<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 9, 1998.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
PMC INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
----------------
THE ZIEGLER COMPANIES, INC.
ZACQ CORP.
(BIDDERS)
----------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
PREFERRED STOCK, NO PAR VALUE PER SHARE
(TITLES OF CLASSES OF SECURITIES)
[COMMON STOCK: 693437-40-2]
[PREFERRED STOCK: 693437-20-4]
(CUSIP NUMBERS OF CLASSES OF SECURITIES)
----------------
S. CHARLES O'MEARA, ESQ.
THE ZIEGLER COMPANIES, INC.
215 N. MAIN STREET
WEST BEND, WI 53095-3317
(414) 334-5521
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
----------------
COPY TO:
CONRAD G. GOODKIND, ESQ.
QUARLES & BRADY
411 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
(414) 277-5000
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TRANSACTION VALUATION: $10,559,070.90*AMOUNT OF FILING FEE: $2,111.90*
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* For purposes of calculating fee only. This amount assumes the purchase of
15,723,451.5 shares of Common Stock, par value $.01 per share, of the
Subject Company, on a fully diluted basis (consisting of 4,446,828.5
shares currently outstanding plus an additional 11,276,623 shares issuable
upon exercise of options) at $0.60 in cash per share and 450,000 shares of
Preferred Stock, no par value per share, of the Subject Company, on a
fully diluted basis (consisting of 138,182 shares currently outstanding
plus an additional 311,818 shares issuable upon exercise of options) at
$2.50 in cash per share. The amount of the filing fee, calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of
1934, equals 1/50 of one percentum of the value of the shares to be
purchased.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: NOT APPLICABLEFILING PARTY:
FORM OF REGISTRATION NO.: DATE FILED:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 693437-20-4
CUSIP NO. 693437-40-2
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS ZACQ CORP.
OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A)[_]
(B) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS):
WC (FROM PARENT)
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(E) OR 2(F)
[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
COLORADO
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0%
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
2
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 693437-20-2
CUSIP NO. 693437-40-2
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS: THE ZIEGLER COMPANIES, INC.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON: (ENTITIES ONLY).
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A)[_]
(B) [X]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(E) OR 2(F)
[_]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
WISCONSIN
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 COMMON SHARES (OPTION TO PURCHASE 4,500,000 COMMON SHARES AND NOTE WHICH
IS CONVERTIBLE INTO 5,833,333 COMMON SHARES)
0 PREFERRED SHARES (OPTION TO PURCHASE 111,818 PREFERRED SHARES AND NOTE
WHICH IS CONVERTIBLE INTO 200,000 PREFERRED SHARES)
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0% OF COMMON SHARES (65.72% IF OPTION FULLY EXERCISED AND NOTE FULLY
CONVERTED)
0% OF PREFERRED SHARES (69.30% IF OPTION FULLY EXERCISED AND NOTE FULLY
CONVERTED)
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
- -------------------------------------------------------------------------------
3
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is PMC International, Inc., a Colorado
corporation (the "Company"). The address of the principal executive offices of
the Company is set forth in Section 8 ("Certain Information Concerning the
Company") of the Offer to Purchase, dated November 9, 1998 (the "Offer to
Purchase"), a copy of which is filed as Exhibit (a)(1) hereto.
(b) This Statement relates to a tender offer by ZACQ Corp., a Colorado
corporation (the "Offeror") and a wholly-owned subsidiary of The Ziegler
Companies, Inc., a Wisconsin corporation ("Parent"), to purchase all
outstanding shares of Common Stock, par value $.01 per share (the "Common
Shares"), and all outstanding shares of Preferred Stock, no par value per
share (the "Preferred Shares") (the Common Shares and Preferred Shares shall
together be known as the "Shares"), of the Company, at a purchase price of
$0.60 per Common Share, net to the seller in cash, and $2.50 per Preferred
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal, a
copy of which is filed as Exhibit (a)(2) hereto. The Offer to Purchase and
Letter of Transmittal (which, together with any supplements or amendments,
collectively constitute the "Offer") are incorporated herein by reference.
Information concerning the number of outstanding Shares is set forth in the
Introduction of the Offer to Purchase and is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(g) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror") and Schedule I of the
Offer to Purchase is incorporated herein by reference. During the past five
years, neither the Offeror, Parent, nor any of the persons listed in Schedule
I of the Offer to Purchase has been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction, and, as a result of such proceeding, was or is subject to a
judgment, decree or final order enjoining further violation of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)-(b) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror"), Section 11 ("Background
of the Offer"), Section 12 ("Purpose of the Offer and the Merger; Plans for
the Company") and Section 13 ("The Merger Agreement") of the Offer to Purchase
is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in the Introduction and Section 10
("Source and Amount of Funds") of the Offer to Purchase is incorporated herein
by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
Introductory Paragraph: (a)-(e) The information set forth in the
Introduction, Section 11 ("Background of the Offer"), Section 12 ("Purpose of
the Offer and the Merger; Plans for the Company") and Section 13 ("The Merger
Agreement") of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on
Market for Common Shares, Price Quotations and Registration Under the Exchange
Act") of the Offer to Purchase is incorporated herein by reference.
4
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) The information contained in Items 7 and 9 of the cover pages hereto is
incorporated herein by reference. The information set forth in the
Introduction, Section 9 ("Certain Information Concerning the Parent and the
Offeror") and Schedule I of the Offer to Purchase also is incorporated herein
by reference.
(b) The information contained in Section 9 ("Certain Information Concerning
the Parent and the Offeror"), Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company"), Section 13 ("The Merger Agreement") and
Schedule I of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror"), Section 11 ("Background
of the Offer"), Section 12 ("Purpose of the Offer and the Merger; Plans for
the Company"), Section 13 ("The Merger Agreement"), and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 ("Certain Information Concerning the
Parent and the Offeror") of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a holder of Common Shares or Preferred Shares of the Company
whether to sell, tender or hold securities being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror"), Section 10 ("Source and
Amount of Funds"), Section 11 ("Background of the Offer"), and Section 13
("The Merger Agreement") of the Offer to Purchase is incorporated herein by
reference.
(b)-(c) The information set forth in Section 16 ("Certain Regulatory and
Legal Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on Market
for Common Shares, Price Quotations and Regulation Under the Exchange Act"),
Section 10 ("Source and Amount of Funds"), and Section 16 ("Certain Regulatory
and Legal Matters") of the Offer to Purchase is incorporated herein by
reference.
(e) Not applicable.
(f) Reference is hereby made to the Offer to Purchase and the related Letter
of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), and are incorporated herein by reference in their entirety.
5
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<C> <S>
(a)(1) Offer to Purchase, dated November 9, 1998.
(a)(2) Form of Letter of Transmittal, dated November 9, 1998.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Form of Letter to Clients from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Text of Joint Press Release, dated November 3, 1998.
(b)(1) Not Applicable.
(c)(1) Agreement and Plan of Merger, dated as of November 3, 1998, among
The Ziegler Companies, Inc., ZACQ Corp. and PMC International,
Inc.
(c)(2) Preferred Stock Option Agreement, dated as of October 15, 1998,
between The Ziegler Companies, Inc. and PMC International, Inc.
(c)(3) Convertible Promissory Note, dated October 15, 1998, under which
PMC International, Inc. promises to pay $500,000.00 to the order
of The Ziegler Companies, Inc.
(c)(4) Credit Agreement, dated November 3, 1998, between PMC
International, Inc. and The Ziegler Companies, Inc.
(c)(5) Option for Common Stock, dated November 3, 1998, between PMC
International, Inc. and The Ziegler Companies, Inc.
(c)(6) Guaranty, dated October 15, 1998, by PMC Investment Services, Inc.
(c)(7) Guaranty, dated October 15, 1998, by Portfolio Technology
Services, Inc.
(c)(8) Guaranty, dated October 15, 1998, by Portfolio Management
Consultants, Inc.
(c)(9) General Business Security Agreement, dated October 15, 1998, by
PMC International, Inc.
(c)(10) General Business Security Agreement, dated October 15, 1998, by
PMC Investment Services, Inc.
(c)(11) General Business Security Agreement, dated October 15, 1998, by
Portfolio Technology Services, Inc.
(c)(12) General Business Security Agreement, dated October 15, 1998, by
Portfolio Management Consultants, Inc.
(c)(13) Employment Agreement dated November 3, 1998, between Scott A.
MacKillop and PMC International, Inc.
(c)(14) Shareholder Tender Agreements (including list of persons executing
such agreements and the number of Common Shares).
(c)(15) First Amendment to Stock Purchase Agreement, dated November 3,
1998, among PMC International, Inc. and the former ADAM
Shareholders.
(d) Not Applicable.
(e) Not Applicable.
(f) Not Applicable.
</TABLE>
6
<PAGE>
SIGNATURES
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
ZACQ Corp.
/s/ S. Charles O'Meara
BY: _________________________________
Name: S. Charles O'Meara
Title: Secretary
The Ziegler Companies, Inc.
/s/ S. Charles O'Meara
BY: _________________________________
Name: S. Charles O'Meara
Title: Senior Vice President and
General Counsel
Dated: November 9, 1998
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE
------- ----
<C> <S> <C>
(a)(1) Offer to Purchase, dated November 9, 1998.
(a)(2) Form of Letter of Transmittal, dated November 9, 1998.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Form of Letter to Clients from Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Text of Joint Press Release, dated November 3, 1998.
(b)(1) Not Applicable.
(c)(1) Agreement and Plan of Merger, dated as of November 3, 1998,
among The Ziegler Companies, Inc., ZACQ Corp. and PMC
International, Inc.
(c)(2) Preferred Stock Option Agreement, dated as of October 15,
1998, between The Ziegler Companies, Inc. and PMC
International, Inc.
(c)(3) Convertible Promissory Note, dated October 15, 1998, under
which PMC International, Inc. promises to pay $500,000.00 to
the order of The Ziegler Companies, Inc.
(c)(4) Credit Agreement, dated November 3, 1998, between PMC
International, Inc. and The Ziegler Companies, Inc.
(c)(5) Option for Common Stock, dated November 3, 1998, between PMC
International, Inc. and The Ziegler Companies, Inc.
(c)(6) Guaranty, dated October 15, 1998, by PMC Investment Services,
Inc.
(c)(7) Guaranty, dated October 15, 1998, by Portfolio Technology
Services, Inc.
(c)(8) Guaranty, dated October 15, 1998, by Portfolio Management
Consultants, Inc.
(c)(9) General Business Security Agreement, dated October 15, 1998,
by PMC International, Inc.
(c)(10) General Business Security Agreement, dated October 15, 1998,
by PMC Investment Services, Inc.
(c)(11) General Business Security Agreement, dated October 15, 1998,
by Portfolio Technology Services, Inc.
(c)(12) General Business Security Agreement, dated October 15, 1998,
by Portfolio Management Consultants, Inc.
(c)(13) Employment Agreement dated November 3, 1998, between Scott A.
MacKillop and PMC International, Inc.
(c)(14) Shareholder Tender Agreements (including list of persons
executing such agreements and the number of Common Shares).
(c)(15) First Amendment to Stock Purchase Agreement, dated November
3, 1998, among PMC International, Inc. and the former ADAM
Shareholders.
(d) Not Applicable.
(e) Not Applicable.
(f) Not Applicable.
</TABLE>
8
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING SCRIP) AND PREFERRED STOCK
OF
PMC INTERNATIONAL, INC.
AT
$0.60 NET PER COMMON SHARE (INCLUDING SCRIP)
AND
$2.50 NET PER PREFERRED SHARE
BY
ZACQ CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
THE ZIEGLER COMPANIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.
EASTERN TIME, ON THURSDAY, DECEMBER 10, 1998,
UNLESS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN THAT NUMBER OF COMMON SHARES
(INCLUDING SCRIP) AND PREFERRED SHARES OF PMC INTERNATIONAL, INC. WHICH, WHEN
ADDED TO THE NUMBER OF COMMON SHARES (INCLUDING SCRIP) AND PREFERRED SHARES
THEN OWNED BY THE ZIEGLER COMPANIES, INC. AND ITS AFFILIATES, WILL REPRESENT
AT LEAST TWO-THIRDS OF THE OUTSTANDING COMMON SHARES AND PREFERRED SHARES,
RESPECTIVELY. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS.
SEE SECTION 15.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER,
DATED AS OF NOVEMBER 3, 1998, AMONG THE ZIEGLER COMPANIES, INC., ZACQ CORP.
AND PMC INTERNATIONAL, INC. THE BOARD OF DIRECTORS OF PMC INTERNATIONAL, INC.
HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT; HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE PMC INTERNATIONAL, INC. SHAREHOLDERS; AND RECOMMENDS
THAT THE HOLDERS OF COMMON SHARES AND PREFERRED SHARES ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES IN THE OFFER.
----------------
IMPORTANT
Any shareholder desiring to tender Shares (including scrip) should either
(i) complete and sign the Letter of Transmittal or a facsimile thereof in
accordance with the instructions in the Letter of Transmittal and deliver the
Letter of Transmittal with the Shares and all other required documents to the
Depositary of this Offer, Firstar Bank Milwaukee, N.A. (f/k/a) Firstar Trust
Company, or follow the procedure for book-entry transfer set forth in Section
3 herein or (ii) request his or her broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for the shareholder. A
shareholder having Shares (including scrip) registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such person if he or she desires to tender the Shares.
Any shareholder who desires to tender Shares (including scrip) and cannot
deliver such Shares and all other required documents to the Depositary by the
expiration of the Offer must tender such Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 herein.
Questions and requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to Georgeson & Company
Inc., the Information Agent, at its address or telephone number set forth on
the back cover of this Offer to Purchase.
----------------
November 9, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION............................................................ 1
1. Terms of the Offer.......................................... 3
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedure for Tendering Shares.............................. 5
4. Withdrawal Rights........................................... 7
5. Certain Federal Income Tax Consequences..................... 8
6. Price Range of Shares; Dividends............................ 9
7. Effect of the Offer on Market for Common Shares, Price
Quotations and Registration Under the Exchange Act......... 9
8. Certain Information Concerning the Company.................. 10
9. Certain Information Concerning the Parent and the Offeror... 12
10. Source and Amount of Funds.................................. 13
11. Background of the Offer..................................... 14
12. Purpose of the Offer and the Merger; Plans for the Company.. 15
13. The Merger Agreement........................................ 16
14. Dividends and Distributions................................. 22
15. Certain Conditions to Offeror's Obligations................. 23
16. Certain Regulatory and Legal Matters........................ 24
17. Fees and Expenses........................................... 25
18. Miscellaneous............................................... 25
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT AND THE OFFEROR....... I-1
</TABLE>
<PAGE>
To The Holders of Common Stock (including scrip)
and Preferred Stock of
PMC International, Inc.
INTRODUCTION
ZACQ Corp., a Colorado corporation (the "Offeror") and a wholly-owned
subsidiary of The Ziegler Companies, Inc., a Wisconsin corporation (the
"Parent"), hereby offers to purchase all outstanding shares (including scrip)
of Common Stock, par value $.01 per share (the "Common Shares") and all
outstanding shares of Preferred Stock, no par value per share (the "Preferred
Shares") (collectively, the Common Shares and the Preferred Shares are
referred to as the "Shares"), of PMC International, Inc., a Colorado
corporation (the "Company"), at a purchase price of $0.60 per Common Share,
net to the seller in cash, without interest thereon, and $2.50 per Preferred
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which together constitute the "Offer").
Those shareholders who tender shares will not be obligated to pay brokerage
fees or commissions or, except as set forth in the Letter of Transmittal,
transfer taxes on the purchase of Shares by the Offeror pursuant to the Offer.
The Offeror will pay all charges and expenses of Firstar Bank Milwaukee, N.A.
(f/k/a) Firstar Trust Company (the "Depositary") and Georgeson & Company Inc.
(the "Information Agent") in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER (AS HEREINAFTER DEFINED) AND THE MERGER AGREEMENT (AS HEREINAFTER
DEFINED); HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS; AND RECOMMENDS
THAT THE HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES IN
THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
COMMON SHARES AND PREFERRED SHARES WHICH, WHEN ADDED TO THE NUMBER OF COMMON
SHARES AND PREFERRED SHARES THEN OWNED BY THE PARENT AND ITS AFFILIATES,
INCLUDING ANY COMMON SHARES AND/OR PREFERRED SHARES ACQUIRED PURSUANT TO THE
CONVERSION RIGHTS OR THE OPTIONS DESCRIBED BELOW, WILL REPRESENT NOT LESS THAN
TWO-THIRDS OF THE COMMON SHARES OUTSTANDING AND TWO-THIRDS OF THE PREFERRED
SHARES OUTSTANDING, RESPECTIVELY (THE "MINIMUM CONDITION"). THE OFFER IS ALSO
SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 15 OF THIS OFFER TO
PURCHASE.
Value Investing Partners, Inc., the Company's financial advisor, has
delivered to the Company's Board of Directors its written opinion that, as of
October 26, 1998, the date of such opinion, the consideration to be received
by the holders of the Shares pursuant to the Offer and the Merger is fair to
such holders from a financial point of view. A copy of such opinion is
contained in the Company's Statement on Schedule 14D-9 which is also being
distributed to the Company's shareholders.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of November 3, 1998 (the "Merger Agreement"), among the Offeror, the Parent
and the Company. The Merger Agreement provides that, among other things, as
soon as practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement, all in
accordance with the relevant provisions of the Colorado Business Corporation
Act ("CBCA"), the Offeror will be merged with and into the Company (the
"Merger"). See Section 13 herein. Following consummation of the Merger, the
Company will continue as the surviving corporation (the "Surviving
Corporation") and will be a wholly-owned subsidiary of the Parent. At the
effective time of the Merger (the "Effective Time"), each issued and
outstanding Share (other than Shares owned by the Company, the Parent, or any
subsidiary of either, including the Offeror, or Shares with respect to
1
<PAGE>
which dissenters rights are properly exercised under the CBCA ("Dissenting
Shares")), will be converted into and represent the right to receive $0.60 per
Common Share (or any higher price that may be paid for each Common Share
pursuant to the Offer) in cash, without interest thereon (the "Common Share
Offer Price"), or $2.50 per Preferred Share (or any higher price that may be
paid for each Preferred Share pursuant to the Offer) in cash, without interest
thereon (the "Preferred Share Offer Price"), as appropriate. See Section 5
herein for a description of certain tax consequences of the Offer and the
Merger.
The Merger Agreement provides that, promptly upon the purchase by Parent or
any of its affiliates of such number of Common Shares which, when added to the
number of Common Shares owned by Parent and the Offeror, represents at least
two-thirds of the outstanding Common Shares, and from time to time thereafter,
the Parent will be entitled to designate for election to the Board of
Directors of the Company a number of directors (rounded up to the next whole
number) that will give the Parent representation on such Board equal to the
product of (i) the total number of directors on such Board and (ii) the
percentage that the aggregate number of Common Shares owned by the Parent and
the Offeror bears to the total number of outstanding Common Shares. The
Company and its Board of Directors have agreed, upon the request by the
Parent, to promptly increase the size of the Board of Directors of the Company
and/or use its reasonable best efforts to secure the resignations of such
number of directors as is necessary to enable the Parent's designees to be
elected to the Board and to cause the Parent's designees to be so elected.
The Company has advised the Offeror that as of October 22, 1998, there were
(i) 4,446,828.5 Common Shares issued and outstanding (including scrip), (ii)
138,182 Preferred Shares issued and outstanding and (iii) outstanding warrants
and options, including under the Company's stock option plans, to purchase an
aggregate of 943,290 Common Shares, all of which have exercise prices of more
than $0.60 per Common Share. Additionally, as of the date hereof, there are
(i) conversion rights granted to the Parent, pursuant to that certain
Convertible Promissory Note given by the Company, in the principal amount of
$500,000, dated October 15, 1998 (the "First Note"), to convert, at the
Parent's option, the then outstanding principal of the First Note at the time
of conversion or such lesser amount as selected by the Parent, in whole or in
part, into Preferred Shares (the "Preferred Conversion Rights"), (ii)
conversion rights granted to the Parent, pursuant to that certain Convertible
Promissory Note given by the Company, in the principal amount of $3.5 million,
dated November 3, 1998 (the "Second Note" and together with the First Note,
the "Notes") to convert, at the Parent's option the then outstanding principal
and accrued interest of the Second Note at the time of conversion or such
lesser amount as selected by the Parent, in whole or in part, into Common
Shares (the "Common Conversion Rights" and together with the Preferred
Conversion Rights, the "Conversion Rights"), (iii) an option granted to the
Parent, pursuant to that certain Stock Option Agreement between the parent and
the Company dated October 15, 1998 (the "First Stock Option Agreement"), to
purchase 111,818 Preferred Shares (the "Preferred Option") and (iv) an option
granted to the Parent, pursuant to a Stock Option Agreement dated November 3,
1998 (the "Second Stock Option Agreement" and together with the First Stock
Option Agreement collectively the "Option Agreements") to purchase 4,500,000
shares of Common Stock (the "Common Option" and together with the Preferred
Option collectively the "Options"). See Section 13. As of the date hereof,
neither the Offeror nor the Parent beneficially owns any Shares, exclusive of
the Conversion Rights and the Options. Assuming no exercise of any options and
warrants outstanding as of October 22, 1998 (which have exercise prices above
$.60 per share), and no exercise of any of the Conversion Rights and Options,
if the Offeror acquires at least 2,964,553 Common Shares and 92,122 Preferred
Shares in the Offer it will own two-thirds of the outstanding Common Shares
and Preferred Shares, respectively. Accordingly, the Minimum Condition would
be satisfied and the Offeror would have sufficient voting power to approve the
Merger without the affirmative vote of any other shareholder. The Merger
Agreement requires Parent to exercise the Conversion Rights and Options if
necessary to meet the Minimum Condition. Subsequent to October 22, 1998, the
Company purchased 150,001 outstanding warrants from the holders thereof at a
price of $0.05 per warrant. Based upon this information, and as a result of
the expiration of certain options, the purchase by the Company of the warrants
and the receipt of certain tenders pursuant to Shareholder Tender Agreements
(described below), upon full exercise of the Options and Conversion Rights,
the Offeror will not need to obtain any Common Shares or Preferred Shares in
the Offer in order to meet the Minimum Condition. In the event the Offeror
acquires at least 90% of the then outstanding Common Shares and Preferred
Shares, respectively, through the Offer or otherwise, the Offeror would be
able to effect the Merger pursuant to the short form merger provisions of the
CBCA without any action by any other holder of Shares. As of the date hereof,
thirty-one of the Company's shareholders, who beneficially own in the
aggregate 262,277
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Common Shares, including all of the Company's directors and officers who own
Shares, have entered into Shareholder Tender Agreements with the Parent
whereby such shareholders have agreed to tender all of the Common Shares
beneficially owned by such shareholders pursuant to the Offer and to not
withdraw such Common Shares (the "Shareholder Tender Agreements").
As a result of the Company's December 30, 1997 reverse stock split,
shareholders who would have acquired fractional shares of common stock,
instead acquired scrip. The sole rights of a holder of scrip is that upon
presentation of one share of scrip, a holder would acquire one share of common
stock.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 herein. The term "Expiration Date" means 5:00 p.m.,
Eastern time, on Thursday, December 10, 1998, unless the Offeror shall have
extended the period of time that the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Offeror, shall expire.
If the Offeror shall decide, in its sole discretion, to increase the
consideration offered in the Offer to holders of Common Shares and/or
Preferred Shares and if, at the time that notice of such increase is first
published, sent or given to holders of Shares in the manner specified below,
the Offer is scheduled to expire at any time earlier than the expiration of a
period ending on the tenth business day from, and including, the date that
such notice is first so published, sent or given, then the Offer will be
extended until the expiration of such period of ten business days. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday, and consists of the time period from 12:01 a.m.
through 12:00 Midnight (Eastern Time).
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 15 HEREIN.
The Offeror reserves the right (but shall not be obligated), in accordance
with applicable rules and regulations of the United States Securities and
Exchange Commission (the "Commission"), subject to the limitations set forth
in the Merger Agreement and described below, to waive any condition to the
Offer, provided that the Minimum Condition may be reduced or waived only with
the consent of the Company. Shares issued to the Parent upon the exercise of
the Conversion Rights and the Options may be counted toward satisfaction of
the Minimum Condition and the Merger Agreement requires Parent to exercise the
Conversion Rights and the Options if necessary to satisfy the Minimum
Condition. If the Minimum Condition or any of the other conditions set forth
in Section 15 have not been satisfied by 5:00 p.m.(Eastern Time), Thursday,
December 10, 1998 (or any other time then set as the Expiration Date), the
Offeror may, subject to the terms of the Merger Agreement as described below,
elect to (i) extend the Offer and, subject to applicable withdrawal rights,
retain all tendered Shares until the expiration of the Offer, as extended,
(ii) subject to complying with applicable rules and regulations of the
Commission, accept for payment all Shares so tendered and not extend the Offer
or (iii) terminate the Offer and not accept for payment any Shares and return
all tendered Shares to tendering shareholders. Under the terms of the Merger
Agreement, the Offeror reserves the right to waive any condition to the Offer,
to increase the price per Share payable in the Offer, and to make any other
changes in the terms and conditions of the Offer; provided, however, that the
Offeror may not change the form of consideration to be paid in the Offer,
decrease the price per Common Share or Preferred Share payable in the Offer,
reduce the maximum number of Shares to be purchased in the Offer or impose any
condition to the Offer in addition to those set forth in the Merger Agreement
or amend any other term of the Offer in a manner materially adverse to the
holders of Shares; and provided further that the Offeror may not unilaterally
waive the Minimum Condition which condition may be waived by the Offeror only
with the prior written consent of the Company. Notwithstanding the foregoing,
the Offeror may, without the consent of the Company, extend the Offer (i) if,
at the then scheduled Expiration Date of the Offer any of the conditions to
the Offer shall not have been satisfied or waived, until such conditions are
satisfied or waived, and (ii) for any period required by any rule, regulation,
interpretation or position of the Commission or the Commission staff
applicable to the Offer.
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Subject to the limitations set forth in the Merger Agreement and described
above, the Offeror reserves the right (but will not be obligated), at any time
or from time to time in its sole discretion, to extend the period during which
the Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that the Offeror will exercise its right to extend the Offer.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, the Offeror also
expressly reserves the right, at any time and from time to time, in its sole
discretion, (i) to delay payment for any Shares regardless of whether such
Shares were theretofore accepted for payment, or to terminate the Offer and
not to accept for payment or pay for any Shares not theretofore accepted for
payment or paid for, upon the occurrence of any of the events described in the
conditions set forth in Section 15, by giving oral or written notice of such
delay or termination to the Depositary and (ii) at any time or from time to
time, to amend the Offer in any respect. The Offeror's right to delay payment
for any Shares or not to pay for any Shares theretofore accepted for payment
is subject to the applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), relating to the Offeror's obligation to pay for or
return tendered Shares promptly after the termination or withdrawal of the
Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00
a.m., Eastern time, on the next business day after the previous scheduled
Expiration Date in accordance with the public announcement requirements of
Rules 14d-4(c) and 14e-1(d) under the Exchange Act. Without limiting the
obligation of the Offeror under such rules or the manner in which the Offeror
may choose to make any public announcement, the Offeror currently intends to
make announcements by issuing a press release to the PR News Service and
making any appropriate filing with the Commission.
If the Offeror makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer (including a reduction of the Minimum Condition), the Offeror will
disseminate additional tender offer materials and extend the Offer if, and to
the extent, required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act or otherwise. The minimum period during which a tender offer must remain
open following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage
of securities sought, will depend upon the facts and circumstances, including
the relative materiality of the terms or information changes. With respect to
a change in price or a change in percentage of securities sought, a minimum
ten business day period is generally required to allow for adequate
dissemination to shareholders and for investor response.
The Company has provided the Offeror with the Company's list of shareholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the Letter of Transmittal are
being mailed to record holders of the Shares and furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the list of shareholders or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Offeror will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 promptly after the later to occur of (i) the
Expiration Date and (ii) subject to compliance with Rule 14e-1(c) under the
Exchange Act, the satisfaction or waiver of the conditions set forth in
Section 15 herein. Subject to compliance with Rule 14e-1(c) under the Exchange
Act, the Offeror expressly reserves the right to delay payment for Shares in
order to comply in whole or in part with any applicable law. See Sections 1,
16 and 18 herein. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after
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timely receipt by the Depositary of (i) certificates for such Shares or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facilities"), pursuant to the procedures set forth in
Section 3, (ii) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) with all required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined below) and (iii) any other documents required by the Letter of
Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment. In all cases, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price with the Depositary, which will act as agent for tendering shareholders
for the purpose of receiving payment from the Offeror and transmitting such
payment to tendering shareholders. If, for any reason whatsoever, acceptance
for payment of any Shares tendered pursuant to the Offer is delayed, or the
Offeror is unable to accept for payment Shares tendered pursuant to the Offer,
then, without prejudice to the Offeror's rights under Section 1, the
Depositary may, nevertheless, on behalf of the Offeror, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that the
tendering shareholders are entitled to withdrawal rights as described in
Section 4 below and as otherwise required by Rule 14e-1(c) under the Exchange
Act. Under no circumstances will interest be paid by the Offeror because of
any delay in making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unpurchased or
untendered Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares delivered by book-entry transfer to a
Book-Entry Transfer Facility, such Shares will be credited to an account
maintained within such Book-Entry Transfer Facility), as promptly as
practicable after the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the price being paid
for Common Shares or Preferred Shares accepted for payment pursuant to the
Offer, such increased consideration will be paid for all Shares of such class
that are purchased pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the tendering shareholder must comply with the guaranteed delivery
procedures set forth below. In addition, either (i) certificates representing
such Shares must be received by the Depositary or such Shares must be tendered
pursuant to the procedure for book-entry transfer set forth below, and a Book-
Entry Confirmation must be received by the Depositary, in each case prior to
the Expiration Date or (ii) the guaranteed delivery procedures set forth below
must be complied with. No alternative, conditional or contingent tenders will
be accepted. Delivery of documents to a Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures does not
constitute delivery to a Depositary for this Offer.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make
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book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at a Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
transfer. Although delivery of Shares may be effected through book-entry at a
Book-Entry Transfer Facility prior to the Expiration Date, (i) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be transmitted to and received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase or (ii)
the guaranteed delivery procedures described below must be complied with.
Signature Guarantee. Signatures on the Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, or by any other bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Exchange Act (each of the
foregoing being referred to as an "Eligible Institution" and, collectively, as
"Eligible Institutions"), unless the Shares tendered thereby are tendered (i)
by a registered holder of Shares who has not completed either the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of any
Eligible Institution. If the certificates evidencing Shares are registered in
the name of a person or persons other than the signer of the Letter of
Transmittal, or if payment is to be made or delivered to, or certificates for
unpurchased Shares are to be issued or returned to, a person other than the
registered owner or owners, then the certificates for the tendered Shares must
be endorsed or accompanied by duly executed stock powers, in either case
signed exactly as the name or names of the registered owner or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed by an Eligible Institution as provided in the Letter of
Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the
Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all of the following guaranteed delivery procedures are duly
complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Offeror herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), and any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal are received by the Depositary within three (3)
Nasdaq National Market trading days after the date of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or a Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with all required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message and (iii) any other documents required by the Letter of Transmittal.
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BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE FOR SHARES PURCHASED
PURSUANT TO THE OFFER, EACH SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS
OR HER CORRECT TAX IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT HE OR SHE IS
NOT SUBJECT TO BACKUP FEDERAL WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-
9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE THE INSTRUCTIONS SET FORTH IN THE
LETTER OF TRANSMITTAL.
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including timeliness and receipt) and acceptance for
payment of any tender of Shares will be determined by the Offeror, in its sole
discretion, and its determination will be final and binding on all parties.
The Offeror reserves the absolute right to reject any or all tenders of any
Shares that are determined by it not to be in proper form or the acceptance of
or payment for which may, in the opinion of the Offeror, be unlawful. The
Offeror also reserves the absolute right to waive any of the conditions of the
Offer, subject to the limitations set forth in the Merger Agreement, or any
defect or irregularity in the tender of any Shares. The Offeror's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the Instructions to the Letter of Transmittal) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. The Offeror, the Parent, the Information Agent, the Depositary or any
other person will not be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the Offeror
as such shareholder's proxy, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such
shareholder's rights with respect to the Shares tendered by such shareholder
and accepted for payment by the Offeror (and any and all other Shares or other
securities or rights issued or issuable in respect of such Shares on or after
November 3, 1998). All such proxies shall be considered coupled with an
interest in the tendered Shares. This appointment is effective when, and only
to the extent that, the Offeror accepts for payment the Shares deposited with
the Depositary. Upon acceptance for payment, all prior proxies given by the
shareholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent proxies may be given or
written consent executed (and, if given or executed, will not be deemed
effective). The designees of the Offeror will, with respect to the Shares and
other securities or rights, be empowered to exercise all voting and other
rights of such shareholder as they in their sole judgment deem proper in
respect of any annual or special meeting of the Company's shareholders, or any
adjournment or postponement thereof. The Offeror reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon the
Offeror's payment for such Shares, the Offeror must be able to exercise full
voting and other rights with respect to such Shares and the other securities
or rights issued or issuable in respect of such Shares, including voting at
any meeting of shareholders (whether annual or special and whether or not
adjourned) in respect of such Shares.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment pursuant to the Offer, may also be withdrawn
at any time after January 7, 1999. If the purchase of or payment for Shares is
delayed for any reason or if the Offeror is unable to purchase or pay for
Shares for any reason, then, without prejudice to the Offeror's rights under
the Offer, tendered Shares may be retained by the Depositary on behalf of the
Offeror and may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as set forth in this Section 4,
subject to Rule 14e-1(c) under the Exchange Act, which provides that no person
who makes a tender offer shall fail to pay the consideration offered or return
the securities deposited by or on behalf of security holders promptly after
the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any notice of withdrawal must specify the name of the person who tendered the
Shares to be
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withdrawn, the number and class of Shares to be withdrawn and the name in
which the certificates representing such Shares are registered, if different
from that of the person who tendered the Shares. If certificates for Shares to
be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the serial numbers
shown on such certificates must be submitted to the Depositary and, unless
such Shares have been tendered by an Eligible Institution, the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer
set forth in Section 3, any notice of withdrawal must also specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares. All questions as to the form and validity
(including timeliness and receipt) of notices of withdrawal will be determined
by the Offeror, in its reasonable discretion, and its determination will be
final and binding on all parties. The Offeror, the Parent, the Depositary, the
Information Agent or any other person will not be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section 3
herein.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted to the right to receive cash in the
Merger (including pursuant to the exercise of dissenters rights). The
discussion applies only to holders of Shares in whose hands Shares are capital
assets and may not apply to Shares received pursuant to the exercise of
employee stock options or otherwise as compensation, or to holders of Shares
who are in special tax situations (such as insurance companies, tax-exempt
organizations or non-U.S. persons).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL
INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S
OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO
SUCH SHAREHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER INCOME TAX
LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger
(including pursuant to the exercise of dissenters rights) will be a taxable
transaction for federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax laws). In
general, for federal income tax purposes, a holder of Shares will recognize
gain or loss equal to the difference between the holder's adjusted tax basis
in the Shares sold pursuant to the Offer or converted into the right to
receive cash in the Merger and the amount of cash received therefor. Gain or
loss must be determined separately for Shares acquired in different
transactions which are sold pursuant to the Offer or are converted into the
right to receive cash in the Merger, as well as for each class of Shares
involved. Such gain or loss will be capital gain or loss (other than, with
respect to the exercise of dissenters rights, amounts, if any, which are or
are deemed to be interest for federal income tax purposes, which amounts will
be taxed as ordinary income) and will be long-term gain or loss if, on the
date of sale (or, if applicable, the date of the Merger), the Shares were held
for more than one year.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the shareholder (i) fails to furnish his or her TIN, (ii) furnishes an
incorrect TIN, (iii) fails to properly include a reportable interest or
dividend payment on his or her federal income tax return or (iv) under certain
circumstances, fails to provide a certified statement, signed under penalty of
perjury, that the TIN provided is his or her correct number and that he or she
is not subject to backup withholding. Backup withholding is not an additional
tax, but merely an advance payment, which may be refunded to the extent it
results in an overpayment of tax. Certain persons generally are entitled to
exemption from backup withholding. Certain penalties apply for failure to
furnish correct information and for failure to
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include reportable payments in income. Each shareholder should consult with
his or her own tax advisor as to his or her qualification for exemption from
backup withholding and the procedure for obtaining such exemption. Tendering
shareholders may be able to prevent backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. See Section 3.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Common Shares are principally traded on the OTC Bulletin Board under the
symbol "PMCI". There is no active or organized trading market for the
Preferred Shares or the scrip. The following table sets forth for the periods
indicated the high and low bid prices per Common Share as reported by the
principal market maker in the Common Shares. These prices reflect prices
between dealers, without retail markups, markdowns or commissions, and may not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
------ -----
<S> <C> <C>
Year Ended December 31, 1996
First Quarter............................................. $ 4.00 $2.50
Second Quarter............................................ 7.25 3.75
Third Quarter............................................. 8.25 5.50
Fourth Quarter (1)........................................ 8.00 5.50
Year Ended December 31, 1997
First Quarter............................................. $10.00 $8.00
Second Quarter............................................ 10.00 6.50
Third Quarter............................................. 7.75 5.00
Fourth Quarter............................................ 7.00 6.00
Year Ended December 31, 1998
First Quarter............................................. $ 7.00 $4.00
Second Quarter............................................ 4.13 2.88
Third Quarter............................................. 3.81 0.10
Fourth Quarter (Through November 5, 1998)................. 0.94 0.15
</TABLE>
- --------
(1) Does not reflect the private placement of 1,294,250 Common Shares by the
Company in December 1996 at $8.50 per share.
On November 3, 1998, the last full day of trading prior to the announcement
of the Offer, the closing bid price per Common Share as reported by the
principal market maker in the Common Shares was $0.86 and on November 6, 1998,
the closing bid was $.60. Holders of Common Shares are urged to obtain current
market quotations for the Common Shares.
The Company has not paid dividends on the Common Shares. Under the terms of
the Merger Agreement the Company is prohibited from paying any dividends on
its capital stock, including the Shares. The Company is in default in the
payment of dividends on the Preferred Shares (in the amount of $298,419 as of
March 31, 1998). The Company is prohibited by its Articles of Incorporation
from paying dividends on its Common Shares so long as it is in default in the
dividend payment of Preferred Shares.
7. EFFECT OF THE OFFER ON MARKET FOR COMMON SHARES, PRICE QUOTATIONS AND
REGISTRATION UNDER THE EXCHANGE ACT.
The purchase of the Shares by the Offeror pursuant to the Offer will reduce
the number of Common Shares that might otherwise trade publicly and will
reduce the number of holders of Shares, which will adversely affect the
liquidity and market value of the remaining Shares held by shareholders other
than the Offeror. Consummation of the Merger in accordance with the Merger
Agreement will eliminate all Shares held by anyone other than the Offeror and
its affiliates.
9
<PAGE>
Following consummation of the Offer, the extent of the public market for the
Common Shares and the availability of price quotations will depend upon the
number of holders of Common Shares remaining at such time, the interest in
maintaining a market in Common Shares on the part of securities firms, the
termination of registration of Common Shares under the Exchange Act, as
described below, and other factors.
The Common Shares are currently registered under the Exchange Act. The
Preferred Shares are not registered under the Exchange Act and the
registration of the Common Shares may be terminated upon application by the
Company to the Commission if there are fewer than 300 record holders of Common
Shares. It is the intention of the Offeror both to consummate the Merger and
to seek to cause an application for such termination to be made as soon after
consummation of the Offer as the requirements for termination of registration
of the Common Shares are met. If such registration were terminated, the
Company would no longer legally be required to disclose publicly in proxy
materials distributed to holders of Common Shares the information which it now
must provide under the Exchange Act or to make public disclosure of financial
and other information in annual, quarterly and other reports required to be
filed with the Commission under the Exchange Act; and the officers, directors
and 10% or more shareholders of the Company would no longer be subject to the
"short-swing" insider trading reporting and profit recovery provisions of the
Exchange Act. Furthermore, if such registration were terminated, persons
holding "restricted securities" of the Company may be deprived of their
ability to dispose of such securities under Rule 144 promulgated under the
Securities Act of 1933, as amended.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Colorado corporation with its principal executive offices
located at 555 17th Street, 14th Floor, Denver, Colorado 80202. Except as
otherwise set forth herein, the information concerning the Company contained
in this Offer to Purchase, including financial information, has been furnished
by the Company or has been taken from or based upon publicly available
documents and records on file with the Commission and other public sources.
Although neither the Offeror nor the Parent has any knowledge that would
indicate that statements contained herein based upon such documents are
untrue, neither the Offeror, the Parent nor the Information Agent assumes any
responsibility for the accuracy or completeness of the information concerning
the Company, furnished by the Company, or contained in such documents and
records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information
but which are unknown to the Offeror and the Parent.
The Company develops, markets and manages sophisticated investment
management products and services. Not a money manager itself, the Company
provides products and services that facilitate the selection and/or monitoring
of unaffiliated money managers or mutual funds for customers of the Company's
distribution channels depending upon the size, sophistication and requirements
of such customers. The Company's products and services address investment
diversification, asset allocation recommendations, portfolio modeling and
rebalancing, comprehensive accounting and portfolio performance reporting.
Set forth below is certain summary consolidated financial data with respect
to the Company excerpted or derived from financial information contained in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
1997, and the Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1998. More comprehensive financial information is included in such
reports and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to such reports
and such other documents and all the financial information (including any
related notes) contained therein. Such reports and other documents are
available for inspection and copies thereof are obtainable in the manner set
forth below.
10
<PAGE>
PMC INTERNATIONAL, INC.
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------ ----------------
1998 1997 1997 1996
-------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Income Statement Data:
Total revenue.................... $ 10,871 $ 5,851 $14,863 $10,087
Net loss......................... (2,706) (1,312) (3,823) (4,001)
Net loss per Common Share........ $ (0.56) $ (0.37) $ (0.98) $ (2.85)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------
1998 1997 1996
----------- ------- ------
(UNAUDITED)
<S> <C> <C> <C>
Balance Sheet Data:
Total assets................................. $11,626 $13,376 $9,163
Total liabilities............................ 5,458 4,495 2,893
Shareholders' equity......................... 6,168 8,882 6,271
</TABLE>
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interests of such persons in transactions with the Company. Such reports,
proxy statements and other information may be inspected at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Northeast Regional Office, Seven World Trade Center, 13th
Floor, New York, New York 10048 and Midwest Regional Office, Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Because the
Company files certain documents electronically with the Commission, reports,
proxy and information statements and other information may be accessed through
the Commission's website, http://www.sec.gov.
On November 3, 1998, the Company and Parent entered into a Credit Agreement
(the "Credit Agreement") pursuant to which Parent agreed to make, through
March 31, 1999, revolving credit loans (the "Loans") to the Company in an
aggregate principal amount of up to $3,500,000 at a variable rate of interest
equal to the prime rate as published in The Wall Street Journal (Midwest
Edition). All Loans are to be evidenced by the Second Note. The proceeds of
the Loans are to be used solely to retire indebtedness under a bridge loan
provided to the Company by Dundee Bancorp, Inc. in July, 1998, to compensate
investment managers, to pay legal and investment banking fees, to make earn-
out payments under the PMCIS Acquisition Agreement, as amended, and for
general working capital and general corporate purposes, including payment of
aged payables. In connection with the Credit Agreement, the Company made
certain standard representations and warranties and agreed to certain negative
covenants, including limitations on: liens, indebtedness, investments,
payments (including dividends and distributions), the disposition of assets,
sales and leasebacks, loans, transactions with affiliates, guarantees,
formation of subsidiaries and its ability to consolidate or merge with any
other person. The Company also agreed to standard affirmative covenants,
including: timely payment of the Loans, maintenance of its corporate
existence, maintenance of licenses, timely reporting, timely payment of taxes,
inspection of properties and records, compliance with laws and other
agreements of the Company, where noncompliance with any covenant would have a
Material Adverse Effect (as defined in the Credit Agreement). Parent has the
standard remedies available to creditors in the event of any default under the
Credit Agreement including acceleration and setoff. The Loans are secured by
unlimited guarantees by three of the Company's subsidiaries (described below)
and by the assets of the Company and three of its subsidiaries (described
below).
11
<PAGE>
The foregoing summary of certain provisions of the Credit Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Credit Agreement, a copy of which is filed as an Exhibit to the Schedule 14D-
1.
In connection with the Credit Agreement, three subsidiaries of the Company,
PMC Investment Services Inc. ("PMCIS"), Portfolio Management Consultants, Inc.
("PMC") and Portfolio Technology Services, Inc. ("PTS") each agreed to
guaranty the Company's Obligations (as defined in the Guarantees) to Parent of
any kind, past, present or future, plus any costs of collection.
The foregoing summary of certain provisions of the Guarantees does not
purport to be complete and is qualified in its entirety by reference to the
Guarantees, copies of which are filed as Exhibits to the Schedule 14D-1.
In connection with the Credit Agreement, the Company, PMCIS, PMC and PTS
(each, a "Debtor") each granted to Parent a security interest pursuant to a
General Business Security Agreement (collectively, the "Security Agreements")
in all tangible and intangible assets, now owned or hereafter acquired by each
of them, wherever located, to secure all Obligations (as defined in the
Security Agreements) of the Debtor. Under the Security Agreements, each Debtor
made customary warranties and covenants. Upon an event of default or at any
time Parent deems itself insecure, Parent has all customary rights of a
secured party.
The foregoing summary of certain provisions of the Security Agreements does
not purport to be complete and is qualified in its entirety by reference to
the Security Agreements, copies of which are filed as Exhibits to the Schedule
14D-1.
9. CERTAIN INFORMATION CONCERNING THE PARENT AND THE OFFEROR.
The Offeror is a newly incorporated Colorado corporation and a wholly-owned
subsidiary of Parent, which is a Wisconsin corporation. To date, the Offeror
has not conducted any business other than that incident to its formation, the
execution and delivery of the Merger Agreement and the commencement of the
Offer. Accordingly, no meaningful financial information with respect to the
Offeror is available.
The principal executive offices of the Offeror and the Parent are located at
215 North Main Street, West Bend, Wisconsin 53095. The Parent is a holding
company which owns nine operating subsidiary companies. Eight of the companies
are engaged in financially oriented businesses and the other company is
engaged in recycling, reclaiming and disposing of industrial chemicals and
solvents and providing pollution abatement services.
The Parent's subsidiaries include: (i) B.C. Ziegler and Company, an
investment banking and brokerage firm; (ii) Ziegler Asset Management, Inc., an
investment adviser; (iii) Ziegler Thrift Trading, Inc., a discount brokerage
firm; (iv) GS/2/ Securities, Inc., an institutional research and brokerage
firm, and investment adviser; (v) Ziegler Financing Corporation, a provider of
short-term loans, and an originator of Federal Housing Administration insured
mortgage loans; (vi) Ziegler Capital Company, LLC, a special purpose limited
liability company formed for the purpose of financing or investing in senior
living facilities, primarily in the form of subordinated participating
mortgages; (vii) First Church Financing Corporation, which securitizes pools
of first mortgage loans to churches, (viii) Ziegler Collateralized Securities,
Inc., which securitizes pools of equipment leases; and (ix) WRR Environmental
Services Co., Inc., which engages in recycling chemicals, blending virgin
chemicals for manufacturers, and performing pollution abatement services.
The Parent's operations are conducted through four industry segments,
namely, (1) broker-dealer, (2) hazardous waste management, (3) real estate
financing and (4) corporate and other. The industry segments are each served
by a separate subsidiary or group of subsidiaries.
The Parent and its subsidiaries have not purchased any products or services
from the Company during 1998 or during the fiscal years ended December 31,
1997, December 31, 1996 and December 31, 1995, respectively.
12
<PAGE>
Set forth below is certain summary consolidated financial data with respect
to the Parent excerpted or derived from financial information contained in the
Parent's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, and the Parent's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (which are incorporated by reference herein). More comprehensive
financial information is included in such reports and other documents filed
with the Commission. The following summary is qualified in its entirety by
reference to such reports and such other documents and all financial
information (including any related notes) contained therein. Such reports and
other documents are available for inspection and copies thereof are obtainable
in the manner set forth below.
THE ZIEGLER COMPANIES, INC.
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------- -----------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Total revenues...................... $37,735 $24,311 $59,694 $49,317 $44,942
Income before extraordinary items... 77 (150) 354 2,975 3,328
Net income.......................... 77 (150) 354 3,645 4,044
Per share data:
Income per Common Share before
extraordinary items.............. $ 0.03 $ (0.06) $ 0.15 $ 1.25 $ 1.40
Extraordinary items............... -- -- -- 0.28 0.30
Net income per Common Share....... 0.03 (0.06) 0.15 1.53 1.70
Net income per Common Share on a
fully diluted basis.............. 0.03 (0.06) 0.14 1.51 1.68
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ----------------
1998 1997 1996
----------- -------- -------
(UNAUDITED)
<S> <C> <C> <C>
Balance Sheet Data:
Total assets..................................... $186,817 $167,477 141,156
Total assets less goodwill....................... 185,473 166,076 141,060
Total liabilities................................ 134,693 115,182 86,937
Total shareholders' equity....................... 52,124 52,295 54,219
</TABLE>
The Parent is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports and other information with
the Commission relating to its business, financial condition and other
matters. Such reports and other information are available for inspection and
copying at the offices of the Commission in the same manner as set forth with
respect to the Company in Section 8.
Except pursuant to the Conversion Rights, the Options and the Shareholder
Tender Agreements and as otherwise described in this Offer to Purchase,
neither of the Offeror, the Parent, nor, to the best knowledge of the Parent
and its subsidiaries, any of the persons listed in Schedule I to this Offer to
Purchase owns or has any right to acquire any Shares and none of them has
effected any transaction in the Shares during the past 60 days.
