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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1 )*
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PMC INTERNATIONAL, INC.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
693437105
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(CUSIP Number)
Karen L. Barsch, Esq.
950 17th Street, Suite 1600
Denver, Colorado 80202 (303) 825-8400
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 24, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Check the following box if a fee is being paid with this statement / /.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class. (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following page(s))
Page 1 of Pages
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CUSIP No. 693437105 13D Page 2 of Pages
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(1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Person
Bedford Capital Financial Corporation
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(2) Check the Appropriate Box if a Member (a) / /
of a Group* (b) / /
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(3) SEC Use Only
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(4) Source of Funds*
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) / /
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(6) Citizenship or Place of Organization
Liberia
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NUMBER OF SHARES (7) Sole Voting Power
BENEFICIALLY OWNED 2,971,250
BY EACH REPORTING --------------------------------------------------
PERSON WITH (8) Shared Voting Power
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(9) Sole Dispositive Power
2,971,250
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(10) Shared Dispositive Power
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
2,971,250
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares*
/ /
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(13) Percent of Class Represented by Amount in Row (11)
19.9%
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(14) Type of Reporting Person*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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This Amendment No. 1 amends and supplements the Schedule 13D (the "Original
13D") relating to the beneficial ownership by Bedford Capital Financial
Corporation, a Liberian corporation ("Bedford") of shares of Common Stock, par
value $.01 per share (the "Shares"), of PMC International, Inc., a Colorado
corporation (the "Company").
Unless otherwise indicated herein each capitalized term used and not
defined herein shall have the meaning assigned to such term in the Original 13D.
The information set forth in the Original 13D is hereby amended and
supplemented by the following information:
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
In November 1996, a wholly-owned subsidiary of Bedford loaned the Company
$62,500. As additional consideration for the loan, the Company issued Bedford's
subsidiary a warrant to purchase 6,250 shares of Common Stock at an exercise
price of $1.625. The loan funds advanced were solely from Bedford's
subsidiary's existing available working capital.
ITEM 4. PURPOSE OF TRANSACTION.
(a) Bedford has entered into the following transactions related to the
Company's securities:
(1) At various times from December 1995 through July 1996, Bedford
exercised portions of its option under the Investment Agreement
to loan an additional $1.8 million to the Company. Bedford's
option to loan $400,000 of the $1.8 million was assigned to two
individual affiliates of Bedford (the "Affiliates"). As of July
9, 1996, Bedford (and its Affiliates) had exercised its option to
loan the full $1.8 million and Bedford had been issued warrants
to purchase an additional 1.4 million shares of Common Stock at
$1.00 per share.
(2) Effective October 15, 1996, a wholly-owned subsidiary of Bedford
loaned the Company $62,500. As additional consideration for the
loan, the Company issued Bedford's subsidiary a warrant to
purchase 6,250 shares of Common Stock, at an exercise price of
$1.625.
(3) Effective November 22, 1996, as part of an amendment of the terms
of the Option and to facilitate a loan to Phillips & Andrus, LLC,
Bedford relinquished its rights to purchase 100,000 shares of
Common Stock pursuant to the Bedford Option Agreement dated as of
July 26, 1995.
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Bedford retained the Option to purchase 235,000 shares of Common
Stock from Phillips & Andrus, LLC.
(4) Effective December 24, 1996, Bedford and the Company entered into
that certain Restructuring Agreement (the "Restructuring
Agreement") pursuant to which (i) Bedford (and its Affiliates)
exercised warrants to purchase 1,023,750 shares of common stock
of the Company ("Common Stock"), (ii) Bedford (and its
Affiliates) delivered to the Company and accepted the
cancellation of warrants to purchase 1,576,250 shares of Common
Stock in exchange for 976,250 shares of Common Stock, and
(iii) the Company issued Bedford a warrant to purchase 130,000
shares of the Common Stock at an exercise price of $2.125 per
share.
(d) Bedford does not currently have any plans or proposals which relate to
or would result in any material change in the present board of directors or
management of the Company, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the board, except
pursuant to a Shareholders Agreement dated December 24, 1996 (the "New
Shareholders Agreement") among Bedford, Kenneth S. Phillips, David L. Andrus and
KP3, LLC, a Colorado limited liability company (the assignee of Phillips &
Andrus, LLC) (the "LLC") in which Bedford (i) is granted the right, so long as
Bedford owns at least 10% of the Company's issued and outstanding Common Stock,
to designate one director for the Company's board of directors and, (ii) so long
as Bedford owns at least 5% of the Company's issued and outstanding Common
Stock, is granted the joint right with the LLC to designate one additional
director for the Company's board of directors (the "Joint Director"). The Joint
Director position is currently vacant and Bedford and the LLC are considering
candidates for such position.
(g) As part of the Restructuring Agreement, the Investment Agreement was
terminated. Bedford does not currently have any plans or proposals that relate
to or would result in any changes to the Company's charter, bylaws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the issuer by any person.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Bedford has a beneficial interest in 2,971,250 shares of Common Stock, of
which Bedford may exercise the sole voting power and sole dispositive power.
