third party technologies and devices, and sales distribution networks in North America, Europe and Asia, position the Company to capitalize on growth and value opportunities. SAFE HARBOR STATEMENT: Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results in the future to differ materially from forecasted results. These risks and uncertainties include, among other things, our ability to timely close the sale of Dasibi under the terms of the letter of intent, our ability to timely and cost effectively enhance our new products and develop new products targeted to the bio-chemical and medical markets, commercial acceptance of our products, product price volatility, product demand, market competition and general economic conditions. CONTACT: Universal Detection Technology www.udetection.com Jacques Tizabi, CEO, 310/248-3655 or For Investor Relations for UDET: Phoenix Alliance Phil Huss, 970/259-7241 phoenixalliance@frontier.net -----END PRIVACY-ENHANCED MESSAGE-----