10. SOURCE AND AMOUNT OF FUNDS.
If all Shares outstanding at October 22, 1998, and all Shares covered by
options and warrants outstanding at October 22, 1998 (excluding the Conversion
Rights and the Options) which were exercisable at such date or the exercise of
which has been accelerated to immediately prior to the closing of the Offer
are tendered pursuant
13
<PAGE>
to the Offer, the aggregate purchase price and estimated fees and expenses
will be approximately $4.1 million (the aggregate purchase price and estimated
fees and expenses will be approximately $11.0 million if the Options and the
Conversion Rights are exercised in full). The Offeror will obtain all such
funds from the Parent, which currently has these funds in available cash. This
Offer is not subject to a financing condition.
11. BACKGROUND OF THE OFFER.
During the week of September 7, 1998, Richard Glaisner, an executive officer
of one of the Parent's subsidiaries, was in Denver, Colorado on vacation and
learned from a local Denver newspaper story that the Company was seeking a
strategic investor. Mr. Glaisner, through his background and operational
responsibilities at GS/2/ Securities, Inc., a subsidiary of the Parent which
operates, in part, a business similar to that of the Company, was familiar
with the Company and its operations. On September 9, 1998, Mr. Glaisner
contacted Mr. C.R. Tucker, chief executive officer of the Company, to express
Parent's possible interest in considering an investment in the Company. On
September 10, 1998, before the Company had disclosed any confidential
information to Parent or any of its employees or affiliates, the Company and
Parent entered into a confidentiality agreement concerning information
provided as due diligence material by the Company.
During the week of September 14, 1998, the Parent and the Company, through
Mr. Glaisner and Mr. Tucker, discussed various business combinations,
including a possible transaction structured as a joint venture or the sale of
substantially all of the Company's assets to the Parent, which Mr. Tucker
declined. Mr. Glaisner and Mr. Tucker then discussed a transaction whereby the
Parent would purchase a majority of the Common Stock directly from the Company
and have the right to nominate a majority of the board of directors of the
Company.
In addition to Mr. Glaisner, Dennis Wallestad (Senior Vice President and
Chief Financial Officer of the Parent), and Peter Ziegler (President and Chief
Executive Officer of the Parent) discussed these arrangements with the Company
during the week of September 21, 1998.
On September 25, 1998, the Parent and the Company entered into a non-binding
letter of intent to purchase a majority of the shares of Common Stock of the
Company at $.75 per share of Common Stock, with the Parent providing a
$500,000 loan to the Company to meet the Company's immediate working capital
needs.
During the week of September 28, 1998, Mr. Wallestad conducted a more
detailed due diligence analysis of the Company and met with the Company's
officers in Denver, Colorado. Similarly, representatives of the Parent
forwarded a lengthy due diligence request to the Company on September 28, 1998
and Charles O'Meara (Senior Vice President and General Counsel of the Parent)
and representatives of the Parent visited the Company's headquarters and
conducted additional due diligence on October 1 and 2, 1998.
On October 2, 1998, the Parent's board of directors met to consider the
possible acquisition of the Company and approved a $500,000 loan to the
Company to provide the Company with needed working capital to meet its current
obligations.
On October 5, 1998, the Company executed a confidentiality agreement
covering due diligence materials provided by the Parent to the Company
pursuant to a due diligence request by the Company.
During the week of October 5, 1998, the Parent discussed with Mr. Tucker,
Ms. Dobel (General Counsel of the Company), and Mr. MacKillop (President of
the Company), the terms of the First Note and revised terms of the proposed
acquisition. Specifically, the Parent proposed undertaking a tender offer for
all of the Company's Shares at $.60 per Common Share and $2.50 per Preferred
Share and entering into a $3.5 million credit facility to provide the Company
with additional working capital to meet its obligations.
On October 6, 1998 and continuing through October 7, 1998, Mr. Tucker, Mr.
MacKillop and Emmett Daly, a director of the Company, met with officers of
Parent to discuss the possible terms of the proposed transaction and to
conduct due diligence on the Parent.
14
<PAGE>
On October 7, 1998, Mr. Tucker, Mr. MacKillop and Mr. Daly visited with
representatives of Parent's management at the offices of GS/2/ Securities,
Inc., a subsidiary of Parent ("GS/2/"), located in Milwaukee, Wisconsin. The
purpose of the visit was to learn more about Parent and continue negotiations
regarding the transaction. Representatives of Parent present at this meeting
included, at various times, Messrs. Ziegler, Glaisner, Wallestad, and Richard
Schilffarth, an officer of GS/2/. During those meetings, Parent informed the
Company that it was not willing to proceed under the terms of the Letter of
Intent because such items would not accomplish Parent's objectives. As a
result, the per share price and structure of the transaction were
renegotiated.
During the week of October 12, 1998, the parties negotiated the terms of the
First Note and the Preferred Option and on October 15, 1998, entered into such
agreements.
On October 15, 1998, the Company's board met to discuss the proposed
transaction and approved the terms of the First Note and the Preferred Option
for the Parent to purchase up to 111,818 Preferred Shares. The Preferred
Option was granted to induce Parent to purchase the First Note and to pursue
the Offer and the Merger.
After October 15, members of the Company's management continued to negotiate
with members of Parent's management, especially with respect to the basis upon
which the Offer would proceed and the Merger would be consummated and with
respect to the priority of payment of certain of the Company's creditors, in
particular Dundee.
On October 21, 1998, Parent's board of directors met to consider and approve
the proposed transaction, including the Merger Agreement and the $3.5 million
credit facility.
On October 21 and 22, 1998, members of the Company's management met with Mr.
Glaisner and Mr. Wallestad to continue discussions about the transaction and
the Company's financial condition and operations.
On October 26, 1998, the board of directors of the Company met to consider
and approve the proposed transaction. From October 26, 1998, officers of the
Company and the Parent reviewed and negotiated the final terms of the
documents, including the $3.5 million credit facility. In a joint press
release issued prior to commencement of trading on November 4, 1998, the
Parent and the Company announced, among other things, that they had entered
into the Merger Agreement and that the Parent intended to commence the Offer
within five business days following execution of the Merger Agreement. On
November 9, 1998, the Offeror commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
The purpose of the Offer, the Merger and the Merger Agreement is to enable
the Parent to acquire control of, and the entire equity interest in, the
Company. Upon consummation of the Merger, the Company will become a wholly-
owned subsidiary of the Parent. The Offer is being made pursuant to the Merger
Agreement.
Under the CBCA and the Company's Articles of Incorporation, the approval of
the Board of Directors of the Company and the affirmative vote of the holders
of two-thirds of the outstanding Common Shares and Preferred Shares,
respectively, are required to approve and adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger. A vote by holders of
scrip is not required to effect the Merger. The Board of Directors of the
Company has unanimously approved the Offer, the Merger and the Merger
Agreement, and, unless the Merger is consummated pursuant to the short form
merger provisions under the CBCA described below, the only remaining required
corporate action of the Company is the approval and adoption of the Merger
Agreement by the affirmative vote of the holders of at least two-thirds of the
Common Shares and Preferred Shares voting as separate classes. If the Minimum
Condition is satisfied, including satisfaction as a result of the exercise, in
whole or in part, of the Conversion Rights and/or the Options held by the
Parent, the Offeror will have sufficient voting power to cause the approval
and adoption of the Merger Agreement and the transactions contemplated thereby
without the affirmative vote of any other shareholder. See Section 13 for a
discussion of the Conversion Rights and the Options.
15
<PAGE>
In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its shareholders as promptly as practicable after the
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required by the CBCA. The Parent has agreed that all Shares owned by the
Parent or the Offeror (including any Shares acquired pursuant to the exercise
of the Conversion Rights of the Options) will be voted in favor of the Merger
Agreement.
The Parent intends to undertake a review of the Company's operations and to
study how operations of the two companies can best be optimized. The Parent
will continue to evaluate the Company's other business and operations and will
take such actions as a result of such review as are appropriate under the
circumstances.
Except as indicated in this Offer to Purchase, the Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of consolidated assets of the Company and its subsidiaries or
any material change in the Company's capitalization or dividend policy or any
other material changes in the Company's corporate structure or business.
13. THE MERGER AGREEMENT.
The following summary of certain provisions of the Merger Agreement, a copy
of which has been filed as an exhibit to the Schedule 14D-1, is qualified in
its entirety by reference to the text of the Merger Agreement.
The Offer. The Offeror commenced the Offer in accordance with the terms of
the Merger Agreement. Pursuant to the terms and conditions of the Merger
Agreement, the Parent, the Offeror and the Company are required to use their
best efforts to take all action as may be necessary or appropriate in order to
effectuate the Offer and the Merger as promptly as possible and to carry out
the transactions provided for or contemplated by the Merger Agreement.
Company Actions. Pursuant to the Merger Agreement, the Company has agreed
that, subject to the fiduciary duties of the Board of Directors of the Company
under applicable law as determined by the Board of Directors of the Company in
good faith after consultation with the Company's outside counsel, it will file
with the Commission and mail to its shareholders, a
Solicitation/Recommendation Statement on Schedule 14D-9 containing the
recommendation of the Board of Directors that the Company's shareholders
accept the Offer and approve the Merger and the Merger Agreement.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the CBCA,
the Offeror shall be merged with and into the Company at the Effective Time.
Following the Merger, the separate corporate existence of the Offeror shall
cease and the Company shall continue as the Surviving Corporation and shall
succeed to and assume all the rights and obligations of the Offeror in
accordance with the CBCA and the Merger Agreement. The Articles of
Incorporation and the By-laws of the Company shall continue as the Articles of
Incorporation and the By-laws of the Surviving Corporation and the officers
and directors of the Offeror shall continue as the officers and directors of
the Surviving Corporation, in each case until their successors are chosen.
Conversion of Securities. At the Effective Time, each Common Share issued
and outstanding immediately prior thereto shall be canceled and extinguished
and each Common Share (other than Common Shares owned by the Company, the
Parent, or any affiliate of either, including the Offeror, and any Dissenting
Shares representing Common Shares) shall, by virtue of the Merger and without
any action on the part of the Offeror, the Company or the holders of the
Common Shares, be converted into and represent the right to receive an amount
equal to the Common Share Offer Price.
At the Effective Time, each Preferred Share issued and outstanding
immediately prior thereto shall be canceled and extinguished and each
Preferred Share (other than Preferred Shares owned by the Company, the Parent,
or any affiliate of either, including the Offeror, and any Dissenting Shares
representing Preferred Shares)
16
<PAGE>
shall, by virtue of the Merger and without any action on the part of the
Offeror, the Company or the holders of the Preferred Shares, be converted into
and represent the right to receive an amount equal to the Preferred Share
Offer Price.
Each share of common stock of the Offeror issued and outstanding immediately
prior to the Effective Time shall, at the Effective Time, by virtue of the
Merger and without any action on the part of the Offeror, the Company or the
holders of such shares, be converted into and shall thereafter evidence one
validly issued and outstanding share of common stock of the Surviving
Corporation.
Dissenting Shares. Shares which are held by holders who have properly
exercised dissenters rights with respect thereto in accordance with Article
113 of the CBCA will not be exchangeable for the right to receive an amount
equal to the Common Share Offer Price or Preferred Share Offer Price, as
appropriate, in cash, and instead holders of such Shares will be entitled to
receive payment of the appraised value of such stock, unless such holders fail
to perfect or withdraw or lose their right to appraisal and payment under the
CBCA, in which case Shares held by such holders will be exchangeable for the
right to receive the Common Share Offer Price or Preferred Share Offer Price,
as appropriate, in cash.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to the Offeror, including, but
not limited to, representations and warranties relating to: the Company's
organization, qualification and capitalization; its authority to enter into
the Merger Agreement and carry out related transactions; filings made by the
Company with the Commission under the Securities Act of 1933, as amended or
the Exchange Act (including financial statements included in the documents
filed by the Company under these Acts); required consents and approvals;
compliance with applicable laws, the Company's intellectual property;
litigation involving the Company; the Company's benefit plans; title to its
assets; insurance coverage for the Company and its business; tax matters; Year
2000 compliance and the absence of certain changes or events which would have
a Material Adverse Effect on the Company. "Material Adverse Effect" is defined
as a material adverse effect on the operations of the Company and its
subsidiaries taken as a whole including without limitation information that a
significant customer intends to cancel or substantially reduce its
relationship with the Company, as determined by the Parent in its reasonable
discretion.
The Offeror and the Parent have also made customary representations and
warranties to the Company, including, but not limited to, representations and
warranties relating to the Offeror's and the Parent's organization and
qualification, authority to enter into the Merger Agreement, required consents
and approvals and the availability of sufficient funds to consummate the Offer
and the Merger.
Covenants Relating to the Conduct of Business. The Company has agreed that
it will, and will cause its subsidiaries to, carry on their respective
businesses in, and not enter into any material transaction other than in
accordance with, the usual and ordinary course of business. The Company has
agreed that, except as contemplated by the Merger Agreement or as disclosed by
the Company to the Parent prior to the execution of the Merger Agreement, it
shall not, and shall not permit any of its subsidiaries to, without the prior
consent of the Parent:
(i) issue, sell, pledge or encumber, or authorize or propose the
issuance, sale, pledge or encumbrance of (a) any shares of capital stock of
any class (including Common Shares or Preferred Shares), or securities
convertible into any such shares, or any rights, warrants or options to
acquire any such shares or other convertible securities, or grant or
accelerate any right to convert or exchange any securities of the Company
or any of its subsidiaries for such shares, other than Common Shares
issuable upon exercise of currently outstanding options, or (b) any other
securities in respect of, in lieu of or in substitution for Common Shares
or Preferred Shares outstanding on the date of the Merger Agreement;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding securities (including
Common Shares or Preferred Shares) or declare any dividends on Common
Shares or Preferred Shares;
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(iii) split, combine or reclassify any shares of its capital stock or
declare or pay any dividend or distribution on any shares of capital stock
of the Company;
(iv) except pursuant to agreements or arrangements in effect on the date
of the Merger Agreement which have been disclosed to the Parent, authorize
capital expenditures in excess of $50,000 in the aggregate, make any
acquisition or disposition of a material amount of assets or securities,
or, except for routine contracts with customers and clients consistent with
past practices, enter into or amend or terminate any contract material to
the business of the Company and its subsidiaries taken as a whole, or
release or relinquish any contract rights or claims material to the
business of the Company and its subsidiaries taken as a whole;
(v) pledge or encumber any material assets of the Company except in the
ordinary course of business;
(vi) except for loans from the Parent or the Offeror, incur any long-term
debt for borrowed money or short-term debt for borrowed money in an
aggregate amount in excess of $10,000;
(vii) propose or adopt any amendments to the Articles of Incorporation or
By-Laws of the Company or any of its subsidiaries;
(viii) adopt a plan of complete or partial liquidation or resolutions
providing for the complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
the Company or any of its subsidiaries;
(ix) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person, except wholly owned subsidiaries of the Company in the
ordinary course of business and consistent with past practice;
(x) make any loans, advances or capital contributions to, or investments
in, any other person (other than loans or advances to subsidiaries and
loans or advances to employees in accordance with past practices);
(xi) except as required by applicable laws, adopt or amend any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, severance, termination, employment or other employee benefit
plan, agreement, trust, fund, policy or other arrangement for the benefit
or welfare of any registered representative, agent, employee or director or
former employee or director or, except as required by applicable laws or in
the ordinary course of business, increase the compensation or fringe
benefits of any employee or pay any employee or pay any benefit not
required by any existing plan, arrangement or agreement;
(xii) make any tax election or settle or compromise any federal, state,
local or foreign income tax liability, except in the ordinary course of
business and consistent with past practice;
(xiii) agree in writing or otherwise to take any of the foregoing
actions; or
(xiv) fail to comply in all material respect with all applicable laws.
No Solicitation. The Merger Agreement provides that neither the Company nor
any of its subsidiaries, nor any of their respective directors, officers,
employees, representatives, agents or affiliates, will directly or indirectly
encourage, solicit, initiate or, except as is required in the exercise of
fiduciary duties of the Company's directors and officers under applicable
laws, upon advice of counsel to the Company, participate in any discussions or
negotiations with, or knowingly provide any information to, any corporation,
partnership, person or other entity or group (other than the Parent or any of
its affiliates or associates) concerning any merger, sale of substantially all
the assets, sale of shares of capital stock or similar transactions involving
the Company or any material subsidiary or division of the Company, provided,
however, that nothing contained in the Merger Agreement will prohibit the
Company or its Board of Directors from (i) taking and disclosing to the
Company's shareholders a position with respect to a tender offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act,
(ii) making such disclosure to the Company's shareholders which, in the
judgment of the Board of Directors with the advice of counsel, may be required
under applicable law or (iii) providing information to, or participating in
discussions or negotiations with, any party that has actually made, and which
the Board of Directors believes in good faith would be capable of effecting an
acquisition of the
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Company on terms that are superior, from a financial point of view, to the
Offer and the Merger if the Board of Directors in good faith believes, upon
the written advice of counsel, that the failure to so disclose would
constitute a breach of its fiduciary duty to the Company and its shareholders.
The Merger Agreement requires the Company promptly to communicate to Offeror
if it is furnishing information to or engaging in negotiations with any third
party with respect to the acquisition of the Company or any of its assets or
subsidiaries.
Preservation of Relationships and Obtaining Consents. The Company has agreed
that it will, and will cause its subsidiaries to, use their reasonable best
efforts to: (i) preserve their business organizations intact; (ii) retain the
services of their present officers and key employees; (iii) preserve the
goodwill of suppliers, customers, creditors and others having business
relationships with them and (iv) obtain consents to the assignment of
contracts under the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act") required for the Consummation of the transactions
contemplated by the Merger Agreement.
Warrants and Options. Warrants and options to purchase Common Shares are
outstanding under stock option plans of the Company and pursuant to grants
outside any formal plan (the "Company Stock Option Plans") and pursuant to the
Option Agreements, the Company has granted the Parent the Options to purchase
111,818 Preferred Shares at a price of $2.50 per Preferred Share and 4,500,000
Common Shares at $.60 per Common Share. See Below. Additionally, pursuant to
the First Note, the Company has granted the Parent the Preferred Conversion
Rights (providing for the conversion, at the Parent's option, of the then
outstanding principal and accrued interest of the First Note at the time of
conversion or such lesser amount as selected by the Parent, in whole or in
part, into Preferred Shares at a price of $2.50 per Preferred Share) and,
pursuant to the Second Note, the Company has granted the Parent the Common
Conversion Rights (providing for the conversion, at the Parent's Option, of
the then outstanding principal and accrued interest of the Second Note at the
time of conversion or such lesser amount as selected by the Parent, in whole
or in part, into Common Shares at a price of $0.60 per Common Share). See
below. As of the date of the Merger Agreement options for a total of 662,625
Common Shares (the "Company Stock Options") were outstanding under the Company
Stock Option Plans and warrants for a total of 118,751 Common Shares (the
"Warrants") were outstanding. The Merger Agreement provides that at the
Effective Time each Company Stock Option shall automatically terminate and be
of no further force and effect whatsoever and each Warrant shall be
automatically converted into the right to receive upon exercise thereof, in
lieu of Common Shares issuable upon exercise thereof immediately prior to the
Effective Time, the Common Share Offer Price (subject to any applicable
withholding taxes).
Indemnification. The Offeror has agreed, from and after the Effective Time,
to cause the Surviving Corporation to honor the performance of certain
contracts, agreements and commitments of the Company and its subsidiaries
which indemnify certain employees and directors of the Company and its
subsidiaries. Additionally, the Offeror has agreed that for six years from the
date of the Merger Agreement the Articles of Incorporation and By-laws of the
Surviving Corporation will not be amended to reduce or limit the rights to
indemnity currently afforded thereunder.
Employee Benefits. The Merger Agreement provides that if any salaried or
non-union hourly employee of the Company or any of its subsidiaries is or
becomes a participant in any written employee benefit plan or program of the
Offeror or any member of its controlled group within the meaning of the
Section 414(b) or (c) of the Code, such employee shall be credited under such
plan or program with all service prior to the Effective Time with the Company
and its subsidiaries (and any predecessor employer) to the extent credit was
given by the Company and its subsidiaries for purposes of eligibility and
vesting under such plan or program. The Parent and the Offeror have
acknowledged in the Merger Agreement that consummation of the Offer will
constitute a change of control of the Company (to the extent such concept is
relevant) for purposes of certain employment, severance or benefit agreements
and plans. See Below.
Board Representation. The Merger Agreement provides that promptly upon the
purchase by Parent or any of its affiliates of such number of Common Shares
which, when added to the number of Common Shares owned by Parent and the
Offeror, represents at least two-thirds of the outstanding Common Shares, and
from time to time thereafter, the Parent shall be entitled to designate such
number of members of the Board of Directors of
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the Company, rounded up to the next whole number as will give the Parent,
subject to compliance with the provisions of Section 14(f) of the Exchange
Act, representation on the Board of Directors of the Company equal to the
product of (i) the total number of directors on such Board and (ii) the
percentage that the aggregate number of Common Shares owned by the Parent and
Offeror bears to the total number of outstanding Common Shares. The Company
has agreed, upon the request of the Parent and upon the purchase of Shares
pursuant to the Offer, to promptly increase the size of the Board of Directors
of the Company and/or use its reasonable best efforts to secure the
resignations of such number of directors as is necessary to enable the
Parent's designees to be elected the Board of Directors and shall cause the
Parent's designees to be so elected. The Company has agreed to take, at its
expense, all actions required by Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder to effect any such election, including the
mailing to its shareholders the information required to be disclosed pursuant
thereto. The Parent will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Conditions Precedent. The respective obligations of each party to effect the
Merger are subject to the satisfaction or waiver, at or prior to the Effective
Time, of the following conditions: (a) if required by applicable law, the
Merger Agreement and the Merger shall have been approved by the requisite vote
of the holders of two-thirds of the outstanding Common Shares and two-thirds
of the outstanding Preferred Shares voting as a separate class; (b) no
governmental entity or court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation, executive
order, decree or injunction which prohibits or restricts the consummation of
the Merger; and (c) the Offeror shall have accepted and paid for Shares
tendered pursuant to the Offer, including satisfaction of the Minimum
Condition (unless waived).
Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time:
(i) by mutual written consent duly authorized by the Boards of Directors of
the Company (excluding any representative of Parent or an affiliate of
Parent), the Parent and the Offeror; (ii) by either Parent or the Company if
the Effective Time shall not have occurred on or before March 31, 1999; (iii)
by either Parent or the Company if any court of competent jurisdiction in the
United States or other United States governmental body shall have issued an
order, decree or ruling, or taken any other action restraining, enjoining, or
otherwise prohibiting the Merger and such order, decree, ruling or other
action has become final and non-appealable; (iv) by the Offeror, if (a) due to
an occurrence or circumstance that would result in a failure to satisfy any of
the conditions set forth in Section 15 of this Offer to Purchase, the Offeror
shall have (1) failed to commence the offer within 20 days following the date
of the Merger Agreement, (2) terminated the Offer or the Offer shall have
expired without the purchase of the Shares thereunder at any time after the
latest date, if any, to which the Offer shall have been extended pursuant to
the Merger Agreement or (3) failed to pay for Shares pursuant to the Offer by
the 40th business day following such commencement, unless such failure to
commence, termination or failure to pay for Shares shall have been caused by
or resulted from the failure of the Offeror or an affiliate to perform in any
material respect its material covenants and agreements contained in the Merger
Agreement; or (b) prior to the purchase of Shares pursuant to the Offer, the
Board of Directors of the Company shall have withdrawn or modified in a manner
adverse to the Offeror its approval or recommendation of the Offer, the Merger
Agreement or the Merger, or shall have recommended another Offer, or shall
have resolved to do any of the foregoing; provided, however, that the Offeror
shall have no right to terminate the Merger Agreement and abandon the Merger
if the Company withdraws or modifies its recommendation of the Offer, the
Merger Agreement, or the Merger, by reason of taking and disclosing to the
Company's shareholders a position contemplated by Rule 14e-2(a)(2) or (3)
promulgated under the Exchange Act with respect to another proposal, and if
within ten days of taking and disclosing to its shareholders the
aforementioned position, the Company publicly reconfirms its recommendation of
the Offer, the Merger Agreement and the Merger and takes and discloses to the
Company's shareholders a recommendation to reject such other proposal as
contemplated by Rule 14e-2(a)(1) promulgated under the Exchange Act; or (v) by
the Company, if (a) due to an occurrence or circumstance that would result in
a failure to satisfy any of the conditions set forth in Section 15 of this
Offer to Purchase or otherwise, the Offeror shall have (1) failed to commence
the Offer as provided in the Merger Agreement within 20 days following the
date of the Merger Agreement, (2) terminated the Offer or the Offer shall have
expired without the purchase of Shares thereunder at any time after the latest
date, if any, to which
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the Offer shall have been extended in accordance with the terms of the Merger
Agreement or (3) failed to pay for Shares pursuant to the Offer by the 40th
business day following such commencement, unless such failure to commence,
termination or failure to pay for Shares shall have been caused by or resulted
from the occurrence or existence of the condition described in paragraph (iv)
or (vii) of Section 15 of this Offer to Purchase or (b) prior to the purchase
of Shares pursuant to the Offer, (1) a corporation, partnership, person or
other entity or group shall have made a bona fide proposal that the Board of
Directors of the Company believes, in good faith, after consultation with its
legal and financial advisors, is more favorable to the Company and its
shareholders than the Offer and the Merger and (2) the Offeror does not make,
within ten days of the Offeror receiving notice of such third party proposal,
an offer which the Board of Directors believes, in good faith after
consultation with its legal and financial advisors, is at least as favorable
to the Company's shareholders as such third party proposal.
Fees and Expenses. The Company has agreed in the Merger Agreement to pay the
Offeror the sum of $250,000 and all actual, documented out-of-pocket expenses
relating to the Offer and the Merger in an amount up to $100,000 if the Merger
Agreement or the transactions contemplated thereby are terminated or abandoned
(unless at such time the Parent or the Offeror shall be in breach in any
material respect of any of its obligations or representations and warranties
thereunder) and prior to or contemporaneously with such termination or
abandonment, any corporation, partnership, person, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act) other than Parent or any of
its subsidiaries or affiliates, shall have acquired or beneficially owns (and
failed to tender such shares) (as defined in Rule 13d-3 promulgated under the
Exchange Act) at least 33.34% of the then outstanding Common Shares.
Except as provided in the preceding paragraph, the Merger Agreement provides
that whether or not the Merger is consummated, each party thereto shall pay
its own expenses incident to preparing for, entering into and carrying out the
Merger Agreement and the consummation of the Offer and the Merger.
Employment Agreement. Mr. Scott MacKillop, the President of the Company, was
a party to a two-year employment agreement dated September 23, 1997, with PMC
Investment Services, Inc. ("PMCIS"), a wholly owned subsidiary of the Company,
formerly known as ADAM Investment Services, Inc. PMCIS had the right to
terminate the agreement at any time after the one-year anniversary of the date
of the agreement by giving six months' prior written notice. The agreement
provided for a minimum salary of $240,000, an annual bonus of up to $50,000,
options to acquire 62,500 shares of Common Stock at an exercise price of
$6.485 per share (with such options expiring six years from the date of grant
and vesting ratably 20% per year over a five-year period beginning September
24, 1998), and participation in the Company's other benefit plans. As a
condition to Parent's agreeing to participate in the Offer and the Merger, Mr.
MacKillop agreed to terminate this agreement and to enter into an employment
agreement with the Company, as described below.
On November 3, 1998, Mr. MacKillop and the Company entered into a one-year
employment agreement. This agreement provides for a minimum salary of $240,000
that the Company may augment with performance-based increases as established
in the Company's discretion, and participation in the Company's other benefit
plans. In addition, the new employment agreement provides that if payment in
full of the 1998 earn-out payment due under the PMCIS Acquisition Agreement is
not paid in accordance with the PMCIS Acquisition Agreement, as amended, then
the Company will pay Mr. MacKillop $250,000 on the earlier of April 2, 1999 or
two business days after the consummation of the Merger. Upon the effectiveness
of this agreement, Mr. MacKillop's existing employment agreement with PMCIS
(as described above) was terminated.
Change in Control Severance Agreements. In May 1998, the Company entered
into Change in Control Severance Agreements with Mr. MacKillop, Stephen A. Ash
and Maureen E. Dobel (for purposes of their respective agreements, each the
"Executive"). Each of these agreements provides that if a Change in Control
(as defined in each such agreement) occurs, and before the two-year
anniversary of the Change in Control or the Executive's 65th birthday,
whichever comes first, (i) the Executive's employment is terminated by the
Company or any of its subsidiaries (unless such termination is for cause or
because Executive becomes permanently disabled and begins to receive
disability benefits pursuant to the long-term disability plan in effect for,
or applicable to, the Executive immediately prior to the Change in Control),
or (ii) if the Executive terminates his
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or her employment with the Company or any of its subsidiaries for Good Reason
(as defined in each such agreement), then Executive will be entitled to (x) a
cash payment payable during each month of the Continuation Period (twenty-
seven months following termination of employment for Messrs. MacKillop and
Ash, and twelve months following termination of employment for Ms. Dobel) in
an amount equal to 1/12 of the sum of the Executive's annual base salary and
the average of the Executive's annual bonus over the preceding three fiscal
years, (y) a lump-sum cash payment which the Company will pay within ten
business days after the expiration of the Continuation Period equal to the
Company matching contributions that would have been made under the Company's
401(k) savings plan(s) on the amounts described in the preceding clause (x) if
the Executive had continued in employment and participated to the fullest
extent under such plan(s), and (z) during the Continuation Period, the Company
will arrange to provide the Executive with continued medical, group life, and
dental benefits substantially similar, and subject to the same employee
contribution requirement, to those that the Executive was receiving or
entitled to receive immediately prior to the date his or her employment is
terminated.
In addition to the foregoing general terms, Mr. MacKillop's Change in
Control Severance Agreement also provides that if a Change in Control occurs,
then Mr. MacKillop may terminate his employment with the Company or any of its
subsidiaries for any reason, or without reason, during the sixty-day period
immediately following the first anniversary of a Change in Control giving rise
to a right to severance compensation. Pursuant to the employment agreement
entered into as of November 3, 1998 between the Company and Mr. MacKillop, Mr.
MacKillop's Change in Control Severance Agreement was terminated.
Conversion Rights and Option. Pursuant to the First Note, the Company has
granted the Parent Preferred Conversion Rights to convert the then outstanding
principal of the First Note at the time of conversion or such lesser amount as
selected by the Parent, in whole or in part, into Preferred Shares at a price
per Preferred Share of $2.50. Pursuant to the Second Note, the Company has
granted the Parent Common Conversion Rights to convert the then outstanding
principal and accrued interest of the Second Note of the time of conversion or
such lesser amount as selected by the Parent, in whole or in part, into Common
Shares, at a price per Common Share of $0.60. In addition, pursuant to the
Option Agreements, the Company has granted the Parent Options to purchase
111,818 Preferred Shares at a price per Preferred Share of $2.50 and 4,500,000
Common Shares at a price per Common Share of $0.60. The Conversion Rights and
the Options are intended to ensure the likelihood that the Offer and Merger
will be consummated in accordance with the terms of the Merger Agreement.
Consequently, certain aspects of the Conversion Rights and the Options may
have the effect of discouraging persons who might now, or prior to the
Effective Time may, be interested in acquiring all or a significant interest
in, other otherwise effecting a business combination with the Company or from
considering or proposing such a transaction, even if such persons were
prepared to offer to pay consideration which had a higher value than $0.60 per
Common Share or $2.50 per Preferred Share. The Conversion Rights and the
Options may be exercised, in whole or in part, at any time. The Conversion
Rights will terminate upon the earlier of (i) the Effective Time or (ii)
payment by the Company of the entire unpaid principal and accrued interest
under the Notes, the Preferred Option will terminate on December 31, 1999 and
the Common Option will terminate on the later of March 31, 1999 or fifteen
days after the date all loans and interest from Parent and its affiliates to
the Company have been repaid in full and all amounts due to Parent under the
Merger Agreement have been paid in full. The Purchaser has agreed to exercise
the Conversion Rights and/or the Options in order to meet the Minimum
Condition.
Shareholder Tender Agreements. As of the date hereof, thirty-one of the
Company's shareholders who beneficially own in the aggregate 262,277 Common
Shares, including all of the Company's officers and directors who own Shares,
have entered into Shareholder Tender Agreements with the Parent whereby the
shareholders have agreed to tender all of the Common Shares beneficially owned
by such shareholders pursuant to the Offer and not withdraw such shares. If
any of the conditions of the Offer as set forth herein have not been satisfied
by December 31, 1998, the Shareholder Tender Agreements will terminate and the
Parent will return all Shares tendered pursuant to such agreements.
14. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, prior to the Effective Time (i) declare
or pay any dividend (whether in cash, stock or property) or make
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any other distribution with respect to any shares of its capital stock, (ii)
split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) repurchase or otherwise
acquire any shares of capital stock of the Company; or (iv) issue, deliver or
sell or authorize or propose the issuance, delivery or sale of, any shares of
its capital stock or any class of securities convertible into, or
subscriptions, rights, warrants or options to acquire, or enter into other
agreements or commitments of any character obligating it to issue any such
shares or other convertible securities other than the issuance of Shares
pursuant to the exercise of the Conversion Rights, the Options, the Company
Stock Options or the Warrants.
15. CERTAIN CONDITIONS TO OFFEROR'S OBLIGATIONS.
Notwithstanding any other term of the Offer or of the Merger Agreement, the
Offeror is not required to accept for payment, purchase or pay for, subject to
any applicable rules and regulations of the Commission, including Rule 14e-
1(c) of the Exchange Act, any Shares tendered in the Offer and may terminate
or, subject to the terms of the Merger Agreement, amend the Offer and may
postpone the acceptance for payment of and payment for shares if (i) on or
before the Expiration Date, the number of shares validly tendered and not
withdrawn shall not satisfy the Minimum Condition or (ii) at any time on or
after the date of the Merger Agreement and before the acceptance of such
Shares for payment or the payment therefor, any of the following conditions
exist or shall occur and remain in effect:
(i) there shall have occurred (a) any general suspension of trading in,
or limitation on prices for, securities on the American Stock Exchange, (b)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (c) a commencement of a war, armed
hostilities or other national or international calamity directly or
indirectly involving the United States, (d) any material limitation
(whether or not mandatory) by any governmental authority on, or any other
event which might materially and adversely affect, the extension of credit
by lending institutions or (e) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof; or
(ii) there shall have been any statute, rule or regulation enacted,
promulgated, entered or enforced or deemed applicable, or any decree, order
or injunction entered or enforced by any government or governmental
authority in the United States or by any court in the United States that
(a) restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, (b) prohibits or restricts the ownership or
operation by the Offeror (or any of its affiliates or subsidiaries) of any
portion of its or the Company's business or assets which is material to the
business of all such entities taken as a whole or (c) imposes material
limitations on the ability of the Offeror effectively to acquire or to hold
or to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by the Offeror on all
matters properly presented to the shareholders of the Company; provided,
however, that the Offeror and the Parent shall have used their best efforts
to have any such decree, order or injunction vacated or reversed,
including, without limitation, by proffering their willingness to accept an
order embodying any arrangement required to be made by the Offeror or the
Parent pursuant to the Merger Agreement (and notwithstanding anything in
this subsection (ii) to the contrary, no terms, conditions or provisions of
an order embodying such an arrangement shall constitute a basis for the
Offeror asserting nonfulfillment of the conditions contained in this
subsection (ii)); or
(iii) the Merger Agreement shall have been terminated in accordance with
its terms; or
(iv) the Company shall have breached or failed to perform any of its
covenants or agreements which breach or failure to perform is material to
the obligations of the Company under the Merger Agreement taken as a whole
or any of the representations and warranties of the Company set forth in
the Merger Agreement shall not have been true in any respect which is
material to the Company and its subsidiaries taken as a whole, in each
case, when made or a material adverse change in the financial condition or
results of operations of the Company and its subsidiaries taken as a whole,
provided that the aggregate effect under this condition shall be in excess
of $250,000; or
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(v) the Board of Directors of the Company shall have publicly withdrawn
or modified in any material respect adverse to the Offeror its
recommendation of the Offer; provided, however, the Offeror shall have no
right to terminate the Offer or not accept for payment or pay for any
Shares if the Company withdraws or modifies its recommendation of the Offer
and the Merger, by reason of taking and disclosing to the Company's
shareholders a position contemplated by Rule 14e-2(a)(2) or (3) promulgated
under the Exchange Act with respect to another proposal, and if within ten
days of taking and disclosing to its shareholders the aforementioned
position, the Company publicly reconfirms its recommendation of the Offer
and Merger and takes and discloses to the Company's shareholders a
recommendation to reject such other proposal as contemplated by Rule 14e-
2(a)(1) promulgated under the Exchange Act; or
(vi) Parent and the Company shall have agreed that the Offeror shall
terminate the Offer; or
(vii) the Company has not delivered to Parent consents conforming with
the requirements of the Investment Advisors Act from investment advisers
with assets under management with the Company representing in the aggregate
at least 80% of the total assets under management by the Company as of
October 1, 1998.
The foregoing conditions are for the sole benefit of the Parent and the
Offeror and may be asserted by the Parent regardless of the circumstances
giving rise to any such condition and may be waived by the Parent, in whole or
in part, at any time and from time to time, in the reasonable discretion of
the Parent. The failure by the Parent or the Offeror at any time to exercise
any of the foregoing rights will not be deemed a waiver of any right, the
waiver of such right with respect to any particular facts or circumstances
shall not be deemed a waiver with respect to any other facts or circumstances,
and each right will be deemed an ongoing right which may be asserted at any
time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be
returned by the Depositary to the tendering shareholders.
16. CERTAIN REGULATORY AND LEGAL MATTERS.
Except as set forth in this Section, the Offeror is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such
matter, subject, however, to the Offeror's right to decline to purchase Shares
if any of the conditions specified in Section 15 shall have occurred. There
can be no assurance that any such approval or other action, if needed, would
be obtained or would be obtained without substantial conditions, or that
adverse consequences might not result to the Company's business or that
certain parts of the Company's business might not have to be disposed of if
any such approvals were not obtained or other action taken.
State Takeover Laws. A number of states have adopted laws and regulations
applicable to attempts to acquire securities of corporations which are
incorporated, or have substantial assets, shareholders, principal executive
offices or principal places of business, or whose business operations
otherwise have substantial economic effects in such states. In Edgar v. MITE
Corp., in 1982, the Supreme Court of the United States (the "U.S. Supreme
Court") invalidated on constitutional grounds the Illinois Business Takeover
statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the U.S. Supreme Court held that the
State of Indiana could, as a matter of corporate law and, in particular, with
respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquirer from voting on the affairs of
a target corporation without the prior approval of the remaining shareholders.
The state law before the U.S. Supreme Court was by its terms applicable only
to corporations that had a substantial number of shareholders in the state and
were incorporated there.
While Colorado, the Company's state of incorporation, has not adopted any
such takeover laws or regulations, the Company, directly or through
subsidiaries, conducts business in certain states of the United
24
<PAGE>
States which have enacted takeover laws. The Offeror does not know whether any
of these laws will, by their terms, apply to the Offer or the Merger and has
not complied with any such laws. Should any person seek to apply any state
takeover law, the Offeror will take such action as then appears desirable,
which may include challenging the validity or applicability of any such
statute in appropriate court proceedings. In the event it is asserted that one
or more state takeover laws is applicable to the Offer or the Merger, and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, the Offeror might be required to file certain
information with, or receive approvals from, the relevant state authorities.
In addition, if enjoined, the Offeror might be unable to accept for payment
any Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer and the Merger. In such case, the Offeror may not be
obligated to accept for payment any Shares tendered. See Sections 15 and 18
herein.
17. FEES AND EXPENSES.
Neither the Offeror nor the Parent, nor any officer, director, stockholder,
agent or other representative of the Offeror or the Parent, will pay any fees
or commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by the Offeror
for customary mailing and handling expenses incurred by them in forwarding
materials to their customers.
The Offeror has retained Firstar Bank Milwaukee, N.A. as Depositary and
Georgeson & Company Inc. as Information Agent in connection with the Offer.
The Information Agent and the Depositary will receive reasonable and customary
compensation for their services in connection with the Offer and the Merger
and reimbursement for their reasonable out-of-pocket expenses. The Depositary
will also be indemnified by the Offeror against certain liabilities in
connection with the Offer and the Merger.
18. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making
or acceptance thereof would not be in compliance with the securities, blue sky
or other laws of such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Offeror by one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Offeror other than as contained in this Offer
to Purchase or in the Letter of Transmittal, and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror.
The Offeror and the Parent have filed with the Commission the Schedule 14D-
1, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-1 promulgated
thereunder, furnishing certain information with respect to the Offer. Such
Schedule 14D-1 and any amendments thereto, including exhibits, may be examined
and copies may be obtained at the same places and in the same manner as set
forth with respect to the Company in Section 8 (except that exhibits will not
be available at the regional offices of the Commission).
Zacq Corp.
The Ziegler Companies, Inc.
November 9, 1998
25
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF
THE PARENT AND THE OFFEROR
1. Directors and Executive Officers of the Parent. The following table sets
forth the name, business address and present principal occupation or employment
and material occupations, positions, offices or employments for the past five
years of each member of the Board of Directors and each executive officer of
the Parent. Unless otherwise indicated, the business address of each such
person is c/o The Ziegler Companies, Inc., 215 North Main Street, West Bend,
Wisconsin 53095. Unless otherwise indicated, each occupation set forth opposite
an individual's name refers to employment with the Parent. Each person listed
is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND BUSINESS ADDRESS OFFICE AND FIVE-YEAR EMPLOYMENT HISTORY
------------------------- ------ ------------------------------------------
<C> <S> <C>
Peter D. Ziegler Chairman, President and Chairman, President and Chief Executive Officer
Chief Executive Officer of Parent and B.C. Ziegler and Company
Dennis A. Wallestad Senior Vice President Senior Vice President and Chief Financial Officer
and Chief Financial of Parent; Chief Administrative Officer for Calamos
Officer Asset Management until April 1997; Chief Financial
Officer of Firstar Investment Research Management
Company until November 1996; auditor for Arthur
Andersen & Co. until June 1994.
Donald A. Carlson, Jr. President, Chief President, Chief Executive Officer and Treasurer
Executive Officer and of Ziegler Securities, a Division of B.C. Ziegler
Treasurer of Ziegler and Company and Senior Vice President of B.C.
Securities, a Division Ziegler and Company
of B.C. Ziegler and
Company and Director
Geoffrey G. Maclay, Jr. President and Chief President and Chief Executive Officer of Ziegler
Executive Officer of Asset Management, Inc.; self-employed as a
Ziegler Asset financial/strategic consultant until 1996; lending,
Management, Inc. marketing, planning and investments specialist for
Firstar Investment Services until 1995
S. Charles O'Meara Senior Vice President Senior Vice President and General Counsel of the
and General Counsel Parent and B.C. Ziegler and Company
John C. Wagner Senior Vice President-- Senior Vice President--Retail Sales of B.C.
Retail Sales Ziegler and Company
Frederick J. Wenzel Director Professor of Medical Practice Management,
University of St. Thomas Graduate School of
Business; Advisor to the President, Marshfield Clinic
Peter R. Kellogg Director Senior Managing Director, Spear, Leeds & Kellogg
Stephen A. Roell Director Vice President and Chief Financial Officer,
Johnson Controls, Inc.
Bernard C. Ziegler III Director President, Ziegler/Limbach, Inc.
John C. Frueh Director President, Aegis Group, Inc.
John R. Green Director Partner, Green Manning & Bunch
</TABLE>
I-1
<PAGE>
2. Directors and Executive Officers of the Offeror. Except as otherwise
indicated, the table below identifies each director and executive officer of
the Offeror. Information about each applicable person identified is given in
the foregoing table with respect to the Parent.
<TABLE>
<CAPTION>
NAME OFFICE
---- ------
<S> <C>
Richard J. Glaisner(/1/) President and Director
S. Charles O'Meara Secretary
Dennis A. Wallestad Treasurer and Director
Peter D. Ziegler Director
</TABLE>
- --------
(1) Mr. Glaisner is the President and Chief Executive Officer of the Ziegler
Investment Division of B.C. Ziegler and Company. He previously served as
President and Chief Executive Officer of Glaisner, Schilffarth, Grande &
Scholl, Ltd since 1993. Mr. Glaisner's business address is c/o The Ziegler
Companies, Inc., 215 North Main Street, West Bend, Wisconsin 53095. Mr.
Glaisner is a citizen of the United States.
I-2
<PAGE>
THE DEPOSITARY FOR THE OFFER IS:
FIRSTAR BANK MILWAUKEE, N.A., F/K/A FIRSTAR TRUST COMPANY
By Mail: By Hand: By Overnight Courier:
FIRSTAR BANK MILWAUKEE, N.A.
Corporate Trust Services Corporate Trust Services Corporate Trust Services
Box 2077 1555 North River Center 1555 North River Center
Milwaukee, WI 53201 Drive Drive
Suite 301 Suite 301
Milwaukee, WI 53212 Milwaukee, WI 53212
or
c/o IBJ Schroder Bank & Trust Company
Subcellar 1
One State Street
New York, New York 10004
Facsimile for Eligible Institutions: (414) 905-5049
To confirm fax only: (414) 287-3905
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery
may be directed to the Information Agent at the telephone numbers and location
listed below. Shareholders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
Wall Street Plaza
New York, New York 10005
Bankers and Brokers call collect:
(212) 440-9800
All Others Call Toll-Free:
1-800-223-2064
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK (INCLUDING SCRIP) AND PREFERRED STOCK
OF
PMC INTERNATIONAL, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 9, 1998
BY
ZACQ CORP.
A WHOLLY OWNED SUBSIDIARY OF
THE ZIEGLER COMPANIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME,
ON THURSDAY, DECEMBER 10, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
FIRSTAR BANK MILWAUKEE, N.A.
(F/K/A) FIRSTAR TRUST COMPANY
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
Corporate Trust Services Corporate Trust Services Corporate Trust Services
P.O. Box 2077 1555 N. RiverCenter Drive 1555 N. RiverCenter Drive
Milwaukee, WI 53201 Suite 301 Suite 301
Milwaukee, WI 53212 Milwaukee, WI 53212
FACSIMILE TRANSMISSION
For Eligible Institutions Only:
(414) 905-5049
Confirm by Telephone
(414) 276-3737
FOR INFORMATION CALL:
(800) 637-7549
(414) 276-3737
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used only if (a) certificates for Shares
(as defined below) are being forwarded herewith (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or (b) a tender of Shares is being made concurrently by book-entry
transfer to the account maintained by Firstar Trust Company (the "Depositary")
at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant
to Section 3 of the Offer to Purchase. See Instruction 2.
Shareholders who cannot deliver the certificates for their Shares to the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase)
or who cannot complete the procedure for book-entry transfer on a timely basis
or who cannot deliver a Letter of Transmittal and all other required documents
to the Depositary prior to the Expiration Date must, in each case, tender
their Shares pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE>
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary.
[_]CHECK HERE IF TENDERED SHARES (INCLUDING SCRIP) ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS
IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY
TRANSFER):
Name of Tendering Institution ________________________________________________
If delivered by Book-Entry Transfer, The Depository Trust Company must be
used; provide Account Number and Transaction Code Number in the space below:
Account Number _______________________ Transaction Code Number _______________
[_]CHECK HERE IF CERTIFICATES FOR TENDERED SHARES (INCLUDING SCRIP) ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO
THE DEPOSITARY (PLEASE INCLUDE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY) AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ______________________________________________
Date of Execution of Notice of Guaranteed Delivery: __________________________
Name of Institution that Guaranteed Delivery: ________________________________
If delivered by Book-Entry Transfer, The Depository Trust Company must be
used; provide Account Number and Transaction Code Number in the space below:
Account Number _______________________ Transaction Code Number _______________
<PAGE>
DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
- -------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED TENDERED CERTIFICATES(ATTACH SIGNED
HOLDER(S) (PLEASE FILL IN, IF BLANK, ADDITIONAL LIST IFNECESSARY)
EXACTLY AS NAME(S) APPEAR(S) ON
CERTIFICATE(S) AND SHARES TENDERED)
- -------------------------------------------------------------------------------
CERTIFICATENUMBER(S)*
NUMBER
OF SHARES
SPECIFY NUMBER
COMMON OR OF SHARES TENDERED
SCRIP **
OR PREFERRED
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
TOTALSHARESTENDERED
SCRIP COMMON PREFERRED
- -------------------------------------------------------------------------------
*DOES NOT need to be completed if Shares are tendered by book-entry transfer.
**If you desire to tender fewer than all Shares evidenced by any certificates
listed above, please indicate in this column the number of Shares you wish
to tender. Otherwise, all Shares evidenced by such certificates will be
deemed to have been tendered. See Instruction 4.
- -------------------------------------------------------------------------------
[_]Check here if any of the certificates representing Shares that you own
have been lost, destroyed or stolen. See Instruction 12.
