EXHIBIT 10.170
POLLUTION RESEARCH AND CONTROL CORP.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
effective as of the 27th day of January, 1999, by and between Pollution Research
and Control Corp., a California corporation (the "Company"), 000 Xxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000, and Xxxx X. Xxxx (the "Optionee"), 00 Xxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000.
The Company desires to provide the Optionee an opportunity to purchase
shares of its common stock, no par value (the "Common Stock"), as hereinafter
provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall mean:
(a) "Board" - the Board of Directors of the Company.
(b) "Common Stock" - the Common Stock, no par value, of the Company.
(c) "Company" - Pollution Research and Control Corp., a California
corporation, 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000.
(d) "Effective Date" - January 27, 1999.
(e) "Optionee" - Xxxx X. Xxxx
(f) "Exercise Period" - from January 27, 1999, through and including
January 27, 2002.
(g) "Expiration Date" - January 27, 2002.
(h) "Option" - The right to purchase shares of Common Stock of the
Company as provided herein, and any options delivered in
substitution or exchange therefor, as provided herein.
(i) "Purchase Price" - $.75 per share.
(j) "Shares" - 48,000 shares of Common Stock of the Company.
(k) "Subscription and Acknowledgement Form" - The form attached to
this Agreement as Exhibit "A".
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2. Grant of Option. Subject to the terms and conditions of this Agreement,
the Company hereby grants to the Optionee the right to purchase all or any part
of an aggregate of 48,000 shares of Common Stock of the Company at the Purchase
Price set forth in Section 3 hereof and in accordance with the schedule set
forth in Section 5 hereof. This right to purchase Shares is hereinafter referred
to as the "Option."
3. Purchase Price. The purchase price of the shares of Common Stock of the
Company issuable pursuant to the exercise of this Option shall be $.75 per Share
(the "Purchase Price.")
4. Term of Option. Notwithstanding anything to the contrary contained in
this Agreement, no option granted hereunder shall be exercisable after the
expiration of the Expiration Date.
5. Exercise.
(a) Time of Exercise. This Option may be exercised commencing on the
Effective Date, in whole or in part (but not as to a fractional share) at the
principal executive offices of the Company, at any time or from time to time,
through and including January 27, 2002; provided, however, that this Option
shall expire and be null and void if not exercised in the manner herein provided
by 5:00 p.m., Pacific Standard Time, on January 27, 2002.
(b) Manner of Exercise. This Option is exercisable at the Purchase
Price, payable in cash or by cashier's check payable to the order of the
Company, subject to adjustment as provided in Section 6 hereof. Upon surrender
of this Option to the Company at its principal executive offices with the
annexed Subscription and Acknowledgment Form duly executed, together with
payment of the Purchase Price for the Shares purchased (and any applicable
transfer taxes) at the Company's principal executive offices, the Optionee shall
be entitled to receive a certificate or certificates for the Shares so
purchased. The Optionee hereby acknowledges and agrees to the taxable nature of
the event of the exercise of the Option and that the Optionee will not hold the
Company responsible for the reporting or payment of such taxes.
(c) Delivery of Stock Certificates. As soon as practicable, but not
exceeding five days after complete or partial exercise of this Option, the
Company, at its expense, shall cause to be issued in the name of the Optionee
(or upon payment by the Optionee of any applicable transfer taxes, the
Optionee's assigns) a certificate or certificates for the number of fully-paid
and nonassessable Shares to which the Optionee shall be entitled upon such
exercise, together with such other stock or securities or property or
combination thereof to which the Optionee shall be entitled upon such exercise,
determined in accordance with Section 6 hereof.
(d) Record Date of Transfer of Shares. Irrespective of the date of
issuance and delivery of certificates for any stock or securities issuable upon
the exercise of this Option, each person (including a corporation or
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partnership) in whose name any such certificate is to be issued shall for all
purposes be deemed to have become the owner of record of the stock or other
securities represented thereby immediately prior to the close of business on the
date on which a duly executed Subscription Form containing notice of exercise of
this Option and payment of the Purchase Price is received by the Company.
6. Adjustment of Purchase Price.
The Purchase Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of its
capital stock (other than an issuance of shares of capital stock to holders of
Common Stock who have elected to receive a dividend in shares in lieu of cash),
(ii) subdivide its outstanding shares of Common Stock, (iii) reduce, consolidate
or combine its outstanding shares of Common Stock into a smaller number of
shares or (iv) issue by reclassification of its shares of Common Stock any
shares of the Company, the Purchase Price in effect immediately prior thereto
shall be adjusted to that amount determined by multiplying the Purchase Price in
effect immediately prior to such date by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding on such date before
giving effect to such division, subdivision, reduction, combination,
consolidation or stock dividend and of which the denominator shall be the number
of shares of Common Stock after giving effect thereto. Such adjustment shall be
made successively whenever any such effective date or record date shall occur.
An adjustment made pursuant to this subsection (a) shall become effective
retroactively to the Effective Date immediately after the record date in the
case of a dividend and shall become effective immediately after the effective
date in the case of a subdivision, reduction, consolidation, combination or
reclassification.