Such interest represents 19.9% of the Common Stock.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
(1) A Bedford Option Agreement dated as of July 26, 1995, as amended by
that certain First Amendment to Bedford Option Agreement dated October 15, 1996
and that certain Second Amendment to Option Agreement dated January 7, 1997,
pursuant to which Bedford holds an option to purchase 235,000 shares of Common
Stock from the LLC, exercisable as to all or any portion of such shares at any
time or from time to time until July 26, 2000, for a purchase price of $1.226
per share, plus 9% per annum from the date on which the LLC began paying
interest on certain debt, until exercised.
(2) A Common Stock Purchase Warrant dated November 22, 1996 granting
Bedford Capital Financial, Inc. ("BCF"), a wholly-owned subsidiary of Bedford,
the right to purchase up to 6,250 shares of Common Stock from the Company at an
exercise price of $1.625, exercisable at any time or from time to time prior to
November 22, 2001.
(3) A Restructuring Agreement dated December 24, 1996 pursuant to which
Bedford (and its Affiliates) exercised warrants to purchase 1,023,750 shares of
Common Stock at $1.00 per share, Bedford (and its Affiliates) accepted
cancellation of warrants to purchase 1,576,250 shares of Common Stock in
exchange for 976,250 shares of Common Stock and Bedford received a warrant to
purchase 130,000 shares of Common Stock at an exercise price of $2.125 per
share.
(4) A Shareholders Agreement dated December 24, 1996 among the Company,
Bedford, Kenneth S. Phillips, David L. Andrus and KP3, LLC, a Colorado limited
liability company (assignee of Phillips & Andrus, LLC), pursuant to which
Bedford has the right to designate one of the Company's directors and a joint
right with KP3, LLC to jointly designate an additional director of the Company.
(5) An Amended and Restated Registration Rights Agreement dated
December 24, 1996, pursuant to which the Company (i) has agreed to file a "shelf
registration" statement covering Bedford's Common Stock, (ii) gives Bedford two
rights to request the Company to register Bedford's Common Stock within 60 days
of its demand; and (iii) if the Company is registering other Common Stock, gives
Bedford the right to cause the Company to register Bedford's Common Stock at the
same time, such that Bedford's Common Stock constitutes at least 25% of the
total Common Stock registered.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT 8. Restructuring Agreement dated December 24, 1996.
EXHIBIT 9. Shareholders Agreement dated December 24, 1996.
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EXHIBIT 10. Amended and Restated Registration Rights Agreement dated
December 24, 1996.
EXHIBIT 11. Warrant (No. N-6) issued to BCF dated November 22, 1996.
EXHIBIT 12. Warrant (No. F-1) dated December 24, 1996.
EXHIBIT 13. First Amendment to Bedford Option Agreement dated
October 15, 1996.
EXHIBIT 14. Second Amendment to Option Agreement dated January 7, 1997.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: February 25, 1997 /s/ RICHARD C.W. MAURAN
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Signature
Richard C.W. Mauran
Chief Executive Officer
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RESTRUCTURING AGREEMENT
This RESTRUCTURING AGREEMENT (this "Agreement"), dated as of December 24, 1996,
is between Bedford Capital Financial Corporation, a corporation organized under
the laws of Liberia ("Bedford"), PMC International Inc., a Colorado corporation
(the "Company"), Portfolio Management Consultants, Inc., a Colorado corporation
("PMC"), Portfolio Brokerage Services Inc., a Colorado corporation ("PBS"), and
Portfolio Technology Services, Inc. a Colorado corporation ("PTS").
RECITALS
A. Bedford, the Company, PMC, PBS and PTS are parties to the Investment
Agreement, dated as of July 26, 1995 (the "Investment Agreement"), pursuant to
which Bedford loaned a total of $3,000,000 to the Company (the "Loans")
evidenced by certain promissory notes of the Company (the "Notes"). The Loans
are secured by Security and Pledge Agreements between Bedford and each of the
Company and PTS, each dated as of July 26, 1995 (the "Security Agreements") and
a Non-Recourse Guaranty and Pledge Agreement between Bedford and PBS dated as
of July 26, 1995 (the "Pledge Agreement"). In connection with the Loans,
Bedford received warrants (the "Warrants") to purchase up to 3,000,000 shares
of the Company's Common Stock, par value $.01 ("Common Stock").
B. Concurrent with the execution and delivery of this Agreement, the Company
is effecting the closing of a private placement of its Common Stock (the
"Offering") pursuant to the terms of the Private Placement Memorandum dated
November 11, 1996 (as amended and supplemented from time to time, the
"Memorandum"). Closing of the Offering is conditioned upon effectiveness of the
restructuring of the relationship of the Company and its subsidiaries with
Bedford reflected in this Agreement (the "Restructuring").
C. Concurrent with the execution and delivery of this Agreement, Bedford and
the Company are amending and restating the Registration Rights Agreement dated
as of July 26, 1996 (the "Registration Rights Agreement").
D. Bedford has assigned a portion of the Loans and the Warrants to
certain persons associated with it. References to Bedford has holder
of the Loans and the Warrants include such assignees.