Number of Shares represented by lost, destroyed or stolen certificates:
Common Scrip Preferred
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL
CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to ZACQ Corp., a Colorado corporation (the
"Purchaser") and a wholly owned subsidiary of The Ziegler Companies, Inc., a
Wisconsin corporation, the above-described shares of common stock, par value
$.01 per share, including scrip (the "Common Shares"), and the above-described
shares of $0.325 Cumulative Series A Preferred Stock, no par value per share
(the "Preferred Shares") (collectively, the Common Shares and the Preferred
Shares are referred to as the "Shares") of PMC International, Inc., a Colorado
corporation (the "Company"), pursuant to the Purchaser's offer to purchase all
of the outstanding Common Shares, including scrip, at a price of $.60 per
share, net to the tendering shareholder in cash, and all of the outstanding
Preferred Shares at a price of $2.50 per share, net to the tendering
shareholder in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated November 9, 1998 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which together constitute the "Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Purchaser all right, title and
interest in and to all the Shares that are being tendered hereby and orders
the registration of all such Shares if tendered by book-entry transfer and
hereby irrevocably constitutes and appoints the Depositary as the true and
lawful agent
3
<PAGE>
and attorney-in-fact of the undersigned (with full knowledge that said
Depositary also acts as the agent of the Purchaser) with respect to such
Shares with full power of substitution (such power of attorney being deemed to
be an irrevocable power coupled with an interest), to:
(a) deliver certificate(s) for such Shares or transfer ownership of such
Shares on the account books maintained by the Book-Entry Transfer Facility,
together in either such case with all accompanying evidences of transfer
and authenticity, to, or upon the order of, the Purchaser upon receipt by
the Depositary, as the undersigned's agent, of the aggregate purchase price
with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer on
the Company's books; and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares, subject to the next paragraph, all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants to the Purchaser that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that:
(i) the undersigned has a net long position in Shares or equivalent
securities at least equal to the Shares tendered within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and
(ii) such tender of Shares complies with Rule 14e-4 under the 1934
Act;
(b) when and to the extent the Purchaser accepts such Shares for
purchase, the Purchaser will acquire good, marketable and unencumbered
title to them, free and clear of all security interests, liens, charges,
encumbrances, conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any additional
documents the Depositary or the Purchaser deems necessary or desirable to
complete the assignment, transfer and purchase of the Shares tendered
hereby; and
(d) the undersigned has read and agrees to all of the terms of the Offer.
All authorities conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy, and legal representatives of the undersigned. Except
as stated in the Offer to Purchase, this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed
above, if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The type (common or
preferred) and certificate numbers, the number of Shares represented by such
certificates and the number of Shares that the undersigned wishes to tender,
should be set forth in the appropriate boxes above.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
(as discussed in Instruction 8) may accept for payment fewer than all of the
Shares tendered hereby. In any such event, the undersigned understands that
certificate(s) for any Shares delivered herewith but not tendered or not
purchased will be returned to the undersigned at the address indicated above,
unless otherwise indicated under the "Special Payment Instructions" or
"Special Delivery Instructions" boxes below. The undersigned recognizes that
the Purchaser has no obligation, pursuant to the Special Payment Instructions,
to transfer any certificate for Shares from the name of its registered holder,
or to order the registration or transfer of Shares tendered by book-entry
transfer, if the Purchaser purchases none of the Shares represented by such
certificate or tendered by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Purchaser for
payment will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer.
<PAGE>
The check for the aggregate purchase price for such of the Shares tendered
hereby as are purchased will be issued to the order of the undersigned and
mailed to the address indicated above, unless otherwise indicated under the
"Special Payment Instructions" or "Special Delivery Instructions" boxes below.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 4, 5, 6 AND 7)
To be completed ONLY if To be completed ONLY if
certificates for Shares not certificates for Shares not
tendered or not accepted for tendered or not accepted for
payment and/or the check for the payment and/or the check for the
aggregate purchase price of Shares aggregate purchase price of Shares
accepted for payment are to be accepted for payment are to be sent
issued in the name of someone other to someone other than the
than the undersigned. undersigned, or to the undersigned
at an address other than that shown
under "Description of Shares
Tendered."
Issue:
[_] Check to:
[_] Certificates to:
Name(s) ____________________________ Mail:
(Please Print) [_] Check to:
[_] Certificates to:
Address ____________________________
- ------------------------------------ Name(s) ____________________________
(Please Print)
(Zip Code)
Address ____________________________
- ------------------------------------
(Taxpayer Identification or Social ------------------------------------
Security Number) (Zip Code)
(See Substitute Form W-9 below.)
IF YOU FILL OUT THIS BOX, YOU MUST
IF YOU FILL OUT THIS BOX, YOU MUST HAVE YOUR SIGNATURE GUARANTEED
HAVE YOUR SIGNATURE GUARANTEED BELOW.
BELOW.
<PAGE>
IMPORTANT
SHAREHOLDER(S): SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
X ____________________________________________________________________________
X ____________________________________________________________________________
Signature(s) of Holder(s)
Dated: __________________, 199_.
(Must be signed by a registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or on a security position listing or by a person(s)
authorized to become registered holder(s) by certificate and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or another acting in a
fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s): _____________________________________________________________________
(Please Print)
_______________________________________________________________________
Capacity (full title): _______________________________________________________
Address: _____________________________________________________________________
_______________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ______________________________________________
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER: ___________________________
(SEE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
(Please Print)
Title: _______________________________________________________________________
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ______________________________________________
Dated: _________________,
199
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required if:
(a) this Letter of Transmittal is signed by the registered holder of the
Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility's system whose name appears
on a security position listing as the owner of such Shares) exactly as the
name of the registered holder appears on the certificate(s) tendered with
this Letter of Transmittal and such registered holder(s) has completed
neither the box entitled "Special Payment Instructions" nor the box
entitled "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a participant in the
Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program, or the Stock Exchange Medallion
Program (each such entity, an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures on
this Letter of Transmittal. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if certificates for
Shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender for Shares is being made concurrently pursuant to
the procedure for tender by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Certificates for all physically tendered Shares or
confirmation of a book-entry transfer into the Depositary's account at a Book-
Entry Transfer Facility of Shares tendered electronically, together in each
case with a properly completed and duly executed Letter of Transmittal or duly
executed and manually signed facsimile of it, and any other documents required
by this Letter of Transmittal, should be mailed or delivered to the Depositary
at the appropriate address set forth herein and must be delivered to the
Depositary on or before the Expiration Date (as defined in the Order of
Purchase). DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Shareholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary before the Expiration Date, or whose Shares cannot be delivered on
a timely basis pursuant to the procedures for book-entry transfer, must, in
any case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile of it) and by otherwise complying with the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant
to such procedure, certificates for all physically tendered Shares or book-
entry confirmations, as the case may be, as well as a properly completed and
duly executed Letter of Transmittal (or facsimile of it) and all other
documents required by this Letter of Transmittal, must be received by the
Depositary within the time period provided in Section 3 of the Offer to
Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY.
The Purchaser will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer of Purchase. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their tender.
<PAGE>
3. INADEQUATE SPACE. If the space provided in the box captioned "Description
of Shares Tendered" is inadequate, the certificate numbers, the class or
classes, and/or the number of Shares should be listed on a separate signed
schedule and attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to shareholders
who tender by book entry transfer.) If fewer than all of the Shares evidenced
by any certificate are to be tendered, fill in the number of Shares that are
to be tendered in the column entitled "Number of Shares Tendered," in the box
captioned "Description of Shares Tendered." In such case, if any tendered
Shares are purchased, a new certificate for the remainder of the Shares
(including any Shares not purchased) evidenced by the old certificate(s) will
be issued and sent to the registered holder(s), unless otherwise specified in
either the "Special Payment Instructions" or "Special Delivery Instructions"
box on this Letter of Transmittal, as soon as practicable after the Expiration
Date. Unless otherwise indicated, all Shares represented by the
certificates(s) listed and delivered to the Depositary will be deemed to have
been tendered.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered holder(s)
of the Shares tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the certificate(s) without any
change whatsoever.
(b) If any tendered Shares are registered in the names of two or more
joint holders, each such holder must sign this Letter of Transmittal.
(c) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares listed and transmitted hereby, no endorsement(s) of
certificate(s) representing such Shares or separate stock power(s) are
required unless payment is to be made, or the certificate(s) for the Shares
not tendered or not purchased are to be issued, to a person other than the
registered holder(s). If this Letter of Transmittal is signed by a person
other than the registered holder(s) of the certificate(s) listed, or if
payment is to be made to a person other than the registered holder(s), the
certificate(s) must be endorsed or accompanied by appropriate stock
power(s), in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on the certificate(s). SIGNATURE(S) ON SUCH
CERTIFICATE(S) OR STOCK POWER(S) MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. See Instruction 1.
(d) If this Letter of Transmittal or any certificate(s) or stock
powers(s) are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in fiduciary
or representative capacity, such persons should so indicate when signing
and must submit proper evidence satisfactory to the Purchaser of their
authority to so act.
6. STOCK TRANSFER TAXES. Except as provided in this Instruction 6, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter
of Transmittal. The Purchaser will pay or cause to be paid any stock transfer
taxes payable on the transfer to it of Shares purchased pursuant to the Offer.
If, however:
(a) payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any other person than the
registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be registered
in the name(s) of any person(s) other than the registered holder(s); or
(c) tendered certificates are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate purchase price the amount
of any stock transfer taxes (whether imposed on the registered holder, such
other person or otherwise) payable on account of the transfer to such person,
unless satisfactory evidence of the payment of such taxes or any exemption
from them is submitted.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of
a person other than the signer of the Letter of Transmittal or to the signer
at a different address, the boxes captioned "Special Payment Instructions"
and/or "Special Delivery Instructions" on this Letter of Transmittal should be
completed as applicable and signatures must be guaranteed as described in
Instruction 1.
<PAGE>
8. IRREGULARITIES. All questions as to the number of Shares to be accepted,
the price to be paid therefor and the validity, form, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares will be
determined by the Purchaser in its sole discretion, which determinations shall
be final and binding on all parties. The Purchaser reserves the absolute right
to reject any or all tenders of Shares it determines not to be in proper form
or the acceptance of which or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any of the conditions of the Offer and any defect or
irregularity in the tender of any particular Shares, and the Purchaser's
interpretation of the terms of the Offer (including these instructions) will
be final and binding on all parties. No tender of Shares will be deemed to be
properly made until all defects and irregularities have been cured or waived.
Unless waived, any defects or irregularities in connection with tenders must
be cured within such time as the Purchaser shall determine. Neither the
Purchaser, Depositary, nor any other person is or will be obligated to give
notice of any defects or irregularities in tenders and none of them will incur
any liability for failure to give any such notice.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent at its address and
telephone number set forth at the end of this Letter of Transmittal or from
your broker, dealer, commercial bank or trust company.
10. 31% BACKUP WITHHOLDING. Under Federal income tax law, a shareholder who
receives a payment pursuant to the Offer is required to provide the Depositary
(as payor) with such shareholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 below. If the shareholder is an individual, the
TIN is his or her social security number. If the Depositary is not provided
with the correct TIN, payments that are made to such shareholder or other
payee with respect to the Offer may be subject to 31% backup withholding.
Certain shareholders (including, among others, certain foreign individuals)
may not be subject to these backup withholding and reporting requirements. In
order for a foreign individual to qualify as an exempt recipient, the
shareholder must submit a Form W-8, signed under penalties of perjury,
attesting to that individual's exempt status. A Form W-8 can be obtained from
the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the shareholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld, provided
that the required information is given to the Internal Revenue Service. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in part 3 is checked, the
shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
shareholder if a TIN is provided to the Depositary within 60 days.
The shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
11. WITHHOLDING FOR NON-U.S. SHAREHOLDERS. Although a non-U.S. shareholder
may be exempt from U.S. Federal backup withholding, certain payments to non-
U.S. shareholders are subject to U.S. withholding tax at a rate of 30%. The
Depositary will withhold the 30% from gross payments made to non-U.S.
shareholders pursuant to the Offer unless the Depositary determines that a
non-U.S. shareholder is either exempt from the withholding or entitled to a
reduced withholding
<PAGE>
rate under an income tax treaty. For purposes of this discussion, a "non-U.S.
shareholder" means a shareholder who is not (i) a citizen or resident of the
United States, (ii) a corporation or partnership created or organized in the
United States or under the law of the United States or of any State or
political subdivision of the foregoing, (iii) an estate the income of which is
includible in gross income for U.S. federal income tax purposes regardless of
its source, or (iv) a "United States Trust." A United States Trust is any
trust if, and only if, (i) a court within the United States is able to
exercise primary supervision over the administration of the trust and (ii) one
or more U.S. trustees have the authority to control all substantial decisions
of the trust. A non-U.S. shareholder will not be subject to the withholding
tax if the payment from the Company is effectively connected with the conduct
of a trade or business in the United States by such non-U.S. shareholder (and,
if certain tax treaties apply, is attributable to a United States permanent
establishment maintained by such non-U.S. shareholder) and the non-U.S.
shareholder has furnished the Depositary with a properly executed IRS Form
4224 prior to the time of payment.
A non-U.S. shareholder who is eligible for a reduced rate of withholding
pursuant to U.S. income tax treaty must certify such to the Depositary by
providing to the Depositary a properly executed IRS Form 1001 prior to the
time payment is made. A non-U.S. shareholder may be eligible to obtain from
the IRS a refund of tax withheld if such non-U.S. shareholder is able to
establish that no tax (or a reduced amount of tax) is due.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box provided in the box titled
"Description of Shares Tendered" and indicating the number of Shares so lost,
destroyed or stolen. The shareholder will then be instructed by the Depositary
as to the steps that must be taken in order to replace the certificate(s).
This Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen certificates have been
followed. Please allow at least ten to fourteen business days to complete such
procedures.
13. DEFINITIONS. For purposes hereof, the term "Agent's Message" means a
message transmitted by a Book-Entry Transfer Facility to, and received by, the
Depositary and forming a part of a Book-Entry Confirmation, which states that
such Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering the Shares that
such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that the Offeror may enforce such agreement against
the participant.
14. PROXY. By executing the Letter of Transmittal as set forth above, a
tendering shareholder irrevocably appoints designees of the Offeror as such
shareholder's proxy, with full power of substitution, in the manner set forth
in the Letter of Transmittal, to the full extent of such shareholder's rights
with respect to the Shares tendered by such shareholder and accepted for
payment by the Offeror (and any and all other Shares or other securities or
rights issued or issuable in respect of such Shares on or after November 3,
1998). All such proxies shall be considered coupled with an interest in the
tendered Shares. This appointment is effective when, and only to the extent
that, the Offeror accepts for payment the Shares deposited with the
Depositary. Upon acceptance for payment, all prior proxies given by the
shareholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent proxies may be given or
written consent executed (and, if given or executed, will not be deemed
effective). The designees of the Offeror will, with respect to the Shares and
other securities or rights, be empowered to exercise all voting and other
rights of such shareholder as they in their sole judgment deem proper in
respect of any annual or special meeting of the Company's shareholders, or any
adjournment or postponement thereof. The Offeror reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon the
Offeror's payment for such Shares, the Offeror must be able to exercise full
voting and other rights with respect to such Shares and the other securities
or rights issued or issuable in respect of such Shares, including voting at
any meeting of shareholders (whether annual or special and whether or not
adjourned) in respect of such Shares.
<PAGE>
PAYOR'S NAME: FIRSTAR TRUST COMPANY
- -------------------------------------------------------------------------------
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR Social Security
FORM W-9 TIN IN THE BOX AT RIGHT AND Number or
CERTIFY BY SIGNING AND DATING Employer
BELOW Identification
Number:
DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICATION ---------------------
NUMBER (TIN)
----------------------------------------------------------
Part 2--CERTIFICATION--Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me) and
(2) I am not subject to backup withholding either
because: (a) I am exempt from backup withholding,
or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to
backup withholding.
----------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross Part 3
out item (2) above if you have been
notified by the IRS that you are currently
subject to backup withholding because of
underreporting interest or dividends on
your tax return. However, if after being
notified by the IRS that you are subject
to backup withholding, you received
another notification from the IRS that you
are no longer subject to backup
withholding, do not cross out such item
(2).
Awaiting
TIN [_]
The Internal Revenue Service does not
require your consent to any provision of
this document other than the
certifications required to avoid backup
withholding.
SIGNATURE _____________ DATE ______________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE MERGER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number by the
time of payment, 31% of all reportable payments made to me will be withheld;
but that such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
______________________________________________________________________________
Signature Date
<PAGE>
The Information Agent for the Offer is:
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK, INCLUDING SCRIP, AND PREFERRED STOCK
OF
PMC INTERNATIONAL, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 9, 1998
BY
ZACQ CORP.
A WHOLLY OWNED SUBSIDIARY OF
THE ZIEGLER COMPANIES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereof must be used to accept the Offer
(as defined below) if certificates for common stock, par value $.01 per share,
including scrip (the "Common Shares"), and/or certificates for $0.325
Cumulative Series A Preferred Stock, no par value per share (the "Preferred
Shares") (collectively, the Common Shares and Preferred Shares are referred to
as the "Shares"), of PMC International, Inc., a Colorado corporation (the
"Company"), are not immediately available (including if the procedure for book-
entry transfer cannot be completed on a timely basis or time will not permit
all required documents to reach the Depositary prior to the Expiration Date).
The term "Expiration Date" means 5:00 p.m., Eastern Time, on Thursday, December
10, 1998, unless and until the ZACQ Corp., a Colorado corporation, and a wholly
owned subsidiary of The Ziegler Companies, Inc., a Wisconsin corporation, in
its sole discretion, shall have extended the period of time during which the
Offer is open, in which event the "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by the Purchaser, will expire. This
form may be delivered by hand to the Depositary or transmitted by telegram,
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution (as defined in the Offer to Purchase) in the form
set forth herein. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
FIRSTAR BANK MILWAUKEE, N.A.
(F/K/A) FIRSTAR TRUST COMPANY
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
Corporate Trust Services Corporate Trust Services Corporate Trust Services
P.O. Box 2077 1555 N. RiverCenter 1555 N. RiverCenter
Milwaukee, WI 53201 Drive Drive
Suite 301 Suite 301
Milwaukee, WI 53212 Milwaukee, WI 53212
FACSIMILE TRANSMISSION
For Eligible Institutions Only:
(414) 705-5049
Confirm by Telephone
(414) 276-3737
FOR INFORMATION CALL:
(800) 637-7549
(414) 276-3737
<PAGE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
(as defined below) under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to ZACQ Corp., a Colorado corporation (the
"Purchaser"), which is a wholly owned subsidiary of The Ziegler Companies,
Inc., a Wisconsin corporation, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated November 9, 1998 (the "Offer to Purchase")
and the related Letter of Transmittal (such Offer to Purchase and related
Letter of Transmittal, together with any amendments or supplements thereto, the
"Offer"), receipt of which is hereby acknowledged, the number of Shares set
forth below, all pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
(Please type or print)
Number of Common Shares: ______________________________________
(including scrip)
Number of Preferred Shares: ___________________________________
Certificate Nos. (if available): ______________________________
---------------------------------------------------------------
Name(s)
---------------------------------------------------------------
Address(es)
---------------------------------------------------------------
---------------------------------------------------------------
Area Code(s) and Telephone Numbers
SIGN HERE
---------------------------------------------------------------
Signature(s)
---------------------------------------------------------------
Dated:
If Shares will be tendered by book-entry transfer, fill in the applicable
account number of The Depository Trust Company, below:
Account Number: _______________________________________________
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program, or
the Stock Exchange Medallion Program (each such entity, an "Eligible
Institution"), hereby guarantees to deliver to the Depositary either the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation with respect to such Shares, together
with a properly completed and duly executed Letter of Transmittal (or manually
executed facsimile thereof), with any required signature guarantees and any
other required documents within three trading days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
All terms used herein have the meaning set forth in the Offer to Purchase.
Authorized Signature: _________________________________________
Name: _________________________________________________________
(Please Print)
---------------------------------------------------------------
---------------------------------------------------------------
Title: ________________________________________________________
Name of Firm: _________________________________________________
Address: ______________________________________________________
---------------------------------------------------------------
---------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number: _______________________________
Date: ______________________ , 199
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING SCRIP) AND PREFERRED STOCK
OF
PMC INTERNATIONAL, INC.
AT
$.60 NET PER SHARE OF COMMON STOCK (INCLUDING SCRIP)
AND
$2.50 NET PER SHARE OF PREFERRED STOCK
BY
ZACQ CORP.
A WHOLLY OWNED SUBSIDIARY
OF
THE ZIEGLER COMPANIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
THURSDAY, DECEMBER 10, 1998, UNLESS THE OFFER IS EXTENDED.
November 9, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
ZACQ Corp., a Colorado corporation (the "Purchaser") and a wholly owned
subsidiary of The Ziegler Companies, Inc., a Wisconsin corporation ("Ziegler"),
has appointed us to act as Information Agent in connection with its offer to
purchase all outstanding shares of common stock, par value $.01 per share,
including scrip (the "Common Shares") and all outstanding shares of $0.325
Cumulative Series A Preferred Stock, no par value per share (the "Preferred
Shares") (collectively, the Common Shares and Preferred Shares are referred to
as the "Shares"), of PMC International, Inc., a Colorado corporation (the
"Company"), upon the terms and subject to the conditions set forth in the Offer
to Purchase dated November 9, 1998 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), at a price of $.60
per Common Share, including scrip, net to the seller in cash, without interest
thereon, and $2.50 per Preferred Share, net to the seller in cash, without
interest thereon.
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
<PAGE>
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the offer a number of
Common Shares and Preferred Shares that, when added to the Common and Preferred
Shares beneficially owned by the Purchaser or Ziegler on the date of purchase,
will constitute two-thirds of the total number of outstanding Common and
Preferred Shares, respectively, of the Company entitled to vote on a merger
under the Company's Articles of Incorporation, as amended, and the Colorado
Business Corporation Act.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
herewith copies of the following documents:
1. Offer to Purchase, dated November 9, 1998;
2. Letter of Transmittal (together with accompanying Form W-9) to be used
by shareholders of the Company in accepting the Offer and tendering Shares;
3. Letter to Clients which may be sent to your clients for whose account
you hold Shares in your name or in the name of a nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
4. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Date or if the procedure for book-entry
transfer cannot be completed on a timely basis;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9;
6. Letter, dated November 9, 1998, from Scott A. MacKillop, President of
the Company, to shareholders of the Company; and
7. Return envelope addressed to Firstar Bank Milwaukee, N.A., f/k/a
Firstar Trust Company, the Depositary.
The term "Expiration Date" means 5:00 p.m., Eastern Time, on Thursday,
December 10, 1998, unless and until the Purchaser, in its sole discretion,
shall have extended the period of time during which the Offer is open, in which
event the "Expiration Date" shall mean the latest time and date at which the
Offer, as so extended by the Purchaser, will expire.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., EASTERN TIME, ON THURSDAY,
DECEMBER 10, 1998, UNLESS THE OFFER IS EXTENDED BY THE PURCHASER.
Neither the Purchaser nor Ziegler will pay any fees or commissions to any
broker or dealer or other person (other than the Depositary and the Information
Agent as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be
reimbursed, upon request, for customary mailing and handling expenses incurred
by you in forwarding the enclosed offering materials to your customers. The
Purchaser will pay or cause to be paid any stock transfer taxes applicable to
its purchase of Shares, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to
the undersigned and additional copies of the enclosed material may be obtained
by contacting the undersigned at telephone numbers 212-440-9800 or 800-223-2064
(toll free).
Very truly yours,
Georgeson & Company Inc.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY
OTHER PERSON THE AGENT OF THE PURCHASER, ZIEGLER, THE DEPOSITARY OR THE
INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF
ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR
THE LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING SCRIP) AND PREFERRED STOCK
OF
PMC INTERNATIONAL, INC.
AT
$.60 NET PER SHARE OF COMMON STOCK (INCLUDING SCRIP)
AND
$2.50 NET PER SHARE OF PREFERRED STOCK
BY
ZACQ CORP.
A WHOLLY OWNED SUBSIDIARY
OF
THE ZIEGLER COMPANIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
THURSDAY, DECEMBER 10, 1998, UNLESS THE OFFER IS EXTENDED.
November 9, 1998
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated November 9,
1998 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to the offer by ZACQ Corp., a Colorado corporation (the
"Purchaser") and a wholly owned subsidiary of The Ziegler Companies, Inc., a
Wisconsin corporation ("Ziegler"), to purchase for cash all outstanding shares
of common stock, par value $.01 per share, including scrip (the "Common
Shares") and all outstanding shares of $0.325 Cumulative Series A Preferred
Stock, no par value per share (the "Preferred Shares") (collectively, the
Common Shares and Preferred Shares are referred to as the "Shares"), of PMC
International, Inc., a Colorado corporation (the "Company"), at a price of
$.60 per Common Share, including scrip, net to the seller in cash, without
interest thereon, and $2.50 per Preferred Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions of the
Offer.
The enclosed material is being sent to you as the beneficial owner of Shares
held by us for your account but not registered in your name. We are the holder
of record of Shares held by us for your account. A TENDER OF SUCH SHARES CAN
BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any or all of the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The tender offer price is $.60 per Common Share (including scrip), net
to the seller in cash, without interest thereon, and $2.50 per Preferred
Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions of the Offer.
2. The Offer is being made for all of the outstanding Common and
Preferred Shares.
3. The Offer and withdrawal rights will expire at 5:00 p.m., Eastern
Time, on Thursday, December 10, 1998, unless the Offer is extended by the
Purchaser.
<PAGE>
4. The Board of Directors of the Company unanimously has determined that
each of the Offer and the related Merger (as defined in the Offer to
Purchase) is fair to, and in the best interest of, the shareholders of the
Company, and recommends that shareholders accept the Offer and tender their
Shares pursuant to the Offer.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to expiration of the offer a number of
Common Shares and Preferred Shares that, when added to the Common and
Preferred Shares beneficially owned by the Purchaser and Ziegler on the
date of purchase, will constitute two-thirds of the total number of
outstanding Common and Preferred Shares, respectively, of the Company
entitled to vote on a merger under the Company's Articles of Incorporation,
as amended, and the Colorado Business Corporation Act.
6. The term "Expiration Date" means 5:00 p.m., Eastern Time, on Thursday,
December 10, 1998, unless and until the Purchaser, in its sole discretion,
shall have extended the period of time during which the Offer is open, in
which event the "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Purchaser, will expire.
7. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal. Backup tax withholding at a 31%
rate may be required, however, unless the required tax identification
information is provided. See Instruction 10 of the Letter of Transmittal.
YOUR INSTRUCTIONS TO US SHOULD BE FORWARDED PROMPTLY TO PERMIT US TO SUBMIT
A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
If you wish to have us tender any of or all of your Shares held by us for
your account, please so instruct us by completing, executing, and returning to
us the instruction form set forth below. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise specified on the instruction
form set forth below. PLEASE FORWARD YOUR INSTRUCTIONS TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by Firstar Bank Milwaukee, N.A., f/k/a
Firstar Trust Company (the "Depositary"), of (a) certificates for (or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to)
such Shares, (b) a Letter of Transmittal (or a manually executed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING
COMMON SHARES (INCLUDING SCRIP) AND PREFERRED SHARES OF PMC INTERNATIONAL,
INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated November 9, 1998 (the "Offer to Purchase") and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer") relating to the offer by ZACQ
Corp., a Colorado corporation (the "Purchaser") and a wholly owned subsidiary
of The Ziegler Companies, Inc., a Wisconsin corporation ("Ziegler"), to
purchase for cash all outstanding shares of common stock, par value $.01 per
share, including scrip (the "Common Shares") and all outstanding shares of
$0.325 Cumulative Series A Preferred Stock, no par value per share (the
"Preferred Shares") (collectively, the Common Shares and Preferred Shares are
referred to as the "Shares"), of PMC International, Inc., a Colorado
corporation (the "Company"), at a price of $.60 per Common Share (including
scrip), net to the seller in cash, without interest thereon, and $2.50 per
Preferred Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions of the Offer.
This will instruct you to tender to the Purchaser on my behalf the number of
Shares indicated below (or if no number is indicated in either appropriate
space below, all Common and Preferred Shares) held by you (or your nominee)
for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Account Number: _____________________________________________________________
NUMBER OF SHARES TO BE TENDERED:
Common Shares Preferred Shares
(including scrip)
(Unless otherwise indicated, it will be assumed that all the Shares held for
your account are to be tendered.)
SIGN HERE
X ___________________________________________________________________________
X ___________________________________________________________________________
Signature(s)
_____________________________________________________________________________
Name(s) (Please Print)
_____________________________________ _____________________________________
(Area Code) Telephone Number Tax Identification or Social
Security Number(s)
Dated:
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- -----------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-
savings trust (grantor trustee(1)
is also trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
5. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
--------
<S> <C>
6. A valid trust, estate, or The legal
pension trust entity(5)
7. Corporate account The corporation
8. Religious, charitable, or The organization
educational organization
account
9. Partnership account held The partnership
in the name of the business
10. Association, club, or The organization
other tax-exempt
organization
11. A broker or registered The broker or
nominee nominee
12. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
- ---------------------------------------
---------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust. Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5 (Application for a Social Security Number Card) or
Form SS-4 (Application for Employer Identification Number) from your local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. An organization exempt from tax under section 501(a), of the Internal Rev-
enue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A state, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
Other payees that may be exempt from backup withholding include:
. A corporation.
. A financial institution.
. A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441
of the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one non-resident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
. Payments described in section 6049(b)(5) of the Code to non-resident al-
iens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT
ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A
COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041 6041(a), 6045, and 6050A of the
Code.
PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of div-
idend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to the Internal Revenue Service. The In-
ternal Revenue Service uses the numbers for identification purposes. Payers
must be given the numbers whether or not recipients are required to file tax
returns. Beginning January 1, 1993, payers must generally withhold 31% of tax-
able interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
FOR IMMEDIATE RELEASE
November 3, 1998
THE ZIEGLER COMPANIES, INC. SIGNS DEFINITIVE AGREEMENT
TO PURCHASE PMC INTERNATIONAL, INC.
WEST BEND, WIS.--The Ziegler Companies, Inc. [AMEX:ZCO], a financial
services holding company, announced today the signing of a definitive merger
agreement for the acquisition of PMC International, Inc., a Denver-based
investment management and consulting firm.
Under the terms of the agreement, a subsidiary of The Ziegler Companies
will commence a tender offer to acquire all of the outstanding common stock of
PMC International for $0.60 per share and all of the outstanding preferred stock
of PMC International for $2.50 per share. Following the completion of the
tender offer, The Ziegler Companies will consummate a second-step merger in
which the remaining PMC International common shareholders will receive $0.60 per
share and its preferred shareholders will receive $2.50 per share. The total
purchase price for the currently outstanding common and preferred stock,
including PMC International stock warrants and options, is approximately $3.1
million, which will be funded from working capital of The Ziegler Companies.
To support PMC International during the period in which the companies are
effecting the merger, The Ziegler Companies has executed a $3.5 million credit
facility with PMC International, the outstanding balance of which is convertible
into PMC common stock at $0.60 per share. On October 15, 1998, the Ziegler
Companies loaned $500,000 for working capital. In addition, the two firms have
entered into an option for common stock under which The Ziegler Companies may
immediately purchase 4,500,000 shares of PMC common stock for $0.60 per share.
The Ziegler Companies, Inc., with annual revenues of approximately $75
million, is a holding company headquartered in West Bend, Wis. The company's
principal subsidiary, B.C. Ziegler and Company, is an investment banking and
brokerage firm.
<PAGE>
Other Ziegler subsidiaries provide services that include asset management,
investment consulting, and reduced-commission brokerage services.
PMC International, Inc., with annual revenues of approximately $15 million,
provides investment management and consulting services that support the
relationships between financial advisers and their clients. Its services
include privately managed accounts and mutual fund wrap programs. The firm has
four subsidiaries, which include Portfolio Management Consultant, Inc., an
investment advisory firm; the company also operates a broker/dealer, an
investment advisory firm specializing in mutual fund asset allocation products,
and a subsidiary which develops proprietary software for the financial services
industry.
Peter D. Ziegler, president and chief executive officer of The Ziegler
Companies, said, "This acquisition fits strategically with our plans on the
money management side of our business. It adds $2 billion in assets under
management to Ziegler, and PMC's services complement our existing business
extremely well. Adding PMC positions us favorably as the financial services
industry moves away from transaction business toward fee-based services."
The board of directors of PMC International has unanimously approved the
tender offer and recommended that PMC shareholders accept the offer and tender
their shares. Scott MacKillop, president of PMC International, said, "This
transaction is very exciting for us because it represents the culmination of an
exhaustive 10-month effort to find a strategic partner who could provide the
financial strength, credibility and experience necessary to keep our firm in the
forefront of this highly competitive and growing part of the financial services
industry. This combination represents a win for our clients, our business
partners and our shareholders."
This new release contains forward-looking statements made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Management
of The Ziegler Companies, Inc. and PMC International, Inc. caution that the
projections are based on a current understanding of the PMC International
business, and are highly dependent on a variety of factors which could cause
actual results to differ from these
2
<PAGE>
estimates. These factors include, without limitation, general economic
conditions, market conditions in relevant markets, market acceptance of existing
and new products and services and successful integration of PMC International
with The Ziegler Companies.
CONTACTS: S. Charles O'Meara, General Counsel, The Ziegler Companies, Inc. (414)
334-5521; Scott MacKillop, President, PMC International, Inc. (303) 292-1177
3
<PAGE>
AGREEMENT AND PLAN OF MERGER
AMONG
THE ZIEGLER COMPANIES, INC.
ZACQ CORP.
AND
PMC INTERNATIONAL, INC.
DATED AS OF NOVEMBER 3, 1998
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of November 3, 1998, among THE
ZIEGLER COMPANIES, INC., a Wisconsin corporation (the "Purchaser"), ZACQ CORP.,
a Colorado corporation (the "Sub"), which is a wholly-owned subsidiary of the
Purchaser, and PMC INTERNATIONAL, INC., a Colorado corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of the Purchaser, the Sub and
the Company have each determined that it is advisable and in the best interest
of each such corporation and its shareholders, on the terms and subject to the
conditions of this Agreement, (a) for the Sub to commence a cash tender offer to
purchase all outstanding shares of common stock, par value $0.01 per share, of
the Company, including scrip (the "Common Stock") and $0.325 Cumulative
Convertible Series A Preferred Stock, without par value, of the Company (the
"Preferred Stock") and (b) following the consummation of the cash tender offer,
to merge the Sub into the Company; and
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving that Offer (as hereafter defined) and the Merger (as hereafter
defined) and recommends that the holders of the Common Stock and Preferred Stock
accept the Offer;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms and subject to the conditions
hereafter set forth, the parties hereto do hereby agree as follows:
ARTICLE I.
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.01 hereof, as promptly as
practicable (but in any event within five business days of the date of this
Agreement), the Purchaser shall cause the Sub to commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) an offer to purchase all outstanding shares of Common Stock (including
scrip) and Preferred Stock not owned by the Purchaser or the Sub at a price of
$0.60 per share of Common Stock (including scrip), net to the seller in cash and
$2.50 per share of Preferred Stock, net to the seller in cash, which offer shall
remain open for at least 20 business days (the "Offer") and, subject to the
conditions of the Offer set forth in Exhibit A hereto, shall use its best
efforts to consummate the Offer, including, if necessary, conversion of
convertible loans including a $3,500,000 credit facility and options outstanding
into Common Stock or Preferred Stock of the Company, as the case may be, in
order to consummate the Offer. The obligations of the Purchaser and the Sub to
consummate the Offer, to accept for payment and to pay for any shares of Common
<PAGE>
Stock and Preferred Stock tendered shall be subject only to those conditions set
forth in Exhibit A hereto.
(b) Neither the Purchaser nor the Sub will, without the prior written
consent of the Board of Directors of the Company, decrease the amount or change
the form of the consideration payable in the Offer, decrease the number of
shares of Common Stock or Preferred Stock sought pursuant to the Offer, change
the conditions to the Offer, impose additional conditions or terms to the Offer,
amend or waive the condition that there be validly tendered and not properly
withdrawn prior to the expiration of the Offer a number of shares of Common
Stock and Preferred Stock which when added to the number of shares of Common
Stock and Preferred Stock owned by the Purchaser and its affiliates constitutes
at least two-thirds of the then outstanding shares of Common Stock and two-
thirds of the then outstanding shares of Preferred Stock, respectively, on a
fully diluted basis, or amend any term of the Offer in any manner adverse to
holders of shares of Common Stock or Preferred Stock. Assuming the prior
satisfaction or waiver of the conditions to the Offer, the Purchaser covenants
and agrees to accept for payment and pay for, in accordance with the terms of
the Offer, shares of Common Stock and Preferred Stock tendered pursuant to the
Offer as soon as it is permitted to do so under applicable Law, provided that
the Purchaser and the Sub shall have the right, upon consultation with the
Company, to extend the Offer (if without such extension the Purchaser would be
unable to consummate the Offer) to a date not later than the 35th business day
following the commencement of the Offer or for such longer period as may be
required by Law.
(c) Notwithstanding anything to the contrary in this Agreement, the
Purchaser and the Sub further agree that, subject to the terms and conditions of
this Agreement, in the event that the conditions to the Offer set forth in
paragraphs (a) or (b) of Exhibit A hereto shall occur or exist (and shall not
have been waived), the Sub shall, at the Company's request, extend the Offer to
a date not later than the 40th business day following the commencement of the
Offer; provided, however, if the condition set forth in paragraph (d)(i) of
Exhibit A shall not have been satisfied, the Purchaser and the Sub shall, if
reasonably requested by the Company, extend the Offer for five business days to
enable the Company to cure such breach.
(d) As soon as practicable on or before the date of commencement of the
Offer, but not later than five business days after the execution of this
Agreement, the Purchaser and the Sub shall file with the Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer which will contain the offer to purchase and form of the related
letter of transmittal (together with any supplements or amendments thereto, the
"Offer Documents"). The Offer Documents will comply in all material respects
with the provisions of applicable federal securities Laws and, on the date filed
with the SEC and on the date first published, sent or given to the holders of
the Common Stock and Preferred Stock of the Company, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Purchaser or the Sub with respect to
information supplied by the Company in writing for inclusion in the Offer
Documents. The Purchaser, the Sub and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall be
-2-
<PAGE>
discovered to have been or to have become false or misleading in any material
respect and the Purchaser and the Sub each further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and disseminated to the holders of the Common Stock and Preferred Stock of the
Company, in each case as and to the extent required by applicable federal
securities Laws. The Purchaser and the Sub agree to provide the Company and its
counsel in writing with any comments the Purchaser, the Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
SECTION 1.02 Company Actions. The Company hereby consents to the Offer,
recommends its acceptance by the Company's shareholders and represents that (a)
its Board of Directors or a duly authorized committee thereof (at a meeting duly
called and held) has (i) determined that the Offer and the Merger (as
hereinafter defined) taken together, are fair to the holders of the Common Stock
and Preferred Stock of the Company and (ii) resolved, subject to its fiduciary
duties under applicable Laws as advised by counsel, to recommend acceptance of
the Offer and approval and adoption of this Agreement by the holders of the
Common Stock and Preferred Stock of the Company, and (b) Value Investing
Partners, Inc. has advised the Company's Board of Directors that the $0.60 per
share of Common Stock and $2.50 per share of Preferred Stock cash consideration
to be received by holders of Common Stock and Preferred Stock of the Company,
respectively, in the Offer and the Merger, taken together, is fair to such
shareholders (other than the Purchaser and its affiliates) from a financial
point of view. The Company hereby agrees to file with the SEC as soon as
practicable after the commencement of the Offer a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") containing the recommendations described in the
first sentence of this Section 1.02. The Company, the Purchaser and the Sub
each agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall be discovered to have been or
to have become false or misleading in any material respect and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to the holders of the
Company's Common Stock and Preferred Stock and to the extent required by
applicable federal securities Laws. The Company agrees to provide the Purchaser
and the Sub and their counsel, in writing, with any comments the Company or its
counsel may receive from the SEC or its Staff with respect to the Schedule 14D-9
promptly after the receipt of such comments. Notwithstanding anything contained
in this Section 1.02, if the Board of Directors of the Company determines in the
exercise of its fiduciary duties to withdraw, modify or amend its
recommendation, such withdrawal, modification or amendment shall not constitute
a breach of this Agreement. The Company hereby consents to the inclusion in the
Offer of the recommendation referred to in the first sentence of this Section
1.02. In connection with the Offer, the Company will promptly furnish the
Purchaser with mailing labels, security position listings and any available
listing or computer file containing the names and addresses of the record
holders of the shares of Common Stock and Preferred Stock as of a recent date
and will furnish the Purchaser with such information and assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to the
holders of the Common Stock and Preferred Stock of the Company. Subject to the
requirements of applicable Law, and except for such steps as are necessary to
disseminate the documents constituting the Offer and any other documents
necessary to consummate the Merger, the Purchaser and the Sub and each of their
affiliates and associates shall hold in confidence the information contained in
any of such labels, listings and files, will use such information only in
connection with the Offer and the
-3-
<PAGE>
Merger, and, if this Agreement is terminated, will deliver to the Company the
information and all copies of such information then in their possession and in
the possession of their legal, accounting and financial advisors.
SECTION 1.03 Directors. (a) Promptly upon the purchase by the Purchaser
or any of its affiliates of such number of shares of Common Stock which, when
added to the number of shares of Common Stock owned by the Purchaser and the
Sub, represents at least two-thirds of the outstanding shares of Common Stock,
and from time to time thereafter, the Purchaser shall be entitled to designate
such number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give the Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors of
the Company equal to the product of the number of directors on the Board of
Directors of the Company and the percentage that such number of shares of Common
Stock so owned bears to the number of shares of Common Stock outstanding, and
the Company, through action of its Board of Directors, if necessary, shall, upon
request by the Purchaser, promptly, at the Company's election, either increase
the size of the Board of Directors of the Company or exercise its reasonable
best efforts to secure the resignations of such number of directors as is
necessary to enable the Purchaser's designees to be elected to the Board of
Directors of the Company and shall cause the Purchaser's designees to be so
elected to the Board of Directors.
(b) The obligations to appoint designees to its Board of Directors
hereunder shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill the obligations
under this Section 1.03 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 1.03.
The Purchaser will supply to the Company, in writing, and be solely responsible
for any information with respect to itself and its nominees, officers, directors
and affiliates required by Section 14(f) and Rule 14f-1.
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Colorado Business
Corporation Act (the "Colorado Law"), the Sub shall be merged with and into the
Company (the "Merger") as soon as practicable following the satisfaction or
waiver, if permissible, of the conditions set forth in Article VII hereof.
Following the Merger, the Company shall continue as the surviving corporation
(the "Surviving Corporation"), and the separate corporate existence of the Sub
shall cease.
SECTION 2.02 Effective Time. The Merger shall be consummated by filing
with the Colorado Secretary of State articles of merger in such form as is
required by, and executed in accordance with, the relevant provisions of the
Colorado Law (the time of such filing or such other time as may be set forth in
the articles of merger being the "Effective Time").
-4-
<PAGE>
SECTION 2.03 Effects of the Merger. The Merger shall have the effects set
forth in the Colorado Law. As of the Effective Time, the Company shall be a
wholly-owned subsidiary of the Purchaser.
SECTION 2.04 Articles of Incorporation and By-Laws. The Articles of
Incorporation and Bylaws of the Company shall be the Articles of Incorporation
and Bylaws of the Surviving Corporation.
SECTION 2.05 Directors and Officers. The directors of the Company at the
Effective Time shall continue as the directors of the Surviving Corporation
until their successors are duly elected and qualified. The officers of the
Company at the Effective Time shall continue as the officers of the Surviving
Corporation until their successors are duly appointed and qualified.
SECTION 2.06 Conversion of Shares. (a) Each share of Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares of
Common Stock owned by the Purchaser or any affiliate of the Purchaser or held in
the treasury of the Company, and Dissenting Shares (as defined in Section 3.01
hereof) representing shares of Common Stock) shall, as of the Effective Time,
and by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive from the Surviving Corporation
the equivalent of $0.60 net to the holder in cash or any higher price paid per
share of Common Stock pursuant to the Offer (the "Common Stock Merger
Consideration"), payable to the holder thereof, without interest thereon, upon
the surrender of the certificate formerly representing such share of Common
Stock. At and after the Effective Time, each holder of a certificate or
certificates that represented issued and outstanding shares of Common Stock
immediately prior to the Effective Time (other than shares of Common Stock owned
by the Purchaser or any affiliate of the Purchaser and Dissenting Shares
representing shares of Common Stock) shall cease to have any rights as a
shareholder of the Company, except for the right to surrender such certificate
or certificates in exchange for the Common Stock Merger Consideration or to
perfect the right to receive payment for such shares pursuant to Article 113 of
Title 7 of the Colorado Revised Statutes and Section 3.01 hereof if such holder
has validly exercised and not withdrawn such right to receive payment for such
shares.
(b) Each share of Preferred Stock issued and outstanding immediately prior
to the Effective Time (other than shares of Preferred Stock owned by the
Purchaser or any affiliate of the Purchaser or held in the treasury of the
Company, and Dissenting Shares (as defined in Section 3.01 hereof) representing
shares of Preferred Stock) shall, as of the Effective Time, and by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive from the Surviving Corporation $2.50 net to the holder
in cash or any higher price paid per share of Preferred Stock pursuant to the
Offer (the "Preferred Stock Merger Consideration"), payable to the holder
thereof, without interest thereon, upon the surrender of the certificate
formerly representing such share of Preferred Stock. At and after the Effective
Time, each holder of a certificate or certificates that represented issued and
outstanding shares of Preferred Stock immediately prior to the Effective Time
(other than shares of Preferred Stock owned by the Purchaser or any affiliate of
the Purchaser and Dissenting Shares representing shares of Preferred Stock)
shall cease to have any rights as a shareholder of the Company, except for the
right to surrender such certificate or certificates in exchange for the
Preferred Stock Merger Consideration
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or to perfect the right to receive payment for such shares pursuant to Article
113 of Title 7 of the Colorado Revised Statutes and Section 3.01 hereof if such
holder has validly exercised and not withdrawn such right to receive payment for
such shares.
(c) Each share of Common Stock and Preferred Stock held by the Pur chaser
or any of its affiliates or held in the Company's treasury or by a subsidiary of
the Company shall, as of the Effective Time, and by virtue of the Merger and
without any action on the part of the holder thereof, cease to be outstanding,
and be canceled and be retired without payment of any consideration therefor.
(d) The Purchaser and the Sub acknowledge that each share of Common Stock
outstanding immediately prior to the date hereof which was granted to
participants pursuant to the Stock Option Plans (as defined in Section 2.07
hereof) as of the date of acquisition of shares of Common Stock pursuant to the
Offer, will become fully vested and free of any and all restrictions to which
such shares of Common Stock are otherwise subject.
(e) Each certificate for scrip issued and outstanding immediately prior to
the Effective Time shall, as of the Effective Time, and by virtue of the Merger
and without any action on the part of the holder thereof, be converted into the
right to receive from the Surviving Corporation the equivalent of $0.60 net to
the holder in cash or any higher price paid per share of Common Stock pursuant
to the Offer, payable to the holder thereof, without interest thereon, upon the
surrender of the certificate formerly representing such scrip. At and after the
Effective Time, each holder of a certificate or certificates that represented
scrip immediately prior to the Effective Time shall cease to have any rights as
a holder of scrip of the Company, except for the right to surrender such
certificate or certificates in exchange for the Common Stock Merger
Consideration.
SECTION 2.07 Stock Options and Warrants. Promptly after the date hereof,
the Company shall give written notice of the Merger under its applicable Stock
Option Plans to the holders of all outstanding options to purchase Common Stock
granted to officers, employees, directors or consultants (or other persons) of
the Company ("Options"). Upon the occurrence of the Merger and in accordance
with their terms, all options, stock option plans, programs, arrangements or
agreements pursuant to which Options have or may be granted by the Company
(collectively, "Stock Option Plans") shall automatically terminate and be of no
further force and effect whatsoever, without the necessity for any additional
notice or action by the Surviving Corporation under the applicable Stock Option
Plans or otherwise. Each warrant to purchase Common Stock of the Company issued
and outstanding immediately prior to the Effective Time shall, as of the
Effective Time, automatically be converted solely into the right to receive from
the Company upon exercise thereof, in lieu of each share of Common Stock
issuable upon such exercise thereof immediately prior to the Effective Date, the
Common Stock Merger Consideration.
SECTION 2.08 Conversion of Sub Common Stock. Each share of common stock,
par value $.01 per share, of the Sub issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and exchangeable for one share of
common stock of the Surviving Corporation.
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SECTION 2.09 Shareholders' Meeting. If approval by the Company's
shareholders is required by applicable Law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable Law:
(a) duly call, give notice of, convene and hold an annual or special
meeting (the "Shareholders' Meeting") of holders of shares of Common Stock and
Preferred Stock of the Company as soon as practicable following the consummation
of the Offer for the purpose of considering and taking action on this Agreement;
(b) subject to its fiduciary duties under applicable Laws as advised by
counsel, include in the Proxy Statement (as hereinafter defined) the
recommendation of the Board of Directors that shareholders of the Company vote
in favor of the approval and adoption of this Agreement; and
(c) use its best efforts (i) if a Proxy Statement or Information Statement,
as selected by the Purchaser, is required to be filed, to obtain and furnish the
information required to be included by it in the Proxy Statement, and, after
consultation with the Purchaser, respond promptly to any comments made by the
SEC with respect to the Proxy Statement and any preliminary version thereof and
cause the Proxy Statement to be mailed to its shareholders at the earliest
practicable time following the expiration of the Offer, and (ii) subject to
fiduciary duties of the Board of Directors under applicable Law as advised by
counsel, to obtain the necessary approvals of the Merger and this Agreement by
its shareholders. The Purchaser agrees that, at the Shareholders' Meeting, all
of the shares of Common Stock and Preferred Stock acquired pursuant to the Offer
or otherwise by the Purchaser, the Sub or any other affiliate of the Purchaser
will be voted in favor of the Merger and this Agreement.
SECTION 2.10 Merger Without Meeting of Shareholders. Notwithstanding the
foregoing, if, following the completion of the Offer, the Merger may be
consummated under Colorado Law without a vote of the Company's shareholders, the
parties hereto agree to take all necessary and appropriate action to cause the
Merger to become effective without a meeting of the shareholders, as soon as
practicable after the acquisition of shares of Common Stock and Preferred Stock
pursuant to the Offer, but in no event later than 30 days thereafter.