(b) In case the Company shall issue rights or options to all or
substantially all holders of its Common Stock entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe for
or purchase shares of Common Stock (or securities convertible into Common Stock)
at a price per share (the "Offering Price") less than the Purchase Price at the
record date mentioned below, the Purchase Price shall be determined by dividing
the Purchase Price in effect immediately prior to such issuance by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding on
the date of issuance of such rights or options plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights or options plus the number of shares which the
aggregate Offering Price of the total number of shares so offered would purchase
at such fair market value. Such adjustment shall be made whenever such rights or
options are issued, and shall become effective retroactively, immediately after
the record date for the determination of shareholders entitled to receive such
rights or options.
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock evidence of its indebtedness, shares of any class of
the Company's stock other than Common Stock or assets (excluding cash dividends)
or rights or options to subscribe for or purchase shares of Common Stock or
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securities convertible into Common Stock (excluding those referred to in
subsection (b) above), then in each such case the Purchase Price shall be
determined by dividing the Purchase Price in effect immediately prior to such
issuance by a fraction, of which the numerator shall be the Purchase Price on
the date of such distribution and of which the denominator shall be such fair
market value per share of the Common Stock, less the then fair market value (as
determined by the Committee, whose determination shall be conclusive, and
described in a statement, which will have the applicable resolutions of the
Board of Directors attached thereto, filed with the Company) of the portion of
the assets or evidences of indebtedness or shares so distributed or of such
subscription rights or options applicable to one share of the Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become
effective retroactively immediately after the record date for the determination
of stockholders entitled to receive such distribution.
(d) If the Common Stock issuable upon the conversion of the Option
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation or sale of assets
provided for in this Section 6), then, and in each such event, the Optionee
shall have the right thereafter to convert such Option into the kind and amount
of shares of Common Stock and other securities and property receivable upon such
reorganization, reclassification or other change by the holders of the number of
shares of Common Stock into which such Option might have been converted, as
reasonably determined by the Committee, immediately prior to such
reorganization, reclassification or change, all subject to further adjustment as
provided herein.
(e) If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section 6)
or a merger or consolidation of the Company with or into another corporation, or
the sale of all or substantially all of the Company's properties and assets to
any other person (except as provided for in Section 6(f)), then, as a part of
such reorganization, merger, consolidation or sale, provision shall be made as
reasonably determined by the Committee so that the Optionee shall thereafter be
entitled to receive upon conversion of such Option, the number of shares of
stock or other securities or property of the Company or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such capital reorganization, merger, consolidation or sale.
(f) The adjustments provided for in this Section 6 are cumulative and
shall apply to successive divisions, subdivisions, reductions, combinations,
consolidations, issue, distributions or other events contemplated herein
resulting in any adjustment under the provisions of this Section; provided that,
notwithstanding any other provision of this Section, no adjustment of the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price then in effect;
provided, however, that any adjustments which by reason of this subsection (f)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.
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(g) Notwithstanding Sections 6(b) and (c) above, no adjustment shall
be made in the Purchase Price if provision is made for the Optionee to
participate in such distribution as if the Optionee had converted all of the
principal balance of the Option into shares of Common Stock at the Purchase
Price in effect immediately prior to such distribution.
(h) Upon each adjustment of the Purchase Price, the Company shall give
prompt written notice thereof addressed to the Optionee at the Optionee's
address as shown on the records of the Company, which notice shall state the
Purchase Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares issuable upon the conversion of such Optionee's
Option, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is bases.
(i) In the event of any question arising with respect to the
adjustments provided for in Section 6, such question shall be conclusively
determined by an opinion of independent certified public accountants appointed
by the Company (who may be the auditors of the Company) and acceptable to the
Optionee. Such accountants shall have access to all necessary records of the
Company, and such determination shall be binding upon the Company and the
Optionee.
(j) The Company may, in its sole discretion and without any obligation
to do so, reduce the Purchase Price then in effect by giving fifteen days'
written notice to the Optionee. The Company may limit such reduction as to its
temporal duration or may impose other conditions thereto in its sole discretion.
7. Acceleration of Right to Exercise Options. Notwithstanding anything to
the contrary contained herein regarding the time for exercise of this Option,
the following provisions shall apply:
(a) Mergers and Reorganizations. If the Company or its shareholder
enter into an agreement to dispose of all or substantially all of the assets of
the Company by means of a sale, merger or other reorganization of liquidation,
or otherwise in a transaction in which the Company is not the surviving
corporation, this Option shall become immediately exercisable with respect to
the full number of Shares subject to the Option during the period commencing as
of the date of the agreement to dispose of all or substantially all of the
assets or stock of the Company and ending when the disposition of assets or
stock contemplated by the agreement is consummated or this Option is otherwise
terminated in accordance with its provisions, whichever occurs first. This
Option shall not become immediately exercisable, however, if the transaction
contemplated in the agreement is a merger or reorganization in which the Company
will survive.