E. In order to facilitate the Closing, the parties desire to complete the
Restructuring on the terms set forth herein. Undefined capitalized terms used
in this Agreement shall have the meaning given
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to such terms in the Investment Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
Repayment of The Loans; Exercise and
Cancellation of Warrants; Return of Notes
Section 1.1 Repayment of the Loans. Upon execution and delivery of this
Agreement, the Company is paying to Bedford by wire transfer of immediately
available funds an amount equal to the sum of (i) all interest accrued on the
Loans through the date hereof, plus (ii) principal in amount equal to
$1,976,250.
Section 1.2 Exercise and Cancellation of Warrants; Issuance of Additional
Warrants. Upon execution and delivery of this Agreement, (i) Bedford is
exercising Warrants to purchase 1,023,750 shares of Common Stock, (ii) Bedford
is delivering to the Company and the Company is accepting for cancellation the
remaining Warrants not being exercised pursuant to clause (i) of this Section
1.2 in exchange for the issuance and delivery of 976,250 shares of Common Stock
and (iii) the Company is executing and delivering to Bedford a new Warrant to
purchase 150,000 shares of Common Stock at an exercise price of $2.125 per
share. In payment of the exercise price of these Warrants, Bedford is
delivering and the Company is accepting delivery of the unpaid portion of the
Notes to the extent of their outstanding principal balance. The Company is
issuing and delivering to Bedford certificates representing such shares, which
shall be duly issued and authorized, fully paid and non-assessable.
Section 1.3 Cancellation of Notes and Warrants. Bedford is delivering to the
Company for cancellation all Notes and Warrants, such cancellation to be
effective upon consummation of the transactions contemplated by Sections 1.1
and 1.2.
ARTICLE 2
Termination of Investment Agreement and
Related Agreements; Release of Liens
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Section 2.1 Termination of Investment Agreement and Related Agreements. Except
as specified in Section 2.3, the Investment Agreement and all agreements
executed by Bedford pursuant to or in connection with the Investment Agreement
including, without limitation, the Security Agreements, the Pledge Agreement
and all other Security Documents, and all obligations of the parties
thereunder, are hereby terminated, and notwithstanding any provision to the
contrary in any such agreement, no provision of any such agreement will survive
such termination.
Section 2.2 Release of Liens. Bedford will, and will cause all other holders of
the Notes to, cooperate in good faith and execute such documents as the Company
reasonably requires to effect the release of all liens or other security
interests of such parties over or affecting the Collateral under the Security
Documents.
Section 2.3 Other Agreements. This Agreement does not affect the Rights
Agreement, which is being amended concurrently herewith and which shall remain
in effect, as amended, following consummation of the transactions contemplated
hereby and shall terminate only in accordance with its terms. In addition,
Bedford, the Company and certain shareholders of the Company are as of the date
hereof executing and delivering a Shareholders Agreement to replace the
shareholders agreement entered into by Bedford and the Company, among others,
in connection with the Investment Agreement.
ARTICLE 3
Representations and Warranties of the Parties
Each of the parties represents and warrants to the other parties that (i) it
has full power and authority to enter into this Agreement, (ii) it has duly
authorized the execution and delivery of this Agreement, and the performance
and observance of its terms, (iii) this Agreement constitutes legal, valid and
binding obligations of such party, enforceable against it in accordance with
its terms, and (iv) no consent, approval, exemption, authorization or order of
or other action by, and no notice to or filing with, any third party is
required in connection with the execution, delivery or performance by such
party of this Agreement or to consummate any transactions contemplated hereby,
except for filings required under the applicable securities laws.
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ARTICLE 4
Miscellaneous
4.1 Notices. All notices given hereunder shall be in writing, shall be given by
overnight courier service, telecopy, facsimile or copy delivered by hand, and,
(i) if delivered by overnight air courier service, shall be deemed received one
business day after having been deposited with such overnight air courier
service, postage prepaid, and (ii) if delivered by telex, telecopy or hand
delivery, shall be deemed received on the day the notice is sent, in each case
addressed as follows:
If to Bedford or to any holder of a Note, to:
Bedford Capital Financial Corporation
2nd Floor
Charlotte Hs.
Shirly Street
Nassau, Bahamas
Attention: Richard C. Mauran
Chairman and CEO
and Suzanne J. Black
Treasurer and CFO
With a copy to:
Karen L. Barsch, Esq.
Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
950 Seventeenth Street, Suite 1600
Denver, Colorado 80202
If to the Company, PMC, PBS, or PTS, to:
PMC International, Inc.
555 17th Street
Suite 1400
Denver, Colorado 80202
Attention: Chief Executive Officer
With a copy to:
Holme Roberts & Owen LLP
1700 Lincoln
Suite 4100
Denver, CO 80206
Attention: Francis R. Wheeler
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Any party may, by written notice so delivered to the others, change the address
or facsimile number to which delivery shall thereafter be made.