SECTION 2.11 Closing. Upon the terms and subject to the conditions
hereof, as soon as practicable after consummation of the Offer, and if required
by Law, after the vote of the shareholders of the Company in favor of the
adoption of this Agreement has been obtained, the Company (or the Purchaser or
the Sub, if appropriate) shall execute in the manner required by the Colorado
Law and deliver to the Secretary of State of the State of Colorado the duly
executed articles of merger, and the parties shall take all such other and
further actions as may be required by Law to make the Merger effective. Prior
to the filing referred to in this Section, a closing (the "Closing") will be
held at the offices of the Company (or such other place as the parties may
agree) for the purpose of confirming all the foregoing.
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ARTICLE III.
DISSENTING SHARES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, in the event that appraisal rights are available in
connection with the Merger pursuant to Colorado Law, shares of Common Stock or
Preferred Stock which are issued and outstanding immediately prior to the
Effective Time and which are held by shareholders who did not vote in favor of
the Merger and who comply with all of the relevant provisions of Article 113 of
Title 7 of the Colorado Revised Statutes (the "Dissenting Shares") shall not be
converted into or be exchangeable for the right to receive the Common Stock
Merger Consideration or the Preferred Stock Merger Consideration, as
appropriate, unless and until such holders shall have failed to perfect or shall
have effectively withdrawn or lost their rights to appraisal under Colorado Law.
If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right, such holder's shares of Common Stock or Preferred
Stock shall thereupon be deemed to have been converted into and to have become
exchangeable for the right to receive, as of the Effective Time, the Common
Stock Merger Consideration or Preferred Stock Merger Consideration, as
appropriate, without any interest thereon.
SECTION 3.02 Exchange of Certificates. (a) The Purchaser shall
deposit or cause to be deposited in trust for the benefit of the Surviving
Corporation with an exchange agent selected by the Purchaser (the "Exchange
Agent") at the Effective Time cash in an aggregate amount necessary to make the
payments pursuant to Section 2.06 hereof to holders (other than the Purchaser,
or the Sub or any of their respective affiliates) of shares of Common Stock and
Preferred Stock that are issued and outstanding immediately prior to the
Effective Time (such amounts being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions, make
the payments provided for in the preceding sentence out of the Exchange Fund.
The Exchange Agent shall invest the Exchange Fund as the Purchaser directs,
provided that all such investments shall be in obligations of or guaranteed by
the United States of America, in commercial paper obligations receiving the
highest rating from either Moody's Investors Services, Inc. or Standard & Poor's
Corporation, or in certificates of deposit, bank repurchase agreements or
banker's acceptances of commercial banks with capital exceeding $50 million.
The Exchange Fund shall not be used for any other purpose, except as provided in
this Agreement. If for any reason (including, without limitation, losses
sustained by such investments) the Exchange Fund is inadequate to pay the amount
holders of Common Stock and Preferred Stock shall be entitled to hereunder, the
Surviving Corporation shall remain solely liable for the payment thereof.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Exchange Agent to mail to each record holder, as of the Effective
Time, other than the Purchaser or any of its affiliates and other than holders
of Dissenting Shares, of an outstanding certificate or certificates which
immediately prior to the Effective Time represented scrip shares or shares of
Common Stock or Preferred Stock (the "Certificates") a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificate for payment therefor. Upon surrender to the
Exchange
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Agent of a Certificate, together with such letter of transmittal duly executed,
and any other required documents, the holder of such Certificate shall be paid
in exchange therefor cash in an amount equal to the product of the amount of
scrip or the number of shares of Common Stock, formerly represented by such
Certificate multiplied by the Common Stock Merger Consideration or the number of
shares of Preferred Stock formerly represented by such Certificate multiplied by
the Preferred Stock Merger Consideration, respectively, and such Certificate
shall forthwith be canceled. No interest will be paid or accrued on the cash
payable upon the surrender of the Certificates. If payment is to be made to a
person other than the person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.02, each
Certificate (other than Certificates representing shares of Common Stock or
Preferred Stock owned by the Purchaser or any affiliate of the Purchaser, and
Dissenting Shares) shall represent for all purposes the right to receive the
Common Stock Merger Consideration or Preferred Stock Merger Consideration, as
appropriate, in cash multiplied by the number of shares of scrip, Common Stock
or Preferred Stock, respectively, evidenced by such Certificate, without any
interest thereon.
(c) After the Effective Time, there shall be no transfers of shares of
Common Stock or Preferred Stock or of scrip which were outstanding immediately
prior to the Effective Time on the stock transfer books of the Surviving
Corporation. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as provided
in this Article III. As of the Effective Time, the stock ledger of the Company
shall be closed.
(d) Any portion of the Exchange Fund (including the proceeds of any
investments thereof) that remains unclaimed by the holders of scrip or the
shareholders of the Company for six months after the Effective Time shall be
paid to the Surviving Corporation. Any shareholders of the Company who have not
theretofore complied with Section 3.01 hereof shall thereafter look only to the
Surviving Corporation for payment of their claim for the Common Stock Merger
Consideration or Preferred Stock Merger Consideration, as appropriate, without
any interest thereon.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Purchaser and the Sub as
follows:
SECTION 4.01 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Colorado and
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has all requisite corporate power and authority to carry on its business as it
is now being conducted. The Company is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be in good standing or so
qualified would not have a Material Adverse Effect. Each of the Company's
wholly owned subsidiaries is duly organized, validly existing and in good
standing under the applicable laws of its state of incorporation.
SECTION 4.02 Capitalization. The authorized capital stock of the
Company consists of (a) 50,000,000 shares of Common Stock, par value $.01 per
share, of which, as of October 22, 1998, 4,446,828.5 shares were issued and
outstanding (including scrip) and (b) 5,000,000 shares of Preferred Stock,
without par value, of which 450,000 shares have been designated as $0.325
Cumulative Series A Preferred Stock ("Preferred Stock"), of which, as of October
22, 1998, 138,182 shares were issued and outstanding. All of the issued and
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable and free of preemptive
rights. As of October 22, 1998, 943,290 shares of Common Stock and no shares of
Preferred Stock were reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of all outstanding Options under the
Stock Option Plans or warrants. Except as set forth above and except for the
conversion rights granted to the Purchaser in that certain Convertible
Promissory Note given by the Company, dated October 15, 1998 (the "Note) and the
$3,500,000 credit facility being entered into by the Purchasers concurrently
with this Agreement and the options to purchase 4,500,000 shares of Common Stock
and the options to purchase 111,818 shares of Preferred Stock granted to
Purchaser, there are not as of the date hereof, and at the Effective Time there
will not be, any outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments or any other agreements of any character obligating
the Company to issue any additional shares of Common Stock, Preferred Stock or
any other shares of capital stock of the Company or any other securities
convertible into or evidencing the right to subscribe for any such shares.
SECTION 4.03 Corporate Power and Authority. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than, with respect to the Merger, if
required, the approval and adoption of this Agreement by the Company's
shareholders). This Agreement has been duly and validly executed and delivered
by the Company and, assuming this Agreement constitutes a valid and binding
obligation of each of the Purchaser and the Sub, this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms.
SECTION 4.04 Reports. (a) Except as set forth in Schedule 4.04,
since January 1, 1997, the Company has filed all required forms, reports and
documents with the SEC required to be filed by it pursuant to the federal
securities Laws and the SEC's rules and regulations thereunder, all of which
have complied, after giving effect to all amendments thereof filed prior to
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the date hereof, in all material respects with all applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange
Act, and the rules promulgated thereunder (collectively, the "SEC Reports").
None of the SEC Reports, including without limitation any financial statements
or schedules included therein, at the time filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated balance sheets and the related consolidated
statements of net earnings and of changes in financial position (including the
related notes thereto) of the Company included in the SEC Reports fairly present
the consolidated financial position of the Company and its subsidiaries as of
their respective dates, and the results of consolidated operations and changes
in consolidated financial position for the periods presented therein, all in
conformity with generally accepted accounting principles applied on a consistent
basis (subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments), except as otherwise noted therein, and except that
the quarterly financial statements do not contain all of the footnote
disclosures required by generally accepted accounting principles.
SECTION 4.05 Offer Documents; Proxy Statement; Information Statement;
Other Information. The letter to shareholders, notice of meeting, proxy
statement and form of proxy, or the information statement, as the case may be
and as selected by Purchaser, to be distributed to shareholders in connection
with the Merger, are collectively referred to herein as the "Proxy Statement".
The Schedule 14D-9 and, if required for the consummation of the Merger under
applicable Law, the Proxy Statement will comply in all material respects with
the applicable federal securities Laws and, on the date filed with the SEC,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by the Purchaser or any affiliate of the
Purchaser, in writing, for inclusion in the Schedule 14D-9 or the Proxy
Statement or any amendments or supplements thereto. None of the information
relating to the Company and its subsidiaries supplied in writing by the Company
for inclusion in the Offer Documents or the Proxy Statement, including any
amendments or supplements to either of the foregoing, or any schedules required
to be filed with the SEC in connection therewith, will, at the respective times
the Offer Documents or Proxy Statement or any amendments or supplements thereto
are filed with the SEC or mailed to the shareholders of the Company, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 4.06 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby will (i) conflict with or
result in a breach of any provision of the Articles of Incorporation or By-laws
of the Company or its subsidiaries; (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (A) pursuant to the applicable requirements of
the Exchange Act, the Investment
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Advisers Act of 1940, as amended (the "Advisers Act"), and the rules and
regulations of the NASD (as defined hereafter), (B) the filing of the articles
of merger pursuant to the Colorado Law, or (C) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a Material Adverse Effect or a
material adverse effect on the consummation of the transactions contemplated
hereby; or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or its subsidiaries, except for violations
which would not in the aggregate have a Material Adverse Effect or a material
adverse effect on the consummation of the transactions contemplated hereby.
SECTION 4.07 Brokerage Fees and Commissions. Except for those fees
and expenses payable to Value Investing Partners, Inc. and Putnam, Lovell, De
Guardiola & Thornton, Inc. collectively limited to less than $276,000, the
Company hereby represents and warrants to the Purchaser with respect to the
Company, that no person or entity is entitled to receive from the Company, or
any of its subsidiaries any investment banking, brokerage or finder's fee in
connection with this Agreement or the transactions contemplated hereby based
upon arrangements made by or on behalf of the Company.
SECTION 4.08 Events Subsequent to June 30, 1998. Except as described
on Schedule 4.08, in the Company's Form 10-QSB for the quarter ended June 30,
1998, as amended as of September 16, 1998, or related to transactions involving
the Purchaser or the Purchaser's affiliates since June 30, 1998, there has not
been any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Company and its
subsidiaries. Without limiting the foregoing, since that date and except as
provided in Schedule 4.08:
(i) The Company and its subsidiaries have not sold, leased,
transferred, or assigned any of its assets, tangible or intangible other
than for a fair consideration in the ordinary course of business;
(ii) the Company and its subsidiaries have not entered into any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either requiring payment by the Company of
more than $25,000 or other than in the ordinary course of business (except
for product purchase orders and agreements in the ordinary course of
business and in amounts and on terms consistent with past practices);
(iii) no party (including the Company or its subsidiaries) has
accelerated, terminated, modified, or canceled any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses) involving more than $25,000 to which the Company or its
subsidiaries is a party or by which it is bound;
(iv) the Company and its subsidiaries have not imposed or
permitted other parties to impose any security interest upon any of its or
their assets, tangible or intangible;
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(v) the Company and its subsidiaries have not made any capital
expenditure (or series of related capital expenditures) either involving
more than $25,000 or outside the ordinary course of business;
(vi) the Company and its subsidiaries have not issued any note,
bond, or other debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease obligation
involving more than $25,000 in the aggregate;
(vii) the Company and its subsidiaries have not granted any
license or sublicense of any rights under or with respect to any
intellectual property;
(viii) the Company and its subsidiaries have not made any loan
to, or entered into any other transaction with, any of its or their
directors, officers, and employees outside the ordinary course of business;
(ix) the Company and its subsidiaries have not granted any
increase in the base compensation of any of its or their directors,
officers, and employees outside the ordinary course of business;
(x) the Company and its subsidiaries have not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its or their
directors, officers, employees, registered representatives or agents
outside the ordinary course of business; and
(xi) the Company and its subsidiaries have not issued any shares
of capital stock of any class (including shares of Common Stock or
Preferred Stock), or securities convertible into such shares or other
convertible securities or any rights, warrants or options to acquire any
such shares or other convertible securities.
SECTION 4.09 Intellectual Property. The Company and its
subsidiaries own or have the right to use pursuant to license, sublicense,
agreement, or permission all intellectual property necessary for the operation
of the business of the Company and its subsidiaries as presently conducted
(excluding property for which the loss of ownership or right to use would result
in a loss of not more than $10,000 annually in revenue) and there is no pending
or threatened challenge to the ownership or right of the Company and its
subsidiaries to use any of the foregoing.
SECTION 4.10 Litigation. Except litigation disclosed on Schedule
4.10, there is no action, order, writ, injunction, judgment or decree
outstanding or any claim, suit, litigation, proceeding, labor dispute, arbitral
action, governmental audit or investigation (collectively, "Actions") pending or
threatened against the Company or any of its subsidiaries and the Company does
not have any knowledge of an event that reasonably can be expected to result in
pending or threatened material litigation.
SECTION 4.11 Contracts. Except as disclosed on Schedule 4.11, all
contracts involving more than $50,000 to which the Company and/or its
subsidiaries are a party are valid and
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binding and in full force and effect and there are no defaults thereunder by the
Company, or to the knowledge of the Company by any other party thereto or events
which with notice or the passage of time would constitute a default by the
Company or to the knowledge of the Company by any other party thereto, except
for such defaults and events as to which requisite waivers or consents have been
obtained; and neither the execution of this Agreement nor the effectuation of
this plan of merger will constitute a default under or breach of any such
contract.
SECTION 4.12 Subsidiaries. The Company is the sole beneficial
holder and record owner of all of the issued and outstanding capital stock of
Portfolio Management Consultants, Inc., Portfolio Brokerage Services, Inc.,
Portfolio Technology Services, Inc. and PMC Investment Services, Inc. (the
"subsidiaries"), which the Company owns free and clear of all liens, except as
set forth on Schedule 4.12. There are no outstanding options or other rights to
purchase the securities of any of the subsidiaries. The Company does not own
any interest in any other corporation, partnership, or other entity, except for
any publicly traded securities held in trading accounts.
SECTION 4.13 Accounts Receivable. Except as identified on Schedule
4.13, all accounts receivable shown on the June 30, 1998 balance sheets or
incurred since the date thereof, represent arm's length transactions actually
made in the ordinary course of business and are believed collectible in the
ordinary course of business without the necessity of commencing legal
proceedings, and are not subject to counterclaim or set-off or in dispute.
SECTION 4.14 Title to Assets. The Company and its subsidiaries own
good and valid title to the assets and properties which they own or purport to
own, free and clear of any and all Liens affecting material assets and
properties of the Company and its subsidiaries, except those Liens identified on
the Schedule 4.14 and Liens for taxes not yet due and payable and such other
Liens or minor imperfections of title, if any, which do not materially detract
from the value or interfere with the present use of the affected asset or which
individually or in the aggregate would not have a Material Adverse Effect. As
used in this Agreement, the term "Lien" shall mean, with respect to any asset:
(a) any mortgage, pledge, lien, covenant, lease or security interest; and (b)
the interest of a vendor or lessor under any conditional sale agreement,
financing lease or other title retention agreement relating to such asset.
SECTION 4.15 Insurance Policies. The Company and its subsidiaries
currently maintain valid insurance as is reasonably prudent for the Company
(including its subsidiaries) and its business. No property damage, personal
injury or liability claims have been made, or are pending, against the Company
or its subsidiaries that are not covered by insurance. Within the past two (2)
years, no insurance company has canceled any insurance (of any type) maintained
by the Company (including its subsidiaries).
SECTION 4.16 Employee Benefit Plans.
(a) Definition. As used in this Agreement, the term "Employee Benefit
Plans" shall mean any pension plan, profit sharing plan, bonus plan, incentive
compensation plan, stock ownership plan, stock purchase plan, stock option plan,
stock appreciation rights plan, employee welfare plan, retirement plan, deferred
compensation plan, fringe benefit program,
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insurance plan, severance plan, disability plan, health care plan, sick leave
plan, death benefit plan, defined contribution plan, or any other plan or
program to provide retirement income, fringe benefits or other benefits to
former or current employees of the Company or its subsidiaries.
(b) Existing Plans. Except for the Employee Benefit Plans of the
Company identified as the "Existing Plans" on Schedule 4.16, the Company and its
subsidiaries do not maintain, nor is it bound by, any Employee Benefit Plan.
All of the Existing Plans are, to the extent applicable, in compliance in all
material respects with ERISA, the Code and all other applicable Laws. Except as
disclosed on Schedule 4.16, all of the Existing Plans that are intended to meet
the requirements of Section 401(a) or 403(a) of the Code have been determined to
be "qualified" within the meaning of the Code and, there are no facts that would
adversely affect the qualified status of any of such Existing Plans. Except as
disclosed on Schedule 4.16, each Existing Plan has been administered in all
material respects in accordance with its terms and is in compliance in all
material respects with all applicable Laws. Any Employee Benefit Plan that is
not an Existing Plan that has been terminated was done so in compliance in all
material respects with all applicable Laws, and, there is no basis for further
liability or obligation of the Company or its subsidiaries pursuant to any past
Employee Benefit Plan.
(c) Certain Matters. With respect to each Existing Plan which is
subject to either Title IV of ERISA or Section 412 of the Code, there are no
unfunded benefit liabilities as defined in Section 4001(a)(18) of ERISA, there
has occurred no failure to meet the minimum funding standards of Section 412 of
the Code, there is no "accumulated funding deficiency" within the meaning of
Section 412 of the Code, no such Existing Plan has terminated or has filed a
Notice of Intent to terminate, the Pension Benefit Guaranty Corporation has not
instituted proceedings to terminate any such Existing Plan and there is no
outstanding liability under Section 4062 of ERISA.
(d) Prohibited Transactions; Reportable Events. There have been no
prohibited transaction within the meaning of Section 4975 of the Code or Section
406 of ERISA or reportable event as described in Section 4043 of ERISA has
occurred with respect to any of the Existing Plans.
(e) Multiemployer Plans. Neither Company nor its subsidiaries is
contributing to, nor has it ever contributed to, any "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
(f) Claims. There are no pending or threatened claims with respect to
any of the Existing Plans, other than claims for benefits arising in the
ordinary course of business .
(g) Welfare Benefits. Except as disclosed on Schedule 4.16, neither
the Company nor any Existing Plan provides or has any obligation to provide (or
contribute to the cost of) post-retirement (or post-termination of service)
welfare benefits with respect to current or former employees, registered
representatives or agents of the Company or its subsidiaries, including without
limitation post-retirement medical, dental, life insurance, severance or any
similar benefit, whether provided on an insured or self-insured basis.
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(h) Welfare Plans. Except as otherwise provided in this Agreement,
each Existing Plan that is an "employee welfare benefit plan" as defined in
ERISA may be amended or terminated at any time after the Effective Time of
Merger without liability to the Company or any of its subsidiaries.
(i) COBRA. With respect to each Existing Plan, the Company has
complied in all material respects with the applicable health care continuation
and notice provisions of the Consolidation Omnibus Budget Reconciliation Act of
1985 and the proposed regulations thereunder, and the applicable requirements of
the Family and Medical Leave Act of 1993 and the regulations thereunder.
(j) The Merger. The Merger and the consummation of the transactions
contemplated by this Agreement will not entitle any current or former employee,
registered representatives or agents, of the Company or its subsidiaries to
severance benefits or any other payment, except as set forth in the Schedule
4.16(g), or accelerate the time of paying or vesting, or increase the amount of
compensation due any such person.
(k) Copies. Correct and complete copies of all Existing Plans,
together with recent summary plan descriptions, have been delivered by the
Company to the Purchaser.
SECTION 4.17 Taxes.
(a) Tax Returns. The Company and its subsidiaries have timely and
properly filed all federal, state, local and foreign tax returns (including but
not limited to income, business, franchise, sales, payroll, employee withholding
and social security and unemployment) which were required to be filed. The
Company and its subsidiaries have paid or made adequate provision, in reserves
reflected in its financial statements included in the SEC Reports in accordance
with generally accepted accounting principles, for the payment of all taxes
(including interest and penalties) and withholding amounts owed by them or
assessable against them. No material tax deficiencies have been proposed or
assessed against the Company (or its subsidiaries) and there is no basis in fact
for the assessment of any tax or penalty tax against the Company (or its
subsidiaries). No issue has been raised in any prior tax audit which, by
application of the same or similar principles, could reasonably be expected upon
a future tax audit to result in a proposed material deficiency for any period.
(b) Extensions. The Company and its subsidiaries have not consented
to any extension of the statute of limitation with respect to any open federal
or state tax returns.
(c) Tax Liens. There are no tax Liens upon any property or assets of
the Company (or its subsidiaries) except for Liens for current taxes not yet due
and payable.
(d) Delivery of Tax Returns. The Company has made available, and will
deliver upon request, to the Purchaser correct and complete copies of all tax
returns and reports of each of the Company and its subsidiaries filed for all
periods for which a tax audit or adjustment is not barred by the applicable
statute of limitations. No examination or audit of any tax return or
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report for any period not barred by the applicable statute of limitations has
occurred, no such examination is in progress and, to the knowledge of the
Company, no such examination or audit is planned.
(e) Employment Taxes. The Company and its subsidiaries have properly
withheld and timely paid all withholding and employment taxes which any of them
was required to withhold and pay relating to salaries, compensation and other
amounts heretofore paid to its employees or other Persons. All Forms W-2 and
1099 required to be filed with respect thereto have been timely and properly
filed.
(f) Tax Sharing Agreements. The Company and its subsidiaries are not
parties to any agreement relating to allocating or sharing any taxes.
(g) Excess Parachute Payments. The Company and its subsidiaries are
not parties to any contract that could result, on account of the Merger or
otherwise, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.
(h) Liabilities of Other Persons. The Company and its subsidiaries do
not have any liability for taxes of any kind of any Person other than the
Company and its subsidiaries under any contract or under Treasury Regulations
Section 1.1502-6 (or any similar provision of Law) as a transferee or successor
or otherwise.
SECTION 4.18 Labor Matters. Except as set forth in Schedule 4.18,
there are no pending and unresolved material claims by any Person against any of
the Company or its subsidiaries arising out of any Law relating to
discrimination against employees or employee practices or occupational or safety
and health standards. There is no pending or, to the knowledge of the Company,
threatened, labor dispute, strike or work stoppage.
SECTION 4.19 Vote Required. The affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock and two-thirds of the
outstanding shares of Preferred Stock, respectively, are the only vote of the
holders of any class or series of capital stock or other securities of the
Company entitled to vote necessary to approve the Merger, this Agreement and the
transactions contemplated by this Agreement.
SECTION 4.20 Year 2000 Compliance. The Company has in place
adequate and reasonable plans so that all of the material computer hardware and
software systems of the Company and its subsidiaries (including, without
limitation, those related to their facilities, accounting and bookkeeping
records and record keeping activities) are presently or will be prior to
December 31, 1999 Year 2000 Compliant. As used in this Agreement, the phrase
"Year 2000 Compliant" shall mean with respect to the Company's material hardware
and software systems, that such hardware and software is designed to be used
prior to, during, and after the calendar Year 2000 A.D., and such hardware and
software used during each such time period will accurately receive, provide and
process date/time data from, into and between the twentieth and twenty-first
centuries, and will not malfunction, cease to function, or provide invalid or
incorrect
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results as a result of date/time data, to the extent that other hardware and
software, used in combination with the Company's hardware and software, properly
exchanges date/time data with the Company's hardware and software.
SECTION 4.21 Undisclosed Liabilities. The Company and its
subsidiaries have no material liabilities of any nature except as disclosed in
the SEC Reports or which do not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 4.22 Compliance with Laws and Orders. Except as set forth
in Schedule 4.22, the Company and its subsidiaries are in compliance with all
applicable Laws and orders, including, without limitation, those applicable to
discrimination in employment, occupational safety and health, securities,
broker-dealer and investment advisor regulation, employment, retirement, labor
relations and the protection of the environment. Except as set forth in
Schedule 4.22, neither the Company nor its subsidiaries has received notice of
any violation or alleged violation of, and is not subject to liability for past
or continuing violation of any Laws or court or regulatory orders. All reports
and returns required to be filed by the Company with any government entity or
the National Association of Securities Dealers, Inc. ("NASD") have been filed,
and, after giving effect to any amendment thereof, were accurate and complete
when filed. Without limiting the generality of the foregoing, except as set
forth in Schedule 4.22:
(i) The operation of the Company's business and its subsidiaries
does not violate any provision of the Securities Act, the Securities
Exchange Act, the Advisers Act, the rules and regulations of the
Securities and Exchange Commission, the rules and regulations of the
NASD or state securities Laws and regulations and state Laws and
regulations respecting broker-dealers and investment advisors so as to
give rise to or constitute the grounds for a suit, action, claim or
demand by any government entity, the NASD or any person or persons
seeking compensation or damages or seeking to impose any penalty or to
restrain, enjoin or otherwise prohibit any aspect of the conduct of
the business in the manner in which it is now conducted.
(ii) The Company and its subsidiaries and their respective
employees and registered representatives and other associated persons
have all licenses, permits, approvals, authorizations, consents of all
government entities and the NASD required for the conduct of the
Business. All such licenses, permits, approvals, authorizations and
consents are in full force and effect and will not be affected or made
subject to loss, limitation or any obligation to reapply as a result
of the transactions contemplated hereby.
SECTION 4.23 Disclosures. No statement of fact by the Company
and/or its subsidiaries contained in this Agreement or in the Disclosure
Schedules contains or will contain any untrue statement of material fact
necessary in order to make the statements herein or therein contained, in light
of the circumstances under which they were made, not misleading as the date of
which it speaks.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND SUB
The Purchaser and the Sub represent and warrant to the Company as
follows:
Section 5.01 Organization and Qualification. Each of the Purchaser
and the Sub is a corporation duly organized, validly existing and in active
status or, if applicable, good standing under the Laws of the jurisdiction of
its incorporation and has all requisite corporate power and authority to carry
on its business as it is now being conducted. Each of the Purchaser and the Sub
is duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except where
the failure to be in good standing or so qualified would not in the aggregate
have a material adverse effect on the financial condition or results of
operations of the Purchaser and its subsidiaries taken as a whole. The Sub is a
corporation wholly owned by the Purchaser that was recently formed for the
purpose of engaging in the transactions described in this Agreement and has not
engaged in any activity other than those incident to the foregoing.
SECTION 5.02 Corporate Power and Authority. Each of the Purchaser
and the Sub has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by the Purchaser and the Sub of this Agreement and
the consummation by the Purchaser and the Sub of the trans actions contemplated
hereby have been duly authorized by the respective Boards of Directors of the
Purchaser and the Sub, and the shareholder of the Sub, and no other corporate
proceedings on the part of the Purchaser or the Sub are necessary to authorize
this Agreement, or commence the Offer or to consummate the transactions so
contemplated by this Agreement (including the Offer). This Agreement has been
duly and validly executed and delivered by each of the Purchaser and the Sub
and, assuming this Agreement constitutes a valid and binding obligation of the
Company, this Agreement constitutes the legal, valid and binding obligation of
each of the Purchaser and the Sub, enforceable against each of the Purchaser and
the Sub in accordance with its terms.
SECTION 5.03 Offer Documents; Proxy Statement. The Offer Documents
and the Offer will comply in all material respects with applicable federal
securities Laws, except that no representation is made by the Purchaser with
respect to information supplied by the Company, in writing, for inclusion in the
Offer Documents or any amendments or supplements thereto. None of the
information supplied by the Purchaser and its affiliates, in writing, for
inclusion in the Proxy Statement or any amendments or supplements thereto will,
at the respective times the Proxy Statement or any amendments or supplements
thereto are filed with the SEC, at the time that the Proxy Statement or any
amendment or supplement thereto is mailed to the Company's shareholders, or, at
the time of the Shareholders' Meeting or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
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SECTION 5.04 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by the Purchaser and the Sub nor the
consummation by the Purchaser or the Sub of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
respective Articles of Incorporation or by-laws (or other similar governing
documents) of the Purchaser or the Sub; (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (A) pursuant to the applicable requirements of
the Exchange Act, (B) the filing of the articles of merger pursuant to Colorado
Law, (C) any consents, approvals, authorizations or permits, filings or
notifications required to be given or made to any foreign jurisdiction, or (D)
where the failure to obtain such consent, approval, authorization or permit, or
to make such filing or notification, would not in the aggregate have any
material adverse effect on the financial condition or results of operations of
the Purchaser and its subsidiaries taken as a whole or a material adverse effect
on the consummation of the transactions contemplated hereby; or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Purchaser, except for violations which would not have in the aggregate any
material adverse effect on the financial condition or results of operations of
the Purchaser and its subsidiaries taken as a whole or a material adverse effect
on the consummation of the transactions contemplated hereby.
SECTION 5.05 Financing. The Purchaser and the Sub have and will
have, immediately prior to the consummation of the Offer, and at the Closing,
sufficient funds necessary to consummate timely the Offer and the Merger and the
other transactions contemplated hereby including the payment of related fees and
expenses.
SECTION 5.06 Financial Statements. The Purchaser has delivered to
the Company copies of the audited consolidated and unaudited consolidating
balance sheets of the Purchaser as of December 31, 1997 and June 30, 1998,
respectively, and the related audited consolidated statements of income,
shareholders' equity and cash flows for the fiscal year ended December 31, 1997
(including the related notes thereto) (the "Purchaser Financial Statements").
The Purchaser Financial Statements fairly present the consolidated financial
position of Purchaser as of their respective dates, and the results of
consolidated operations and changes in consolidated financial position for the
periods therein, all in conformity with generally accepted accounting
principles.
ARTICLE VI.
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as
contemplated by this Agreement or as set forth in Schedule 6.01, during the
period from the date of this Agreement to the Effective Time, the Company and
its subsidiaries will each conduct its operations according to their ordinary
and usual course of business and consistent with past practice. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, or as set forth in Schedule 6.01, prior to the
Effective Time, neither the Company nor any of it subsidiaries, as the case may
be, will, without the prior written consent of the Purchaser, (i) issue, sell,
pledge or encumber, or authorize or propose the issuance, sale, pledge or
encumbrance of (A)
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any shares of capital stock of any class (including the shares of Common Stock
or Preferred Stock), or securities convertible into any such shares, or any
rights, warrants or options to acquire any such shares or other convertible
securities, or grant or accelerate any right to convert or exchange any
securities of the Company or any of its subsidiaries for such shares, other than
shares of Common Stock issuable upon exercise of currently outstanding Options,
or (B) any other securities in respect of, in lieu of or in substitution for
shares of Common Stock or Preferred Stock outstanding on the date hereof; (ii)
redeem, purchase or otherwise acquire, or propose to redeem, purchase or
otherwise acquire, any of its outstanding securities (including the shares of
Common Stock and Preferred Stock) or declare any dividends on Common Stock or
Preferred Stock; (iii) split, combine or reclassify any shares of its capital
stock or declare or pay any dividend or distribution on any shares of capital
stock of the Company; (iv) except pursuant to agreements or arrangements in
effect on the date hereof which have been disclosed to the Purchaser, authorize
any capital expenditure in excess of $50,000 in the aggregate, make any
acquisition or disposition of a material amount of assets or securities, or,
except for routine contracts with customers and clients consistent with past
practices, enter into or amend or terminate any contract, material to the
business of the Company and its subsidiaries taken as a whole, or release or
relinquish any contact rights or claims, material to the business of the Company
and its subsidiaries taken as a whole; (v) pledge or encumber any material
assets of the Company except in the ordinary course of business; (vi) except for
loans from Purchaser or Sub, incur any long-term debt for borrowed money or
short-term debt for borrowed money in an aggregate amount in excess of $10,000;
(vii) propose or adopt any amendments to the Articles of Incorporation or By-
Laws of the Company or any of its subsidiaries; (viii) adopt a plan of complete
or partial liquidation or resolutions providing for the complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Company or any of its subsidiaries; (ix) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except wholly
owned subsidiaries of the Company in the ordinary course of business and
consistent with past practice; (x) make any loans, advances or capital
contributions to, or investments in, any other person (other than loans or
advances to subsidiaries and loans or advances to employees in accordance with
past practices); (xi) except as required by applicable Laws, adopt or amend any
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, severance, termination, employment or other employee benefit plan,
agreement, trust, fund, policy or other arrangement for the benefit or welfare
of any registered representative, agent, employee or director or former employee
or director or, except as required by applicable Laws or in the ordinary course
of business, increase the compensation or fringe benefits of any employee or pay
any employee or pay any benefit not required by any existing plan, arrangement
or agreement; (xii) make any tax election or settle or compromise any federal,
state, local or foreign income tax liability, except in the ordinary course of
business and consistent with past practice; (xiii) agree in writing or otherwise
to take any of the foregoing actions or (xiv) fail to comply in all material
respects with all applicable Laws. Following the date of this Agreement, the
Company will review its financing documents to determine if the consent of any
third party is required in connection with the transactions contemplated hereby.
If following such review, the Company becomes actually aware that any such
consent is required, it will so notify the Purchaser, and the parties hereto
shall use their respective best efforts to secure such consent; provided,
however, that for this purpose "best efforts" shall not require the Company or
the Purchaser to make any payment in order to secure any such consents.
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SECTION 6.02 No Solicitation. Neither the Company nor any of its
subsidiaries, nor any of their respective officers, directors, employees,
representatives, agents or affiliates, shall, directly or indirectly, encourage,
solicit, initiate or, except as is required in the exercise of the fiduciary
duties of the Company's directors and officers under applicable Laws upon advice
of counsel to the Company, participate in any way in discussions or negotiations
with, or knowingly provide any information to, any corporation, partnership,
person or other entity or group (other than the Purchaser or any affiliate or an
associate of the Purchaser) concerning any merger, sale of substantially all the
assets, sale of shares of capital stock or similar transactions involving the
Company or any material subsidiary or division of the Company; provided,
however, that nothing contained in this Section 6.02 shall prohibit the Company
or its Board of Directors from (i) taking and disclosing to the Company's
shareholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, (ii) making such
disclosure to the Company's shareholders which, in the judgment of the Board of
Directors with the advice of counsel, may be required under applicable Law or
(iii) providing information to, or parti cipating in discussions or
negotiations with, any party that has actually made, and which the Board of
Directors believes in good faith would be capable of effecting an acquisition of
the Company on terms that are superior, from a financial point of view, to the
Offer and the Merger if the Board of Directors in good faith believes, upon the
written advice of counsel, that the failure to so disclose would constitute a
breach of their fiduciary duty to the Company and its shareholders. The Company
will promptly communicate to the Purchaser if it is furnishing information to or
engaging in negotiations with any third party with respect to the acquisition of
the Company or any of its assets or subsidiaries.
SECTION 6.03 Access to Information. Subject to the existing
confidentiality agreement among the parties, the Company and its subsidiaries
will, upon reasonable notice to Maureen Dobel or her designee, allow the
Purchaser and its authorized representatives reasonable access during regular
business hours to its offices, other facilities and books and records. The
Company will also make its employees available for interviews with the
Purchaser, with Company personnel present, for reasonable purposes in a manner
reasonably acceptable to Ms. Dobel.
SECTION 6.04 Notification of Certain Matters. Each of the Company
and the Purchaser shall give prompt notice to the other party of any notice or
other communication from (i) the SEC, NASD or any other regulatory body relating
to the Merger, the Offer or any of the transactions contemplated by this
Agreement or (ii) any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.
SECTION 6.05 Best Efforts. Subject to the terms and conditions
herein provided, and with respect to the Company, to the fiduciary duties of the
Board of Directors of the Company under applicable Laws, each of the parties
hereto agrees to use its best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable Laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, in the
case of the Purchaser and the Sub, the filings required under the Colorado
Securities Act, as amended, with respect to the Offer and Merger and, in the
case of the Company, obtaining the consents of the fiduciary clients pursuant
to
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Section 6.11 hereof. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall take all
such necessary action.
SECTION 6.06 Indemnification and Insurance. (a) The Purchaser will
honor the Surviving Corporation's performance of all contracts, agreements and
commitments of the Company or any of its subsidiaries, including those reflected
in their Articles of Incorporation and Bylaws, which indemnify any officer or
director of the Company or any of its subsidiaries, as disclosed on Schedule
6.06(b), against claims made against them arising from their service, but only
to the extent that such contract, agreement or commitment was entered into
before the date of this Agreement and is listed on Schedule 6.06.
(b) Any indemnified party wishing to claim indemnification under this
Section, upon learning of any such action, suit, claim, proceeding or
investigation, shall promptly notify the Purchaser and the Surviving Corporation
thereof and the Purchaser and the Surviving Corporation shall cooperate in the
defense of any such matter; provided, however, that any failure so to notify the
Purchaser and the Surviving Corporation of any obligation to indemnify such
indemnified party or of any other obligation imposed by this Section shall not
affect such obligations unless such failure to so notify materially prejudices
the rights of the Purchaser and the Surviving Corporation to defend any such
action, suit, claim, proceeding or investigation. The indemnified parties as a
group shall retain only one counsel in each jurisdiction to represent them with
respect to any single action; provided, however, in the event that there is,
under applicable standards of professional conduct, a conflict between the
positions of any two or more indemnified parties, the Purchaser and such
indemnified parties may retain, at the expense of the Purchaser and the
Surviving Corporation, as the case may be, such number of additional counsel as
are necessary to eliminate all conflicts of the type referred to above.
(c) In the event any claim is made against directors, officers or
employees of the Company that is covered or potentially covered by insurance,
the Surviving Corporation and the Purchaser shall do nothing that would in their
reasonable discretion forfeit, jeopardize, restrict or limit the insurance
coverage available for that claim until the final disposition of that claim.
(d) The Surviving Corporation and the Purchaser agree that until six
years from the date hereof, the Articles and the Bylaws of the Surviving
Corporation will not be amended to reduce or limit the rights to indemnity
currently afforded thereunder. To the knowledge of the Company, there are no
pending or threatened claims which are reasonably anticipated to result in a
claim for indemnification.
SECTION 6.07 Company Indebtedness. Prior to the Effective Time, the
Company shall cooperate with the Purchaser in taking such actions as are
reasonably appropriate or necessary in connection with the redemption,
prepayment, modification, satisfaction or elimination of any outstanding long-
term indebtedness of the Company or any of its subsidiaries with respect to
which a consent is required to be obtained to effectuate the Merger and the
transactions contemplated by this Agreement and has not been so obtained
(provided that prior to consummation of the Merger, the Company shall not be
required to actually redeem, prepay, modify, satisfy or
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eliminate any such outstanding long-term indebtedness, make any payment or
undertake any obligation in order to secure any such consents or take any steps
which would irrevocably lead to any of the foregoing).
SECTION 6.08 Benefit Plans. (a) Schedule 6.08(a) includes all
employee benefit plans, programs, policies and agreements which provide
compensation or other benefits upon a termination of employment, voluntary or
involuntary, for the 20 highest paid employees of the Company or its
subsidiaries or which include a "change of control" provision, and a complete
and correct copy (or model form) of each such plan, program, policy and
agreement has been provided to Purchaser. Schedule 6.08(a) also sets forth the
annual compensation and average annual compensation, as the case may be, as of
the date of this Agreement for purposes of calculating the amount payable for
each of the 20 highest paid employees of the Company or its subsidiaries and any
other employee covered by a change of control provision under any of the plans,
programs, policies and agreements listed on Schedule 6.08(a).
(b) If any salaried or non-union hourly employee of the Company or any
of its subsidiaries is or becomes a participant in any written employee benefit
plan or program of the Purchaser or any member of its controlled group within
the meaning of Section 414(b) or (c) of the Internal Revenue Code of 1986, as
amended (the "Code"), such employee shall be credited under such plan or program
with all service prior to the Effective Time with the Company and its
subsidiaries (and any predecessor employer) to the extent credit was given by
the Company and its subsidiaries for purposes of eligibility for all purposes
and vesting under such plan or program.
(c) The Purchaser and the Sub acknowledge that consummation of the
Offer will constitute a change of control of the Company (to the extent such
concept is relevant) for purposes of any and all of the agreements and plans
specified on Schedule 6.08(a).
SECTION 6.09 No Default. From the date of this Agreement to the
Effective Date, the Company shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
material contract to which the Company and/or its subsidiaries is a party.
SECTION 6.10 Preservation of Relationships. From the date of this
Agreement to the Effective Date, the Company and its subsidiaries shall use
reasonable best efforts to preserve their business organization intact, to
retain the services of their present officers and key employees and to preserve
the goodwill of suppliers, customers, creditors and others having material
business relationships with them.
SECTION 6.11 Obtaining Consents. The Company and its subsidiaries
shall use their reasonable best efforts to obtain consents to the assignments of
the contracts under the Advisers Act, as amended, required for the consummations
of transactions contemplated hereby.
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ARTICLE VII.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, at or prior to the
Effective Time, of the following conditions:
(a) this Agreement shall have been adopted by the affirmative vote of
the shareholders of the Company owning at least two-thirds of the Company's
outstanding Common Stock and two-thirds of the Company's outstanding Preferred
Stock in accordance with applicable Law, if such vote is required by applicable
Law;
(b) no statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the Merger; provided, however, that the
parties shall use their best efforts to have any such order, decree or
injunction vacated or reversed;
(c) the Sub shall have purchased all shares of Common Stock and
Preferred Stock validly tendered and not withdrawn pursuant to the Offer;
provided, however, that this condition shall not be applicable to the
obligations of the Purchaser or the Sub in violation of the terms of this
Agreement or the Offer if the Sub fails to purchase shares of Common Stock and
Preferred Stock tendered pursuant to the Offer;
SECTION 7.02 Opinion of Counsel for the Company. Prior to beginning
the Offer, Purchaser shall have been furnished with an opinion of Holme, Roberts
& Owen LLP, counsel for the Company.
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company (excluding any representative of the Purchaser or an
affiliate of the Purchaser), the Purchaser and the Sub;
(b) by either the Purchaser or the Company, if the Effective Time
shall not have occurred on or before March 31, 1999 (provided that the right to
terminate this Agreement under this Section 8.01(b) shall not be available to
any party whose failure to fulfill any obligation
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under this Agreement has been the cause of or resulted in the failure of the
Effective Time to occur on or before such date);
(c) by either the Purchaser or the Company, if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree or ruling, or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and non-appealable; provided, however, that
the parties shall use their best efforts to have any such order, decree, ruling
or injunction vacated or reversed;
(d) by the Purchaser, if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any of the conditions set forth in Exhibit
A hereto, the Sub shall have (A) failed to commence the Offer as provided in
Section 1.01 hereof within 20 days following the date of this Agreement; (B)
terminated the Offer or the Offer shall have expired without the purchase of
shares of Common Stock and Preferred Stock thereunder at any time after the
latest date, if any, to which the Offer shall have been extended pursuant to
Section 1.01(c) hereof or (C) failed to pay for shares of Common Stock or
Preferred Stock pursuant to the Offer by the 40th business day following such
commencement, unless such failure to commence, termination or failure to pay for
shares of Common Stock or Preferred Stock shall have been caused by or resulted
from the failure of the Sub or the Purchaser to perform in any respect its
material covenants and agreements contained in this Agreement or Offer; or (ii)
prior to the purchase of shares of Common Stock and Preferred Stock pursuant to
the Offer, the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to the Purchaser its approval or recommendation of
the Offer, this Agreement or the Merger, or shall have recommended another
offer, or shall have resolved to do any of the foregoing; provided, however, the
Purchaser shall have no right to terminate this Agreement and abandon the Merger
if the Company withdraws or modifies its recommendation of the Offer, this
Agreement or the Merger, by reason of taking and disclosing to the Company's
shareholders a position contemplated by Rule 14e-2(a)(2) or (3) promulgated
under the Exchange Act with respect to another proposal, and if within ten days
of taking and disclosing to its shareholders the aforementioned position, the
Company publicly reconfirms its recommendation of the Offer, this Agreement or
the Merger and takes and discloses to the Company's shareholders a
recommendation to reject such other proposal as contemplated by Rule 14e-2(a)(1)
promulgated under the Exchange Act; or
(e) by the Company, if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any of the conditions set forth in Exhibit
A hereto or otherwise, the Sub shall have (A) failed to commence the Offer as
provided in Section 1.01 hereof within 20 days following the date of this
Agreement, (B) terminated the Offer or the Offer shall have expired without the
purchase of shares of Common Stock and Preferred Stock thereunder at any time
after the latest date, if any, to which the Offer shall have been extended
pursuant to Section 1.01(c) hereof or (C) failed to pay for shares of Common
Stock or Preferred Stock pursuant to the Offer by the 40th business day
following such commencement, unless such failure to commence, termination or
failure to pay for shares of Common Stock or Preferred Stock shall have been
caused by or resulted from the occurrence or existence of the condition
described in paragraph (d) or (g) of Exhibit A hereto, or (ii) prior to the
purchase of shares of Common Stock and Preferred Stock pursuant to the Offer,
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<PAGE>
(A) a corporation, partnership, person or other entity or group shall have made
a bona fide proposal that the Board of Directors of the Company believes, in
good faith after consultation with its legal and financial advisors, is more
favorable to the Company and its shareholders than the Offer and the Merger and
(B) the Sub does not make, within ten days of the Sub receiving notice of such
third party proposal, an offer which the Board of Directors believes, in good
faith after consultation with its legal and financial advisors, is at least as
favorable to the Company's shareholders as such third party proposal, it being
understood that the Company shall remain obligated to pay the fees to the
Purchaser pursuant to Section 9.09 hereof.
SECTION 8.02 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 8.01 hereof, this
Agreement, except for the provisions of this Section 8.02 and Section 9.09
hereof, shall forthwith become void and have no effect, without any liability on
the part of any party or its directors, officers or shareholders. Nothing in
this Section 8.02 shall relieve any party to this Agreement of liability for
breach of this Agreement.
SECTION 8.03 Amendment. To the extent permitted by applicable Law,
this Agreement may be amended by action taken by or on behalf of the Boards of
the Company (excluding any representative of the Purchaser or an affiliate of
the Purchaser), the Purchaser and the Sub at any time before or after adoption
of this Agreement by the shareholders of the Company; provided, however, that,
after any such shareholder approval, no amendment shall be made which decreases
the Common Stock Merger Consideration or Preferred Stock Merger Consideration or
which adversely affects the rights of the Company's shareholders hereunder
without the approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties.
SECTION 8.04 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company (excluding any representatives or directors
appointed by or elected on behalf of the Purchaser or an affiliate of the
Purchaser), the Purchaser or the Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
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<PAGE>
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in Articles IV and V shall not survive
beyond the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time.
SECTION 9.02 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof except the Confidentiality Agreement, dated September __, 1998,
between the Company and the Purchaser and (b) shall not be assigned by operation
of Law or otherwise, provided that the Purchaser or the Sub may assign any of
their rights and obligations to any wholly-owned, direct or indirect subsidiary
of the Purchaser, but no such assignment shall relieve the Purchaser or the Sub
of its obligations hereunder. It is understood and agreed that either the
Purchaser, or any wholly-owned subsidiary of the Purchaser, may purchase shares
of Common Stock under the Offer.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agree ment, which shall remain in full force and
effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by cable, telegram, telecopier or
telex, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
if to the Purchaser or the Sub:
The Ziegler Companies Inc.
215 N. Main Street
West Bend, WI 53095-3317
Attention: S. Charles O'Meara, Esq.
with a copy to:
Quarles & Brady
411 E. Wisconsin Avenue
Milwaukee, WI 53202
Attention: Conrad G. Goodkind, Esq.
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<PAGE>
if to the Company:
PMC International, Inc.
555 17th Street, 14th Floor
Denver, CO 80202
Attention: C.R. Tucker and Scott A. MacKillop
with a copy to:
Holme Roberts & Owen LLP
Suite 4100, 1700 Lincoln
Denver, CO 80203
Attention: Francis R. Wheeler, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Colorado regardless of the
Laws that might otherwise govern under principles of conflicts of Laws
applicable thereto.
SECTION 9.06 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for all of Articles II and III and Section 6.06.
SECTION 9.08 Counterparts. This Agreement may be executed in
counterparts, manually or by facsimile, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
SECTION 9.09 Expenses. (a) All costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses.
(b) The Purchaser acknowledges and agrees that the Company has
disclosed that it is indebted for fees and expenses (including fees and expenses
of its counsel and advisors) incurred by it in connection with the transactions
contemplated by this Agreement as set forth in Schedule 9.09. To the best
knowledge of the Company, the fees and expenses listed in Schedule 9.09
represent the only significant fees and expenses incurred by the Company in
connection with the transactions contemplated by this Agreement. It is
understood that certain of
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<PAGE>
such fees and expenses may be paid by the Company prior to the execution of this
Agreement, and the Purchaser agrees to refrain from taking any action which
would interfere with the payment of the foregoing fees and expenses by the
Company.
(c) If this agreement or the transactions contemplated hereby are
terminated or abandoned (unless at such time the Purchaser or the Sub shall be
in breach in any material respect of any of its obligations or representations
and warranties hereunder) and prior to or contemporaneously with such
termination or abandonment, any corporation, partnership, person, other entity
or group (as defined in Section 13(d)(3) of the Exchange Act) other than the
Purchaser or any of its subsidiaries or affiliates (collectively, "Person"),
shall have acquired or beneficially owns (and failed to tender such shares) (as
defined in Rule 13d-3 promulgated under the Exchange Act) at least 33.34% of the
then outstanding shares of Common Stock, then the Company shall promptly (and in
any event within 2 days of receipt by the Company of written notice from the
Purchaser) pay the Purchaser the sum of (x) two hundred fifty thousand dollars
and (y) all actual, documented out-of-pocket expenses relating to the Offer and
the Merger in an amount up to one hundred thousand dollars.