(b) Change in Control. In the event of a change in control or
threatened change in control of the Company, this Option shall become
immediately exercisable. The term "change in control," for purposes of this
Section, shall refer to the acquisition of 20 per cent or more of the voting
securities of the Company by any person or by persons acting as a group within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended; provided that no change in control or threatened change in control
shall be deemed to have occurred if, prior to the acquisition of, or offer to
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acquire, 20 per cent or more of the voting securities of the Company, the full
Board of Directors shall have adopted by not less than two-thirds vote a
resolution specifically approving such acquisition or offer. The term "person"
refers, for purposes of this Section, to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. Whether a change in control is threatened shall be
determined solely by the Committee.
8. Restrictions on Transfer.
(a) This option may not be sold, assigned, transferred, pledged or
otherwise disposed of or encumbered in any manner otherwise than by will, the
laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Code; provided, however, that the Optionee may assign or
transfer this Option to members of his immediate family or to a trust for the
benefit of such members of his immediate family and, during the lifetime of the
Optionee, this Option may be exercised only by the Optionee or assignee, as the
case may be, or his legally authorized representative. The Optionee shall not
have any right to sell, assign, transfer, pledge or otherwise dispose of or
encumber this Option, and any attempted transfer, sale, assignment, pledge or
encumbrance shall have no effect on the Company. The Company may also require a
Optionee to furnish evidence satisfactory to the Company, including a written
and signed representation letter and consent to be bound by any transfer
restrictions imposed by law, legend, condition or otherwise. The Shares shall
not be issued with respect to any Option unless the exercise of the Option shall
comply with the terms and conditions of the Consulting Agreement and all
relevant provisions of federal and state law, including without limitation the
Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(b) The Optionee, by its acceptance hereof, represents, opines,
covenants and agrees that (i) the Optionee has knowledge of the business and
affairs of the Company, and (ii) this Option is being acquired for investment
and not with a view to the distribution hereof and that, absent an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
covering the disposition of this Option, it will not be sold, transferred,
assigned, hypothecated or otherwise disposed of without first providing the
Company with an opinion of counsel (which may be counsel for the Company) or
other evidence, reasonably acceptable to the Company, to the effect that such
sale, transfer, assignment, hypothecation or other disposal will be exempt from
the registration and prospectus delivery requirements of the Act, as amended,
and the registration or qualification requirements of any applicable state
securities laws. The Optionee consents to the making of a notation in the
Company's records or giving to any transfer agent of the Option an order to
implement such restriction on transferability.
This Option shall bear the following legend or a legend of similar
import; provided, however, that such legend shall be removed, or not placed upon
the Option if such legend is no longer necessary to assure compliance with the
Act:
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THIS OPTION HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
BECAUSE IT IS BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER THE ACT.
THIS OPTION IS "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.
9. Information to Optionee. The Company shall furnish to the Optionee a
copy of the annual report, proxy statements and all other reports sent to the
Company's shareholders. Upon written request, the Company shall furnish to the
Optionee a copy of its most recent Annual Report on Form 10-K and each quarterly
report to shareholders issued since the end of the Company's most recent fiscal
year.
10. Payment of Taxes. All Shares issued upon the exercise of this Option
shall be validly issued, fully-paid and nonassessable and the Company shall pay
all taxes and other governmental charges (other than income tax) that may be
imposed in respect of the issue or delivery thereof. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for Shares in any name other
than that of the Optionee surrendered in connection with the purchase of such
Shares, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the Company's satisfaction that no tax or other charge is
due.
11. Reservation of Common Stock. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of issuance upon the exercise of this Option, such number of
shares of Common Stock as shall be issuable upon the exercise hereof. The
Company covenants and agrees that, upon exercise of this Option and payment of
the Purchase Price thereof, all Shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully-paid and nonassessable.
12. Notices to Optionee. Nothing contained in this Option shall be
construed as conferring upon the Optionee hereof the right to vote or to consent
or to receive notice as a share- Optionee in respect of any meetings of
share-Optionees for the election of directors or any other matter or as having
any rights whatsoever as a share-Optionee of the Company. All notices, requests,
consents and other communications hereunder shall be in writing and shall be
deemed to have been duly made when delivered or mailed by registered or
certified mail, postage prepaid, return receipt requested:
(a) If to the Optionee, to the address of such Optionee as shown on
the books of the Company; or
(b) If to the Company, to the address set forth in Section 1(b)
hereof.
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13. Replacement of Option. Upon receipt of evidence reasonably satisfactory
to the Company of the ownership of and the loss, theft, destruction or
mutilation of this Option and (in case of loss, theft or destruction) upon
delivery of an indemnity agreement in an amount reasonably satisfactory to the
Company, or (in the case of mutilation) upon surrender and cancellation of the
mutilated Option, the Company will execute and deliver, in lieu thereof, a new
Option of like tenor.
14. Successors. All the covenants, agreements, representations and
warranties contained in this Option shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.
15. Change; Waiver. Neither this Option nor any term hereof may be changed,
waived, discharged or terminated verbally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
16. Headings. The section headings in this Option are inserted for purposes
of convenience only and shall have no substantive effect.
17. Law Governing. This Option shall for all purposes be construed and
enforced in accordance with, and governed by, the internal laws of the State of
California, without giving effect to principles of conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by its
duly authorized officer and this Option to be dated as of the date first above
written.
POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxx, Xx., President
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