4.2 Counterpart Execution; Bedford Representation. This Agreement may be
executed in any number of counterparts which together, including those received
by facsimile transmission which shall be effective as originals, shall
constitute but one and the same instrument. This Agreement shall become
effective upon execution by the parties, provided that Bedford's execution
shall constitute execution on behalf of itself and each holder of a Note for
purposes of this Section 4.2. Bedford hereby represents and warrants that it
has full authority and approval to execute this Agreement on behalf of each
holder of a Note and acknowledges that the Company is relying on such
representation. Bedford will fully indemnify and hold the Company harmless for
any damage or expense incurred by the Company resulting directly or indirectly
from the inaccuracy of the Representations of Bedford in this Paragraph 4.2.
4.3 Entire Agreement. This Agreement constitutes and incorporates the entire
agreement between the parties concerning the subject matter hereof and
supersedes and cancels any prior or contemporaneous agreements, verbal or
written, between the parties concerning the subject matter hereof.
4.4 Amendments; Waiver. No amendment or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing
and signed by each of Bedford and the Company.
4.5 Inconsistent Provisions; Severability. The invalidity,
illegality or unenforceability of any provision of this Agreement
shall not in any way affect or impair the legality or enforceability
of the remaining provisions hereof.
4.6 References and Titles. All references in this Agreement to Sections and
other subdivisions are to Sections and other subdivisions of this Agreement
unless expressly provided otherwise. The words "this Agreement", "this
instrument", "herein", "hereof", "hereby", "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited.
4.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
4.8 Governing Law; Jurisdiction. This Agreement shall be governed by
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and construed in accordance with the laws of the state of Colorado. Each party
hereby consents to venue and jurisdiction in the District Court in and for the
City and County of Denver, State of Colorado and in the United States District
Court for the District of Colorado with respect to any claim arising out of or
in connection with this Agreement.
EXECUTED to be effective as of the day and year first above written.
BEDFORD CAPITAL FINANCIAL CORPORATION,
By: /s/ J.W. Nevil Thomas
Chairman, President & CEO
PMC INTERNATIONAL, INC.
By: /s/ Kenneth S. Phillips
President & CEO
PORTFOLIO MANAGEMENT CONSULTANTS, INC.
By: /s/ Kenneth S. Phillips, President
PORTFOLIO BROKERAGE SERVICES, INC.
By: /s/ Vali Nasr
President
PORTFOLIO TECHNOLOGY SERVICES, INC.
By: /s/ Kenneth S. Phillips, EVP
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SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of December 24, 1996,
is among PMC International, Inc., a Colorado corporation (the "Company"),
Bedford Capital Financial Corporation, a corporation organized under the laws
of Liberia ("Bedford"), Kenneth S. Phillips, an individual ("Phillips"), David
L. Andrus, an individual ("Andrus") and Phillips & Andrus, LLC, a Colorado
limited liability company ("HoldCo").
RECITALS
A. Concurrent with the execution and delivery of this Agreement, the Company is
effecting the closing of a private placement (the "Offering") of its common
stock ("Common Stock") pursuant to the terms of the Private Placement
Memorandum dated November 11, 1996, as amended. Closing of the Offering is
conditioned upon effectiveness of the restructuring of the relationship of the
Company and its subsidiaries with Bedford as reflected in this Agreement and
the Restructuring Agreement dated as of the date hereof among Bedford, the
Company and the Company's subsidiaries.
B. Bedford, Phillips, Andrus and HoldCo, each of whom beneficially own Common
Stock, are entering into this Agreement to define the circumstances under which
each such party will vote his or its shares of Common Stock in favor of the
Company board of directors nominee or nominees of the other parties, and for
certain other purposes. Each person who now owns or hereafter acquires shares
of Common Stock subject to the provisions of this Agreement, including
initially Bedford, Phillips, Andrus and HoldCo, is sometimes referred to
hereinafter as a "Shareholder" and Phillips, Andrus and HoldCo are collectively
referred to hereinafter as "HoldCo Shareholders."
AGREEMENT
Section 1. Board of Directors.
(a) Composition. Until such time as this Agreement is terminated or amended,
the Company's Board of Directors shall consist of a maximum of seven persons.
(b) Bedford Nominee and Joint Nominee. For such time as Bedford
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beneficially owns (determined as provided in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any equivalent
successor rule, but excluding any shares as to which Bedford does not have a
pecuniary interest as provided in the rules adopted under Section 16 of the
Exchange Act) at least 10% of the Company's issued and outstanding Common Stock
(all outstanding in the money options and warrants issued by the Company being
assumed to have been exercised) Bedford shall be entitled to designate one
person to be nominated as director of the Company (the "Bedford Nominee"). In
addition, for such time as Bedford beneficially owns at least 5% of the
Company's issued and outstanding Common Stock (beneficial ownership and issued
and outstanding Common Stock being determined as specified above), Bedford and
the HoldCo Shareholders shall be entitled to designate one person to be
nominated as a director of the Company, such person to be reasonably acceptable
to Bedford and the HoldCo Shareholders (the "Joint Nominee"). Bill Atkinson is
deemed to be an acceptable Joint Nominee to Bedford and the HoldCo Shareholders
so long as he is willing to serve as such.