SECTION 9.10 Certain Definitions. For purposes of this Agreement:
(a) "subsidiary" shall mean, when used with reference to an entity,
any corporation, a majority of the outstanding voting securities of which are
owned directly or indirectly by such entity.
(b) "Material Adverse Effect" shall mean any material adverse change
in the financial condition or results of operations of the Company and its
subsidiaries taken as a whole including, without limitation, information whether
written or oral, that Ernst & Young LLP intends to cancel or substantially
reduce the relationship with the Company and its subsidiary, as determined by
the Purchaser in its reasonable discretion.
(c) "Law" shall mean any federal, state, local or other law, rule,
regulation or governmental requirement of any kind and the rules, regulations
and orders promulgated thereunder by any regulatory agencies.
(d) "Person" shall mean a natural person, corporation, trust
partnership, limited liability company, governmental entity, agency or branch or
department thereof, or any other legal entity.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder, as the same may be in effect from
time to time.
(f) "ERISA" shall mean the Employee Retirement Income Security Act of
1976, as amended, as the same may be in effect from time to time.
(g) "knowledge" shall mean actual knowledge of the officers and
directors of the Company or any knowledge which any such officer or director
should have by virtue of his
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<PAGE>
or her position with or relationship to the Company and its subsidiaries from
operating or managing the Company and its subsidiaries.
SECTION 9.11 Performance by Sub. The Purchaser hereby agrees to
cause the Sub to comply with its obligations hereunder and under the Offer and
to cause the Sub to consummate the Merger as contemplated herein.
SECTION 9.12 Publicity. So long as this Agreement is in effect,
each of the Purchaser and the Sub, on the one hand, and the Company, on the
other hand, promptly shall consult and cooperate with the other prior to issuing
any press release or otherwise making any public statements with respect to this
Agreement or the transactions contemplated hereby and shall not issue any such
press release or make any such public statement prior to consultation, except as
may be required by Law or by obligations pursuant to any listing agreement with
any national securities exchange and except to allow internal communications
with employees.
SECTION 9.13 Agreement of Shareholders. Simultaneously herewith,
those shareholders named on Schedule 9.13 have entered into a letter agreement
with the Purchaser and the Sub pursuant to which such shareholders have agreed
to tender (and not withdraw) all shares of Common Stock and/or Preferred Stock
held by such shareholder to the Sub pursuant to the Offer on the terms set forth
in such letter agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
THE ZIEGLER COMPANIES, INC.
By: /s/ Dennis A. Walstad
___________________________
Senior Vice President
____________________
and CFO
____________________
ZACQ CORP.
By: /s/ Richard J. Glaisner
___________________________
President
__________________
__________________
PMC INTERNATIONAL, INC.
By: /s/ C.R. Tucker
___________________________
Chief Executive
_________________
Officer
_________________
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<PAGE>
EXHIBIT A
The capitalized terms used in this Exhibit A have the meanings set
forth in the attached Agreement, except that the term "Merger Agreement" shall
be deemed to refer to the attached Agreement.
Notwithstanding any other provisions of the Offer, the Purchaser shall
not be required to accept for payment, purchase or pay for any shares of Common
Stock or Preferred Stock tendered, and may terminate or, subject to the terms of
the Merger Agreement, amend the Offer and may postpone the acceptance for
payment of and payment for scrip, or shares of Common Stock or Preferred Stock,
if (A) on or prior to the time at which the Offer shall have expired (i) the
number of shares of Common Stock or certificates for scrip validly tendered and
not withdrawn immediately prior to the expiration of the Offer, when added to
the shares of Common Stock then owned by the Purchaser and its affiliates, shall
not constitute two-thirds of the shares of Common Stock outstanding on a fully
diluted basis, (ii) the number of shares of Preferred Stock validly tendered
and not withdrawn immediately prior to the expiration of the Offer, when added
to the shares of Preferred Stock then owned by the Purchaser and its affiliates,
shall not constitute two-thirds of the shares of Preferred Stock outstanding on
a fully diluted basis or (B) at any time on or after October ___, 1998 and
before the time of acceptance for payment for any such shares of Common Stock
and Preferred Stock any of the following conditions exist or shall occur and
remain in effect:
(a) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the American
Stock Exchange, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii)
a commencement of a war, armed hostilities or other national or
international calamity directly or indirectly involving the United
States, (iv) any material limitation (whether or not mandatory) by any
governmental authority on, or any other event which might materially
and adversely affect the extension of credit by lending institutions,
or (v) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening
thereof; or
(b) there shall have been any statute, rule or regulation
enacted, promulgated, entered or enforced or deemed applicable, or any
decree, order or injunction entered or enforced by any government or
governmental authority in the United States or by any court in the
United States that (i) restrains or prohibits the making or
consummation of the Offer or the consummation of the Merger, (ii)
prohibits or restricts the ownership or operation by the Purchaser (or
any of its affiliates or subsidiaries) of any portion of its or the
Company's business or assets which is material to the business of all
such entities taken as a whole or (iii) imposes material limitations
on the ability of the Purchaser effectively to acquire or to hold or
to exercise full rights of ownership of the shares of Common Stock or
Preferred Stock, including, without limitation, the right to vote the
shares of Common Stock or Preferred Stock purchased by the Purchaser
on all matters properly presented to
A-1
<PAGE>
the shareholders of the Company; provided, however, that the Purchaser
and the Sub shall have used their best efforts to have any such
decree, order or injunction vacated or reversed, including, without
limitation, by proffering their willingness to accept an order
embodying any arrangement required to be made by the Purchaser or the
Sub pursuant to Section 7.01(b) of the Merger Agreement (and
notwithstanding anything in this subsection (b) to the contrary, no
terms, conditions or provisions of an order embodying such an
arrangement shall constitute a basis for the Purchaser asserting
nonfulfillment of the conditions contained in this subsection (b)); or
(c) the Merger Agreement shall have been terminated in accordance
with its terms; or
(d) (i) the Company shall have breached or failed to perform any
of its covenants or agreements which breach or failure to perform is
material to the obliga tions of the Company under the Merger
Agreement taken as a whole, (ii) any of the representations and
warranties of the Company set forth in the Merger Agreement shall not
have been true in any respect which is material to the Company and its
subsidiaries taken as a whole, in each case, when made or (iii) a
Material Adverse Effect has occurred, provided that the aggregate
effect under (i), (ii), and (iii) shall be in excess of $250,000; or
(e) the Board of Directors of the Company shall have publicly
withdrawn or modified in any material respect adverse to the Purchaser
its recommendation of the Offer; provided, however, the Purchaser
shall have no right to terminate the Offer or not accept for payment
or pay for any scrip or shares of Common Stock or Preferred Stock if
the Company withdraws or modifies its recommendation of the Offer and
the Merger, by reason of taking and disclosing to the Company's
shareholders a position contemplated by Rule 14e-2(a)(2) or (3)
promulgated under the Exchange Act with respect to another proposal,
and if within ten days of taking and disclosing to its shareholders
the aforementioned position, the Company publicly reconfirms its
recommendation of the Offer and Merger and takes and discloses to the
Company's shareholders a recommendation to reject such other proposal
as contemplated by Rule 14e-2(a)(1) promulgated under the Exchange
Act; or
(f) the Purchaser and the Company shall have agreed that the
Purchaser shall terminate the Offer, or
(g) the Company has not delivered to Purchaser consents
conforming with the requirements of the Advisers Act from investment
advisors with assets under management with the Company representing in
the aggregate at least 80% of the total assets under management by the
Company as of October 1, 1998.
which, in the reasonable judgment of the Purchaser, makes it inadvisable to
proceed with the Offer or with such acceptance for payment or payments.
A-2
<PAGE>
Subject to the terms and provisions of the Merger Agreement the
foregoing conditions are for the sole benefit of the Purchaser and may be
asserted by the Purchaser regardless of the circumstances giving rise to any
such condition and may be waived by the Purchaser in whole or in part, at any
time and from time to time, in the sole discretion of the Purchaser. The
failure by the Purchaser at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right and each right will be deemed an
ongoing right which may be asserted at any time and from time to time.
A-3
<PAGE>
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 15, 1998 by and among The
Ziegler Companies, Inc., a Wisconsin corporation ("Ziegler"), and PMC
International, Inc., a Colorado corporation (the "Company").
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties are entering into a convertible promissory note.
WHEREAS, as a condition to Ziegler's willingness to enter into the
convertible promissory note, Ziegler has requested that the Company agree, and
the Company has so agreed, to grant to Ziegler an option with respect to certain
shares of the Company's $0.325 Cumulative Convertible Series A Preferred Stock,
no value ("Preferred Stock"), on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, to induce Ziegler to enter into the convertible promissory
note, and in consideration of the mutual covenants and agreements set forth
herein, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants Ziegler an irrevocable
option (the "Company Option") to purchase 111,818 shares of Preferred Stock as
of the date hereof, subject to adjustment as provided in Section 7 (such shares
being referred to herein as the "Company Shares"), of the Company (the "Company
Preferred Stock") in the manner set forth below at a price (the "Exercise
Price") per Company Share of $2.50 payable in cash.
2. Exercise of Option. The Company Option may be exercised by Ziegler, in
whole or in part, at any time or from time to time until the Company Option
expires, without expense to Ziegler. In the event Ziegler wishes to exercise the
Company Option, Ziegler shall deliver to the Company a written notice (an
"Exercise Notice") specifying the total number of Company Shares it wishes to
purchase. Each closing of a purchase of Company Shares (a "Closing") shall occur
at a place, on a date and at a time designated by Ziegler in an Exercise Notice
delivered at least two business days prior to the date of the Closing. The
Company Option shall terminate December 31, 1999. Upon the giving by Ziegler to
the Company of the Exercise Notice and the tender of the applicable aggregate
Exercise Price, Ziegler shall be deemed to be the holder of record of the
Company Shares issuable upon such exercise, notwithstanding that the stock
<PAGE>
transfer books of the Company shall then be closed or that certificates
representing such Company Shares shall not then be actually delivered to
Ziegler.
3. Closing. At any Closing, (a) the Company will deliver to Ziegler or
its designee a single certificate in definitive form representing the number of
the Company Shares designated by Ziegler in its Exercise Notice, such
certificate to be registered in the name of Ziegler and to bear the legend set
forth in Section 8, and (b) Ziegler will deliver to the Company the aggregate
purchase price for the Company Shares so designated by wire transfer of
immediately available funds or certified check or bank check. The Company shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates in the name of Ziegler or its designee.
4. Representations and Warranties of the Company. The Company represents
and warrants to Ziegler that (a) the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado
and has the corporate power and authority to enter into this Agreement, and to
carry out its obligations hereunder, (b) the execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
the Company, constitutes a valid and binding obligation of the Company and,
assuming this Agreement constitutes a valid and binding obligation of Ziegler,
is enforceable against the Company in accordance with its terms, (d) the Company
has taken all necessary corporate action to authorize and reserve for issuance
and to permit it to issue, upon exercise of the Company Option, and at all times
from the date hereof through the expiration of the Company Option will have
reserved, authorized and unissued Company Shares equal to 111,818 of the
outstanding Shares of Preferred Stock dated hereof, such amount being subject to
adjustment as provided in Section 7, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable, (e) upon delivery of the Company Shares to Ziegler
upon the exercise of the Company Option, Ziegler will acquire the Company Shares
free and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever, (f) the execution and delivery of this
Agreement by the Company does not, and the consummation by the Company of the
transactions contemplated hereby will not, violate, conflict with, or result in
a breach of any provision of, or constitute a default (with or without notice or
lapse of time, or both) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination, cancellation,
or acceleration of any obligation or the loss of a material benefit under or the
creation of a lien, pledge, security interest or other encumbrance on assets of
the Company or any of its subsidiaries.
-2-
<PAGE>
5. Representations and Warranties of Ziegler. Ziegler represents and
warrants to the Company that (a) Ziegler is a corporation duly organized,
validly existing and in good standing under the laws of the State of Wisconsin
and has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder, (b) the execution and delivery of this
Agreement by Ziegler and the consummation by Ziegler of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Ziegler and no other corporate proceedings on the part of Ziegler
are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
Ziegler and constitutes a valid and binding obligation of Ziegler, and, assuming
this Agreement constitutes a valid and binding obligation of Company, is
enforceable against Ziegler in accordance with its terms.
6. Voting of Shares. Ziegler shall vote any shares of capital stock
acquired by such party pursuant to this Agreement, or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act")) as it sees fit.
7. Adjustment Upon Changes in Capitalization. Without limitation to any
restriction on the Company contained in this Agreement, in the event of any
change in Company Preferred Stock by reason of stock dividends, splitups,
mergers, recapitalizations, combinations, exchange of shares or the like, or the
sale of Preferred Stock or the grant of any option to anyone other than Ziegler,
the type and number of shares or securities subject to the Company Option, and
the purchase price per share provided in Section 1, shall be adjusted
appropriately to restore to Ziegler its rights hereunder to purchase the
remaining amount of such Preferred Stock.
8. Restrictive Legends. Each certificate representing shares of Company
Preferred Stock issued to Ziegler pursuant to the Option, shall include a legend
in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Ziegler shall have delivered
to the Company a copy of a letter from the staff of the Securities and Exchange
Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such legend is not required for
purposes of the Securities Act; and (ii) the reference to the provisions
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<PAGE>
to this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference. In addition,
such certificates shall bear any other legend as may be required by law.
9. Binding Effect; No Assignment; No Third Party Beneficiaries. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Except as expressly
provided for in this Agreement, neither this Agreement nor the rights or the
obligations of either party hereto are assignable, except by operation of law,
or with the written consent of the other party. nothing contained in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective permitted assigns any rights or remedies
of any nature whatsoever by reason of this Agreement.
10. Specific Performance. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed in accordance
with their specific terms or are otherwise breached, immediate or irreparable
harm or injury would be caused for which money damages would not be an adequate
remedy. Accordingly, each party agrees that, in addition to other remedies, the
other party shall be entitled to an injunction restraining any violation or
threatened violation of the provisions of this Agreement. In the event that any
action should be brought in equity to enforce the provisions of the Agreement,
neither party will allege, and each party hereby waives the defense, that there
is adequate remedy at law.
11. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
thereof.
12. Further Assurances. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary or in order to consummate the transactions contemplated hereby.
13. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. In
the event any court or other competent authority holds any provisions of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith the execution and delivery of an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision and the economic
effects thereof. If for any reason any such court or regulatory agency
determines that Ziegler is not permitted to acquire the full number of shares of
Company
-4-
<PAGE>
Preferred Stock provided in Section 1 hereof (as the same may be adjusted), it
is the express intention of the Company to allow Ziegler to acquire or to
require the Company to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith, or not take any action required
herein, the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited to
money damages, for breach hereof or of any other provision of this Agreement or
part hereof as the result of such holding or order.
14. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if (i) delivered personally, or (ii) sent by
reputable overnight courier service, or (iii) telecopies (which is confirmed),
or (iv) five days after being mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
-5-
<PAGE>
A. If to Ziegler, to:
The Ziegler Companies, Inc.
215 N. Main Street
West Bend, WI 53095-3317
Attention: S. Charles O'Meara, Esq.
with a copy to:
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, WI 53202-4497
Attention: Conrad G. Goodkind, Esq.
B. If to the Company, to:
PMC International, Inc.
555 17th Street, 14th Floor
Denver, CO 80202
Attention: C.R. Tucker
with a copy to:
Holme Roberts & Owen LLP
Suite 4100, 1700 Lincoln
Denver, CO 80203
Attention: Francis R. Wheeler, Esq.
15. Governing Law; Choice of Forum. This Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin applicable
to agreements made and to be performed within such State.
16. Interpretation. When a reference is made in this Agreement to a
Section such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
-6-
<PAGE>
17. Expenses. Except as otherwise expressly provided herein, all costs
and expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses.
18. Extension of Time Periods. The time periods for exercise of certain
rights under the Agreement shall be extended to the extent necessary to avoid
any liability under Section 16(b) of the Exchange Act by reason of such
exercise.
19. Replacement of Company Option. Upon receipt by the Company of
evidence reasonably satisfactory to it on the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
THE ZIEGLER COMPANIES, INC.
By: /s/ S. Charles O'Meara
-------------------------------
Name: S. Charles O'Meara
-----------------------
Title: General Counsel
-----------------------
PMC INTERNATIONAL, INC.
By: /s/ C.R. Tucker
-------------------------------
Name: C.R. Tucker
-----------------------
Title: CEO
-----------------------
-7-
<PAGE>
CONVERTIBLE PROMISSORY NOTE
$500,000 October 15, 1998
FOR VALUE RECEIVED, PMC INTERNATIONAL, INC., a Colorado corporation (the
"Borrower"), hereby unconditionally and absolutely promises to pay to the order
of THE ZIEGLER COMPANIES, INC., a Wisconsin corporation (the "Lender"), at the
Lender's office at 215 North Main Street, West Bend, Wisconsin 53095 (or at such
other location as the Lender may from time to time designate), in lawful money
of the United States of America and in immediately available funds, the
principal amount of (a) FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000) or,
if less, (b) the aggregate unpaid principal amount of all loans made to the
undersigned by the Lender, together with all accrued and unpaid interest thereon
on the earlier to occur of: (i) December 31, 1998; (ii) an Event of Default (as
that term is defined in that certain Loan Agreement (the "Dundee Loan
Agreement") dated as of July 7, 1998 between the Borrower and Dundee Bancorp
Inc.); or (iii) a default occurs under Section 8 of any of those certain
Security Agreements from Borrower and its subsidiaries in favor of Lender, each
of even date herewith (collectively, the "Security Agreement").
The unpaid principal of this Note shall bear interest from and including
the date hereof until paid in full (both before and after judgment) at a
variable rate equal to the prime rate as published in the Wall Street Journal
(Midwest Edition) and the rate of interest hereunder shall change with each
change in such variable rate. The Borrower promises to pay interest accrued on
the unpaid principal balance of this Note at the Lender's office specified above
(or at such other location as the Lender may from time to time designate) in
like money and funds on the date the principal amount hereof is due and
continuing monthly thereafter until the principal amount of this Note is paid in
full.
Whenever any payment to be made hereunder shall be stated to be due on a
day that is not a Business Day, the payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest due hereunder. As used in this Note, "Business Day"
means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are required or permitted by law to close.
<PAGE>
In the event that any amount of the principal of, or interest on, this Note
is not paid within five (5) calendar days after the date when due, whether at
stated maturity, by acceleration or otherwise, then the entire principal amount
outstanding shall bear interest at an annual rate equal to two percent (2%) in
excess of the otherwise applicable annual rate until all such overdue amounts
are paid in full. All interest and other amounts payable under this Note shall
be computed for the actual number of days elapsed on the basis of a 360-day
year.
In the event that any amount of the interest on this Note is not paid
within five (5) calendar days following Borrower's receipt of written notice
that such interest is overdue, the Lender may declare the entire balance of
principal and accrued interest under this Note immediately due and payable. In
the event that (i) the Borrower takes or fails to take any action which
constitutes an admission of inability to pay its debts as they mature; (ii) the
Borrower makes a general assignment for the benefit of creditors or to an agent
authorized to liquidate any substantial amount of its assets; (iii) the Borrower
becomes the subject of any bankruptcy, reorganization, insolvency or analogous
proceeding;(iv) an order is made by any court for the winding-up of the Borrower
or a resolution is passed by the shareholder of the Borrower for its winding-up
or an administrator is appointed by the Borrower; (v) an Event of Default occurs
under the Dundee Loan Agreement; and/or (vi) a default occurs under Section 8 of
the Security Agreement, then, the entire unpaid principal of, and accrued
interest on, this Note shall automatically become immediately due and payable.
The Borrower hereby agrees to pay all fees and expenses incurred by the Lender
or any subsequent holder, including the reasonable fees of counsel, in
connection with the protection and enforcement of the rights of the Lender or
any subsequent holder of this Note, including without limitation the collection
of any amounts due under this Note and the protection and enforcement of such
rights in any bankruptcy, reorganization, insolvency or analogous proceeding
involving the Borrower and any and all proceedings after the entry of judgment
hereof.
This Note, subordinate only to the Dundee Loan Agreement, is secured, among
other things, pursuant to a General Business Security Agreement from the
Borrower in favor of the Lender and dated as of the date hereof, and may now or
hereafter be secured by one or more other security agreements, mortgages, deeds
of trust, assignments or other instruments or agreements. Lender agrees that the
Note and the security interest securing this Note are subordinate to the note
and security interest securing the note
-2-
<PAGE>
granted by Borrower and its subsidiaries pursuant to the Dundee Loan Agreement.
No provision of this Note is intended to or shall require or permit the
Lender, directly or indirectly, to take, collect or receive in money, goods or
in any other form, any interest (including amounts deemed by law to be interest)
in excess of the maximum rate of interest permitted by applicable law. If any
amount due from or paid by the Borrower shall be determined by a court of
competent jurisdiction to be interest in excess of such maximum rate, the
Borrower shall not be obligated to pay such excess and, if paid, such excess
shall be applied against the unpaid principal balance of this Note or, if and to
the extent that this Note has been paid in full, such excess shall be remitted
to the Borrower.
The Borrower acknowledges that the holder of this Note may assign, transfer
or sell all or a portion of its rights and interests to and under this Note to
an affiliate of the Lender and that such persons or entities shall thereupon
become vested with all of the rights and benefits of the Lender in respect
hereof as to all or that portion of the Note which is so assigned, transferred
or sold.
The Borrower and all other parties that at any time may be liable hereon in
any capacity, jointly or severally, waive presentment, demand, protest and
notice of dishonor. The Borrower further waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the obligations evidenced
hereunder and any requirement that the Lender exhaust any rights or take any
action against any other person or entity or any collateral. The Borrower
further hereby waives notice of or proof of reliance by the Lender upon this
Note, and the obligations evidenced hereby shall conclusively be deemed to have
been created, contracted, incurred, renewed, extended, amended or waived in
reliance upon this Note. The Borrower shall make all payments hereunder without
defense, offset or counterclaim. No failure to exercise and no delay in
exercising any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights. This Note may not be changed orally, but only by an
agreement in writing, which is signed by the party or parties against whom
enforcement of any waiver, change, modification or discharge is sought.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS NOTE AND ANY DISPUTE
ARISING OUT OF OR IN CONNECTION WITH THIS NOTE, WHETHER SOUNDING IN CONTRACT,
TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED
-3-
<PAGE>
BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) AND
DECISIONS OF THE STATE OF WISCONSIN.
ALL DISPUTES ARISING UNDER OR IN CONNECTION WITH THIS NOTE, WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE
AND FEDERAL COURTS LOCATED IN MILWAUKEE, WISCONSIN, AND THE COURTS TO WHICH AN
APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE LENDER SHALL HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
BORROWER OR ITS PROPERTY IN ANY LOCATION SELECTED BY THE LENDER TO ENABLE THE
LENDER TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE LENDER. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY
THE LENDER. THE BORROWER WAIVES ANY OBJECTION THAT THE BORROWER MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE LENDER HAS COMMENCED A PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.
THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, THE LENDER EACH HEREBY WAIVE TO
THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING ARISING UNDER OR IN CONNECTION WITH THIS NOTE.
At the option of the Lender, this Note (solely for the then outstanding
principal at the time of conversion or such lesser amount as selected by the
Lender in a written notice to the Borrower) may be converted, in whole or in
part, without expense to Lender, into Borrower's $.325 Cumulative Convertible
Series A Preferred Stock ("Preferred Stock"). The conversion price shall be
$2.50 for each share of Preferred Stock, subject to adjustment as set forth
below ("Conversion Price"). Upon conversion, any accrued interest shall be paid
in cash in accordance with the original terms.
The Borrower hereby agrees that at all times the number of shares of
Preferred Stock that will be delivered upon conversion shall be reserved for
exercise of this Note. No fractional shares shall be issued upon conversion of
this Note.
The Lender, by virtue hereof, shall not be entitled to any rights of a
stockholder in the Borrower, until the Note is converted in whole or in part.
In case the Borrower shall effect a stock dividend, stock split or reverse
stock split of the outstanding shares of Common Stock or Preferred Stock, the
Conversion Price shall be
-4-
<PAGE>
proportionately decreased in the case of a stock dividend or stock split or
increased in the case of a reverse stock split (on the date that such
transaction shall become effective) by multiplying the Conversion Price in
effect immediately prior to the stock dividend or stock split by a fraction, the
numerator of which is the number of shares of Preferred Stock outstanding
immediately prior to such stock dividend or stock split, and the denominator of
which is the number of shares of Preferred Stock outstanding immediately after
such stock dividend or stock split.
In case of any consolidation or merger of the Borrower with or into another
corporation (other than a merger with a subsidiary, in which merger the Borrower
is the continuing corporation) or in the case of any sale or conveyance to
another corporation of the property of the Borrower as an entirety or
substantially as an entirety, the Borrower shall cause effective provision to be
made so that the Note holder shall have the right thereafter, by exercising this
Note, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such consolidation, merger, sale or conveyance as
may be issued or payable with respect to or in exchange for the number of Shares
of the Borrower theretofore purchasable upon the exercise of this Note had such
consolidation, merger, sale or conveyance not taken place. The foregoing
provision shall similarly apply to successive consolidations, mergers, sales or
conveyances.
Notwithstanding anything to the contrary, the Borrower shall not be
required to give effect to any adjustment in the Conversion Price unless and
until the net effect of one or more adjustments, determined as above provided,
shall have required a change of the Conversion Price by at least one cent, but
when the cumulative net effect of more than one adjustment so determined shall
be to change the actual Conversion Price by at least one cent, such change in
the Conversion Price thereupon be given effect.
-5-
<PAGE>
Upon any adjustment of the Conversion Price, the Holder of the Note shall
thereafter (until another such adjustment) be entitled to purchase, at the new
Conversion Price, the number of shares, calculated to the nearest full share,
obtained by multiplying the number of Shares initially issuable upon exercise of
this Note by the Conversion Price in effect on the date hereof and dividing the
product so obtained by the new Conversion Price.
PMC INTERNATIONAL, INC.
By: /s/ Scott A. MacKillop
-------------------------------
Title: President
----------------------------
Attest:
/s/ Maureen E. Dobel
-----------------------------------
-6-
<PAGE>
CREDIT AGREEMENT
BY AND BETWEEN
PMC INTERNATIONAL, INC.
AND
THE ZIEGLER COMPANIES, INC.
DATED AS OF NOVEMBER 3, 1998
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of November 3, 1998 (the "Agreement"), is
by and between PMC INTERNATIONAL, INC. (the "Borrower") and THE ZIEGLER
COMPANIES, INC. (the "Lender").
R E C I T A L S
WHEREAS, Borrower has requested that the Lender provide a total of up to
$3,500,000 in revolving credit loans for the purposes hereinafter set forth; and
WHEREAS, the Lender has agreed to make the requested loans available to
Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
CREDIT FACILITY
1.1 Credit Facility. From time to time prior to March 31, 1999 or the
---------------
earlier termination in full of the Lender's obligation to make Loans hereunder
(in either case, the "Termination Date"), and subject to all of the terms,
conditions and limitations hereof, the Lender agrees to make revolving credit
loans (each a "Loan" and collectively, the "Loans")in an aggregate principal
amount not to exceed THREE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
($3,500,000) (the "Maximum Amount"). Within such Maximum Amount, Loans may be
repaid and reborrowed in accordance with the provisions of this Agreement. All
Loans hereunder shall be evidenced by the Note. Although the Note shall be
expressed to be payable in the full Maximum Amount, Borrower shall be obligated
to pay only the amounts actually disbursed hereunder, together with accrued
interest on the outstanding balance at the rates and on and the dates specified
herein and such other fees and charges provided for herein.
1.2 Interest Rate. (a) Except as otherwise provided herein, the unpaid
-------------
balance of the Note will bear interest from and including the date of
disbursement until paid in full (both before and after judgment) at a variable
rate equal to the prime rate as published in the Wall Street Journal (Midwest
-------------------
Edition) and the rate of interest thereunder shall change with each change in
such variable rate. Borrower promises to pay interest accrued on the unpaid
principal balance of the Note in like money and funds on the Termination Date.
<PAGE>
(b) While any Event of Default has occurred and is continuing, Borrower
will, upon demand of the Lender, pay interest during the continuance of the
Event of Default at a per annum rate equal to two percentage points in excess of
the rate of interest specified above on the unpaid balance of the Note.
(c) Interest will be computed on the basis of actual days elapsed and a
year of 360 days.
1.3 Procedure for Borrowing. (a) Borrower will request a Loan hereunder
-----------------------
by written notice delivered in person, by United States mail, by reputable
overnight courier or by facsimile transmission, which notices will be
irrevocable, to the Lender not later than 12:00 p.m., Milwaukee time, on the
proposed Borrowing Date. Each such request will be effective upon receipt by
the Lender and will specify (i) the amount of the requested Loan and (ii) the
proposed Borrowing Date. Upon its receipt of such notice from Borrower, the
Lender will make a Loan to Borrower in such amount and on such Borrowing Date as
are specified in the borrowing notice.
(b) Loans may be prepaid at the option of Borrower in whole or in part at
any time without premium or penalty. Each prepayment of a Loan shall be in a
minimum amount of $50,000 and in integral multiples of $50,000 above such
minimum. All prepayments of a Loan shall be accompanied by interest accrued on
the amount prepaid through the date of prepayment.
(c) Borrower shall have the right, upon five (5) days' prior written
notice to the Lender, to reduce in part the Loan; provided, however, that each
partial reduction of the Loan shall be in the amount of $500,000 or an integral
multiple thereof. Subject to the limitations of the preceding sentence, the
entire Loan may be terminated by Borrower in whole at any time upon five (5)
days' prior written notice to the Lender.
-2-
<PAGE>
ARTICLE II
GENERAL PROVISIONS
2.1 Use of Proceeds. Borrower shall use the proceeds of the Loans to
---------------
retire indebtedness owed to Dundee Bancorp Inc. ("Dundee") arising under that
certain Loan Agreement dated as of July 7, 1998 (the "Dundee Loan Agreement")
and may use the remaining proceeds of the Loans solely for: (i) working capital,
payment of aged payables and other general corporate purposes; (ii) to
compensate investment managers of Borrower and its Subsidiaries; (iii) to make
earnout payments to former shareholders of PMCIS pursuant to the terms of
certain acquisition documents dated on or about September 24, 1997; (iv) to pay
reasonable fees and costs of legal counsel of Borrower; or (v) to pay reasonable
outstanding investment banking fees of Borrower.
2.2 Payment Procedures. All payments of principal, interest, and fees
------------------
hereunder shall be made in immediately available funds to the Lender at the
Lender's address specified pursuant to Section 9.7 hereof by 12:00 p.m.,
Milwaukee, Wisconsin time on the date when due.
2.3 Record keeping. The Lender shall record in its records the date and
--------------
amount of each Loan and each repayment of such Loan. The aggregate amounts so
recorded shall be rebuttable presumptive evidence of the principal and interest
owing and unpaid on the Note. The failure to so record any such amount or any
error in so recording any such amount shall not, however, limit or otherwise
affect the obligations of Borrower under this Agreement or under the Note to
repay the principal amount of the Note together with all interest accruing
thereon.
2.4 Application of Payments. (a) Except as provided herein to the
-----------------------
contrary, all payments of principal, interest and fees under this Agreement and
the Note shall be made to the Lender for the account of the Lender and the
holder of the Note then outstanding, as appropriate, in respect of amounts then
due hereunder, and any portion of the Note so paid shall not be considered
outstanding for any purpose after the date of such payment.
(b) All payments received by the Lender under this Agreement shall be
applied first, to the payment in full of all fees, costs and expenses under this
Agreement and the other Credit Documents to be delivered by Borrower and the
Subsidiaries to the Lender pursuant to this Agreement; second, to payments of
interest required under this Agreement; and third, to payments of the principal
amounts required under this Agreement.
-3-
<PAGE>
ARTICLE III
CONDITIONS
3.1 Deliveries at Closing. This Agreement shall become effective on the
---------------------
date that the Lender shall have received each of the following:
(a) the Note, executed by Borrower and dated the Closing Date;
(b) the Guarantees, executed by PMC, PMCIS and PTS, dated the Closing
Date;
(c) the Security Agreements, executed by Borrower, PMC, PMCIS and PTS,
dated the Closing Date, together with UCC financing statements;
(d) a certificate, signed by a duly authorized officer of Borrower and
PMC, PMCIS and PTS, dated the Closing Date, as to: (i) the incumbency and
signature of the officers of Borrower or the Subsidiary, as the case may be, who
have signed or will sign this Agreement and the other Credit Documents to which
it is a party; (ii) the adoption and continued effect of resolutions of Borrower
or the Subsidiary, as the case may be, authorizing the execution, delivery and
performance of this Agreement and the other Credit Documents to which it is a
party; and (iii) the accuracy and completeness of attached copies of the
articles or certificate of incorporation and bylaws of Borrower or the
Subsidiary, as the case may be, as amended to date;
(e) a certificate, signed by a duly authorized officer of Borrower,
stating that on the Closing Date, after giving effect to all amounts outstanding
hereunder: (i) no Default or Event of Default has occurred and is continuing;
and (ii) the representations and warranties contained in this Agreement are true
and correct as of such Closing Date;
(f) a certificate of the Colorado Secretary of State of recent date as
to the existence and good standing of Borrower, Portfolio Management
Consultants, inc. and Portfolio Technology Services, Inc.;
(g) a certificate of the Delaware Secretary of State of recent date as
to the existence and good standing of PMC Investment Services, Inc.;
(h) an opinion letter from Holme Roberts & Owen LLP, counsel to
Borrower and the Subsidiaries, in substantially the form of Exhibit D attached
to this Agreement; and
(i) such additional supporting documents and materials as Lender may
reasonably request on or before the Closing Date.
-4-
<PAGE>
3.2 Deliveries Following Closing. Within five (5) calendar days of the
----------------------------
Closing Date, Borrower shall deliver insurance certificates from Borrower, PMC,
PMCIS and PTS' insurance brokers in form and substance satisfactory to Lender as
to all insurance covering the Collateral and naming the Lender and, if
appropriate, Dundee as an additional insured and lender loss payee thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to the Lender that, except as set
forth on the applicable schedules hereto:
4.1 Organization and Qualification. Each of Borrower and the Subsidiaries
------------------------------
is a corporation duly and validly organized and existing under the Laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted, other than in
those jurisdictions where the failure to have such authority would not
reasonably be expected to have a Material Adverse Effect.
4.2 Financial Statements. All of the financial statements of Borrower and
--------------------
the Subsidiaries heretofore furnished to the Lender by Borrower are accurate and
complete and fairly present in all material respects the financial condition and
the results of operations of Borrower and the Subsidiaries for the periods
covered thereby and as of the relevant dates thereof, all in accordance with
generally accepted accounting principles applied on a consistent basis, subject
in the case of interim financial statements to audit and year-end adjustments.
There has been no material adverse change in the business, properties or
condition (financial or otherwise) of Borrower or any Subsidiary since the date
of the latest of such financial statements not previously disclosed in writing
to the Lender (including in any schedules to that certain Agreement and Plan of
Merger of even date herewith by and between the Borrower and the Lender (the
"Merger Agreement")). Borrower has no knowledge of any material liabilities of
any nature of Borrower or any Subsidiary not previously disclosed in writing to
the Lender (including in any schedules to the Merger Agreement).
4.3 Authorization; Enforceability. The making, execution, delivery and
-----------------------------
performance of this Agreement and the other Credit Documents to which it is a
party by Borrower, PMC, PTS and PMCIS have been duly authorized by all necessary
corporate action of Borrower and such Subsidiary. This Agreement and the other
Credit Documents to which it is a party are the valid and binding obligations of
Borrower, PMC, PTS and PMCIS, enforceable against them in accordance with their
respective terms, except to the
-5-
<PAGE>
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally or by general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at law).
4.4 Absence of Conflicting Obligations. The making of the Note, and the
----------------------------------
execution, delivery and performance of this Agreement and the other Credit
Documents to which it is a party by Borrower, PMC, PTS and PMCIS do not violate
any presently existing provision of Law or the articles or certificate of
incorporation or bylaws of Borrower or any such Subsidiary, as the case may be,
or any agreement to which Borrower or any such Subsidiary is a party or by which
Borrower or any such Subsidiary or any of their assets is bound except for the
Dundee Loan Agreement, with respect to which a waiver from Dundee will be
obtained in connection with the transactions contemplated by this Agreement, and
except for any such violations that would not reasonably be expected to have a
Material Adverse Effect.
4.5 Taxes. Borrower and each Subsidiary has filed all federal, state,
-----
foreign and local tax returns which were required to be filed (subject to any
valid extensions of the time for filing), and has paid, or made provision for
the payment of, all taxes owed by it, and no tax deficiencies have been assessed
or, to Borrower's knowledge, proposed against Borrower or any Subsidiary.
4.6 Absence of Litigation. Except as set forth on Schedule 4.6, neither
---------------------
Borrower nor any Subsidiary is a party to, and so far as is known to Borrower
there is no threat of, any litigation or administrative proceeding which would,
if adversely determined, have a Material Adverse Effect.
4.7 Accuracy of Information. All information, certificates or statements
-----------------------
by Borrower or any Subsidiary given in, or pursuant to, this Agreement (whether
in writing, by electronic messaging or otherwise) shall be accurate, true and
complete when given in all material respects.
4.8 Title to Property. Except as set forth on Schedule 4.8, Borrower and
-----------------
each Subsidiary has good title to, or a valid leasehold interest in, or a valid
license to use, all assets and properties necessary to conduct its respective
business as now conducted, and there are no Liens on any of the assets or
properties of Borrower or any Subsidiary other than Permitted Liens. Borrower
and each Subsidiary has all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, reasonably necessary to conduct
its respective business as now conducted, and neither Borrower nor any
Subsidiary
-6-
<PAGE>
knows of any conflict with or violation of any valid rights of others with
respect thereto.
4.9 ERISA. Borrower does not have any knowledge that any Plan is in
-----
noncompliance with the applicable provisions of ERISA or the Internal Revenue
Code. Except as set forth on Schedule 4.9, Borrower does not have any knowledge
of any pending or threatened litigation or governmental proceeding or
investigation against or relating to any Plan, nor any knowledge of any
reasonable basis for any proceedings, claims or actions against or relating to
any Plan. Borrower does not have any knowledge that it has incurred any
"accumulated funding deficiency" within the meaning of Section 302(a)(2) of
ERISA in connection with any Plan. Borrower does not have any knowledge that
there has been any Reportable Event or Prohibited Transaction (as such terms are
defined in ERISA) with respect to any Plan, or that Borrower has incurred any
liability to the PBGC under Section 4062 of ERISA in connection with any Plan.
Notwithstanding any provision to the contrary contained in this Section 4.9,
Borrower shall not be deemed to be in default hereunder solely by reason of
Borrower's failure to be in compliance with the warranties contained in this
Section 4.9 so long as the sum of (i) the cost of complying with the warranties
contained in this Section 4.9 plus (ii) all fines, penalties, fees and other
costs resulting from such noncompliance would not reasonably be expected to have
a Material Adverse Effect.
4.10 Compliance With Laws. Except as set forth on Schedule 4.10, Borrower
--------------------
and each Subsidiary is in compliance with all Laws to which Borrower or such
Subsidiaries are subject, other than such noncompliance as would not reasonably
be expected to have a Material Adverse Effect.
4.11 Regulation U. No part of the proceeds of the Loans will be used,
------------
directly or indirectly, for the purpose of purchasing or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.
4.12 Subsidiaries. Borrower has no Subsidiaries, other than Portfolio
------------
Management Consultants, Inc., Portfolio Technology Services, Inc., Portfolio
Brokerage Services, Inc. and PMC Investment Services, Inc.
4.13 Full Disclosure. No information, exhibit or report furnished by
---------------
Borrower or any Subsidiary to the Lender in connection with the negotiation or
execution of this Agreement contained any material misstatement of fact as of
the date when made or omitted to state a material fact or any fact necessary to
make the statements contained therein not misleading as of the date when made.
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<PAGE>
4.14 Absence of Default. Except as disclosed on Schedule 4.14 hereto,
------------------
neither Borrower nor any Subsidiary is in default under any note, loan
agreement, indenture, lease, mortgage, security agreement or other contractual
obligation binding upon such party, other than for such defaults as would not
reasonably be expected to have a Material Adverse Effect.
ARTICLE V
NEGATIVE COVENANTS
From and after the date of this Agreement and until the entire amount of
principal of and interest due on the Loans, and all other fees and payments due
under this Agreement and the other Credit Documents are paid in full, Borrower
shall not, and shall not suffer, cause or permit any Subsidiary to, without the
prior written consent of the Lender:
5.1 Liens. Incur, create, assume or permit to be created or allow to
-----
exist any Lien upon or in any of its assets or properties, except Permitted
Liens.
5.2 Indebtedness. Incur, create, assume, permit to exist, guarantee,
------------
endorse or otherwise become directly or indirectly or contingently responsible
or liable for any Indebtedness, except Permitted Indebtedness.
5.3 Consolidation or Merger. Except in a transaction with an Affiliate of
-----------------------
the Lender, consolidate with or merge into any other Person, or permit another
Person to merge into Borrower or any Subsidiary, or acquire substantially all of
the assets of any other Person, whether in one or a series of transactions.
5.4 Disposition of Assets. Sell, lease, assign, transfer or otherwise
---------------------
dispose of all or substantially all of Borrower or any Subsidiary's now owned or
hereafter acquired assets or properties, other than (i) sales of inventory in
the ordinary course of business and (ii) dispositions of assets in an aggregate
amount not to exceed $50,000 (provided that the foregoing limitation shall not
apply if Borrower or the Subsidiary, as the case may be, has entered into a
binding agreement to purchase replacement assets having equal or greater value
for delivery not later than sixty (60) days after the date of such sale, lease
or disposition).
5.5 Sale and Leaseback. Enter into any agreement, directly or indirectly,
------------------
to sell or transfer any real or personal property used in Borrower or a
Subsidiary's business and thereafter to lease back the same or similar property.
5.6 Investments. Make any Investment in or to other Persons, except
-----------
Permitted Investments.
-8-
<PAGE>
5.7 Restricted Payments. Other than with respect to the repurchase of
-------------------
outstanding warrants of Borrower (up to aggregate amount of $10,000):
(a) Declare or pay any dividends or distributions; or
(b) purchase, redeem, or otherwise acquire for value Borrower or any
Subsidiary's capital stock now or hereafter outstanding; or
(c) make any distribution of assets to Borrower or any Subsidiary's
shareholders, whether in cash, assets or in obligations of Borrower or such
Subsidiary; or
(d) allocate or otherwise set apart any sum for payment of any
dividend or distribution on, or for the purchase or redemption of, any shares of
Borrower or any Subsidiary's capital stock.
5.8 Transactions with Affiliates. Engage in any transaction with an
----------------------------
Affiliate on terms materially less favorable to Borrower or a Subsidiary, as the
case may be, than would be available at the time from a Person who is not an
Affiliate.
5.9 Loans and Advances. Make any loan or advance to any Person, except
------------------
(i) extensions of credit in the ordinary course of business by Borrower and its
Subsidiaries to its customers; (ii) advances to officers and employees of
Borrower and its Subsidiaries for travel and other expenses in the ordinary
course of business; and (iii) intercompany loans between Borrower and any
Subsidiary; provided, however, that in no event whatsoever shall Borrower or any
Subsidiary make any loans or advances to Portfolio Brokerage Services, Inc. in
an amount representing a net increase greater than $150,000 over the amount
stated on the Borrower's financial statements dated September 30, 1998, without
the written permission of an officer of the Lender.
5.10 Guarantees. Guarantee the Indebtedness of any Person, except for: (i)
----------
the Guarantees, (ii) the endorsement of instruments for deposit or collection in
the ordinary course of business and (iii) guaranties made pursuant to the Dundee
Loan Agreement.
5.11 Subsidiaries. Form any Subsidiary, other than Portfolio Management
------------
Consultants, Inc., Portfolio Technology Services, Inc., PMC Investment Services,
Inc., and Portfolio Brokerage Services, Inc.
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<PAGE>
ARTICLE VI
AFFIRMATIVE COVENANTS
From and after the date of this Agreement and until the entire amount of
principal of and interest due on the Loans, and all other fees and payments due
under this Agreement and the other Credit Documents are paid in full:
6.1 Payment. Borrower shall timely pay or cause to be paid the principal
-------
of and interest on the Loans and all other amounts due under this Agreement and
Borrower, PMC, PTS and PMCIS shall timely pay all amounts due under the other
Credit Documents to which it is a party.
6.2 Corporate Existence; Properties; Insurance. Borrower and each
------------------------------------------
Subsidiary shall: (a) maintain its existence; (b) conduct its business
substantially as now conducted; (c) maintain all assets (other than assets no
longer used or useful in the conduct of its business) in good repair, working
order and condition, ordinary wear and tear excepted; (d) maintain accurate
records and books of account in accordance with generally accepted principles of
accounting consistently applied throughout all accounting periods; and (e)
maintain insurance of such nature and in such amounts as is customarily
maintained by companies engaged in the same or similar business and as otherwise
required by Section 3.1(h) hereof.
6.3 Licenses. Borrower and each Subsidiary shall maintain in good
--------
standing and in full force and effect each license, permit and franchise granted
or issued by any federal, state or local governmental agency or regulatory
authority that is reasonably necessary to Borrower or such Subsidiary's
business.
6.4 Reporting Requirements. Borrower shall furnish to Lender such
----------------------
information respecting the business, assets and financial condition of Borrower
and its Subsidiaries as the Lender may reasonably request and, without request:
(a) Promptly upon the furnishing thereof to the shareholders of
Borrower, copies of all financial statements, reports and proxy statements so
furnished;
(b) Promptly upon filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which
Borrower or any Subsidiary files with the Securities and Exchange Commission;
and
(c) Such other information as the Lender may from time to time
reasonably request.
6.5 Taxes. Borrower and each Subsidiary shall pay all taxes and
-----
assessments prior to the date on which penalties attach thereto, except for any
tax or assessment which is either not
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<PAGE>
delinquent or which is being contested in good faith and by proper proceedings
and against which adequate reserves have been provided.
6.6 Inspection of Properties and Records. Subject to the terms of that
------------------------------------
certain confidentiality agreement between Borrower and Lender, Borrower, PMC,
PTS and PMCIS shall permit the Lender or its agents or representatives to
inspect any of the properties, books and financial records of Borrower and such
Subsidiary, to examine and make copies of the books of accounts and other
financial records of Borrower, and to discuss the affairs, finances and accounts
of Borrower and such Subsidiary with, and to be advised as to the same by,
Borrower's representatives at such reasonable times and intervals as the Lender
may designate.
6.7 Reference in Financial Statements. Borrower shall include, or cause
---------------------------------
to be included, a general reference to this Agreement in all financial
statements of Borrower which are furnished to financial reporting services,
creditors and prospective creditors.
6.8 Compliance with Laws. Except as disclosed on Schedule 6.8, Borrower
--------------------
and each Subsidiary shall: (a) comply with all applicable Environmental Laws and
orders of regulatory and administrative authorities with respect thereto; and
(b) comply with all other Laws applicable to Borrower and its Subsidiaries or
any of their respective assets or operations, in each case, other than for such
noncompliance as would not reasonably be expected to have a Material Adverse
Effect.
6.9 Compliance with Agreements. Except as disclosed on Schedule 6.9,
--------------------------
Borrower, PMC, PTS and PMCIS shall perform and comply in all respects with the
provisions of any agreement (including without limitation any collective
bargaining agreement), license, regulatory approval, permit and franchise
binding upon Borrower, such Subsidiary, or any of its assets or properties,
other than for such nonperformance or noncompliance as would not reasonably be
expected to have a Material Adverse Effect.
6.10 Notices. Borrower shall:
-------
(a) as soon as possible and in any event within five (5) Business Days
after becoming aware of the occurrence of any Default or Event of Default,
notify the Lender in writing of such Default or Event of Default and set forth
the details thereof and the action which is being taken or proposed to be taken
by Borrower with respect thereto;
(b) promptly notify the Lender of the commencement of any litigation
or administrative proceeding that would cause the representation and warranty of
Borrower contained in Section 4.6 of this Agreement to be untrue;
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<PAGE>
(c) promptly notify the Lender (i) of the occurrence of any Reportable
Event or Prohibited Transaction (as such terms are defined in ERISA) that has
occurred with respect to any Plan, and (ii) of the institution by the PBGC or
Borrower of proceedings under Title IV of ERISA to terminate any Plan;
(d) promptly notify the Lender, and provide copies, immediately upon
receipt, of any notice, pleading, citation, indictment, complaint, order or
decree from any federal, state or local government agency or regulatory body, or
any other source, asserting or alleging a circumstance or condition that
requires or may require a financial contribution by Borrower or any Subsidiary
under Environmental Laws or an investigation, clean-up, removal, remedial action
or other response by or on the part of Borrower or any Subsidiary under
Environmental Laws or which seeks damages or civil, criminal or punitive
penalties from or against Borrower or any Subsidiary for an alleged violation of
Environmental Laws;
(e) notify the Lender at least thirty (30) days prior to any change of
Borrower or any Subsidiary's name or its respective principal business address;
and
(f) promptly notify the Lender of the commencement of any
investigation, litigation, or administrative or regulatory proceeding by, or the
receipt of any notice, citation, pleading, order, decree or similar document
issued by, any federal, state or local governmental agency or regulatory
authority that results in, or may result in, the termination or suspension of
any license, permit or franchise reasonably necessary to Borrower or any
Subsidiary's business, or that imposes, or may result in the imposition of, a
fine or penalty in excess of $100,000 in the aggregate.
ARTICLE VII
REMEDIES
7.1 Acceleration.
------------
(a) Upon the occurrence of an Automatic Event of Default, then,
without notice or action of any kind by the Lender, the Lender's obligation to
make any Loans hereunder shall immediately terminate and the entire disbursed
unpaid principal of, and accrued interest on, the Note, and any other amount due
under this Agreement and all other Credit Documents to which it is a party by
Borrower or a Subsidiary, as the case may be, pursuant to or in connection
herewith or therewith shall be automatically and immediately due and payable.
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<PAGE>
(b) Upon the occurrence of a Notice Event of Default the Lender's
obligation to make any Loans hereunder shall immediately terminate and the
Lender, upon written notice and demand to Borrower, may declare the entire
disbursed unpaid principal of, and accrued interest on, the Note, and any other
amount due under this Agreement, and all other Credit Documents to which it is a
party by Borrower or a Subsidiary, as the case may be, pursuant to or in
connection herewith or therewith immediately due and payable.
7.2 Remedies Not Exclusive. No remedy herein conferred upon the Lender is
----------------------
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given under
this Agreement or any Credit Documents to which it is a party by Borrower or a
Subsidiary, as the case may be, pursuant to or in connection herewith or
therewith, or now or hereafter existing at law or in equity. No failure or
delay on the part of the Lender in exercising any right or remedy shall operate
as a waiver thereof nor shall any single or partial exercise of any right
preclude other or further exercise thereof or the exercise of any other right or
remedy.
7.3 Setoff. Borrower agrees that the Lender shall have all rights of
------
setoff provided by applicable Law, and in addition thereto, Borrower agrees that
if at any time any payment or other amount owing by Borrower or any Subsidiary
under this Agreement or any other Credit Document to which it is a party is then
due to the Lender, the Lender may apply to the payment of such payment or other
amount any and all balances, credits, deposits, accounts or moneys of Borrower
or any Subsidiary then or thereafter with the Lender.
ARTICLE VIII
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
8.1 Affiliate shall mean any Person: (a) that directly or indirectly
---------
controls, or is controlled by, or is under common control with Borrower; (b)
that directly or indirectly beneficially owns or holds ten percent (10%) or more
of any class of voting stock of Borrower; (c) ten percent (10%) or more of the
voting stock of which Person is directly or indirectly beneficially owned or
held by Borrower; (d) that is an officer or director of Borrower; (e) of which
an Affiliate is an officer or director; or (f) who is related by blood, adoption
or marriage to an Affiliate. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
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<PAGE>
8.2 Agreement shall mean this Credit Agreement, together with the Exhibits
---------
and Schedules attached hereto, as the same may be amended from time to time in
accordance with the terms hereof.
8.3 Automatic Event of Default shall mean any one or more of the
--------------------------
following:
(a) Borrower or any Subsidiary shall make a general assignment for the
benefit of creditors or to an agent authorized to liquidate all or substantially
all of its assets; or
(b) Borrower or any Subsidiary shall become the subject of an "order
for relief" within the meaning of the United States Bankruptcy Code, or shall
file a petition in bankruptcy, for reorganization or to effect a plan or other
arrangement with creditors; or
(c) Borrower or any Subsidiary shall have a petition or application
filed against it in bankruptcy or any similar proceeding, or shall have such a
proceeding commenced against it, and such petition, application or proceeding
shall remain undismissed for a period of sixty (60) days or more, or Borrower or
any Subsidiary shall file an answer to such a petition or application, admitting
the material allegations thereof; or
(d) Borrower or any Subsidiary (i) shall apply to a court for the
appointment of a receiver or custodian for any substantial portion of its assets
or properties, or (ii) shall have a receiver or custodian appointed for any
substantial portion of its assets or properties, with or without consent, and
such receiver shall not be discharged within sixty (60) days after his
appointment; or
(e) Borrower or any Subsidiary shall adopt a plan of dissolution or
liquidation of all or substantially all of its assets; or
(f) An "Event of Default" (as that term is defined in the Dundee Loan
Agreement) shall have occurred under or in respect of the Dundee Loan Agreement
(after giving effect to grace or cure periods, if any, provided under such
Agreement).
8.4 Borrower shall mean PMC International, Inc.
--------
8.5 Borrowing Date shall mean each date on which a Loan is made to
--------------
Borrower.
8.6 Business Day shall mean any day other than a Saturday, Sunday, public
------------
holiday or other day when commercial banks in Wisconsin are authorized or
required by Law to close.
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<PAGE>
8.7 Closing shall mean the consummation of the transactions contemplated
-------
by this Agreement.
8.8 Closing Date shall mean November 3, 1998.
------------
8.9 Collateral shall have the meaning specified in each of the Security
----------
Agreements.
8.10 Credit Documents shall mean this Agreement, the Note, the Guarantees,
----------------
the Security Agreements, and all other related agreements and documents issued
or delivered hereunder or thereunder or pursuant hereto or thereto.
8.11 Default shall mean any event which would constitute an Event of
-------
Default but for the requirement that notice be given or time elapse or both.
8.11A Dundee shall have the meaning set forth in Section 2.1.
------
8.11B Dundee Loan Agreement shall have the meaning specified in Section 2.1
---------------------
8.12 Environmental Laws shall mean all Laws, judgments, decrees, permits,
------------------
licenses, agreements and other governmental restrictions, now or at any time
hereafter in effect, relating to (a) the emission, discharge or release of
pollutants, petroleum or petroleum products, chemicals or industrial, toxic or
hazardous substances, materials or wastes into the environment, or (b) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, petroleum or petroleum products, chemicals
or industrial, toxic or hazardous substances or wastes, or (c) the
investigation, clean-up or remediation thereof. These Environmental Laws shall
include but not be limited to the Federal Solid Waste Disposal Act, the Federal
Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation
and Recovery Act of 1976, the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Superfund Amendments and
Reauthorization Act of 1986, regulations of the Environmental Protection Agency,
regulations of the Nuclear Regulatory Agency, regulations of any state
department of natural resources or state environmental protection agency now or
at any time hereafter in effect and local health department ordinances.
8.13 ERISA shall mean the Employee Retirement Income Security Act of 1974,
-----
as amended and as in effect from time to time.
8.14 Event of Default shall mean any Automatic Event of Default or any
----------------
Notice Event of Default.
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<PAGE>
8.14A Guarantees shall mean those certain Unlimited Guarantees executed by
----------
each of PMC, PTS and PMCIS in the form of Exhibit A attached hereto, as the same
may be amended from time to time.
8.15 Indebtedness shall mean all liabilities or obligations of Borrower or
------------
any Subsidiary, whether primary or secondary or absolute or contingent: (a) for
borrowed money or for the deferred purchase price of property or services
(excluding trade obligations and accrued expenses, in each case incurred in the
ordinary course of business, which are not the result of any borrowing); (b) as
lessee under leases that have been or should be capitalized according to
generally accepted accounting principles; (c) evidenced by notes, bonds,
debentures or similar obligations; or (d) secured by any Liens on assets of
Borrower or any Subsidiary, whether or not the obligations secured have been
assumed by Borrower or such Subsidiary.
8.16 [Reserved].
8.17 Investment shall mean: (a) any transfer or delivery of cash, stock or
----------
other property or value by such Person in exchange for Indebtedness, stock or
any other security of another Person; (b) any loan, advance or capital
contribution to or in any other Person; (c) any guaranty, creation or assumption
of any liability or obligation of any other Person; and (d) any investment in
any fixed property or fixed assets other than fixed properties and fixed assets
acquired and used in the ordinary course of the business of that Person.
8.18 Law shall mean any federal, state, local or other law, rule,
---
regulation or governmental requirement of any kind, and the rules, regulations,
written interpretations and orders promulgated thereunder.
8.19 Lender shall mean The Ziegler Companies, Inc.
------
8.20 Lien shall mean, with respect to any asset: (a) any mortgage, pledge,
----
lien, charge, security interest or encumbrance of any kind in respect of such
asset; or (b) the interest of a vendor or lessor under any conditional sale
agreement, financing lease or other title retention agreement relating to such
asset.
8.21 Loans shall have the meaning specified in Section 1.1.
-----
8.22 Material Adverse Effect shall mean a material adverse effect on (a)
-----------------------
the business, operations, property or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole, (b) the ability of Borrower or
any Subsidiary to perform its obligations, when such obligations are required to
be performed, under this Agreement or any of the other Credit Documents to which
it is a party or (c) the validity or
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<PAGE>
enforceability of the obligations of Borrower and any Subsidiary under this
Agreement or any of the other Credit Documents or the rights or remedies of the
Lender hereunder or thereunder.
8.23 Maximum Amount shall have the meaning specified in Section 1.1.
--------------
8.24 [Reserved].
8.25 Obligations shall mean, without duplication, all of the obligations of
-----------
Borrower to the Lender (including the obligations to pay the principal amount of
or interest on the Loans and to pay certain expenses and the obligations arising
in connection with various indemnities) whenever arising, under this Agreement
or any of the Credit Documents.
8.26 Note shall mean that certain promissory note from Borrower payable to
----
the order of the Lender in the form of Exhibit B attached to this Agreement.
8.27 Notice Event of Default shall mean any one or more of the following:
-----------------------
(a) Borrower or any Subsidiary shall fail to pay when due any
installment of the disbursed principal of, or interest on, the Note or any
expense or other amount due under this Agreement or any other Credit Document to
which it is a party; or
(b) there shall be a default in the performance or observance of any
of the covenants and agreements contained in Article V or Section 6.2(a) of this
Agreement; or
(c) there shall be a default in the performance or observance of any
of the other covenants, agreements or conditions contained in this Agreement or
any other Credit Document, and such default shall have continued for a period of
ten (10) Business Days after written notice from the Lender to Borrower
specifying such default and requiring it to be remedied; or
(d) any representation or warranty made by Borrower or any Subsidiary
in this Agreement or in any other Credit Document to which it is a party or
financial statement delivered pursuant to or in connection with this Agreement
shall prove to have been false in any material respect as of the time when made
or given; or
(e) any final judgment shall be entered against Borrower or any
Subsidiary which, when aggregated with other final judgments against Borrower
and its Subsidiaries, exceeds $100,000 in the aggregate, and shall remain
outstanding and unsatisfied, unbonded or unstayed after thirty (30) days from
the date of entry thereof; provided that no final judgment shall be included in
the calculation under this subsection to the extent that the claim
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<PAGE>
underlying such judgment is covered by insurance and the defense of such claim
has been tendered to and accepted by the insurer without reservation; or
(f) (i) any Reportable Event (as defined in ERISA) shall have occurred
which constitutes grounds for the termination of any Plan by the PBGC or for the
appointment of a trustee to administer any Plan, or any Plan shall be terminated
within the meaning of Title IV of ERISA, or a trustee shall be appointed by the
appropriate court to administer any Plan, or the PBGC shall institute
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan, or Borrower or any trade or business which together with Borrower would be
treated as a single employer under Section 4001 of ERISA shall withdraw in whole
or in part from a multiemployer Plan, and (ii) the aggregate amount of
Borrower's liabilities for all such occurrences, whether to a Plan, the PBGC or
otherwise, is reasonably likely to have a Material Adverse Effect, and such
liability is not covered for the benefit of Borrower by insurance.
8.28 PBGC shall mean Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
8.29 Permitted Indebtedness shall mean: (a) Indebtedness of Borrower or
----------------------
any Subsidiary to the Lender; (b) unsecured accounts payable and other unsecured
obligations (including aged payables) of Borrower or a Subsidiary incurred in
the ordinary course of business of Borrower or such Subsidiary and not as a
result of any borrowing; (c) Indebtedness arising out of the lease or purchase
of goods constituting equipment and either unsecured or secured only by a
purchase money security interest securing such purchase money indebtedness in an
amount which does not exceed $100,000 at any time outstanding in the aggregate
for Borrower and its Subsidiaries; (d) Indebtedness outstanding as of the
Closing Date, and shown on the financial statements referred to in Section 4.2
hereof, provided that such Indebtedness shall not be renewed, extended or
increased; and (e) other Indebtedness of Borrower and its Subsidiaries which
does not exceed $150,000 in the aggregate at any time outstanding.
8.30 Permitted Investments shall mean:
---------------------
(a) Investments in prime commercial paper, rated either P-1 by Moody's
Investors Service or A-1 by Standard & Poor's Corporation, maturing within
thirty (30) days of the date of acquisition, certificates of deposit, overnight
bank deposits and bankers acceptances (each with a maturity of one year or
less), or in commercial bank accounts of any commercial bank having capital and
surplus in excess of $100,000,000;
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<PAGE>
(b) Investments in obligations of a governmental body, rated "A" or
better, or fully guaranteed or insured by the United States or any agency
thereof, in each case maturing within one year of the date of acquisition;
(c) endorsement of instruments for deposit or collection in the
ordinary course of business; and
(d) subject to the restrictions set forth in Section 5.9, intercompany
loans and advances.
8.31 Permitted Liens shall mean:
---------------
(a) Liens in favor of the Lender; and
(b) Liens for taxes, assessments, or governmental charges, or levies
that are not yet due and payable or that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established;
and
(c) easements, restrictions, minor title irregularities and similar
matters which have no Material Adverse Effect as a practical matter upon the
ownership and use of the affected property; and
(d) Liens or deposits in connection with workers' compensation,
unemployment insurance, social security, ERISA or similar legislation or to
secure customs' duties, public or statutory obligations in lieu of surety, stay
or appeal bonds, or to secure performance of contracts or bids (other than
contracts for the payment of borrowed money) or deposits required by law as a
condition to the transaction of business or other liens or deposits of a like
nature made in the ordinary course of business; and
(e) A purchase money security interest securing Indebtedness permitted
to be outstanding or incurred under Section 8.29(c); and
(f) Liens incurred in connection with Permitted Indebtedness, provided
that no such Lien shall be amended to cover any additional property after the
Closing Date and the amount of Indebtedness secured thereby shall not be
increased; and
(g) attachment or judgment Liens, where the attachment or judgment
which gave rise to such Liens does not constitute an Event of Default hereunder;
and
(h) landlords' or warehousemen's Liens arising by operation of law;
and
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<PAGE>
(i) lessors' interests under capitalized leases; and
(j) liens in favor of Citywide Bank/Aurora National Bank pursuant to a
promissory note and security agreement.
8.32 Person shall mean and include an individual, partnership, corporation,
------
trust, unincorporated association and any unit, department or agency of
government.
8.33 Plan shall mean each pension, profit sharing, stock bonus, thrift,
----
savings and employee stock ownership plan established or maintained, or to which
contributions have been made, by Borrower or any Subsidiary or any trade or
business which together with Borrower would be treated as a single employer
under Section 4001 of ERISA.
8.34 Security Agreements shall mean those certain General Business Security
-------------------
Agreements executed by Borrower, PMC, PMCIS and PTS in favor of the Lender as of
the Closing Date, in the form of Exhibit C attached to this Agreement, as the
same may be amended from time to time.
8.35 Subsidiary shall mean: (i) on the Closing Date, Portfolio Management
----------
Consultants, Inc. ("PMC"), Portfolio Technology Services, Inc. ("PTS"), PMC
Investment Services, Inc. ("PMCIS") and Portfolio Brokerage Services, Inc. and
(ii) any corporation, more than fifty percent (50%) of the outstanding stock of
which (of any class or classes, however designated, having ordinary voting power
for the election of at least a majority of the members of the board of directors
of such corporation, other than stock having such power only by reason of the
happening of a contingency) is owned by Borrower.
8.36 Termination Date shall have the meaning specified in Section 1.1.
----------------
ARTICLE IX
MISCELLANEOUS
9.1 Expenses and Attorneys' Fees. Borrower shall pay all reasonable fees
----------------------------
and expenses incurred by the Lender, including the reasonable fees of counsel,
in connection with the preparation, issuance, maintenance and amendment of this
Agreement and all other Credit Documents to be executed, delivered and performed
by Borrower or any Subsidiary pursuant to or in connection herewith or
therewith, and the consummation of the transactions contemplated herein or
therein, and the administration, protection and enforcement of the Lender's
rights under this Agreement and all other Credit Documents to be executed,
delivered and performed by Borrower or any Subsidiary pursuant to or in
connection herewith or therewith, including without limitation the protection
and
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<PAGE>
enforcement of such rights in any bankruptcy, reorganization or insolvency
proceeding involving Borrower or any Subsidiary and any and all proceedings
after the entry of judgment hereon. Borrower further agrees to pay on demand all
reasonable audit fees and accountants' fees incurred by the Lender in connection
with the maintenance and enforcement of this Agreement and all other Credit
Documents to be executed, delivered and performed by Borrower or any Subsidiary
pursuant to or in connection herewith or therewith.
9.2 Assignability; Successors. The respective rights, liabilities and
-------------------------
obligations of Borrower under this Agreement are not assignable or delegable, in
whole or in part, without the prior written consent of the Lender. The Lender
agrees that it shall not assign its respective rights, liabilities and
obligations to any party that is not an Affiliate of the Lender without
Borrower's prior written consent, which consent shall not be unreasonably
withheld. The provisions of this Agreement shall inure to the benefit of and be
binding upon the permitted successors and assigns of the parties.
9.3 Survival. All covenants, agreements, representations and warranties
--------
made in this Agreement or in any document delivered pursuant to this Agreement
shall survive the execution and delivery of this Agreement, the issuance of the
Note, the delivery of any such document and the repayment of the Loans pursuant
to the terms of this Agreement.
9.4 Governing Law. This Agreement and the other Credit Documents issued
-------------
pursuant to or in connection herewith or therewith shall be governed by, and
construed and interpreted in accordance with, the internal Laws of the State of
Wisconsin without giving effect to its conflicts of law provisions.
9.5 Counterparts; Headings. This Agreement may be executed in several
----------------------
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same agreement. The article and
section headings in this Agreement are inserted for convenience of reference
only and shall not constitute a part of this Agreement.
9.6 Entire Agreement. This Agreement and the other Credit Documents
----------------
referred to herein and therein contain the entire understanding of the parties
with respect to the subject matter hereof. There are no restrictions, promises,
warranties, covenants or undertakings other than those expressly set forth in
this Agreement. This Agreement supersedes all prior negotiations, agreements
and undertakings between the parties with respect to such subject matter.
9.7 Notices. All communications or notices required or permitted by this
-------
Agreement shall be in writing and shall be deemed
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<PAGE>
to have been given (a) upon delivery if hand delivered, or (b) upon deposit in
the United States mail, postage prepaid, or with a nationally recognized
overnight commercial carrier, airbill prepaid, or (c) upon transmission if by
facsimile, provided that such transmission is promptly confirmed by hand
delivery, mail or as otherwise expressly provided herein, and each such
communication or notice shall be addressed as follows, unless and until any
party notifies the other in accordance with this Section of a change of address:
If to Borrower: PMC International, Inc.
555 17th Street, 14th Floor
Denver, Colorado 80202
Attention: President
If to Lender: The Ziegler Companies, Inc.
215 North Main Street
West Bend, Wisconsin 53095
Attention: Dennis Wallestad
Jeffrey Vredenbregt
9.8 Amendment. No amendment of this Agreement shall be effective unless
---------
in writing and signed by Borrower and the Lender.
9.9 Taxes. If any transfer or documentary taxes, assessments or charges
-----
levied by any governmental authority shall be payable by reason of the
execution, delivery or recording of this Agreement or any other Credit Document
issued or delivered pursuant hereto or thereto, Borrower shall pay all such
taxes, assessments and charges, including interest and penalties, and hereby
indemnifies the Lender against any liability therefor.
9.10 Accounting Terms. All accounting terms used in this Agreement shall
----------------
be construed in accordance with generally accepted accounting principles
consistent with those used in the preparation of the financial statements
referred to in Section 4.2 hereof.
9.11 Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement in such jurisdiction or affecting the
validity or enforceability of any provision in any other jurisdiction.
9.12 Indemnification. In consideration of the execution and delivery of
---------------
this Agreement by the Lender and the agreement to extend the credit provided
hereunder, Borrower hereby agrees to indemnify, exonerate and hold the Lender
and each of the officers, directors, employees, agents and attorneys of the
Lender (collectively, the "Lender Parties") free and harmless from and against
any and all actions, causes of action, suits, losses, liabilities, damages and
expenses, including without limitation,
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<PAGE>
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Lender Parties or any of them as a result of, or
arising out of, or relating to (a) the execution, delivery, performance,
enforcement or administration of this Agreement or any other Credit Document
executed or delivered in connection with this Agreement, or (b) the non-
compliance by Borrower or any Subsidiary or by any property of Borrower or any
Subsidiary with Environmental Laws or Borrower or a Subsidiary's liabilities
under such Laws. To the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable Law. All indemnities set forth
in this Agreement shall survive the execution and delivery of this Agreement and
the Note and the repayment of the Loans.
9.13 Cross Collateral. All of the Collateral shall serve as collateral
----------------
for all of the Obligations under this Agreement and all other Credit Documents
executed in connection herewith and therewith, and Borrower hereby grants a
security interest in the Collateral to the Lender, to the extent of Borrower's
interest in the Collateral, to secure all such Obligations.
9.14 Waiver of Jury Trial. THE LENDER AND BORROWER HEREBY KNOWINGLY,
--------------------
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS AGREEMENT, THE NOTE, THE SECURITY AGREEMENTS, OR ANY OTHER
CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE LENDER OR BORROWER. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.
9.15 Conversion. At the option of the Lender, the Note (for the then
----------
outstanding principal and, if desired by Lender, the then outstanding interest,
in part or in whole, at the time of conversion or such lesser amount as selected
by the Lender in a written notice to the Borrower) may be converted, in whole or
in part, without expense to Lender, into Borrower's Common Stock, par value
$.01, ("Common Stock"). The conversion price shall be $.60 for each share of
Common Stock, subject to adjustment as set forth below ("Conversion Price").
The Borrower hereby agrees that at all times the number of shares of Common
Stock that will be delivered upon conversion shall be reserved for exercise. No
fractional shares shall be issued upon conversion.
The Lender, by virtue hereof, shall not be entitled to any rights of a
stockholder in the Borrower, until the Note is converted in whole or in part.
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<PAGE>
In case the Borrower shall effect a stock dividend, stock split or reverse
stock split of the outstanding shares of Common Stock or Preferred Stock, the
Conversion Price shall be proportionately decreased in the case of a stock
dividend or stock split or increased in the case of a reverse stock split (on
the date that such transaction shall become effective) by multiplying the
Conversion Price in effect immediately prior to the stock dividend or stock
split by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately prior to such stock dividend or stock split, and
the denominator of which is the number of shares of Common Stock outstanding
immediately after such stock dividend or stock split.
In case of any consolidation or merger of the Borrower with or into another
corporation (other than a merger with a subsidiary, in which merger the Borrower
is the continuing corporation) or in the case of any sale or conveyance to
another corporation of the property of the Borrower as an entirety or
substantially as an entirety, the Borrower shall cause effective provision to be
made so that the Note holder shall have the right thereafter, by exercising this
Note, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such consolidation, merger, sale or conveyance as
may be issued or payable with respect to or in exchange for the number of shares
of the common stock of the Borrower theretofore purchasable upon the exercise of
the Note had such consolidation, merger, sale or conveyance not taken place.
The foregoing provision shall similarly apply to successive consolidations,
mergers, sales or conveyances.
Notwithstanding anything to the contrary, the Borrower shall not be
required to give effect to any adjustment in the Conversion Price unless and
until the net effect of one or more adjustments, determined as above provided,
shall have required a change of the Conversion Price by at least one cent, but
when the cumulative net effect of more than one adjustment so determined shall
be to change the actual Conversion Price by at least one cent, such change in
the Conversion Price thereupon be given effect.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Credit Agreement
as of the day and year first above written.
PMC INTERNATIONAL, INC.
By: /s/ C.R. Tucker
------------------------------
Title: CEO
---------------------------
THE ZIEGLER COMPANIES, INC.
By: /s/ Dennis Wallestad
------------------------------
Title: CFO
---------------------------
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<PAGE>
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 3, 1998 by and between The
Ziegler Companies, Inc., a Wisconsin corporation ("Ziegler"), and PMC
International, Inc., a Colorado corporation (the "Company").
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties are entering into a $3.5 million credit facility.
WHEREAS, as a condition to Ziegler's willingness to enter into the $3.5
million credit facility, Ziegler has requested that the Company agree, and the
Company has so agreed, to grant to Ziegler an option with respect to certain
shares of the Company's Common Stock, $.01 par value ("Common Stock"), on the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, to induce Ziegler to enter into the $3.5 million credit
facility, and in consideration of the mutual covenants and agreements set forth
herein, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants as of the date hereof
to Ziegler an irrevocable option (the "Company Option") to purchase 4,500,000
shares of Common Stock, subject to adjustment as provided in Section 7 (such
shares being referred to herein as the "Company Shares"), in the manner set
forth below at a price (the "Exercise Price") per Company Share of $.60 payable
in cash. The Company Option shall expire on the later of (1) March 31, 1999, or
(2) fifteen (15) days after the date all loans (and interest) from Ziegler and
its affiliates to the Company have been repaid in full and all amounts due to
Ziegler under the Agreement and Plan of Merger have been paid in full ("the
"Expiration Date").
2. Exercise of Option. The Company Option may be exercised by
Ziegler, in whole or in part, at any time or from time to time until the Company
Option expires, without expense to Ziegler. In the event Ziegler wishes to
exercise the Company Option, Ziegler shall deliver to the Company a written
notice (an "Exercise Notice") specifying the total number of Company Shares it
wishes to purchase. Each closing of a purchase of Company Shares (a "Closing")
shall occur at a place, on a date and at a time designated by Ziegler in an
Exercise Notice delivered at least two business days prior to the date of the
Closing. Upon the delivery by Ziegler to the Company of the Exercise Notice and
the applicable aggregate Exercise Price, Ziegler shall be deemed to be the
<PAGE>
holder of record of the Company Shares issuable upon such exercise,
notwithstanding that the stock transfer books of the Company may then be closed
or that certificates representing such Company Shares may not then be actually
delivered to Ziegler.
3. Closing. At any Closing, (a) the Company will deliver to Ziegler
or its designee a single certificate in definitive form representing the number
of the Company Shares designated by Ziegler in its Exercise Notice, such
certificate to be registered in the name of Ziegler and to bear the legend set
forth in Section 8, and (b) Ziegler will deliver to the Company the aggregate
purchase price for the Company Shares so designated by wire transfer of
immediately available funds or certified check or bank check. The Company shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates in the name of Ziegler or its designee.
4. Representations and Warranties of the Company. The Company
represents and warrants to Ziegler that (a) the Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has the corporate power and authority to enter into this Agreement,
and to carry out its obligations hereunder, (b) the execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or any of
the transactions contemplated hereby, (c) this Agreement has been duly executed
and delivered by the Company, constitutes a valid and binding obligation of the
Company and, assuming this Agreement constitutes a valid and binding obligation
of Ziegler, is enforceable against the Company in accordance with its terms, (d)
the Company has taken all necessary corporate action to authorize and reserve
for issuance and to permit it to issue, upon exercise of the Company Option, and
at all times from the date hereof through the expiration of the Company Option
will have reserved, authorized and unissued Company Shares equal to 4,500,000 of
the outstanding Shares of Common Stock, such amount being subject to adjustment
as provided in Section 7, all of which, upon their issuance and delivery in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable, (e) upon delivery of the Company Shares to Ziegler against
full payment thereof, Ziegler will acquire the Company Shares free and clear of
all claims, liens, charges, encumbrances and security interests of any nature
whatsoever, (f) the execution and delivery of this Agreement by the Company does
not, and the consummation by the Company of the transactions contemplated hereby
will not, violate, conflict with, or result in a breach of any provision of, or
constitute a default (with or without notice or lapse of time, or both) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination, cancellation, or acceleration of any
obligation or the loss of a material benefit under or the creation of a lien,
pledge, security interest or other encumbrance on assets of the Company or any
of its subsidiaries.
-2-
<PAGE>
5. Representations and Warranties of Ziegler. Ziegler represents
and warrants to the Company that (a) Ziegler is a corporation duly organized,
validly existing under the laws of the State of Wisconsin and has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder, (b) the execution and delivery of this Agreement by
Ziegler and the consummation by Ziegler of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Ziegler and no other corporate proceedings on the part of Ziegler are necessary
to authorize this Agreement or any of the transactions contemplated hereby, (c)
this Agreement has been duly executed and delivered by Ziegler and constitutes a
valid and binding obligation of Ziegler, and, assuming this Agreement
constitutes a valid and binding obligation of Company, is enforceable against
Ziegler in accordance with its terms.
6. Voting of Shares. Ziegler shall vote any shares of capital stock
acquired by it pursuant to this Agreement, or otherwise beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act")) as it sees fit.
7. Adjustment Upon Changes in Capitalization. Without limitation to
any restriction on the Company contained in the Agreement and Plan of Merger,
dated October 29, 1998, among Ziegler, ZACQ Corp., a Colorado corporation and
wholly owned subsidiary of Ziegler, and the Company, in the event of any change
in the Common Stock by reason of stock dividends, stock splits, mergers,
recapitalizations, combinations, exchange of shares or the like, the type and
number of shares or securities subject to the Company Option, and the Exercise
Price per share provided in Section 1, shall be adjusted appropriately to
restore to Ziegler its rights hereunder. Notwithstanding any other provision of
this Agreement, from the date hereof to the Expiration Date, the Company shall
not, without the prior written consent of Ziegler, issue or sell, or authorize
or propose the issuance or sale of any shares of Common Stock, or securities
convertible into any shares of Common Stock, or any rights, warrants or options
to acquire any shares of Common Stock.
8. Restrictive Legends. Each certificate representing shares of
Company Common Stock issued to Ziegler pursuant to the Option, shall include a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s)
-3-
<PAGE>
without such reference if Ziegler shall have delivered to the Company a copy of
a letter from the staff of the Securities and Exchange Commission, or an opinion
of counsel, in form and substance reasonably satisfactory to the Company, to the
effect that such legend is not required for purposes of the Securities Act; and
(ii) the reference to the provisions to this Agreement in the above legend shall
be removed by delivery of substitute certificate(s) without such reference if
the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference. In addition, such certificates shall bear any other legend as may be
required by law.
9. Binding Effect; No Assignment; No Third Party Beneficiaries.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Except as
expressly provided for in this Agreement, neither this Agreement nor the rights
or the obligations of either party hereto are assignable, except by operation of
law, or with the written consent of the other party. Nothing contained in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective permitted assigns any rights or remedies
of any nature whatsoever by reason of this Agreement.
10. Specific Performance. The parties recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate or
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to other
remedies, the other party shall be entitled to an injunction restraining any
violation or threatened violation of the provisions of this Agreement. In the
event that any action should be brought in equity to enforce the provisions of
the Agreement, neither party will allege, and each party hereby waives the
defense, that there is adequate remedy at law.
11. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.
12. Further Assurances. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary to consummate the transactions contemplated hereby.
13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. In
the event any court or other competent authority holds any provisions of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith the execution and delivery
-4-
<PAGE>
of an amendment to this Agreement in order, as nearly as possible, to
effectuate, to the extent permitted by law, the intent of the parties hereto
with respect to such provision and the economic effects thereof. If for any
reason any such court or regulatory agency determines that Ziegler is not
permitted to acquire the full number of shares of Company Common Stock provided
in Section 1 hereof (as the same may be adjusted), it is the express intention
of the Company to allow Ziegler to acquire or to require the Company to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof. Each party agrees that, should any court or
other competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith, or not take any action required herein, the other party
shall not be entitled to specific performance of such provision or part hereof
or to any other remedy, including but not limited to money damages, for breach
hereof or of any other provision of this Agreement or part hereof as the result
of such holding or order.
14. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given (i) upon delivery if delivered personally,
or (ii) the next business day if sent by reputable overnight courier service, or
(iii) upon sending if sent by telecopy (which is confirmed), or (iv) five days
after being mailed by registered or certified mail (return receipt requested),
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
A. If to Ziegler, to:
The Ziegler Companies, Inc.
215 N. Main Street
West Bend, WI 53095-3317
Attention: S. Charles O'Meara, Esq.
with a copy to:
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, WI 53202-4497
Attention: Conrad G. Goodkind, Esq.
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<PAGE>
B. If to the Company, to:
PMC International, Inc.
555 17th Street, 14th Floor
Denver, CO 80202
Attention: C.R. Tucker and Scott A. MacKillop
with a copy to:
Holme Roberts & Owen LLP
Suite 4100, 1700 Lincoln
Denver, CO 80203
Attention: Francis R. Wheeler, Esq.
15. Governing Law; Choice of Forum. This Agreement shall be governed
by and construed in accordance with the laws of the State of Wisconsin
applicable to agreements made and to be performed within such State.
16. Interpretation. When a reference is made in this Agreement to a
Section such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
17. Expenses. Except as otherwise expressly provided herein, all
costs and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
18. Extension of Time Periods. The time periods for exercise of
certain rights under the Agreement shall be extended to the extent necessary to
avoid any liability under Section 16(b) of the Exchange Act by reason of such
exercise.
19. Replacement of Company Option. Upon receipt by the Company of
evidence reasonably satisfactory to it on the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
THE ZIEGLER COMPANIES, INC.
By: /s/ Dennis Wallestad
-------------------------
Name: Dennis Wallestad
-------------------
Title: CFO
------------------
PMC INTERNATIONAL, INC.
By: /s/ C.R. Tucker
-------------------------
Name: C.R. Tucker
-------------------
Title: CEO
------------------
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<PAGE>
CONTINUING GUARANTY (Unlimited)
(For Consumer or Business Transactions)
Dated October 15, 1998
GUARANTY. For value received, and to induce The Ziegler Companies, Inc. of
West Bend, Wisconsin ("Lender"), to extend credit or to grant or continue other
credit accommodations to PMC International, Inc. ("Debtor"), the undersigned
jointly and severally guarantee payment of the Obligations defined below when
due or, to the extent not prohibited by law, at the time any Debtor becomes the
subject of bankruptcy or other insolvency proceedings. "Obligations" means all
loans, drafts, overdrafts, checks, notes, and all other debts, obligations and
liabilities of every kind and description, whether of the same or a different
nature, arising out of credit previously granted, credit contemporaneously
granted or credit granted in the future by Lender to any Debtor, to any Debtor
and another, or to another guaranteed or endorsed by any Debtor. Obligations
include interest and charges and the amount of payments made to Lender or
another by or on behalf of any Debtor which are recovered from Lender by a
trustee, receiver, creditor or other party pursuant to applicable federal or
state law, and to the extent not prohibited by law, all costs, expenses and
attorneys' fees at any time paid or incurred before and after judgement in
endeavoring to collect all or part of any of the above, or to realize upon this
Guaranty, or any collateral securing any of the above, including those incurred
in successful defense or settlement of any counterclaim brought by Debtor or the
undersigned or incident to any action or proceeding involving Debtor or the
undersigned brought pursuant to the United States Bankruptcy Code. Unless a
lien would be prohibited by law or would render a nontaxable account taxable,
the undersigned grant to Lender a security interest and lien in any deposit
account any of the undersigned may at any time have with Lender. Lender may, at
any time after the occurrence of an event of default and notice and opportunity
to cure, if required by (S)425.105, Wis. Stats., set-off any amount unpaid on
the Obligations against any deposit balances any of the undersigned may at any
time have with Lender, or other money now or hereafter owed any of the
undersigned by Lender. This Guaranty is also secured (to the extent not
prohibited by law) by all existing and future security agreements between Lender
and any of the undersigned and by any mortgage stating it secures guaranties of
any of the undersigned. This Guaranty is valid and enforceable against the
undersigned even though any Obligation is
<PAGE>
invalid or unenforceable against any Debtor.
WAIVER. To the extent not prohibited by law the undersigned expressly
waive notice of the acceptance of this Guaranty, the creation of any present or
future Obligation, default under any Obligation, proceedings to collect from any
Debtor or anyone else, all diligence of collection and presentment, demand,
notice and protest and any right to disclosures from Lender regarding the
financial condition of any Debtor or guarantor of the Obligations or the
enforceability of the Obligations. No claim, including a claim for
reimbursement, subrogation, contribution or indemnification which any of the
undersigned may, as a guarantor of the Obligations, have against a co-guarantor
of any of the Obligations or against any Debtor shall be enforced nor any
payment accepted until the Obligations are paid in full and no payments to or
collections by Lender are subject to any right of recovery.
CONSENT. With respect to any of the Obligations, Lender may from time to
time before or after revocation of this Guaranty without notice to the
undersigned and without affecting the liability of the undersigned (a)
surrender, release, impair, sell or otherwise dispose of any security or
collateral for the Obligations, (b) release or agree not to sue any guarantor or
surety, (c) fail to perfect its security interest in or realize upon any
security or collateral, (d) fail to realize upon any of the Obligations or to
proceed against any Debtor or any guarantor or surety, (e) renew or extend the
time of payment, (f) increase or decrease the rate of interest or the amount of
the Obligations, (g) accept additional security or collateral, (h) determine the
allocation and application of payments and credits and accept partial payments,
(i) determine what, if anything, may at any time be done with reference to any
security or collateral, and (j) settle or compromise the amount due or owing or
claimed to be due or owing from any Debtor, guarantor or surety, which
settlement or compromise shall not affect the undersigned's liability for the
full amount of the unpaid Obligations. The undersigned expressly consent to and
waive notice of all of the above. To the extent not prohibited by law, the
undersigned consent that venue for any legal proceeding relating to the
collection of this Guaranty shall be, at Lender's option, the county in which
Lender has its principal office in this state, the county in which any of the
undersigned resides or the county in which this Guaranty was executed by the
undersigned.
PERSONS BOUND. This Guaranty benefits Lender, its successors and assigns,
and binds the undersigned, their respective heirs, personal representatives,
successors and
<PAGE>
assigns.
ENTIRE AGREEMENT. This Guaranty is intended by the undersigned and Lender
as a final expression of this Guaranty and as a complete and exclusive statement
of its terms, there being no conditions to the full effectiveness of this
Guaranty. This Guaranty may not be supplemented or modified except in writing.
This Guaranty includes additional provision on the reverse side.
NOTICE TO GUARANTOR
You are being asked to guarantee the past, present and future Obligations
of Debtor. If Debtor does not pay, you will have to. You may also have to pay
collection costs. Lender can collect the Obligations from you without first
trying to collect from Debtor or another guarantor.
For Wisconsin Married Residents Only: Each guarantor who signs above
represents that this obligation is incurred in the interest of his or her
marriage or family.
X X
<PAGE>
ADDITIONAL PROVISIONS
REPRESENTATIONS. The undersigned acknowledge and agree that Lender (a) has not
made any representations or warranties with respect to, (b) does not assume any
responsibility to the undersigned for, and (c) has no duty to provide
information to the undersigned regarding, the enforceability of any of the
Obligations or the financial condition of any Debtor or guarantor. The
undersigned has independently determined the creditworthiness of Debtor and the
enforceability of the Obligations and until the Obligations are paid in full
will independently and without reliance on Lender continue to make such
determinations.
REVOCATION. This is a continuing guaranty and shall remain in full force and
effect until Lender receives written notice of its revocation signed by the
undersigned or actual notice of the death of the undersigned. Upon revocation
by written notice or actual notice of death, this Guaranty shall continue in
full force and effect as to all renewal, extension or increase in the interest
rate of any such Obligation, whether made before or after revocation, shall
constitute an Obligation contracted for or incurred before revocation.
Obligations contracted for or incurred before revocation shall also include
credit extended after revocation pursuant to commitments made before revocation.
Revocation by one of the undersigned shall not affect any of the liabilities or
obligations of any of the other undersigned and this Guaranty shall continue in
full force and effect with respect to them.
X PMC Investment Services, Inc.(Seal) X (Seal)
By: /s/ C.R. Tucker
555 17th Street, 14th Floor
Denver, Colorado 80202
(Address) (Address)
ACKNOWLEDGEMENT
STATE OF COLORADO)
COUNTY OF DENVER)ss.
This instrument was acknowledged before me on October 15, 1998, by C.R. Tucker
(as Chief Executive Officer of PMC Investment Services, Inc.)
/s/ Donna Jean Flemming
Notary Public, Denver County, CO
My Commission (Expires) (Is) 10/12/2002
<PAGE>
CONTINUING GUARANTY (Unlimited)
(For Consumer or Business Transactions)
Dated October 15, 1998
GUARANTY. For value received, and to induce The Ziegler Companies, Inc. of
West Bend, Wisconsin ("Lender"), to extend credit or to grant or continue other
credit accommodations to PMC International, Inc. ("Debtor"), the undersigned
jointly and severally guarantee payment of the Obligations defined below when
due or, to the extent not prohibited by law, at the time any Debtor becomes the
subject of bankruptcy or other insolvency proceedings. "Obligations" means all
loans, drafts, overdrafts, checks, notes, and all other debts, obligations and
liabilities of every kind and description, whether of the same or a different
nature, arising out of credit previously granted, credit contemporaneously
granted or credit granted in the future by Lender to any Debtor, to any Debtor
and another, or to another guaranteed or endorsed by any Debtor. Obligations
include interest and charges and the amount of payments made to Lender or
another by or on behalf of any Debtor which are recovered from Lender by a
trustee, receiver, creditor or other party pursuant to applicable federal or
state law, and to the extent not prohibited by law, all costs, expenses and
attorneys' fees at any time paid or incurred before and after judgement in
endeavoring to collect all or part of any of the above, or to realize upon this
Guaranty, or any collateral securing any of the above, including those incurred
in successful defense or settlement of any counterclaim brought by Debtor or the
undersigned or incident to any action or proceeding involving Debtor or the
undersigned brought pursuant to the United States Bankruptcy Code. Unless a lien
would be prohibited by law or would render a nontaxable account taxable, the
undersigned grant to Lender a security interest and lien in any deposit account
any of the undersigned may at any time have with Lender. Lender may, at any time
after the occurrence of an event of default and notice and opportunity to cure,
if required by (S)425.105, Wis. Stats., set-off any amount unpaid on the
Obligations against any deposit balances any of the undersigned may at any time
have with Lender, or other money now or hereafter owed any of the undersigned by
Lender. This Guaranty is also secured (to the extent not prohibited by law) by
all existing and future security agreements between Lender and any of the
undersigned and by any mortgage stating it secures guaranties of any of the
undersigned. This Guaranty is valid and enforceable against the undersigned even
though any Obligation is
<PAGE>
invalid or unenforceable against any Debtor.
WAIVER. To the extent not prohibited by law the undersigned expressly
waive notice of the acceptance of this Guaranty, the creation of any present or
future Obligation, default under any Obligation, proceedings to collect from any
Debtor or anyone else, all diligence of collection and presentment, demand,
notice and protest and any right to disclosures from Lender regarding the
financial condition of any Debtor or guarantor of the Obligations or the
enforceability of the Obligations. No claim, including a claim for
reimbursement, subrogation, contribution or indemnification which any of the
undersigned may, as a guarantor of the Obligations, have against a co-guarantor
of any of the Obligations or against any Debtor shall be enforced nor any
payment accepted until the Obligations are paid in full and no payments to or
collections by Lender are subject to any right of recovery.
CONSENT. With respect to any of the Obligations, Lender may from time to
time before or after revocation of this Guaranty without notice to the
undersigned and without affecting the liability of the undersigned (a)
surrender, release, impair, sell or otherwise dispose of any security or
collateral for the Obligations, (b) release or agree not to sue any guarantor or
surety, (c) fail to perfect its security interest in or realize upon any
security or collateral, (d) fail to realize upon any of the Obligations or to
proceed against any Debtor or any guarantor or surety, (e) renew or extend the
time of payment, (f) increase or decrease the rate of interest or the amount of
the Obligations, (g) accept additional security or collateral, (h) determine the
allocation and application of payments and credits and accept partial payments,
(i) determine what, if anything, may at any time be done with reference to any
security or collateral, and (j) settle or compromise the amount due or owing or
claimed to be due or owing from any Debtor, guarantor or surety, which
settlement or compromise shall not affect the undersigned's liability for the
full amount of the unpaid Obligations. The undersigned expressly consent to and
waive notice of all of the above. To the extent not prohibited by law, the
undersigned consent that venue for any legal proceeding relating to the
collection of this Guaranty shall be, at Lender's option, the county in which
Lender has its principal office in this state, the county in which any of the
undersigned resides or the county in which this Guaranty was executed by the
undersigned.
PERSONS BOUND. This Guaranty benefits Lender, its successors and assigns,
and binds the undersigned, their respective heirs, personal representatives,
successors and
<PAGE>
assigns.
ENTIRE AGREEMENT. This Guaranty is intended by the undersigned and Lender
as a final expression of this Guaranty and as a complete and exclusive statement
of its terms, there being no conditions to the full effectiveness of this
Guaranty. This Guaranty may not be supplemented or modified except in writing.
This Guaranty includes additional provision on the reverse side.
NOTICE TO GUARANTOR
You are being asked to guarantee the past, present and future Obligations
of Debtor. If Debtor does not pay, you will have to. You may also have to pay
collection costs. Lender can collect the Obligations from you without first
trying to collect from Debtor or another guarantor.
For Wisconsin Married Residents Only: Each guarantor who signs above
represents that this obligation is incurred in the interest of his or her
marriage or family.
X X
<PAGE>
ADDITIONAL PROVISIONS
REPRESENTATIONS. The undersigned acknowledge and agree that Lender (a) has not
made any representations or warranties with respect to, (b) does not assume any
responsibility to the undersigned for, and (c) has no duty to provide
information to the undersigned regarding, the enforceability of any of the
Obligations or the financial condition of any Debtor or guarantor. The
undersigned has independently determined the creditworthiness of Debtor and the
enforceability of the Obligations and until the Obligations are paid in full
will independently and without reliance on Lender continue to make such
determinations.
REVOCATION. This is a continuing guaranty and shall remain in full force and
effect until Lender receives written notice of its revocation signed by the
undersigned or actual notice of the death of the undersigned. Upon revocation by
written notice or actual notice of death, this Guaranty shall continue in full
force and effect as to all renewal, extension or increase in the interest rate
of any such Obligation, whether made before or after revocation, shall
constitute an Obligation contracted for or incurred before revocation.
Obligations contracted for or incurred before revocation shall also include
credit extended after revocation pursuant to commitments made before revocation.
Revocation by one of the undersigned shall not affect any of the liabilities or
obligations of any of the other undersigned and this Guaranty shall continue in
full force and effect with respect to them.
X Portfolio Technology Services, Inc.(Seal) X (Seal)
By: /s/ Scott A. MacKillop
555 17th Street, 14th Floor
Denver, Colorado 80202
(Address) (Address)
ACKNOWLEDGEMENT
STATE OF COLORADO )
COUNTY OF DENVER ) ss.
This instrument was acknowledged before me on October 15, 1998, by Scott A.
MacKillop(as President of Portfolio Technology Services, Inc.)
/s/ Donna Jean Flemming
Notary Public, Denver County, CO
My Commission (Expires) (Is) 10/12/2002
<PAGE>
CONTINUING GUARANTY (Unlimited)
(For Consumer or Business Transactions)
Dated October 15, 1998
GUARANTY. For value received, and to induce The Ziegler Companies, Inc. of
West Bend, Wisconsin ("Lender"), to extend credit or to grant or continue other
credit accommodations to PMC International, Inc. ("Debtor"), the undersigned
jointly and severally guarantee payment of the Obligations defined below when
due or, to the extent not prohibited by law, at the time any Debtor becomes the
subject of bankruptcy or other insolvency proceedings. "Obligations" means all
loans, drafts, overdrafts, checks, notes, and all other debts, obligations and
liabilities of every kind and description, whether of the same or a different
nature, arising out of credit previously granted, credit contemporaneously
granted or credit granted in the future by Lender to any Debtor, to any Debtor
and another, or to another guaranteed or endorsed by any Debtor. Obligations
include interest and charges and the amount of payments made to Lender or
another by or on behalf of any Debtor which are recovered from Lender by a
trustee, receiver, creditor or other party pursuant to applicable federal or
state law, and to the extent not prohibited by law, all costs, expenses and
attorneys' fees at any time paid or incurred before and after judgement in
endeavoring to collect all or part of any of the above, or to realize upon this
Guaranty, or any collateral securing any of the above, including those incurred
in successful defense or settlement of any counterclaim brought by Debtor or the
undersigned or incident to any action or proceeding involving Debtor or the
undersigned brought pursuant to the United States Bankruptcy Code. Unless a lien
would be prohibited by law or would render a nontaxable account taxable, the
undersigned grant to Lender a security interest and lien in any deposit account
any of the undersigned may at any time have with Lender. Lender may, at any time
after the occurrence of an event of default and notice and opportunity to cure,
if required by (S)425.105, Wis. Stats., set-off any amount unpaid on the
Obligations against any deposit balances any of the undersigned may at any time
have with Lender, or other money now or hereafter owed any of the undersigned by
Lender. This Guaranty is also secured (to the extent not prohibited by law) by
all existing and future security agreements between Lender and any of the
undersigned and by any mortgage stating it secures guaranties of any of the
undersigned. This Guaranty is valid and enforceable against the undersigned even
though any Obligation is
<PAGE>
invalid or unenforceable against any Debtor.
WAIVER. To the extent not prohibited by law the undersigned expressly waive
notice of the acceptance of this Guaranty, the creation of any present or future
Obligation, default under any Obligation, proceedings to collect from any Debtor
or anyone else, all diligence of collection and presentment, demand, notice and
protest and any right to disclosures from Lender regarding the financial
condition of any Debtor or guarantor of the Obligations or the enforceability of
the Obligations. No claim, including a claim for reimbursement, subrogation,
contribution or indemnification which any of the undersigned may, as a guarantor
of the Obligations, have against a co-guarantor of any of the Obligations or
against any Debtor shall be enforced nor any payment accepted until the
Obligations are paid in full and no payments to or collections by Lender are
subject to any right of recovery.