(c) HoldCo Shareholder Nominees. During the term of this Agreement, the HoldCo
Shareholders shall be entitled to designate three persons to be nominated as
directors of the Company, at least one of whom shall be a senior member of the
Company's management appointed as such after the date of this Agreement (the
"HoldCo Shareholders Nominee").
(d) Voting Shares. At every annual meeting of shareholders of the Company and
at every special meeting of the shareholders of the Company held for the
purpose of electing directors of the Company, or in connection with the taking
of any written consent to action in respect of the election of directors of the
Company, (i) Bedford shall vote its shares of Common Stock in favor of the
HoldCo Shareholder Nominees, (ii) Bedford and the HoldCo Shareholders shall
vote their shares of Common Stock in favor of the Joint Nominee, and (iii) for
such time as Bedford beneficially owns at least 10% of the Company's issued and
outstanding Common Stock (beneficial ownership and issued and outstanding
Common Stock being determined as specified above), the HoldCo Shareholders
shall vote their respective shares of Common Stock in favor of the Bedford
Nominee. All parties hereto agree to take such action as is reasonably
requested by any other party in order to effect the parties' intent with
respect to the election of directors and the other terms of this Agreement.
(e) New Shareholders. Bedford and the HoldCo Shareholders acknowledge that
purchasers of Common Stock in connection with the Offering (the "New
Shareholders") have been granted certain rights to nominate persons for
election to the Company's board of directors pursuant to Section 7.2 of their
respective subscription agreements
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with the Company (the "Subscription Agreements"), a copy of which is attached
hereto as Exhibit A. Bedford and the HoldCo Shareholders agree to vote their
respective shares of Common Stock or give written consents in favor of the
nominees designated by the New Shareholders pursuant to the terms of such
Section 7.2. of the Subscription Agreements.
(f) Bedford Shares. For purposes of this Section 1, the number of shares of
Common Stock owned by Bedford shall include (i) such number of the 3,000,000
shares of Common Stock owned as of or acquired by Bedford on or about December
24, 1996 in connection with the Restructuring (as such term is defined in the
Private Placement Memorandum of the Company dated November 11, 1996, as
supplemented December 23, 1996) as are subsequently distributed by Bedford to
executive officers or directors of Bedford, (ii) such number of shares of
Common Stock issued pursuant to Warrants to purchase up to 150,000 shares of
Common Stock acquired by Bedford in connection with the Restructuring and
subsequently distributed to executive officers and directors of Bedford, (iii)
such number of shares of Common Stock acquired by Bedford upon exercise of an
option given by the LLC, in each such case where beneficially owned (determined
as provided above) by such executive officers or directors as of the date of
determination.
Section 2. Restrictions on Transfer of Common Stock.
(a) Certain Transfers Prohibited. Except as provided in Section 2(b), no
Shareholder may sell, assign, pledge or otherwise transfer or encumber in any
manner or by any means whatsoever (collectively, a "Transfer") any shares of
Common Stock which such Shareholder may now own or may hereafter acquire,
unless the transferee shall agree in writing to be bound by the provisions of
this Agreement with respect to shares of Common Stock such transferee acquires.
Any purported Transfer in violation of this Agreement shall be void and
ineffective and shall not operate to Transfer any interest or title to the
purported transferee.
(b) Certain Sales and Transfers Permitted. The restrictions on Transfers
provided under Section 2(a) shall not be applicable with respect (i) to any
Transfer of Common Stock effected pursuant to a public sale or distribution,
(ii) to any Transfer to the Company or (iii) to a Transfer pursuant to a bona
fide pledge to an independent third party. For purposes hereof, the term
"public sale" shall mean any sale of Common Stock to the public pursuant to an
offering registered under the Securities Act of 1933, as amended (the
"Securities Act"), or to the public through a broker, dealer or market maker
pursuant to the provisions of Rule 144 adopted under the
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Securities Act.
Section 3. Restrictive Legend. The following legend shall be placed
on each certificate representing a Shareholder's shares of Common
Stock, including any certificates hereafter acquired by a Shareholder:
The shares represented by this certificate are subject to certain restrictions
on transfer and other agreements as set forth in a Shareholders Agreement,
dated effective as of December 24, 1996, among PMC International, Inc., Bedford
Capital Financial Corporation, Kenneth S. Phillips, David L. Andrus and
Phillips & Andrus, LLC, copies of which are on file in the office of the
corporation.
Section 4. Termination. This Agreement shall terminate upon the earliest of (i)
written consent of the Shareholders; (ii) at such time as Bedford beneficially
owns less than 5% of the Company's issued and outstanding Common Stock
(beneficial ownership and issued and outstanding Common Stock being determined
as specified above); and (iii) December 20, 2006.
Section 5 Miscellaneous.
(a) Further Assurances. From time to time after the date of this Agreement, the
Shareholders shall execute and deliver such other instruments and documents and
shall take such other actions as the other Shareholders may reasonably request
to effectuate the transactions contemplated by this Agreement.
(b) Modification. This Agreement may be modified only by written
instrument properly executed by or on behalf of the Shareholders.