CONSENT. With respect to any of the Obligations, Lender may from time to
time before or after revocation of this Guaranty without notice to the
undersigned and without affecting the liability of the undersigned (a)
surrender, release, impair, sell or otherwise dispose of any security or
collateral for the Obligations, (b) release or agree not to sue any guarantor or
surety, (c) fail to perfect its security interest in or realize upon any
security or collateral, (d) fail to realize upon any of the Obligations or to
proceed against any Debtor or any guarantor or surety, (e) renew or extend the
time of payment, (f) increase or decrease the rate of interest or the amount of
the Obligations, (g) accept additional security or collateral, (h) determine the
allocation and application of payments and credits and accept partial payments,
(i) determine what, if anything, may at any time be done with reference to any
security or collateral, and (j) settle or compromise the amount due or owing or
claimed to be due or owing from any Debtor, guarantor or surety, which
settlement or compromise shall not affect the undersigned's liability for the
full amount of the unpaid Obligations. The undersigned expressly consent to and
waive notice of all of the above. To the extent not prohibited by law, the
undersigned consent that venue for any legal proceeding relating to the
collection of this Guaranty shall be, at Lender's option, the county in which
Lender has its principal office in this state, the county in which any of the
undersigned resides or the county in which this Guaranty was executed by the
undersigned.
PERSONS BOUND. This Guaranty benefits Lender, its successors and assigns,
and binds the undersigned, their respective heirs, personal representatives,
successors and
<PAGE>
assigns.
ENTIRE AGREEMENT. This Guaranty is intended by the undersigned and Lender
as a final expression of this Guaranty and as a complete and exclusive statement
of its terms, there being no conditions to the full effectiveness of this
Guaranty. This Guaranty may not be supplemented or modified except in writing.
This Guaranty includes additional provision on the reverse side.
NOTICE TO GUARANTOR
You are being asked to guarantee the past, present and future Obligations
of Debtor. If Debtor does not pay, you will have to. You may also have to pay
collection costs. Lender can collect the Obligations from you without first
trying to collect from Debtor or another guarantor.
For Wisconsin Married Residents Only: Each guarantor who signs above
represents that this obligation is incurred in the interest of his or her
marriage or family.
X X
<PAGE>
ADDITIONAL PROVISIONS
REPRESENTATIONS. The undersigned acknowledge and agree that Lender (a) has not
made any representations or warranties with respect to, (b) does not assume any
responsibility to the undersigned for, and (c) has no duty to provide
information to the undersigned regarding, the enforceability of any of the
Obligations or the financial condition of any Debtor or guarantor. The
undersigned has independently determined the creditworthiness of Debtor and the
enforceability of the Obligations and until the Obligations are paid in full
will independently and without reliance on Lender continue to make such
determinations.
REVOCATION. This is a continuing guaranty and shall remain in full force and
effect until Lender receives written notice of its revocation signed by the
undersigned or actual notice of the death of the undersigned. Upon revocation by
written notice or actual notice of death, this Guaranty shall continue in full
force and effect as to all renewal, extension or increase in the interest rate
of any such Obligation, whether made before or after revocation, shall
constitute an Obligation contracted for or incurred before revocation.
Obligations contracted for or incurred before revocation shall also include
credit extended after revocation pursuant to commitments made before revocation.
Revocation by one of the undersigned shall not affect any of the liabilities or
obligations of any of the other undersigned and this Guaranty shall continue in
full force and effect with respect to them.
X Portfolio Management Consultants, Inc.(Seal) X (Seal)
By: /s/ Scott A. MacKillop
555 17th Street, 14th Floor
Denver, Colorado 80202
(Address) (Address)
ACKNOWLEDGEMENT
STATE OF COLORADO)
COUNTY OF DENVER)ss.
This instrument was acknowledged before me on October 15, 1998, by Scott A.
MacKillop (as President of Portfolio Management Consultants, Inc.)
/s/ Donna Jean Flemming
Notary Public, Denver County, CO
My Commission (Expires) (Is) 10/12/2002
<PAGE>
GENERAL BUSINESS SECURITY AGREEMENT
1. SECURITY INTEREST
Dated October 15, 1998
The undersigned ("Debtor", whether one or more) grants The Ziegler
Companies, Inc. ("Lender") a security interest in all equipment, fixtures,
inventory (including all goods held for sale, lease or demonstration or to be
furnished under contracts of service, goods leased to others, trade-ins and
repossessions, raw materials, work in process and materials or supplies used or
consumed in Debtor's business), documents relating to inventory, general
intangibles, accounts, contract rights, chattel paper and instruments, now owned
or hereafter acquired by Debtor and all additions and accessions to, all spare
and repair parts, special tools, equipment and replacements for, all returned or
repossessed goods the sale of which gave rise to, and all proceeds and products
of the foregoing ("Collateral"), wherever located, to secure all debts,
obligations and liabilities of any Debtor to Lender arising out of credit
previously granted, credit contemporaneously granted and credit granted in the
future by Lender to any Debtor, to any Debtor and another, or to another
guaranteed or indorsed by any Debtor ("Obligations").
2. DEBTOR'S WARRANTIES
Debtor warrants that while any of the Obligations are unpaid:
(a) Ownership. Debtor owns the Collateral free of all encumbrances and
security interests (except Lender's security interest)*. Chattel paper
constituting Collateral evidences a perfected security interest in the goods
covered by it, free from all other encumbrances and security interests, and no
financing statement (other than Lender's)** is on file covering the Collateral
or any of it. Debtor, acting alone, may grant a security interest in the
Collateral.
(b) Sale of goods or services rendered. Each account and chattel paper
constituting Collateral as of this date arose from the performance of services
by Debtor or from a bona fide sale or lease of goods, which have been delivered
or shipped to the account debtor and for which Debtor has genuine invoices,
shipping documents or receipts.
(c) Enforceability. Each account, contract right and chattel paper
constituting Collateral as of this date is genuine and enforceable against the
account debtor according to its
<PAGE>
terms. It and the transaction out of which it arose comply with all applicable
laws and regulations. The amount represented by Debtor to Lender as owing by
each account debtor is the amount actually owing and is not subject to setoff,
credit, allowance or adjustment, except discount for prompt payment, nor has any
account debtor returned the goods or disputed his liability.
(d) Due date. There has been no default as of this date according to the
terms of any Collateral and no step has been taken to foreclose the security
interest it evidences or otherwise enforce its payment.
(e) Financial condition of account debtor. As of this date Debtor has no
notice or knowledge of anything which might impair the credit standing of any
account debtor.
(f) Valid organization. If a corporation, limited liability company or
partnership, Debtor is duly organized, validly existing and in good standing
under the laws of the state of organization and is authorized to do business in
Wisconsin.
(g) Other agreements. Debtor is not in default under any agreement for
the payment of money.
(h) Authority to contract. The execution and delivery of this Agreement
and any instruments evidencing Obligations will not violate or constitute a
breach of Debtor's articles of incorporation or organization, by-laws,
partnership agreement, operating agreement or any other agreement or restriction
to which Debtor is a party or is subject.
(i) Accuracy of information. All information, certificates or statements
given to Lender pursuant to this Agreement shall be true and complete when
given.
(j) Addresses. The address of the Debtor's residence, or if a
corporation, limited liability company or partnership, the address of Debtor's
place of business, or if Debtor has more than one place of business, then the
address of Debtor's chief executive office, is shown opposite Debtor's
signature. The address where the Collateral will be kept, if different from that
appearing opposite Debtor's signature, is . Such locations
shall not be changed without prior written consent of Lender, but the parties
intend that the Collateral, wherever located, is covered by this Agreement.
(k) Change of name or address. Debtor shall immediately advise Lender in
writing of any change in name or address.
(l) Environmental laws. (i) No substance has been, is or will be present,
used, stored, deposited, treated, recycled or disposed of on, under, in or about
any real estate now or at any time owned or occupied by Debtor ("Property")
during the period of Debtor's ownership or use of the Property in a form,
quantity
<PAGE>
or manner which if known to be present on, under, in or about the Property would
require clean-up, removal or some other remedial action ("Hazardous Substance")
under any federal, state or local laws, regulations, ordinances, codes or rules
("Environmental Laws"), (ii) Debtor has no knowledge, after due inquiry, of any
prior use or existence of any Hazardous Substance on the Property by any prior
owner of or person using the Property, (iii) without limiting the generality of
the foregoing, Debtor has no knowledge, after due inquiry, that the Property
contains asbestos, polychlorinated biphenyl components (PCBs) or underground
storage tanks, (iv) there are no conditions existing currently or likely to
exist during the term of this Agreement which would subject Debtor to an
damages, penalties, injunctive relief or clean-up costs in any governmental or
regulatory action or third-party claim relating to any Hazardous Substance, (v)
Debtor is not subject to any court or administrative proceeding, judgment,
decree, order or citation relating to any such substance, and (vi) Debtor in the
past has been, at the present is, and in the future will remain in compliance
with all Environmental Laws. Debtor shall indemnify and hold harmless Lender,
its directors, officers, employees and agents from all loss, cost (including
reasonable attorneys' fees and legal expenses), liability and damage whatsoever
directly or indirectly resulting from, arising out of, or based upon (1) the
presence, use, storage, deposit, treatment, recycling or disposal, at any time,
of any Hazardous Substance on, under, in or about the Property, or the
transportation of any such substance to or from the Property, (2) the violation
or alleged violation of any Environmental Law, permit, judgment or license
relating to the presence, use, storage, deposit, treatment, recycling or
disposal of any Hazardous Substance on, under, in or about the Property, or the
transportation of any Hazardous Substance to or from Property, or (3) the
imposition of any governmental lien for the recovery of environmental clean-up
costs expended under any Environmental Law. Debtor shall immediately notify
Lender in writing of any governmental or regulatory action or third-party claim
instituted or threatened in connection with any Hazardous Substance described
above on, in, under or about the Property.
(m) Fixtures. If any of the Collateral is affixed to real estate, the
legal description of the real estate set forth in each UCC Financing Statement
signed by Debtor is true and correct.
3. SHIPPERS
Shippers authorized to draw drafts on Lender under section
<PAGE>
7(c) are: NA
4. PERSONS BOUND AND OTHER PROVISIONS
The obligations hereunder of all Debtors are joint and several. This
Agreement benefits Lender, its successors and assigns, and binds Debtor(s) and
their respective heirs, personal representatives, successors and assigns. THIS
AGREEMENT INCLUDES ADDITIONAL PROVISIONS ON REVERSE SIDE.
* and the security interest of
Dundee Bancorp Inc. against the
Collateral
** and the financing statements
of Dundee Bancorp Inc.
<PAGE>
ADDITIONAL PROVISIONS
5. SALE AND COLLECTIONS
(a) Sale of inventory. So long as no default exists under any of the
Obligations of this Agreement, Debtor may (a) sell inventory in the ordinary
course of Debtor's business for cash or on terms customary in the trade, at
prices not less than any minimum sale price shown on instruments evidencing
Obligations and describing inventory, or (b) lease inventory on terms customary
in the trade.
(b) Verification and notification. Lender may verify Collateral in any
manner, and Debtor shall assist Lender in so doing. Upon default Lender may at
any time and Debtor shall, upon request of Lender, notify the account debtors to
make payment directly to Lender and Lender may enforce collection of, settle,
compromise, extend or renew the indebtedness of such account debtors. Until
account debtors are so notified, Debtor as agent of Lender, shall make
collections on the Collateral. Lender may at any time notify the bailee of any
Collateral of Lender's security interest.
(c) Deposit with Lender. At any time Lender may require that all proceeds
of Collateral received by Debtor shall be held by Debtor upon an express trust
for Lender, shall not be commingled with any other funds or property of Debtor
and shall be turned over to Lender in precisely the form received (but endorsed
by Debtor if necessary for collection) not later than the business day following
the day of their receipt. All proceeds of Collateral received by Lender directly
or from Debtor shall be applied against the Obligations in such order and at
such times as Lender shall determine.
6. DEBTOR'S COVENANTS
(a) Maintenance of Collateral. Debtor shall: maintain the Collateral in
good condition and repair and not permit its value to be impaired; keep it free
from all liens, encumbrances and security interests (other than Lender's
security interest); defend it against all claims and legal proceedings by
persons other than Lender; pay and discharge when due all taxes, license fees,
levies and other charges upon it; not sell, lease or otherwise dispose of it or
permit it to become a fixture or an accession to other goods, except for sales
or leases of inventory as provided in this Agreement, not permit it to be used
in violation of any applicable law, regulation or policy of insurance; and, as
to Collateral consisting of instruments and chattel paper, preserve rights in it
against prior parties. Loss of or damage to the Collateral shall not release
Debtor from any
<PAGE>
of the Obligations.
(b) Insurance. Debtor shall keep the Collateral and Lender's interest in
it insured under policies with such provisions, for such amounts and by such
insurers as shall be satisfactory to Lender from time to time, and shall furnish
evidence of such insurance satisfactory to Lender. Subject to Lender's
satisfaction, Debtor is free to select the insurance agent or insurer through
which the insurance is obtained. Debtor assigns (and directs any insurer to pay)
to Lender the proceeds of all such insurance and any premium refund, and
authorizes Lender to indorse in the name of Debtor any instruments for such
proceeds or refunds and, at the option of Lender, to apply such proceeds and
refunds to any unpaid balance of the Obligations, whether or not due, and/or to
restoration of the Collateral, returning any excess to Debtor. Lender is
authorized, in the name of Debtor or otherwise, to make, adjust and/or settle
claims under any credit insurance financed by Lender or any insurance on the
Collateral, or cancel the same after the occurrence of an event of default.
(c) Maintenance of security interest. Debtor shall pay all expenses and
upon request, take any action reasonably deemed advisable by Lender to preserve
the Collateral or to establish, determine priority of, perfect, continue
perfected, terminate and/or enforce Lender's interest in it or rights under this
Agreement.
(d) Taxes and other charges. Pay and discharge all lawful taxes,
assessments and government charges upon Debtor or against its properties prior
to the date on which penalties attach, unless and to the extent only that such
taxes, assessments and charges are contested in good faith and by appropriate
proceedings by Debtor.
(e) Records and statements. Debtor shall furnish to Lender financial
statements at least annually and such other financial information respecting
Debtor at such times and in such form as Lender may request. Debtor shall keep
accurate and complete records respecting the Collateral in such form as Lender
may approve. At such times as Lender may require, Debtor shall furnish to Lender
a statement certified by Debtor and in such form and containing such information
as may be prescribed by Lender, showing the current status and value of the
Collateral.
(f) Inspection of Collateral. At reasonable times Lender may examine the
Collateral and Debtor's records pertaining to it, wherever located, and make
copies of records. Debtor shall assist Lender in so doing.
(g) Service charge. In addition to the required payments
<PAGE>
under the Obligations and this Agreement, Debtor shall pay Lender's then current
service charges for servicing and auditing in connection with this Agreement.
(h) Chattel paper. Lender may require that chattel paper constituting
Collateral shall be on forms approved by Lender. Debtor shall promptly mark all
chattel paper constituting Collateral, and all copies, to indicate conspicuously
the Lender's interest and, upon request, deliver them to Lender.
(i) United State contracts. If any accounts or contract rights
constituting Collateral arose out of contracts with the United States or any of
its departments, agencies or instrumentalities, Debtor will notify Lender and
execute writings required by Lender in order that all money due or to become due
under such contracts shall be assigned to Lender and proper notice of the
assignment given under the Federal Assignment of Claims Act.
(j) Modifications. Without the prior written consent of Lender, Debtor
shall not alter, modify, extend, renew or cancel any accounts or chattel paper
constituting Collateral or any Collateral constituting part of the Debtor's
borrowing base.
(k) Returns and repossessions. Debtor shall promptly notify Lender of the
return to or repossession by Debtor of goods underlying any Collateral and
Debtor shall hold and dispose of them only as Lender directs.
7. RIGHTS OF LENDER
(a) Authority to perform for Debtor. Upon the occurrence of an event of
default or if Debtor fails to perform any of Debtor's duties set forth in this
Agreement or in any evidence of or document relating to the Obligations, Lender
is authorized, in Debtor's name or otherwise, to take any such action including
without limitation signing Debtor's name or paying any amount so required, and
the cost shall be one of the Obligations secured by this Agreement and shall be
payable by Debtor upon demand with interest from the date of payment by Lender
at the highest rate stated in any evidence of any Obligation but not in excess
of the maximum rate permitted by law.
(b) Charging Debtor's credit balance. Unless a lien would be prohibited
by law or would render a nontaxable account taxable, Debtor grants Lender, as
further security for the Obligations, a security interest and lien in any
deposit account Debtor may at any time have with Lender and other money now or
hereafter owed Debtor by Lender and, in addition, agrees that Lender may, at any
time after the occurrence of an event of default, without prior notice or
demand, set-off all or any part of the unpaid balance of the Obligations against
any deposit
<PAGE>
balances or other money now or hereafter owed Debtor by Lender.
(c) Power of attorney. Debtor irrevocably appoints any officer of Lender
as Debtor's attorney, with power after an event of default to receive, open and
dispose of all mail addressed to Debtor; to notify the Post Office authorities
to change the address for delivery of all mail addressed to Debtor to such
address as Lender may designate; and to endorse the name of Debtor upon any
instruments which may come into Lender's possession. Debtor agrees that
Obligations may be created by drafts drawn on Lender by shippers of inventory
named in section 3. Debtor authorizes Lender to honor any such draft accompanied
by invoices aggregating the amount of the draft and describing inventory to be
shipped to Debtor and to pay any such invoices not accompanied by drafts. Debtor
appoints any employee of Lender as Debtor's attorney, with full power to sign
Debtor's name on any instrument evidencing an Obligation, or any renewals or
extensions, or the amount of such drafts honored by Lender and such instruments
may be payable at fixed times or on demand, shall bear interest at the rate from
time to time fixed by Lender and Debtor agrees, upon request of Lender, to
execute any such instruments. This power of attorney to execute instruments may
be revoked by Debtor only by written notice to Lender and no such revocation
shall affect any instruments executed prior to the receipt by Lender of such
notice. All acts of such attorney are ratified and approved and such attorney is
not liable for any act or omission or for any error of judgment or mistake of
fact or law.
(d) Non-liability of Lender. Lender has no duty to determine the validity
of any invoice, the authority of any shipper named in section 3 to ship goods to
Debtor or compliance with any order of Debtor. Lender has no duty to protect,
insure, collect or realize upon the Collateral or preserve rights in it against
prior parties. Debtor releases Lender from any liability for any act or omission
relating to the Obligations, the Collateral or this Agreement, except Lender's
willful misconduct.
8. DEFAULT
Upon the occurrence of one or more of the following events of default:
Nonperformance. Debtor fails to pay when due any of the Obligations or to
perform, or rectify breach of, any warranty or other undertaking by Debtor in
this Agreement or in any evidence of or document relating to the Obligations;
Inability to Perform. Debtor, Debtor's spouse or a surety for any of the
Obligation dies, ceases to exist, becomes insolvent or the subject of bankruptcy
or insolvency proceedings;
<PAGE>
Misrepresentation. Any representation made to induce Lender to extend
credit to Debtor, under this Agreement or otherwise, is false in any material
respect when made; or
Insecurity. Any other event which causes Lender in good faith to deem
itself insecure; all of the Obligations shall, at the option of Lender and
without notice or demand, become immediately payable; and Lender shall have all
rights and remedies for default provided by the Wisconsin Uniform Commercial
Code, as well as any other applicable law and any evidence of or document
relating to any Obligation. With respect to such rights and remedies:
(a) Repossession. Lender may take possession of Collateral without notice
or hearing, which Debtor waives;
(b) Assembling collateral. Lender may require Debtor to assemble the
Collateral and to make it available to Lender at any convenient place designated
by Lender;
(c) Notice of disposition. Written notice, when required by law, sent to
any address of Debtor in this Agreement at least 10 calendar days (counting the
day of sending) before the date of a proposed disposition of the Collateral is
reasonable notice;
(d) Expenses and application of proceeds. Debtor shall reimburse Lender
for any expense incurred by Lender in protecting or enforcing its rights under
this Agreement before and after judgment, including, without limitation,
reasonable attorneys' fees and legal expenses of taking possession, holding,
preparing for disposition and disposing of Collateral. After deduction of such
expenses, Lender may apply the proceeds of disposition to the Obligations in
such order and amounts as it elects; and
(e) Waiver. Lender may permit Debtor to remedy and default without
waiving the default so remedied, and Lender may waive any default without
waiving any other subsequent or prior default by Debtor.
9. INTERPRETATION
The validity, construction and enforcement of this Agreement are governed
by the internal laws of Wisconsin. All terms not otherwise defined have the
meanings assigned to them by the Wisconsin Uniform Commercial Code. Invalidity
of any provision of this Agreement shall not affect the validity of any other
provision. This Agreement is intended by Debtor and Lender as a final expression
of this Agreement and as a complete and exclusive statement of its terms, there
being no conditions to the enforceability of this Agreement. This Agreement may
not be supplemented or modified except in writing.
<PAGE>
PMC International, Inc. (SEAL)
a Colorado corporation
By: /s/ C.R. Tucker
CEO
Address: 555 17th Street By:
14th Floor
Denver, Colorado 80202
(County) Denver
<PAGE>
GENERAL BUSINESS SECURITY AGREEMENT
1. SECURITY INTEREST
Dated October 15, 1998
The undersigned ("Debtor", whether one or more) grants The Ziegler
Companies, Inc. ("Lender") a security interest in all equipment, fixtures,
inventory (including all goods held for sale, lease or demonstration or to be
furnished under contracts of service, goods leased to others, trade-ins and
repossessions, raw materials, work in process and materials or supplies used or
consumed in Debtor's business), documents relating to inventory, general
intangibles, accounts, contract rights, chattel paper and instruments, now owned
or hereafter acquired by Debtor and all additions and accessions to, all spare
and repair parts, special tools, equipment and replacements for, all returned or
repossessed goods the sale of which gave rise to, and all proceeds and products
of the foregoing ("Collateral"), wherever located, to secure all debts,
obligations and liabilities of any Debtor to Lender arising out of credit
previously granted, credit contemporaneously granted and credit granted in the
future by Lender to any Debtor, to any Debtor and another, or to another
guaranteed or indorsed by any Debtor ("Obligations").
2. DEBTOR'S WARRANTIES
Debtor warrants that while any of the Obligations are unpaid:
(a) Ownership. Debtor owns the Collateral free of all encumbrances and
security interests (except Lender's security interest)*. Chattel paper
constituting Collateral evidences a perfected security interest in the goods
covered by it, free from all other encumbrances and security interests, and no
financing statement (other than Lender's)** is on file covering the Collateral
or any of it. Debtor, acting alone, may grant a security interest in the
Collateral.
(b) Sale of goods or services rendered. Each account and chattel paper
constituting Collateral as of this date arose from the performance of services
by Debtor or from a bona fide sale or lease of goods, which have been delivered
or shipped to the account debtor and for which Debtor has genuine invoices,
shipping documents or receipts.
(c) Enforceability. Each account, contract right and chattel paper
constituting Collateral as of this date is genuine and enforceable against the
account debtor according to its
<PAGE>
terms. It and the transaction out of which it arose comply with all applicable
laws and regulations. The amount represented by Debtor to Lender as owing by
each account debtor is the amount actually owing and is not subject to setoff,
credit, allowance or adjustment, except discount for prompt payment, nor has any
account debtor returned the goods or disputed his liability.
(d) Due date. There has been no default as of this date according to the
terms of any Collateral and no step has been taken to foreclose the security
interest it evidences or otherwise enforce its payment.
(e) Financial condition of account debtor. As of this date Debtor has no
notice or knowledge of anything which might impair the credit standing of any
account debtor.
(f) Valid organization. If a corporation, limited liability company or
partnership, Debtor is duly organized, validly existing and in good standing
under the laws of the state of organization and is authorized to do business in
Wisconsin.
(g) Other agreements. Debtor is not in default under any agreement for the
payment of money.
(h) Authority to contract. The execution and delivery of this Agreement
and any instruments evidencing Obligations will not violate or constitute a
breach of Debtor's articles of incorporation or organization, by-laws,
partnership agreement, operating agreement or any other agreement or restriction
to which Debtor is a party or is subject.
(i) Accuracy of information. All information, certificates or statements
given to Lender pursuant to this Agreement shall be true and complete when
given.
(j) Addresses. The address of the Debtor's residence, or if a corporation,
limited liability company or partnership, the address of Debtor's place of
business, or if Debtor has more than one place of business, then the address of
Debtor's chief executive office, is shown opposite Debtor's signature. The
address where the Collateral will be kept, if different from that appearing
opposite Debtor's signature, is . Such locations shall not be
changed without prior written consent of Lender, but the parties intend that the
Collateral, wherever located, is covered by this Agreement.
(k) Change of name or address. Debtor shall immediately advise Lender in
writing of any change in name or address.
(l) Environmental laws. (i) No substance has been, is or will be present,
used, stored, deposited, treated, recycled or disposed of on, under, in or about
any real estate now or at any time owned or occupied by Debtor ("Property")
during the period of Debtor's ownership or use of the Property in a form,
quantity
<PAGE>
or manner which if known to be present on, under, in or about the Property would
require clean-up, removal or some other remedial action ("Hazardous Substance")
under any federal, state or local laws, regulations, ordinances, codes or rules
("Environmental Laws"), (ii) Debtor has no knowledge, after due inquiry, of any
prior use or existence of any Hazardous Substance on the Property by any prior
owner of or person using the Property, (iii) without limiting the generality of
the foregoing, Debtor has no knowledge, after due inquiry, that the Property
contains asbestos, polychlorinated biphenyl components (PCBs) or underground
storage tanks, (iv) there are no conditions existing currently or likely to
exist during the term of this Agreement which would subject Debtor to an
damages, penalties, injunctive relief or clean-up costs in any governmental or
regulatory action or third-party claim relating to any Hazardous Substance, (v)
Debtor is not subject to any court or administrative proceeding, judgment,
decree, order or citation relating to any such substance, and (vi) Debtor in the
past has been, at the present is, and in the future will remain in compliance
with all Environmental Laws. Debtor shall indemnify and hold harmless Lender,
its directors, officers, employees and agents from all loss, cost (including
reasonable attorneys' fees and legal expenses), liability and damage whatsoever
directly or indirectly resulting from, arising out of, or based upon (1) the
presence, use, storage, deposit, treatment, recycling or disposal, at any time,
of any Hazardous Substance on, under, in or about the Property, or the
transportation of any such substance to or from the Property, (2) the violation
or alleged violation of any Environmental Law, permit, judgment or license
relating to the presence, use, storage, deposit, treatment, recycling or
disposal of any Hazardous Substance on, under, in or about the Property, or the
transportation of any Hazardous Substance to or from Property, or (3) the
imposition of any governmental lien for the recovery of environmental clean-up
costs expended under any Environmental Law. Debtor shall immediately notify
Lender in writing of any governmental or regulatory action or third-party claim
instituted or threatened in connection with any Hazardous Substance described
above on, in, under or about the Property.
(m) Fixtures. If any of the Collateral is affixed to real estate, the
legal description of the real estate set forth in each UCC Financing Statement
signed by Debtor is true and correct.
3. SHIPPERS
Shippers authorized to draw drafts on Lender under section
<PAGE>
7(c) are: NA
4. PERSONS BOUND AND OTHER PROVISIONS
The obligations hereunder of all Debtors are joint and several. This
Agreement benefits Lender, its successors and assigns, and binds Debtor(s) and
their respective heirs, personal representatives, successors and assigns. THIS
AGREEMENT INCLUDES ADDITIONAL PROVISIONS ON REVERSE SIDE.
* and the security interest of
Dundee Bancorp Inc. against the
Collateral
** and the financing statements
of Dundee Bancorp Inc.
<PAGE>
ADDITIONAL PROVISIONS
5. SALE AND COLLECTIONS
(a) Sale of inventory. So long as no default exists under any of the
Obligations of this Agreement, Debtor may (a) sell inventory in the ordinary
course of Debtor's business for cash or on terms customary in the trade, at
prices not less than any minimum sale price shown on instruments evidencing
Obligations and describing inventory, or (b) lease inventory on terms customary
in the trade.
(b) Verification and notification. Lender may verify Collateral in any
manner, and Debtor shall assist Lender in so doing. Upon default Lender may at
any time and Debtor shall, upon request of Lender, notify the account debtors to
make payment directly to Lender and Lender may enforce collection of, settle,
compromise, extend or renew the indebtedness of such account debtors. Until
account debtors are so notified, Debtor as agent of Lender, shall make
collections on the Collateral. Lender may at any time notify the bailee of any
Collateral of Lender's security interest.
(c) Deposit with Lender. At any time Lender may require that all proceeds
of Collateral received by Debtor shall be held by Debtor upon an express trust
for Lender, shall not be commingled with any other funds or property of Debtor
and shall be turned over to Lender in precisely the form received (but endorsed
by Debtor if necessary for collection) not later than the business day following
the day of their receipt. All proceeds of Collateral received by Lender
directly or from Debtor shall be applied against the Obligations in such order
and at such times as Lender shall determine.
6. DEBTOR'S COVENANTS
(a) Maintenance of Collateral. Debtor shall: maintain the Collateral in
good condition and repair and not permit its value to be impaired; keep it free
from all liens, encumbrances and security interests (other than Lender's
security interest); defend it against all claims and legal proceedings by
persons other than Lender; pay and discharge when due all taxes, license fees,
levies and other charges upon it; not sell, lease or otherwise dispose of it or
permit it to become a fixture or an accession to other goods, except for sales
or leases of inventory as provided in this Agreement, not permit it to be used
in violation of any applicable law, regulation or policy of insurance; and, as
to Collateral consisting of instruments and chattel paper, preserve rights in it
against prior parties. Loss of or damage to the Collateral shall not release
Debtor from any
<PAGE>
of the Obligations.
(b) Insurance. Debtor shall keep the Collateral and Lender's interest in
it insured under policies with such provisions, for such amounts and by such
insurers as shall be satisfactory to Lender from time to time, and shall furnish
evidence of such insurance satisfactory to Lender. Subject to Lender's
satisfaction, Debtor is free to select the insurance agent or insurer through
which the insurance is obtained. Debtor assigns (and directs any insurer to
pay) to Lender the proceeds of all such insurance and any premium refund, and
authorizes Lender to indorse in the name of Debtor any instruments for such
proceeds or refunds and, at the option of Lender, to apply such proceeds and
refunds to any unpaid balance of the Obligations, whether or not due, and/or to
restoration of the Collateral, returning any excess to Debtor. Lender is
authorized, in the name of Debtor or otherwise, to make, adjust and/or settle
claims under any credit insurance financed by Lender or any insurance on the
Collateral, or cancel the same after the occurrence of an event of default.
(c) Maintenance of security interest. Debtor shall pay all expenses and
upon request, take any action reasonably deemed advisable by Lender to preserve
the Collateral or to establish, determine priority of, perfect, continue
perfected, terminate and/or enforce Lender's interest in it or rights under this
Agreement.
(d) Taxes and other charges. Pay and discharge all lawful taxes,
assessments and government charges upon Debtor or against its properties prior
to the date on which penalties attach, unless and to the extent only that such
taxes, assessments and charges are contested in good faith and by appropriate
proceedings by Debtor.
(e) Records and statements. Debtor shall furnish to Lender financial
statements at least annually and such other financial information respecting
Debtor at such times and in such form as Lender may request. Debtor shall keep
accurate and complete records respecting the Collateral in such form as Lender
may approve. At such times as Lender may require, Debtor shall furnish to
Lender a statement certified by Debtor and in such form and containing such
information as may be prescribed by Lender, showing the current status and value
of the Collateral.
(f) Inspection of Collateral. At reasonable times Lender may examine the
Collateral and Debtor's records pertaining to it, wherever located, and make
copies of records. Debtor shall assist Lender in so doing.
(g) Service charge. In addition to the required payments
<PAGE>
under the Obligations and this Agreement, Debtor shall pay Lender's then current
service charges for servicing and auditing in connection with this Agreement.
(h) Chattel paper. Lender may require that chattel paper constituting
Collateral shall be on forms approved by Lender. Debtor shall promptly mark all
chattel paper constituting Collateral, and all copies, to indicate conspicuously
the Lender's interest and, upon request, deliver them to Lender.
(i) United State contracts. If any accounts or contract rights
constituting Collateral arose out of contracts with the United States or any of
its departments, agencies or instrumentalities, Debtor will notify Lender and
execute writings required by Lender in order that all money due or to become due
under such contracts shall be assigned to Lender and proper notice of the
assignment given under the Federal Assignment of Claims Act.
(j) Modifications. Without the prior written consent of Lender, Debtor
shall not alter, modify, extend, renew or cancel any accounts or chattel paper
constituting Collateral or any Collateral constituting part of the Debtor's
borrowing base.
(k) Returns and repossessions. Debtor shall promptly notify Lender of the
return to or repossession by Debtor of goods underlying any Collateral and
Debtor shall hold and dispose of them only as Lender directs.
7. RIGHTS OF LENDER
(a) Authority to perform for Debtor. Upon the occurrence of an event of
default or if Debtor fails to perform any of Debtor's duties set forth in this
Agreement or in any evidence of or document relating to the Obligations, Lender
is authorized, in Debtor's name or otherwise, to take any such action including
without limitation signing Debtor's name or paying any amount so required, and
the cost shall be one of the Obligations secured by this Agreement and shall be
payable by Debtor upon demand with interest from the date of payment by Lender
at the highest rate stated in any evidence of any Obligation but not in excess
of the maximum rate permitted by law.
(b) Charging Debtor's credit balance. Unless a lien would be prohibited by
law or would render a nontaxable account taxable, Debtor grants Lender, as
further security for the Obligations, a security interest and lien in any
deposit account Debtor may at any time have with Lender and other money now or
hereafter owed Debtor by Lender and, in addition, agrees that Lender may, at any
time after the occurrence of an event of default, without prior notice or
demand, set-off all or any part of the unpaid balance of the Obligations against
any deposit
<PAGE>
balances or other money now or hereafter owed Debtor by Lender.
(c) Power of attorney. Debtor irrevocably appoints any officer of Lender
as Debtor's attorney, with power after an event of default to receive, open and
dispose of all mail addressed to Debtor; to notify the Post Office authorities
to change the address for delivery of all mail addressed to Debtor to such
address as Lender may designate; and to endorse the name of Debtor upon any
instruments which may come into Lender's possession. Debtor agrees that
Obligations may be created by drafts drawn on Lender by shippers of inventory
named in section 3. Debtor authorizes Lender to honor any such draft
accompanied by invoices aggregating the amount of the draft and describing
inventory to be shipped to Debtor and to pay any such invoices not accompanied
by drafts. Debtor appoints any employee of Lender as Debtor's attorney, with
full power to sign Debtor's name on any instrument evidencing an Obligation, or
any renewals or extensions, or the amount of such drafts honored by Lender and
such instruments may be payable at fixed times or on demand, shall bear interest
at the rate from time to time fixed by Lender and Debtor agrees, upon request of
Lender, to execute any such instruments. This power of attorney to execute
instruments may be revoked by Debtor only by written notice to Lender and no
such revocation shall affect any instruments executed prior to the receipt by
Lender of such notice. All acts of such attorney are ratified and approved and
such attorney is not liable for any act or omission or for any error of judgment
or mistake of fact or law.
(d) Non-liability of Lender. Lender has no duty to determine the validity
of any invoice, the authority of any shipper named in section 3 to ship goods to
Debtor or compliance with any order of Debtor. Lender has no duty to protect,
insure, collect or realize upon the Collateral or preserve rights in it against
prior parties. Debtor releases Lender from any liability for any act or
omission relating to the Obligations, the Collateral or this Agreement, except
Lender's willful misconduct.
8. DEFAULT
Upon the occurrence of one or more of the following events of default:
Nonperformance. Debtor fails to pay when due any of the Obligations or to
perform, or rectify breach of, any warranty or other undertaking by Debtor in
this Agreement or in any evidence of or document relating to the Obligations;
Inability to Perform. Debtor, Debtor's spouse or a surety for any of the
Obligation dies, ceases to exist, becomes insolvent or the subject of bankruptcy
or insolvency proceedings;
<PAGE>
Misrepresentation. Any representation made to induce Lender to extend
credit to Debtor, under this Agreement or otherwise, is false in any material
respect when made; or
Insecurity. Any other event which causes Lender in good faith to deem
itself insecure; all of the Obligations shall, at the option of Lender and
without notice or demand, become immediately payable; and Lender shall have all
rights and remedies for default provided by the Wisconsin Uniform Commercial
Code, as well as any other applicable law and any evidence of or document
relating to any Obligation. With respect to such rights and remedies:
(a) Repossession. Lender may take possession of Collateral without notice
or hearing, which Debtor waives;
(b) Assembling collateral. Lender may require Debtor to assemble the
Collateral and to make it available to Lender at any convenient place designated
by Lender;
(c) Notice of disposition. Written notice, when required by law, sent to
any address of Debtor in this Agreement at least 10 calendar days (counting the
day of sending) before the date of a proposed disposition of the Collateral is
reasonable notice;
(d) Expenses and application of proceeds. Debtor shall reimburse Lender
for any expense incurred by Lender in protecting or enforcing its rights under
this Agreement before and after judgment, including, without limitation,
reasonable attorneys' fees and legal expenses of taking possession, holding,
preparing for disposition and disposing of Collateral. After deduction of such
expenses, Lender may apply the proceeds of disposition to the Obligations in
such order and amounts as it elects; and
(e) Waiver. Lender may permit Debtor to remedy any default without waiving
the default so remedied, and Lender may waive any default without waiving any
other subsequent or prior default by Debtor.
9. INTERPRETATION
The validity, construction and enforcement of this Agreement are governed
by the internal laws of Wisconsin. All terms not otherwise defined have the
meanings assigned to them by the Wisconsin Uniform Commercial Code. Invalidity
of any provision of this Agreement shall not affect the validity of any other
provision. This Agreement is intended by Debtor and Lender as a final
expression of this Agreement and as a complete and exclusive statement of its
terms, there being no conditions to the enforceability of this Agreement. This
Agreement may not be supplemented or modified except in writing.
<PAGE>
PMC Investment Services, Inc.
(SEAL)
a Delaware corporation
By: /s/ Scott A. MacKillop
President
Address: 555 17th Street By:
14th Floor
Denver, Colorado 80202
(County) Denver
<PAGE>
GENERAL BUSINESS SECURITY AGREEMENT
1. SECURITY INTEREST
Dated October 15, 1998
The undersigned ("Debtor", whether one or more) grants The Ziegler
Companies, Inc. ("Lender") a security interest in all equipment, fixtures,
inventory (including all goods held for sale, lease or demonstration or to be
furnished under contracts of service, goods leased to others, trade-ins and
repossessions, raw materials, work in process and materials or supplies used or
consumed in Debtor's business), documents relating to inventory, general
intangibles, accounts, contract rights, chattel paper and instruments, now owned
or hereafter acquired by Debtor and all additions and accessions to, all spare
and repair parts, special tools, equipment and replacements for, all returned or
repossessed goods the sale of which gave rise to, and all proceeds and products
of the foregoing ("Collateral"), wherever located, to secure all debts,
obligations and liabilities of any Debtor to Lender arising out of credit
previously granted, credit contemporaneously granted and credit granted in the
future by Lender to any Debtor, to any Debtor and another, or to another
guaranteed or indorsed by any Debtor ("Obligations").
2. DEBTOR'S WARRANTIES
Debtor warrants that while any of the Obligations are unpaid:
(a) Ownership. Debtor owns the Collateral free of all encumbrances and
security interests (except Lender's security interest)*. Chattel paper
constituting Collateral evidences a perfected security interest in the goods
covered by it, free from all other encumbrances and security interests, and no
financing statement (other than Lender's)** is on file covering the Collateral
or any of it. Debtor, acting alone, may grant a security interest in the
Collateral.
(b) Sale of goods or services rendered. Each account and chattel paper
constituting Collateral as of this date arose from the performance of services
by Debtor or from a bona fide sale or lease of goods, which have been delivered
or shipped to the account debtor and for which Debtor has genuine invoices,
shipping documents or receipts.
(c) Enforceability. Each account, contract right and chattel paper
constituting Collateral as of this date is genuine and enforceable against the
account debtor according to its
<PAGE>
terms. It and the transaction out of which it arose comply with all applicable
laws and regulations. The amount represented by Debtor to Lender as owing by
each account debtor is the amount actually owing and is not subject to setoff,
credit, allowance or adjustment, except discount for prompt payment, nor has any
account debtor returned the goods or disputed his liability.
(d) Due date. There has been no default as of this date according to the
terms of any Collateral and no step has been taken to foreclose the security
interest it evidences or otherwise enforce its payment.
(e) Financial condition of account debtor. As of this date Debtor has no
notice or knowledge of anything which might impair the credit standing of any
account debtor.
(f) Valid organization. If a corporation, limited liability company or
partnership, Debtor is duly organized, validly existing and in good standing
under the laws of the state of organization and is authorized to do business in
Wisconsin.
(g) Other agreements. Debtor is not in default under any agreement for
the payment of money.
(h) Authority to contract. The execution and delivery of this Agreement
and any instruments evidencing Obligations will not violate or constitute a
breach of Debtor's articles of incorporation or organization, by-laws,
partnership agreement, operating agreement or any other agreement or restriction
to which Debtor is a party or is subject.
(i) Accuracy of information. All information, certificates or statements
given to Lender pursuant to this Agreement shall be true and complete when
given.
(j) Addresses. The address of the Debtor's residence, or if a
corporation, limited liability company or partnership, the address of Debtor's
place of business, or if Debtor has more than one place of business, then the
address of Debtor's chief executive office, is shown opposite Debtor's
signature. The address where the Collateral will be kept, if different from that
appearing opposite Debtor's signature, is . Such locations shall not be changed
without prior written consent of Lender, but the parties intend that the
Collateral, wherever located, is covered by this Agreement.
(k) Change of name or address. Debtor shall immediately advise Lender in
writing of any change in name or address.
(l) Environmental laws. (i) No substance has been, is or will be present,
used, stored, deposited, treated, recycled or disposed of on, under, in or about
any real estate now or at any time owned or occupied by Debtor ("Property")
during the period of Debtor's ownership or use of the Property in a form,
quantity
<PAGE>
or manner which if known to be present on, under, in or about the Property would
require clean-up, removal or some other remedial action ("Hazardous Substance")
under any federal, state or local laws, regulations, ordinances, codes or rules
("Environmental Laws"), (ii) Debtor has no knowledge, after due inquiry, of any
prior use or existence of any Hazardous Substance on the Property by any prior
owner of or person using the Property, (iii) without limiting the generality of
the foregoing, Debtor has no knowledge, after due inquiry, that the Property
contains asbestos, polychlorinated biphenyl components (PCBs) or underground
storage tanks, (iv) there are no conditions existing currently or likely to
exist during the term of this Agreement which would subject Debtor to an
damages, penalties, injunctive relief or clean-up costs in any governmental or
regulatory action or third-party claim relating to any Hazardous Substance, (v)
Debtor is not subject to any court or administrative proceeding, judgment,
decree, order or citation relating to any such substance, and (vi) Debtor in the
past has been, at the present is, and in the future will remain in compliance
with all Environmental Laws. Debtor shall indemnify and hold harmless Lender,
its directors, officers, employees and agents from all loss, cost (including
reasonable attorneys' fees and legal expenses), liability and damage whatsoever
directly or indirectly resulting from, arising out of, or based upon (1) the
presence, use, storage, deposit, treatment, recycling or disposal, at any time,
of any Hazardous Substance on, under, in or about the Property, or the
transportation of any such substance to or from the Property, (2) the violation
or alleged violation of any Environmental Law, permit, judgment or license
relating to the presence, use, storage, deposit, treatment, recycling or
disposal of any Hazardous Substance on, under, in or about the Property, or the
transportation of any Hazardous Substance to or from Property, or (3) the
imposition of any governmental lien for the recovery of environmental clean-up
costs expended under any Environmental Law. Debtor shall immediately notify
Lender in writing of any governmental or regulatory action or third-party claim
instituted or threatened in connection with any Hazardous Substance described
above on, in, under or about the Property.
(m) Fixtures. If any of the Collateral is affixed to real estate, the
legal description of the real estate set forth in each UCC Financing Statement
signed by Debtor is true and correct.
3. SHIPPERS
Shippers authorized to draw drafts on Lender under section
<PAGE>
7(c) are: NA
4. PERSONS BOUND AND OTHER PROVISIONS
The obligations hereunder of all Debtors are joint and several. This
Agreement benefits Lender, its successors and assigns, and binds Debtor(s) and
their respective heirs, personal representatives, successors and assigns. THIS
AGREEMENT INCLUDES ADDITIONAL PROVISIONS ON REVERSE SIDE.
* and the security interest of
Dundee Bancorp Inc. against the
Collateral
** and the financing statements
of Dundee Bancorp Inc.
<PAGE>
ADDITIONAL PROVISIONS
5. SALE AND COLLECTIONS
(a) Sale of inventory. So long as no default exists under any of the
Obligations of this Agreement, Debtor may (a) sell inventory in the ordinary
course of Debtor's business for cash or on terms customary in the trade, at
prices not less than any minimum sale price shown on instruments evidencing
Obligations and describing inventory, or (b) lease inventory on terms customary
in the trade.
(b) Verification and notification. Lender may verify Collateral in any
manner, and Debtor shall assist Lender in so doing. Upon default Lender may at
any time and Debtor shall, upon request of Lender, notify the account debtors to
make payment directly to Lender and Lender may enforce collection of, settle,
compromise, extend or renew the indebtedness of such account debtors. Until
account debtors are so notified, Debtor as agent of Lender, shall make
collections on the Collateral. Lender may at any time notify the bailee of any
Collateral of Lender's security interest.
(c) Deposit with Lender. At any time Lender may require that all proceeds
of Collateral received by Debtor shall be held by Debtor upon an express trust
for Lender, shall not be commingled with any other funds or property of Debtor
and shall be turned over to Lender in precisely the form received (but endorsed
by Debtor if necessary for collection) not later than the business day following
the day of their receipt. All proceeds of Collateral received by Lender directly
or from Debtor shall be applied against the Obligations in such order and at
such times as Lender shall determine.
6. DEBTOR'S COVENANTS
(a) Maintenance of Collateral. Debtor shall: maintain the Collateral in
good condition and repair and not permit its value to be impaired; keep it free
from all liens, encumbrances and security interests (other than Lender's
security interest); defend it against all claims and legal proceedings by
persons other than Lender; pay and discharge when due all taxes, license fees,
levies and other charges upon it; not sell, lease or otherwise dispose of it or
permit it to become a fixture or an accession to other goods, except for sales
or leases of inventory as provided in this Agreement, not permit it to be used
in violation of any applicable law, regulation or policy of insurance; and, as
to Collateral consisting of instruments and chattel paper, preserve rights in it
against prior parties. Loss of or damage to the Collateral shall not release
Debtor from any
<PAGE>
of the Obligations.
(b) Insurance. Debtor shall keep the Collateral and Lender's interest in
it insured under policies with such provisions, for such amounts and by such
insurers as shall be satisfactory to Lender from time to time, and shall furnish
evidence of such insurance satisfactory to Lender. Subject to Lender's
satisfaction, Debtor is free to select the insurance agent or insurer through
which the insurance is obtained. Debtor assigns (and directs any insurer to pay)
to Lender the proceeds of all such insurance and any premium refund, and
authorizes Lender to indorse in the name of Debtor any instruments for such
proceeds or refunds and, at the option of Lender, to apply such proceeds and
refunds to any unpaid balance of the Obligations, whether or not due, and/or to
restoration of the Collateral, returning any excess to Debtor. Lender is
authorized, in the name of Debtor or otherwise, to make, adjust and/or settle
claims under any credit insurance financed by Lender or any insurance on the
Collateral, or cancel the same after the occurrence of an event of default.
(c) Maintenance of security interest. Debtor shall pay all expenses and
upon request, take any action reasonably deemed advisable by Lender to preserve
the Collateral or to establish, determine priority of, perfect, continue
perfected, terminate and/or enforce Lender's interest in it or rights under this
Agreement.
(d) Taxes and other charges. Pay and discharge all lawful taxes,
assessments and government charges upon Debtor or against its properties prior
to the date on which penalties attach, unless and to the extent only that such
taxes, assessments and charges are contested in good faith and by appropriate
proceedings by Debtor.
(e) Records and statements. Debtor shall furnish to Lender financial
statements at least annually and such other financial information respecting
Debtor at such times and in such form as Lender may request. Debtor shall keep
accurate and complete records respecting the Collateral in such form as Lender
may approve. At such times as Lender may require, Debtor shall furnish to Lender
a statement certified by Debtor and in such form and containing such information
as may be prescribed by Lender, showing the current status and value of the
Collateral.
(f) Inspection of Collateral. At reasonable times Lender may examine the
Collateral and Debtor's records pertaining to it, wherever located, and make
copies of records. Debtor shall assist Lender in so doing.
(g) Service charge. In addition to the required payments
<PAGE>
under the Obligations and this Agreement, Debtor shall pay Lender's then current
service charges for servicing and auditing in connection with this Agreement.
(h) Chattel paper. Lender may require that chattel paper constituting
Collateral shall be on forms approved by Lender. Debtor shall promptly mark all
chattel paper constituting Collateral, and all copies, to indicate conspicuously
the Lender's interest and, upon request, deliver them to Lender.
(i) United State contracts. If any accounts or contract rights
constituting Collateral arose out of contracts with the United States or any of
its departments, agencies or instrumentalities, Debtor will notify Lender and
execute writings required by Lender in order that all money due or to become due
under such contracts shall be assigned to Lender and proper notice of the
assignment given under the Federal Assignment of Claims Act.
(j) Modifications. Without the prior written consent of Lender, Debtor
shall not alter, modify, extend, renew or cancel any accounts or chattel paper
constituting Collateral or any Collateral constituting part of the Debtor's
borrowing base.