(c) Governing Law. This Agreement is a contract entered into in the State of
Colorado, and shall be construed and enforced in accordance with the laws of
the State of Colorado without reference to Colorado's conflicts of laws
principles.
(d) Jurisdiction and Venue. This Agreement shall be subject to the exclusive
jurisdiction of the courts of the City and County of Denver, Colorado or the
federal district courts located in the City and County of Denver. The
Shareholders agree that any breach of any term or condition of this Agreement
shall be deemed to be breach occurring in the State of Colorado by virtue of a
failure to perform any act required to be performed in the State of Colorado
and irrevocably and expressly agree to submit to the jurisdiction of the courts
of the City and County of Denver, Colorado and the federal district courts
located in the City and County of Denver, State of Colorado for the purpose of
resolving any disputes among the Shareholders relating to
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this Agreement or the transactions contemplated hereby. The parties irrevocably
waive, to the fullest extent permitted by law, any objection which they may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, or any judgment entered by any
court in respect hereof brought in the City and County of Denver, Colorado, and
further irrevocably waive any claim that any suit, action or proceeding brought
in the City and County of Denver, Colorado has been brought in an inconvenient
forum.
(e) Waiver. No waiver by any Shareholder, whether express or implied, of its
rights under any provision of this Agreement shall constitute a waiver of the
Shareholder's rights under such provisions at any other time or a waiver of the
Shareholder's rights under any other provision of this Agreement. No failure by
any Shareholder to take any action against any breach of this Agreement or
default by another party shall constitute a waiver of the former Shareholder's
right to enforce any provision of this Agreement or to take action against such
breach or default or any subsequent breach or default by the other Shareholder.
(f) Severability. If any one or more of the provisions contained in this
Agreement shall be declared invalid, illegal or unenforceable, the remainder of
the provisions of this Agreement shall remain in full force and effect, and the
provision held to be invalid, illegal or unenforceable shall be enforced as
nearly as possible according to its original terms and intent to eliminate such
invalidity, illegality or unenforceability.
(g) Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, including all counterparts received
by facsimile transmission, but all of which together shall constitute one and
the same instrument.
(h) Section Headings. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or
affect any provision hereof.
(i) Notices. All notices given hereunder shall be in writing, shall be given by
overnight courier service, telecopy, facsimile or copy delivered by hand, and,
(i) if delivered by overnight air courier service, shall be deemed received one
Business Day after having been deposited with such overnight air courier
service, postage prepaid, and (ii) if delivered by telex, telecopy or hand
delivery, shall be deemed received on the day the notice is sent, in each case
addressed as follows:
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If to Bedford, to:
Bedford Capital Financial Corporation
2nd Floor
Charlotte Hs.
Shirly Street
Nassau, Bahamas
Attention: Richard C. Mauran, Chairman
and CEO and Suzanne J. Black,
Treasurer and CFO
With a copy to:
Karen L. Barsch, Esq.
Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
950 Seventeenth Street, Suite 1600
Denver, Colorado 80202
If to the Company, to:
PMC International, Inc.
555 17th Street
Suite 1400
Denver, Colorado 80202
Attention: Chief Executive Officer
With a copy to:
Holme Roberts & Owen LLP
1700 Lincoln
Suite 4100
Denver, CO 80206
Attention: Francis R. Wheeler
If to Phillips, to:
Kenneth S. Phillips
c/o PMC International, Inc.
555 17th Street
Suite 1400
Denver, Colorado 80202
If to Andrus, to:
David L. Andrus
c/o PMC International, Inc.
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555 17th Street
Suite 1400
Denver, Colorado 80202
If to Phillips & Andrus, LLC
c/o, PMC international, Inc.
555 17th Street
Suite 1400
Denver, Colorado 80202
Attention: Kenneth S. Phillips
Any party may, by written notice so delivered to the others, change the address
or facsimile number to which delivery shall thereafter be made.
(j) Remedies Not Exclusive. No remedy conferred by any of the provisions of
this Agreement is intended to be exclusive of any other remedy. The election
of any one remedy by a party shall not constitute a waiver of the right to
pursue other available remedies.
(k) Successors and Assigns. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties and their successors, assigns,
transferees, heirs and legal representatives, including all persons who acquire
shares of Common Stock from a party subject to this Agreement.
(l) Prevailing Party. In the event of any litigation with regard to this
Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall immediately pay upon
demand, all reasonable fees and expenses of counsel for the prevailing party.
(m) Arbitration. The parties hereby agree that any legal suit, dispute, claim,
demand, controversy or cause of action of every kind and nature whatsoever,
known or unknown, fixed or contingent, that either may now have or at any time
in the future claim to have based in whole or in part, or arising from or out
of or that in any way is related to the negotiations, execution, interpretation
or enforcement of this Agreement (collectively, the "Disputes") shall be
completely and finally settled by submission of any such Disputes to
arbitration under the rules of the American Arbitration Association ("AAA")
then in effect. There shall be one arbitrator, and such arbitrator shall be
chosen by mutual agreement of the parties in accordance with AAA rules. Unless
the parties agree otherwise, the arbitration proceedings shall take place in
Denver, Colorado. Notice of demand for arbitration shall be filed in writing
with the other party to this
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Agreement and with the AAA. In no event shall the demand for arbitration be
made after the date when institution of legal or equitable proceedings based on
such Dispute would be barred by the applicable statute of limitations. The
findings of the arbitrator shall be final and binding on the parties. Judgment
on such award may be entered in any court of competent jurisdiction, or
application may be made to that court for a judicial acceptance of the award
and an order or enforcement, as the party seeking to enforce that award may
elect.
(n) Existing Shareholder Agreement. This Agreement replaces in its
entirety the Shareholders Agreement dated as of July 26, 1995, by the
Company, Bedford, Phillips, Andrus and HoldCo., which is hereby
terminated.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first written above.
PMC INTERNATIONAL, INC., a Colorado corporation
By: /s/ KENNETH S. PHILLIPS
-------------------------------------
Kenneth S. Phillips, President & CEO
BEDFORD CAPITAL FINANCIAL CORPORATION, a Liberia corporation
By: /s/ KENNETH S. PHILLIPS
-------------------------------------
Kenneth S. Phillips, Chairman,
President & CEO
By: /s/ DAVID L. ANDRUS
-------------------------------------
David L. Andrus
PHILLIPS & ANDRUS, LLC, a Colorado limited liability company
By: /s/ KENNETH S. PHILLIPS
-------------------------------------
Kenneth S. Phillips, Manager
EXHIBIT A
Section 7.2 to the Subscription Agreements
Directorships. At a date (or dates) mutually acceptable to the Company, the
Subscriber and the Other Subscribers (which date shall be no more than 90 days
following the Closing unless the Subscriber and the Other Subscribers shall
agree), the Company shall cause its Board of Directors to be expanded by two
and shall appoint a director selected by the Subscriber and the Other
Subscribers (the "Subscribers' Director") and a director who is mutually
acceptable to the Company, the Subscriber and the Other Subscribers (the
"Mutually Acceptable Director"), which Mutually Acceptable Director shall
initially be Emmett J. Daly. D. Porter Bibb shall continue to serve as a member
of the Board of Directors until the earlier of such time as both the
Subscribers' Director and the Mutually acceptable Director have been appointed
as such or his voluntary resignation from the Board of Directors. The Company
agrees to nominate for director and solicit proxies or consents in favor of the
(a) Subscribers' Director
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for so long as the Subscriber and the Other Subscribers own, individually or in
the aggregate, 10% or more of the outstanding Common Stock and (b) Mutually
Acceptable Director for so long as the Subscriber and the Other Subscribers
own, individually or in the aggregate, 5% or more of the outstanding Common
Stock.
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AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of December 24, 1996, is between PMC International, Inc., a Colorado
corporation (the "Company") and Bedford Capital Financial Corporation, a
corporation organized under the laws of Liberia ("Bedford"), and amends and
restates in its entirely that certain Registration Rights Agreement between the
same parties dated as of July 26, 1995 (the "Original Agreement").
RECITALS
A. Concurrent with the execution and delivery of this Agreement, the Company is
effecting the closing of a private placement (the "Offering") of its common
stock, par value $.01 per share ("Common Stock"), pursuant to the terms of the
Private Placement Memorandum dated November 11, 1996, as amended. Closing of
the Offering is conditioned upon effectiveness of the restructuring of the
relationship of the Company and its subsidiaries with Bedford (the
"Restructuring") as reflected in this Agreement and the Restructuring Agreement
dated as of the date hereof among Bedford, the Company and the Company's
subsidiaries.
B. In connection with the Restructuring, Bedford and the Company have agreed to
modify the Original Agreement in the manner provided herein, to be effective
upon closing of the Offering. The Company has agreed to register certain
securities of Bedford in connection with a registration statement being filed
with the Securities and Exchange Commission (the "Commission") pursuant to that
certain Registration Rights Agreement (the "Registration Rights Agreement")
dated as of the date hereof among the Company, Keefe, Bruyette & Woods, Inc.,
certain persons who made bridge loans to the Company in November 1996 and
subscribers for shares of Common Stock in the Offering.
AGREEMENT
The parties hereto agree that the Original Agreement is hereby amended and
restated to read in its entirety as follows:
Section 1. Demand Registration Rights.