(k) Returns and repossessions. Debtor shall promptly notify Lender of the
return to or repossession by Debtor of goods underlying any Collateral and
Debtor shall hold and dispose of them only as Lender directs.
7. RIGHTS OF LENDER
(a) Authority to perform for Debtor. Upon the occurrence of an event of
default or if Debtor fails to perform any of Debtor's duties set forth in this
Agreement or in any evidence of or document relating to the Obligations, Lender
is authorized, in Debtor's name or otherwise, to take any such action including
without limitation signing Debtor's name or paying any amount so required, and
the cost shall be one of the Obligations secured by this Agreement and shall be
payable by Debtor upon demand with interest from the date of payment by Lender
at the highest rate stated in any evidence of any Obligation but not in excess
of the maximum rate permitted by law.
(b) Charging Debtor's credit balance. Unless a lien would be prohibited
by law or would render a nontaxable account taxable, Debtor grants Lender, as
further security for the Obligations, a security interest and lien in any
deposit account Debtor may at any time have with Lender and other money now or
hereafter owed Debtor by Lender and, in addition, agrees that Lender may, at any
time after the occurrence of an event of default, without prior notice or
demand, set-off all or any part of the unpaid balance of the Obligations against
any deposit
<PAGE>
balances or other money now or hereafter owed Debtor by Lender.
(c) Power of attorney. Debtor irrevocably appoints any officer of Lender
as Debtor's attorney, with power after an event of default to receive, open and
dispose of all mail addressed to Debtor; to notify the Post Office authorities
to change the address for delivery of all mail addressed to Debtor to such
address as Lender may designate; and to endorse the name of Debtor upon any
instruments which may come into Lender's possession. Debtor agrees that
Obligations may be created by drafts drawn on Lender by shippers of inventory
named in section 3. Debtor authorizes Lender to honor any such draft accompanied
by invoices aggregating the amount of the draft and describing inventory to be
shipped to Debtor and to pay any such invoices not accompanied by drafts. Debtor
appoints any employee of Lender as Debtor's attorney, with full power to sign
Debtor's name on any instrument evidencing an Obligation, or any renewals or
extensions, or the amount of such drafts honored by Lender and such instruments
may be payable at fixed times or on demand, shall bear interest at the rate from
time to time fixed by Lender and Debtor agrees, upon request of Lender, to
execute any such instruments. This power of attorney to execute instruments may
be revoked by Debtor only by written notice to Lender and no such revocation
shall affect any instruments executed prior to the receipt by Lender of such
notice. All acts of such attorney are ratified and approved and such attorney is
not liable for any act or omission or for any error of judgment or mistake of
fact or law.
(d) Non-liability of Lender. Lender has no duty to determine the validity
of any invoice, the authority of any shipper named in section 3 to ship goods to
Debtor or compliance with any order of Debtor. Lender has no duty to protect,
insure, collect or realize upon the Collateral or preserve rights in it against
prior parties. Debtor releases Lender from any liability for any act or omission
relating to the Obligations, the Collateral or this Agreement, except Lender's
willful misconduct.
8. DEFAULT
Upon the occurrence of one or more of the following events of default:
Nonperformance. Debtor fails to pay when due any of the Obligations or to
perform, or rectify breach of, any warranty or other undertaking by Debtor in
this Agreement or in any evidence of or document relating to the Obligations;
Inability to Perform. Debtor, Debtor's spouse or a surety for any of the
Obligation dies, ceases to exist, becomes insolvent or the subject of bankruptcy
or insolvency proceedings;
<PAGE>
Misrepresentation. Any representation made to induce Lender to extend
credit to Debtor, under this Agreement or otherwise, is false in any material
respect when made; or
Insecurity. Any other event which causes Lender in good faith to deem
itself insecure; all of the Obligations shall, at the option of Lender and
without notice or demand, become immediately payable; and Lender shall have all
rights and remedies for default provided by the Wisconsin Uniform Commercial
Code, as well as any other applicable law and any evidence of or document
relating to any Obligation. With respect to such rights and remedies:
(a) Repossession. Lender may take possession of Collateral without notice
or hearing, which Debtor waives;
(b) Assembling collateral. Lender may require Debtor to assemble the
Collateral and to make it available to Lender at any convenient place designated
by Lender;
(c) Notice of disposition. Written notice, when required by law, sent to
any address of Debtor in this Agreement at least 10 calendar days (counting the
day of sending) before the date of a proposed disposition of the Collateral is
reasonable notice;
(d) Expenses and application of proceeds. Debtor shall reimburse Lender
for any expense incurred by Lender in protecting or enforcing its rights under
this Agreement before and after judgment, including, without limitation,
reasonable attorneys' fees and legal expenses of taking possession, holding,
preparing for disposition and disposing of Collateral. After deduction of such
expenses, Lender may apply the proceeds of disposition to the Obligations in
such order and amounts as it elects; and
(e) Waiver. Lender may permit Debtor to remedy any default without
waiving the default so remedied, and Lender may waive any default without
waiving any other subsequent or prior default by Debtor.
9. INTERPRETATION
The validity, construction and enforcement of this Agreement are governed
by the internal laws of Wisconsin. All terms not otherwise defined have the
meanings assigned to them by the Wisconsin Uniform Commercial Code. Invalidity
of any provision of this Agreement shall not affect the validity of any other
provision. This Agreement is intended by Debtor and Lender as a final expression
of this Agreement and as a complete and exclusive statement of its terms, there
being no conditions to the enforceability of this Agreement. This Agreement may
not be supplemented or modified except in writing.
<PAGE>
Portfolio Technology Services,
Inc. (SEAL)
a Colorado corporation
By: /s/ Scott A. MacKillop
President
Address: 555 17th Street By:
14th Floor
Denver, Colorado 80202
(County) Denver
<PAGE>
GENERAL BUSINESS SECURITY AGREEMENT
1. SECURITY INTEREST
Dated October 15, 1998
The undersigned ("Debtor", whether one or more) grants The Ziegler
Companies, Inc. ("Lender") a security interest in all equipment, fixtures,
inventory (including all goods held for sale, lease or demonstration or to be
furnished under contracts of service, goods leased to others, trade-ins and
repossessions, raw materials, work in process and materials or supplies used or
consumed in Debtor's business), documents relating to inventory, general
intangibles, accounts, contract rights, chattel paper and instruments, now owned
or hereafter acquired by Debtor and all additions and accessions to, all spare
and repair parts, special tools, equipment and replacements for, all returned or
repossessed goods the sale of which gave rise to, and all proceeds and products
of the foregoing ("Collateral"), wherever located, to secure all debts,
obligations and liabilities of any Debtor to Lender arising out of credit
previously granted, credit contemporaneously granted and credit granted in the
future by Lender to any Debtor, to any Debtor and another, or to another
guaranteed or indorsed by any Debtor ("Obligations").
2. DEBTOR'S WARRANTIES
Debtor warrants that while any of the Obligations are unpaid:
(a) Ownership. Debtor owns the Collateral free of all encumbrances and
security interests (except Lender's security interest)*. Chattel paper
constituting Collateral evidences a perfected security interest in the goods
covered by it, free from all other encumbrances and security interests, and no
financing statement (other than Lender's)** is on file covering the Collateral
or any of it. Debtor, acting alone, may grant a security interest in the
Collateral.
(b) Sale of goods or services rendered. Each account and chattel paper
constituting Collateral as of this date arose from the performance of services
by Debtor or from a bona fide sale or lease of goods, which have been delivered
or shipped to the account debtor and for which Debtor has genuine invoices,
shipping documents or receipts.
(c) Enforceability. Each account, contract right and chattel paper
constituting Collateral as of this date is genuine and enforceable against the
account debtor according to its
<PAGE>
terms. It and the transaction out of which it arose comply with all applicable
laws and regulations. The amount represented by Debtor to Lender as owing by
each account debtor is the amount actually owing and is not subject to setoff,
credit, allowance or adjustment, except discount for prompt payment, nor has any
account debtor returned the goods or disputed his liability.
(d) Due date. There has been no default as of this date according to the
terms of any Collateral and no step has been taken to foreclose the security
interest it evidences or otherwise enforce its payment.
(e) Financial condition of account debtor. As of this date Debtor has no
notice or knowledge of anything which might impair the credit standing of any
account debtor.
(f) Valid organization. If a corporation, limited liability company or
partnership, Debtor is duly organized, validly existing and in good standing
under the laws of the state of organization and is authorized to do business in
Wisconsin.
(g) Other agreements. Debtor is not in default under any agreement for
the payment of money.
(h) Authority to contract. The execution and delivery of this Agreement
and any instruments evidencing Obligations will not violate or constitute a
breach of Debtor's articles of incorporation or organization, by-laws,
partnership agreement, operating agreement or any other agreement or restriction
to which Debtor is a party or is subject.
(i) Accuracy of information. All information, certificates or statements
given to Lender pursuant to this Agreement shall be true and complete when
given.
(j) Addresses. The address of the Debtor's residence, or if a
corporation, limited liability company or partnership, the address of Debtor's
place of business, or if Debtor has more than one place of business, then the
address of Debtor's chief executive office, is shown opposite Debtor's
signature. The address where the Collateral will be kept, if different from that
appearing opposite Debtor's signature, is . Such locations shall
not be changed without prior written consent of Lender, but the parties intend
that the Collateral, wherever located, is covered by this Agreement.
(k) Change of name or address. Debtor shall immediately advise Lender in
writing of any change in name or address.
(l) Environmental laws. (i) No substance has been, is or will be present,
used, stored, deposited, treated, recycled or disposed of on, under, in or about
any real estate now or at any time owned or occupied by Debtor ("Property")
during the period of Debtor's ownership or use of the Property in a form,
quantity
<PAGE>
or manner which if known to be present on, under, in or about the Property would
require clean-up, removal or some other remedial action ("Hazardous Substance")
under any federal, state or local laws, regulations, ordinances, codes or rules
("Environmental Laws"), (ii) Debtor has no knowledge, after due inquiry, of any
prior use or existence of any Hazardous Substance on the Property by any prior
owner of or person using the Property, (iii) without limiting the generality of
the foregoing, Debtor has no knowledge, after due inquiry, that the Property
contains asbestos, polychlorinated biphenyl components (PCBs) or underground
storage tanks, (iv) there are no conditions existing currently or likely to
exist during the term of this Agreement which would subject Debtor to an
damages, penalties, injunctive relief or clean-up costs in any governmental or
regulatory action or third-party claim relating to any Hazardous Substance, (v)
Debtor is not subject to any court or administrative proceeding, judgment,
decree, order or citation relating to any such substance, and (vi) Debtor in the
past has been, at the present is, and in the future will remain in compliance
with all Environmental Laws. Debtor shall indemnify and hold harmless Lender,
its directors, officers, employees and agents from all loss, cost (including
reasonable attorneys' fees and legal expenses), liability and damage whatsoever
directly or indirectly resulting from, arising out of, or based upon (1) the
presence, use, storage, deposit, treatment, recycling or disposal, at any time,
of any Hazardous Substance on, under, in or about the Property, or the
transportation of any such substance to or from the Property, (2) the violation
or alleged violation of any Environmental Law, permit, judgment or license
relating to the presence, use, storage, deposit, treatment, recycling or
disposal of any Hazardous Substance on, under, in or about the Property, or the
transportation of any Hazardous Substance to or from Property, or (3) the
imposition of any governmental lien for the recovery of environmental clean-up
costs expended under any Environmental Law. Debtor shall immediately notify
Lender in writing of any governmental or regulatory action or third-party claim
instituted or threatened in connection with any Hazardous Substance described
above on, in, under or about the Property.
(m) Fixtures. If any of the Collateral is affixed to real estate, the
legal description of the real estate set forth in each UCC Financing Statement
signed by Debtor is true and correct.
3. SHIPPERS
Shippers authorized to draw drafts on Lender under section
<PAGE>
7(c) are: NA
4. PERSONS BOUND AND OTHER PROVISIONS
The obligations hereunder of all Debtors are joint and several. This
Agreement benefits Lender, its successors and assigns, and binds Debtor(s) and
their respective heirs, personal representatives, successors and assigns. THIS
AGREEMENT INCLUDES ADDITIONAL PROVISIONS ON REVERSE SIDE.
* and the security interest of
Dundee Bancorp Inc. against the
Collateral, and the security
interest of Bank of Aurora
against certain of Debtor's
accounts receivable
** and the financing statements
of Dundee Bancorp Inc. and Bank
of Aurora
<PAGE>
ADDITIONAL PROVISIONS
5. SALE AND COLLECTIONS
(a) Sale of inventory. So long as no default exists under any of the
Obligations of this Agreement, Debtor may (a) sell inventory in the ordinary
course of Debtor's business for cash or on terms customary in the trade, at
prices not less than any minimum sale price shown on instruments evidencing
Obligations and describing inventory, or (b) lease inventory on terms customary
in the trade.
(b) Verification and notification. Lender may verify Collateral in any
manner, and Debtor shall assist Lender in so doing. Upon default Lender may at
any time and Debtor shall, upon request of Lender, notify the account debtors to
make payment directly to Lender and Lender may enforce collection of, settle,
compromise, extend or renew the indebtedness of such account debtors. Until
account debtors are so notified, Debtor as agent of Lender, shall make
collections on the Collateral. Lender may at any time notify the bailee of any
Collateral of Lender's security interest.
(c) Deposit with Lender. At any time Lender may require that all proceeds
of Collateral received by Debtor shall be held by Debtor upon an express trust
for Lender, shall not be commingled with any other funds or property of Debtor
and shall be turned over to Lender in precisely the form received (but endorsed
by Debtor if necessary for collection) not later than the business day following
the day of their receipt. All proceeds of Collateral received by Lender directly
or from Debtor shall be applied against the Obligations in such order and at
such times as Lender shall determine.
6. DEBTOR'S COVENANTS
(a) Maintenance of Collateral. Debtor shall: maintain the Collateral in
good condition and repair and not permit its value to be impaired; keep it free
from all liens, encumbrances and security interests (other than Lender's
security interest); defend it against all claims and legal proceedings by
persons other than Lender; pay and discharge when due all taxes, license fees,
levies and other charges upon it; not sell, lease or otherwise dispose of it or
permit it to become a fixture or an accession to other goods, except for sales
or leases of inventory as provided in this Agreement, not permit it to be used
in violation of any applicable law, regulation or policy of insurance; and, as
to Collateral consisting of instruments and chattel paper, preserve rights in it
against prior parties. Loss of or damage to the Collateral shall not release
Debtor from any
<PAGE>
of the Obligations.
(b) Insurance. Debtor shall keep the Collateral and Lender's interest in
it insured under policies with such provisions, for such amounts and by such
insurers as shall be satisfactory to Lender from time to time, and shall furnish
evidence of such insurance satisfactory to Lender. Subject to Lender's
satisfaction, Debtor is free to select the insurance agent or insurer through
which the insurance is obtained. Debtor assigns (and directs any insurer to pay)
to Lender the proceeds of all such insurance and any premium refund, and
authorizes Lender to indorse in the name of Debtor any instruments for such
proceeds or refunds and, at the option of Lender, to apply such proceeds and
refunds to any unpaid balance of the Obligations, whether or not due, and/or to
restoration of the Collateral, returning any excess to Debtor. Lender is
authorized, in the name of Debtor or otherwise, to make, adjust and/or settle
claims under any credit insurance financed by Lender or any insurance on the
Collateral, or cancel the same after the occurrence of an event of default.
(c) Maintenance of security interest. Debtor shall pay all expenses and
upon request, take any action reasonably deemed advisable by Lender to preserve
the Collateral or to establish, determine priority of, perfect, continue
perfected, terminate and/or enforce Lender's interest in it or rights under this
Agreement.
(d) Taxes and other charges. Pay and discharge all lawful taxes,
assessments and government charges upon Debtor or against its properties prior
to the date on which penalties attach, unless and to the extent only that such
taxes, assessments and charges are contested in good faith and by appropriate
proceedings by Debtor.
(e) Records and statements. Debtor shall furnish to Lender financial
statements at least annually and such other financial information respecting
Debtor at such times and in such form as Lender may request. Debtor shall keep
accurate and complete records respecting the Collateral in such form as Lender
may approve. At such times as Lender may require, Debtor shall furnish to Lender
a statement certified by Debtor and in such form and containing such information
as may be prescribed by Lender, showing the current status and value of the
Collateral.
(f) Inspection of Collateral. At reasonable times Lender may examine the
Collateral and Debtor's records pertaining to it, wherever located, and make
copies of records. Debtor shall assist Lender in so doing.
(g) Service charge. In addition to the required payments
<PAGE>
under the Obligations and this Agreement, Debtor shall pay Lender's then current
service charges for servicing and auditing in connection with this Agreement.
(h) Chattel paper. Lender may require that chattel paper constituting
Collateral shall be on forms approved by Lender. Debtor shall promptly mark all
chattel paper constituting Collateral, and all copies, to indicate conspicuously
the Lender's interest and, upon request, deliver them to Lender.
(i) United State contracts. If any accounts or contract rights
constituting Collateral arose out of contracts with the United States or any of
its departments, agencies or instrumentalities, Debtor will notify Lender and
execute writings required by Lender in order that all money due or to become due
under such contracts shall be assigned to Lender and proper notice of the
assignment given under the Federal Assignment of Claims Act.
(j) Modifications. Without the prior written consent of Lender, Debtor
shall not alter, modify, extend, renew or cancel any accounts or chattel paper
constituting Collateral or any Collateral constituting part of the Debtor's
borrowing base.
(k) Returns and repossessions. Debtor shall promptly notify Lender of the
return to or repossession by Debtor of goods underlying any Collateral and
Debtor shall hold and dispose of them only as Lender directs.
7. RIGHTS OF LENDER
(a) Authority to perform for Debtor. Upon the occurrence of an event of
default or if Debtor fails to perform any of Debtor's duties set forth in this
Agreement or in any evidence of or document relating to the Obligations, Lender
is authorized, in Debtor's name or otherwise, to take any such action including
without limitation signing Debtor's name or paying any amount so required, and
the cost shall be one of the Obligations secured by this Agreement and shall be
payable by Debtor upon demand with interest from the date of payment by Lender
at the highest rate stated in any evidence of any Obligation but not in excess
of the maximum rate permitted by law.
(b) Charging Debtor's credit balance. Unless a lien would be prohibited
by law or would render a nontaxable account taxable, Debtor grants Lender, as
further security for the Obligations, a security interest and lien in any
deposit account Debtor may at any time have with Lender and other money now or
hereafter owed Debtor by Lender and, in addition, agrees that Lender may, at any
time after the occurrence of an event of default, without prior notice or
demand, set-off all or any part of the unpaid balance of the Obligations against
any deposit
<PAGE>
balances or other money now or hereafter owed Debtor by Lender.
(c) Power of attorney. Debtor irrevocably appoints any officer of Lender
as Debtor's attorney, with power after an event of default to receive, open and
dispose of all mail addressed to Debtor; to notify the Post Office authorities
to change the address for delivery of all mail addressed to Debtor to such
address as Lender may designate; and to endorse the name of Debtor upon any
instruments which may come into Lender's possession. Debtor agrees that
Obligations may be created by drafts drawn on Lender by shippers of inventory
named in section 3. Debtor authorizes Lender to honor any such draft accompanied
by invoices aggregating the amount of the draft and describing inventory to be
shipped to Debtor and to pay any such invoices not accompanied by drafts. Debtor
appoints any employee of Lender as Debtor's attorney, with full power to sign
Debtor's name on any instrument evidencing an Obligation, or any renewals or
extensions, or the amount of such drafts honored by Lender and such instruments
may be payable at fixed times or on demand, shall bear interest at the rate from
time to time fixed by Lender and Debtor agrees, upon request of Lender, to
execute any such instruments. This power of attorney to execute instruments may
be revoked by Debtor only by written notice to Lender and no such revocation
shall affect any instruments executed prior to the receipt by Lender of such
notice. All acts of such attorney are ratified and approved and such attorney is
not liable for any act or omission or for any error of judgment or mistake of
fact or law.
(d) Non-liability of Lender. Lender has no duty to determine the validity
of any invoice, the authority of any shipper named in section 3 to ship goods to
Debtor or compliance with any order of Debtor. Lender has no duty to protect,
insure, collect or realize upon the Collateral or preserve rights in it against
prior parties. Debtor releases Lender from any liability for any act or omission
relating to the Obligations, the Collateral or this Agreement, except Lender's
willful misconduct.
8. DEFAULT
Upon the occurrence of one or more of the following events of default:
Nonperformance. Debtor fails to pay when due any of the Obligations or to
perform, or rectify breach of, any warranty or other undertaking by Debtor in
this Agreement or in any evidence of or document relating to the Obligations;
Inability to Perform. Debtor, Debtor's spouse or a surety for any of the
Obligation dies, ceases to exist, becomes insolvent or the subject of bankruptcy
or insolvency proceedings;
<PAGE>
Misrepresentation. Any representation made to induce Lender to extend
credit to Debtor, under this Agreement or otherwise, is false in any material
respect when made; or
Insecurity. Any other event which causes Lender in good faith to deem
itself insecure; all of the Obligations shall, at the option of Lender and
without notice or demand, become immediately payable; and Lender shall have all
rights and remedies for default provided by the Wisconsin Uniform Commercial
Code, as well as any other applicable law and any evidence of or document
relating to any Obligation. With respect to such rights and remedies:
(a) Repossession. Lender may take possession of Collateral without notice
or hearing, which Debtor waives;
(b) Assembling collateral. Lender may require Debtor to assemble the
Collateral and to make it available to Lender at any convenient place designated
by Lender;
(c) Notice of disposition. Written notice, when required by law, sent to
any address of Debtor in this Agreement at least 10 calendar days (counting the
day of sending) before the date of a proposed disposition of the Collateral is
reasonable notice;
(d) Expenses and application of proceeds. Debtor shall reimburse Lender
for any expense incurred by Lender in protecting or enforcing its rights under
this Agreement before and after judgment, including, without limitation,
reasonable attorneys' fees and legal expenses of taking possession, holding,
preparing for disposition and disposing of Collateral. After deduction of such
expenses, Lender may apply the proceeds of disposition to the Obligations in
such order and amounts as it elects; and
(e) Waiver. Lender may permit Debtor to remedy any default without
waiving the default so remedied, and Lender may waive any default without
waiving any other subsequent or prior default by Debtor.
9. INTERPRETATION
The validity, construction and enforcement of this Agreement are governed
by the internal laws of Wisconsin. All terms not otherwise defined have the
meanings assigned to them by the Wisconsin Uniform Commercial Code. Invalidity
of any provision of this Agreement shall not affect the validity of any other
provision. This Agreement is intended by Debtor and Lender as a final expression
of this Agreement and as a complete and exclusive statement of its terms, there
being no conditions to the enforceability of this Agreement. This Agreement may
not be supplemented or modified except in writing.
<PAGE>
Portfolio Management
Consultants, Inc. (SEAL)
a Colorado corporation
By: /s/ Scott A. MacKillop
President
Address: 555 17th Street By:
14th Floor
Denver, Colorado 80202
(County) Denver
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of November
3, 1998, between PMC International, Inc., a Colorado corporation (the
"Company"), and Scott A. MacKillop ("Employee").
RECITALS
--------
A. The Company has entered into an Agreement and Plan of Merger of even
date herewith (the "Merger Agreement"), pursuant to which the Company will be
the surviving corporation of a merger (the "Merger") with a wholly owned
subsidiary of The Ziegler Companies, Inc., a Wisconsin corporation ("Ziegler").
B. Employee is current President of the Company and Ziegler desires
Employee to continue his affiliation with the Company in such capacity.
Therefore, the Company has offered, and Employee has accepted, employment with
the Company. This Agreement sets forth the terms on which the Company employs
Employee.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms have the
-----------
following meanings:
"Base Salary" has the meaning set forth in Section 3(a).
-----------
"Company" means PMC International, Inc., a Colorado corporation, its
-------
successors and assigns, and any of its present or future subsidiaries.
"Competitive Advisory Business" means services, products or software in the
-----------------------------
wrap-fee or privately managed account business (whether using mutual funds or
separate accounts) and/or services, products or software in the performance
reporting business to the extent such services, products or software are
provided to or through financial intermediaries, including, but not limited to,
investment advisors, broker-dealers, banks, insurance companies, accounting
firms and financial planners for use in providing services to the retail and
small institutional accounts (often under $30 million in assets) of such
financial intermediaries. The term "Competitive Advisory Business" includes the
offering of any of the following products or services through financial
intermediaries, either alone or in combination, whether or not such products or
services are generally or customarily understood to be included in the term
"wrap-fee" or "privately managed account" business, and whether or not such
products or services are offered for a single fee or are charged for separately:
<PAGE>
(1) investment recommendations or portfolio management services based on or
tailored to the specific investment needs and/or risk tolerance of the client
whose assets are being managed; (2) access to the asset management services of
separate account managers; (3) automated trading services that involve the
exercise of discretionary authority, a limited power of attorney or similar
authorization granted by an asset management client; and (4) the preparation of
reports or statements that show the securities transactions in a client account
and/or calculate, display or analyze the performance or investments held in a
client account. The term "Competitive Advisory Business" does not include
personally providing investment advisory products or services directly to
clients through a financial planning, investment management or investment
consulting firm, as long as either (1) at least 75% of the clients of such firm
have assets under management or under advisement by such firm in excess of $30
million, or (2) such clients are not primarily secured by such firm through
referrals or solicitations by individuals not employed by such firm who derive a
fee or other compensation for such referrals or solicitations. The term
"Competitive Advisory Business" specifically includes, but is not limited to,
any investment advisory services or products provided to financial
intermediaries by Lockwood Financial Services, Inc.; Rheinhardt Werba Bowen
Advisory Services; Advisory Consulting Group; SEI Investments; Brinker Capital;
Meridian Investment Management; Frank Russell Company; and Callan Associates,
Inc. The term "Competitive Advisory Business" also includes "turn key asset
management programs."
"Employee" has the meaning set forth in the preamble to this Agreement.
--------
"Expiration Date" has the meaning set forth in Section 4.
---------------
"Inventions" means inventions, discoveries, trade secrets, products,
----------
processes, devices, methods, designs, formulas, techniques, programs, computer
software as well as improvements thereof, in each case whether or not
patentable, that are (a) based on or comprising Proprietary Information, (b)
made or conceived by Employee, whether or not during the hours of his engagement
with the Company or with the use or assistance of the Company's facilities,
materials or personnel, either solely or jointly with others, (c) related to or
arising out of Employee's employment by the Company, and (d) during the term of
this Agreement or any extension hereof. Notwithstanding the foregoing,
Inventions does not include inventions of Employee that Employee establishes, by
competent proof, are neither derived from or made in connection with Proprietary
Information nor developed for the Company.
"Participate In" means directly or indirectly, individually or with or
--------------
through any other person or entity, own, manage, operate, control, lend money to
or participate in the ownership, management, operation or control of, or be
connected to as a director, officer, employee, partner, consultant, agent,
independent contractor or otherwise, or acquiesce in the use of Employee's name
in such above actions. Notwithstanding the foregoing, Employee will not be
deemed to Participate In a business merely because he owns 5% or less of the
outstanding common stock of a corporation if, at the time of his acquisition
thereof, such stock is listed on a national securities exchange or is quoted on
NASDAQ.
2
<PAGE>
"Performance Salary" has the meaning set forth in Section 3(b).
------------------
"Proprietary Information" means information and materials disclosed to or
-----------------------
known or developed by Employee about the Company's plans, strategies, prospects,
products, processes and services, including information and materials relating
to the Company's research, development, inventions, purchasing, accounting,
engineering, marketing, merchandising and selling, but excluding information
that Employee establishes, by competent proof, (i) was known, other than under
an obligation of confidentiality, to Employee prior to the initiation of his
engagement by the Company; (ii) has passed into the public domain prior to or
after its development by or for the Company other than through acts or omissions
attributable to Employee; or (iii) was subsequently obtained other than under an
obligation of confidentiality from a third party not acquiring the information
under an obligation of confidentiality from the disclosing party.
"Ziegler" has the meaning set forth in the recitals to this Agreement.
-------
2. Employment; Capacity; Duties; Reporting Structure; Location. The
-----------------------------------------------------------
Company will employ Employee as its President. During his employment by the
Company, Employee will perform the duties and bear the responsibilities
commensurate with his position and will serve the Company faithfully and to the
best of his ability. As President, which position constitutes the senior
executive position of the Company, the responsibilities of Employee will
include, by way of illustration and not limitation, the day-to-day management
and operations of the Company. Employee will devote his entire working time,
attention and energy to the business of the Company. Employee will not at any
time discredit the Company or any of its products or services. Except for his
involvement in personal investments, as long as such involvement does not
require any significant services on his part, Employee will not engage in any
other business activity that requires significant personal services by Employee
or that, in the Company's judgment, may conflict with the proper performance of
Employee's duties under this Agreement. Employee will report directly to the
Chairman and the Board of Directors of the Company. Employee will be based at
the Company's facilities in Denver, Colorado.
3. Base Salary; Performance Salary; Benefits; Sick Leave; Vacation;
----------------------------------------------------------------
Expenses.
- --------
(a) As compensation for all services provided by Employee, the Company
will pay Employee a base salary of $240,000 per year ("Base Salary"), prorated
for any portion of a year, payable in arrears in the same manner as the Company
customarily pays the salaries of its employees or as the parties hereto may
otherwise agree.
(b) Employee will be eligible for performance-based increases to this
Base Salary as established by the Company in its discretion.
(c) In addition to Base Salary and Performance Salary, the Company
will provide Employee with the benefits of such insurance plans, hospitalization
plans, pension or profit sharing plans and other employee fringe benefit plans
as are customarily provided to employees of the
3
<PAGE>
Company and for which Employee is eligible under the terms of such plans.
Nothing in this Agreement requires the Company to adopt or maintain any such
plan. During Employee's employment by the Company, Employee will be entitled to
four weeks of paid vacation, which will be reasonably used so as to avoid
disruption of the Company's operations.
(d) Except as set forth herein, nothing in this Agreement requires the
Company to establish an equity incentive program or confer on Employee any right
to receive any stock option or other equity incentive not awarded on or before
the date hereof.
(e) The Company will reimburse Employee for all reasonable out-of-
pocket expenses incurred by Employee at the request of the Company in the
performance of his duties under this Agreement and such other expenses as may be
approved by the Company in accordance with the Company's reimbursement policies
as in effect from time to time, in each case upon presentation to the Company of
an itemized accounting of such expenses with reasonable supporting data.
4. Term. Subject to Section 9(j), this Agreement will become effective
----
on November 3, 1998 and, unless earlier terminated in accordance with Section 5,
will expire one year from such effective date (the "Expiration Date"). If this
Agreement expires or is terminated, this Agreement will forthwith become void
and there will be no liability or obligation on the part of the parties hereto,
except as otherwise provided herein and except that the provisions of this
Section 4 and Sections 5, 6, 7, 8 and 9 will remain in full force and effect and
survive any termination or expiration of this Agreement.
5. Termination.
-----------
(a) In the event of the death of the Employee, except with respect to
any benefits that have accrued and have not been paid to the Employee under this
Agreement, the provisions of this Agreement will terminate immediately.
However, the Employee's estate will have the right to receive compensation due
to the Employee as of and to the date of his death and, furthermore, to receive
an additional amount equal to one-twelfth (1/12) of the employee's annual
compensation as specified in Section 3(a).
(b) If the Employee is prevented by illness, accident, or other
incapacity from properly performing his duties under this Agreement (and, if
required by the Company, upon the furnishing of evidence reasonably satisfactory
to the Company of such disability), the Company will, during the continuance of
his disability, but only for the remaining term of this Agreement, pay the
Employee his compensation payable under the provisions of Section 3 (less the
amount of any benefits paid to the Employee under any disability insurance
provided by the Company) and continue to provide the Employee all other benefits
provided under this Agreement. As used herein, the term "disability" means the
complete and total inability of the Employee, due to illness, physical or
comprehensive mental impairment to substantially perform all of his duties as
described in this Agreement for a consecutive period of 30 days or more.
4
<PAGE>
(c) The Company may terminate this Agreement at any time, with or
without cause, by giving written notice of termination to Employee. If Employee
is terminated by the Company, then the Employee retains the right to receive and
the Company shall pay Base Salary, Performance Salary, and benefits through the
Expiration Date; provided, however, that Employee's right to receive and the
Company's obligation to pay Base Salary, Performance Salary and benefits for the
remaining term of this Agreement shall immediately terminate if the Employee
Participates In or obtains employment with a Competitive Advisory Business.
(d) The Employee may terminate this Agreement at any time, for any
reason, by giving written notice of termination to the Company. If Employee
terminates the Agreement, then the Employee releases all rights to receive Base
Salary, Performance Salary, and benefits, other than those which have accrued
prior to the date on which the Employee terminated the Agreement or those which
are required by law and agrees to provide a written release of any age or other
discrimination claims as part of the termination notice.
(e) Upon the termination of this Agreement, for any reason whatsoever,
until December 1, 1999, Employee shall not, directly or indirectly, solicit the
business of Ernst & Young LLP, or act in any other way reasonably intended to
interfere with the relationship between Ernst & Young LLP and the Company.
6. Non-Disclosure of Information.
-----------------------------
(a) Except as specifically permitted by the Company in writing or as
required for Employee to perform his services and duties hereunder, during the
period beginning on the date of this Agreement and ending on the date that is
two years after the expiration or termination of this Agreement (the "Non-
Disclosure Period"), Employee will not disclose any Proprietary Information to
any person or entity for any purpose or use. This Section 6 is not intended to
prevent Employee from obtaining employment in the Company's industry and,
accordingly, the disclosure of the fact of Employee's employment or engagement
in the Company's industry or the use of Employee's industry knowledge or of
information or knowledge which has passed into the public domain other than
through acts or omissions attributable to Employee, shall not be deemed the
disclosure of Proprietary Information.
5
<PAGE>
(b) Upon the termination or expiration of this Agreement, Employee
will deliver to the Company or with the Company's permission cause to be
destroyed all notes, letters, prints, records, forms, contracts, studies,
reports, appraisals, financial data, lists of names or other customer data, and
any other articles or papers, software, computer tapes and materials that have
come into his possession by reason of his engagement by the Company, whether or
not prepared by him, and he will not retain any memoranda, summaries, or copies
of any of those items.
(c) Employee acknowledges that Proprietary Information of the Company
is a unique and valuable asset of the Company, the loss or unauthorized
disclosure or use of which would cause the Company irreparable harm.
7. Inventions.
----------
(a) Employee hereby assigns and agrees to assign to the Company, or to
any person or entity designated by the Company, without royalty or other
consideration to Employee therefor other than the compensation set forth in this
Agreement, all of his right, title and interest in and to all (i) Inventions,
(ii) applications for United States of America and foreign letters patent, (iii)
United States of America and foreign letters patent granted upon Inventions, and
(iv) material related to any of the foregoing subject to copyright. Employee
further acknowledges that all copyrightable materials developed or produced by
Employee within the scope of his engagement by the Company constitute works made
for hire. Notwithstanding anything to the contrary in this Section 7(a),
Employee's obligations under this Section 7(a) will only apply to the extent the
items set forth in clauses (i) through (iv) hereof relate to or arise out of
Employee's employment by the Company.
(b) Employee will communicate promptly and disclose to the Company, in
such form as the Company may reasonably request, all information, details and
data pertaining to any of the items described in Section 7(a).
(c) At the request of the Company, Employee will do all acts necessary
or appropriate to secure for the Company the full benefits of each item
described in Section 7(a), and otherwise to carry into full force and effect the
assignment contained in Section 7(a). Such acts may include giving testimony in
support of Employee's inventorship and promptly executing and delivering to the
Company such papers, instruments and documents, without expense to Employee, as
may be appropriate in the Company's opinion to apply for, secure, maintain,
reissue, extend or defend the Company's worldwide rights in any item described
in Section 7(a).
8. Injunctive Relief. Employee acknowledges that the breach or
-----------------
threatened breach by Employee of any of the provisions of Section 5(e), 6 or 7
would cause the Company irreparable harm. Upon the breach or threatened breach
of any provision of Section 5(e), 6 or 7, the Company will be entitled to any
injunction, without bond, restraining Employee from committing such breach. This
right will not be construed to limit the Company's ability to obtain any other
remedies available to it for such breach or threatened breach, including the
recovery of damages.
6
<PAGE>
9. General Provisions.
------------------
(a) Remedies. Except as otherwise provided herein, any and all
--------
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. No failure or delay on the part of any party
hereto in the exercise of any right hereunder will impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor will any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right.
(b) Governing Law. This Agreement, its interpretation, and the legal
-------------
relations between the parties hereto will be governed by and construed in
accordance with the laws of the State of Colorado, without regard to the
conflict of laws rules thereof.
(c) Severability. If any provision of this Agreement is held to be
------------
invalid, illegal or unenforceable in any jurisdiction by any court of competent
jurisdiction, then (i) such invalidity, illegality or unenforceability will not
affect such provision with respect to any other jurisdiction, (ii) such
invalidity, illegality or unenforceability will not affect any other provision
of this Agreement with respect to such jurisdiction, and (iii) such court may
modify such provision of this Agreement with respect to such jurisdiction, and
such provision will thereafter be enforced in its modified form in such
jurisdiction if the parties hereto agree that such modification will achieve, to
the extent possible, the economic, business and other purposes of such invalid,
illegal or unenforceable provision.
(d) Notices. All notices and other communications hereunder must be
-------
in writing and will be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail, return receipt
requested, or sent via facsimile, with confirmation of receipt, to the parties
hereto at the following address or at such other address for a party hereto as
specified by notice hereunder:
(i) if to the Company, to:
PMC International, Inc.
555 17th Street, 14th Floor
Denver, Colorado 80202
Attention: Maureen E. Dobel, Esq.
Facsimile No.: 303-293-2152
7
<PAGE>
with copies to:
The Ziegler Companies, Inc.
215 N. Main Street
West Bend, Wisconsin 53095-3317
Attention: S. Charles O'Meara, Esq.
Facsimile No.: 414-334-2471
and
Quarles & Brady LLP
411 East Wisconsin Avenue, Suite 2550
Milwaukee, Wisconsin 53202
Attention: Conrad G. Goodkind, Esq.
Facsimile No.: 414-271-3552
(ii) if to Employee:
Scott A. MacKillop
2648 S. Kittredge Park Road
Evergreen, Colorado 80439
(e) Assignment: Binding Effect and Benefit. Except as otherwise
---------------------------------------
provided in this Section 9(e), neither party hereto may assign its rights or
delegate its obligations under this Agreement without the prior written consent
of the other party. The Company may assign its rights and delegate its
obligations under this Agreement, without the prior written consent of Employee,
to any of its affiliates or to any person or entity that acquires all or
substantially all of the business of the Company whether through merger,
purchase of assets, or otherwise, provided that such assignment is for a
reasonable business purpose and not to avoid the terms and conditions hereunder.
This Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, heirs, and permitted
successors and assigns.
(f) Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, whether oral or written,
between the parties hereto with respect to the subject matter hereof, including,
without limitation, the Employment Agreement dated September 23, 1997 and the
Change in Control Agreement, dated May 15, 1998, which, except as provided
herein, shall be null and void.
(g) Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed on behalf of each of the parties hereto.
(h) Headings: "Including". When a reference is made in this
----------------------
Agreement to a section such reference is to a section of this Agreement unless
otherwise indicated. The words
8
<PAGE>
"include," "includes" and "including" when used herein will be deemed in each
case to be followed by the words "without limitation." The section headings
contained in this Agreement are for reference purposes only and will not affect
in any way the meaning or interpretation of this Agreement. Whenever the context
may require, each pronoun includes the corresponding masculine, feminine and
neuter forms.
(i) Representation by Counsel. The parties hereto acknowledge that
-------------------------
they have had the opportunity to consult with counsel and have done so to the
extend they deemed appropriate during the negotiation, preparation and execution
of this Agreement.
(j) Counterparts: Effective Date. This Agreement may be executed in
-----------------------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument. This Agreement will
become effective when one or more counterparts have been signed by each of the
parties hereto and delivered to the other parties hereto, it being understood
that all parties hereto need not sign the same counterpart.
(k) Enforcement Costs. In the event of any proceeding to enforce this
-----------------
Agreement, the prevailing party will be entitled to receive from the other party
all reasonable costs and expenses, including the reasonable fees of attorneys,
accountants and other experts, incurred by the prevailing party in investigating
and prosecuting (or defending) such action at trial or upon any appeal.
IN WITNESS WHEREOF, the parties hereto have duly executed this Employment
Agreement as of the date first written above.
THE COMPANY
PMC INTERNATIONAL, INC.
/s/ C.R. Tucker
By: _____________________________
CEO
Its: _____________________________
EMPLOYEE
/s/ Scott A. MacKillop
___________________________________
Scott A. MacKillop
9
<PAGE>
EXHIBIT C-15
SHAREHOLDER TENDER AGREEMENT
This Shareholder Tender Agreement (the "Agreement") is made and entered
into as of the _____ day of _______, 1998, by and between The Ziegler Companies,
Inc., a Wisconsin corporation ("Ziegler"), and ______________________________
("Shareholder"), a shareholder of PMC International, Inc., a Colorado
corporation (the "Company").
WHEREAS, Ziegler has entered into negotiations with the Company and,
subject to entering into a definitive merger agreement, proposes to offer to
purchase all of the outstanding shares of the Company's common stock, par value
$.01 per share (the "Common Stock") at a price of at least $__________ per share
in a tender offer and proceed with a subsequent merger; and
WHEREAS, Ziegler desires the tender of Shareholder's shares of Common Stock
in the tender offer, and Shareholder is willing to tender [his/her/its] shares
of Common Stock in the tender offer at a price of at least $__________ per
share;
NOW, THEREFORE, in consideration of inducing Ziegler to proceed with
negotiating a definitive merger agreement and a tender offer and the premises
and the mutual covenants and agreements set forth herein and for other
consideration, the validity and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Shareholder Tender. Shareholder agrees to tender as promptly as
practicable after Ziegler commences (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended) an offer to purchase all
outstanding shares of Common Stock at a price of at least $__________ per share
(the "Offer"), to Ziegler or an affiliate all shares of Common Stock which are
outstanding and beneficially owned by Shareholder as of this date (_______
shares) and all shares subsequently acquired by Shareholder, pursuant to and in
accordance with the terms and conditions of the Offer and to not withdraw such
shares.
2. Termination. If any of the conditions set forth in the Offer have not
been satisfied or waived by Ziegler by December 31, 1998 (or earlier, if
required by law), this Agreement shall terminate and Ziegler shall return all
shares of Common Stock, if any, tendered by Shareholder.
3. Effect of Termination. In the event this Agreement is terminated
pursuant to Section 2 hereof, this Agreement shall become void and have no
effect, without any liability on the part of any party or its directors,
officers or shareholders.
4. Legality. The parties stipulate and agree that the provisions
contained herein are reasonable and are not known or believed to be in violation
of any federal or state law or regulation. In the event a court of competent
jurisdiction finds any provision contained herein to be illegal or
unenforceable, such court may modify such provision to make it valid and
enforceable. Such modification shall not affect the remainder of this Agreement,
which shall continue at all times to be valid and enforceable.
5. Entire Agreement. This Agreement contains the entire understanding of
the parties relative to the matters contained herein and therein, and may be
assigned to a wholly owned subsidiary of Ziegler, at Ziegler's option.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Wisconsin.
7. Counterparts. This Agreement may be executed in two counterparts,
manually or in facsimile, each of which shall be deemed to be an original, but
both of which, taken together, shall constitute one and the same instrument.
8. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
<PAGE>
9. No Liability. This Agreement does not constitute and will not give
rise to any legally binding obligation on the part of Ziegler or its affiliates
to enter into a definitive merger agreement or proceed with the Offer, and no
past or future action, course of conduct, or failure to act relating to the
negotiation of the terms of any definitive merger agreement, will give rise to
or serve as a basis for any obligation or other liability on the part of Ziegler
or its affiliates.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
------------------------------------
[Name of Shareholder]
The Ziegler Companies, Inc.
By:
--------------------------------
Its
--------------------------------
Exhibit C-15 Page 2
<PAGE>
SIGNED SHAREHOLDER TENDER AGREEMENTS
10/29/98
<TABLE>
<CAPTION>
SHAREHOLDER NAME # of SHARES
<S> <C>
Berry, Evelyn Custodian for Kimberly 2,500
Berry, Joseph J. 5,000
Berry, Joseph S. Trust, Evelyn trustee 2,500
Berry, Todd P. Trust, Evelyn trustee 2,500
Brown, Robert and Judith Thomson 3,100
Cuthbertson, Philip J. 5,000
Daly, Emmett J. 7,562
Daly, Emmett/Regina 17,437
Dobel, Maureen E. 1,039.67
Duffy, John c/f Kara Duffy 250
Duffy, John c/f Kevin T. 150
Flinn, Michael 5,500
Keefe, Bruyette & Woods 123,166.5
Lewis, Adam J. 6,666.5
Lortcher, Peggy 1,762.5
Lott, Charles H. 4,037
Lott, James C. ITF Kathleen 1,500
Lott, James/Mary 8,500
Lott, Mary E. V. Brown Estate Securities 3,462
MacKillop, Scott A. 5,500
Michaud, Emily L. 5,750
Michaud, Thomas 3,250
Miller, Gary 5,500
Nevcorp 1,000
Selzer, Geoffrey 16,500
Shepard, Kate 2,643.75
Thomas, J. W. Nevil 1,500
Thomas, Susanne E. 2,500
Vadas, Bradley H. 5,000
Van Arkel, Geremy 10,000
Woelk, Guy 1,500
262,276.92
</TABLE>
<PAGE>
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT is made as of the 3rd day
of November, 1998, by and between PMC International, Inc. (the "Company") and
Michael T. Wilkinson, Scott A. MacKillop, Gary A. Miller, Michael J. Flinn,
Jared L. Shope, Graham L. Guy and John W. Burgin (collectively, the "Former ADAM
Shareholders").
WHEREAS, the Company and the Former ADAM Shareholders entered into that
certain Stock Purchase Agreement by and among the Company, the Former ADAM
Shareholders and ADAM Investment Services, Inc., dated as of July 25, 1997 (the
"Stock Purchase Agreement");
WHEREAS, the Initial Purchase Price Adjustment amount has been finally
determined in accordance with the Stock Purchase Agreement in the total amount
of $1,822,311 (the "Amount") plus interest from the Closing Date, as defined in
the Stock Purchase Agreement (the "Closing Date") at an annual rate of 8.5% and
12.0% beginning on November 6, 1998, until full and complete payment is made;
and
WHEREAS, the Company and the Former ADAM Shareholders desire to amend (in
accordance with Section 10.1 of the Stock Purchase Agreement) the payment terms
of the Initial Purchase Price Adjustment.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Definitions. Terms not otherwise defined herein shall have the
meanings assigned to them in the Stock Purchase Agreement.
<PAGE>
2. Amendments. (a) Section 2.3(e) of the Stock Purchase Agreement is
hereby deleted in its entirety and the following inserted in its place.
"(e) If any amount of the Initial Purchase Price Adjustment is not
made when such amount is due and owing hereunder, Buyer (the Company)
shall pay to the Former ADAM Shareholders interest on such unpaid
amount until paid at a rate of 12.0%."
(b) Notwithstanding anything in the Stock Purchase Agreement to the
contrary, the Initial Purchase Price Adjustment shall be paid as follows:
(i) $500,000 of the Initial Purchase Price Adjustment shall be paid on
November 6, 1998 to the account listed hereto as Exhibit A;
(ii) $500,000 of the Initial Purchase Price Adjustment shall be paid
on the earlier of (A) the next business day after the consummation of
the Offer (as such term is defined in that certain Agreement and Plan
of Merger by and among the Company, The Ziegler Companies, Inc. and
ZACQ Corp. (the "Merger Agreement") ), or (B) January 6, 1999 to the
account listed hereto as Exhibit A; and
(iii) the remaining balance of principal and interest of the Initial
Purchase Price Adjustment shall be paid to the account listed hereto
as Exhibit A on the earlier of (A) the Effective Time of the Merger
(as such terms are defined in the Merger Agreement) or (B) March 31,
1999.
(c) Notwithstanding anything in the Stock Purchase Agreement to the
contrary, interest shall be paid on the Amount, which interest shall include:
(i) simple interest at a rate of 8.5% on the
2
<PAGE>
Amount from the Closing Date up through and including November 6, 1998 and (ii)
simple interest at a rate of 12.0% for the remainder of the Amount until paid in
full.
3. Full Force and Effect. Except as explicitly modified herein, the
Stock Purchase Agreement shall remain in full force and effect.
4. Representation. John W. Burgin represents that he is the Shareholder
Representative pursuant to notice dated October 14, 1998, as accepted by the
Company on October 14, 1998 and he has the authority to enter into this binding
Agreement pursuant to Section 10.1 of the Stock Purchase Agreement on behalf of
the Former ADAM Shareholders.
5. Restoration of Rights. In the event the Company does not make the
payments required by paragraph 2(b) hereof and does not cure within five (5)
business days of receiving notice from Shareholders' Representative, such
nonpayment shall constitute a default hereunder, and this First Amendment to the
Stock Purchase Agreement shall become null and void and the rights of the Former
ADAM Shareholders under the Stock Purchase Agreement may be enforced to the full
extent permitted, including but not limited to, the payments required under
Section 2.2 and the interest payments and penalties required under Section
2.3(e).
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
PMC INTERNATIONAL, INC.
/s/ C. R. Tucker
By: ________________________________________
Name: C. R. Tucker
Title: Chief Executive Officer
SHAREHOLDER REPRESENTATIVE
On Behalf of the Former ADAM Shareholders
/s/ John W. Burgin
By: ________________________________________
Name: John W. Burgin
4