(a) The Company shall, within 45 calendar days after the date hereof, file a
"shelf registration" statement (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), covering the
Registrable Securities (as defined below) and all shares
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of Common Stock and other securities which the Company may elect to register on
behalf of other persons and shall use its best efforts to have such
Registration Statement declared effective by the Commission. The Company agrees
to use its best efforts to keep the Registration Statement continuously
effective for the period commencing on the date of effectiveness and ending on
the date it is no longer required to maintain effectiveness under the
Registration Rights Agreement, but in any event until the earlier to occur of
(i) the date when each of the Registrable Securities ceases to be Registrable
Securities and (ii) the date when each of the Registrable Securities not
otherwise transferred or sold pursuant to the Registration Statement may be
sold or distributed by the holder thereof in reliance upon Rule 144 (giving
effect to all conditions thereof, including, without limitation, the volume
limitations contained in Rule 144(e)). The Company shall pay all registration
expenses incurred in connection with the Registration Statement as contemplated
by the Registration Rights Agreement, but Bedford shall pay all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such holder's Registrable Securities pursuant to the
Registration Statement. For purposes of this Agreement, "Registrable
Securities" means any and all shares of Common Stock held by Bedford on the
date hereof (including shares issued in the Restructuring), any and all shares
of Common Stock acquired by Bedford directly from the Company or an affiliate
of the Company in an unregistered transaction not involving any public
offering, including shares of Common Stock issued upon exercise of warrants
issued to Bedford as part of the Restructuring and any securities issued or
issuable with respect to any Common Stock referred to above by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
Securities will cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (iii) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, or (iv) they shall have ceased to be
outstanding.
(b) Bedford may at any time while the Registration Statement is effective,
request that the Company amend or supplement the Registration Statement to
effect a distribution of its shares of Common Stock to its shareholders;
provided, that the Company shall not be obligated
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<PAGE>
to effect any such amendment or supplement if such action would in any way
adversely affect the rights of the holders of Registrable Securities (as such
term is defined in the Registration Rights Agreement).
(c) At any time or from time to time after the Registration Statement is no
longer effective, Bedford may request that the Company effect the registration
under the Securities Act of Bedford's Registrable Securities. The Company shall
file as soon as practicable, and in any event within sixty (60) days of the
receipt of such request, and use its best efforts to cause to become effective
as soon as practicable, the registration under the Securities Act of all
Registrable Securities for which Bedford has requested registration. The
registration requested pursuant to this Section 1(c) shall be referred to
herein as "Demand Registration." Bedford shall have two rights to request
Demand Registrations. The Company will not include in any Demand Registration
any securities other than Bedford's Registrable Securities without the prior
written consent of Bedford. In the case of any underwritten public offering
being effected pursuant to a Demand Registration, the underwriter or
underwriters with respect to such offering shall be selected by Bedford. If at
any time of any request to register Registrable Securities pursuant to this
Section 1, the Company is engaged or has firm plans to engage within 60 days of
the time of the request in a registered public offering as to which Bedford may
seek to include Registrable Securities pursuant to piggyback rights under
Section 2, then the Company may, at its option, direct that such request may be
delayed for a period not in excess of 6 months from the effective date of such
offering, such right to delay a request to be exercised by the Company not more
than once in any 12 month period.
Section 2. Piggyback Registration Rights. Whenever the Company proposes to
register any of its securities under the Securities Act (other than pursuant to
a Demand Registration and other than a registration on Form S-8 of securities
issuable pursuant to employee benefit plans) and the registration form to be
used may be used for the registration of the Common Stock (a "Piggyback
Registration"), the Company will give prompt written notice to Bedford of its
intention to effect such a registration and will include in such registration
all of Bedford's Registrable Securities with respect to which the Company has
received a written request for inclusion therein within fifteen (15) days after
the receipt of the Company's notice. In the event that any negotiation pursuant
to a Piggyback Registration shall be, in whole or in part, an underwritten
public offering, Bedford shall have the right to elect that its Registrable
Securities be included in the underwriting on the same terms and conditions as
the shares of the Company otherwise being sold through underwriters under such
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<PAGE>
registration. If a Piggyback Registration is an underwritten primary
registration by the Company, and Bedford's Registrable Securities requested for
inclusion pursuant to this Section 2 would constitute more than 25% of the
total number of shares to be included in a proposed underwritten public
offering, and the managing underwriter advises the Company in writing that in
its reasonable opinion the number of securities requested to be included in
such registration exceeds the number which can be sold in such offering, the
Company will include in such registration, in order of priority, the following
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested by Bedford to be included in such
registration, and (iii) third, other securities requested to be included in
such registration by persons other than Bedford, provided, however, that the
shares of Bedford's Registrable Securities to be included in such offering
shall constitute at least 25% of the total number of shares to be included in
such offering.
3. Registration Procedures. Except for the filing of the Registration
Statement, which is being effected pursuant to the Registration Rights
Agreement and which will be governed by the registration procedures specified
in the Registration Rights Agreement, if and whenever the Company is required
by the provisions of this Agreement to register any of Bedford's Registrable
Securities under the Securities Act, the Company will, as expeditiously as
possible:
(a) Prepare and file with the Commission a registration statement with respect
to such securities and cause or use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby, provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will furnish
to Bedford's counsel copies of all documents proposed to be filed;
(b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for the period
of distribution contemplated and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement in accordance with Bedford's intended method of
disposition set forth in such registration statement for such period;
(c) furnish to Bedford and to each underwriter such number of copies of the
registration statement the prospectus included therein (including each
preliminary prospectus), all post-effective amendments and such other documents
as such persons may reasonably request in
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order to facilitate the public sale or other disposition of the securities
covered by such registration statement;
(d) use its best efforts to register or qualify the securities covered by such
registration statement under the securities or blue sky laws of such
jurisdictions as Bedford, or in the case of an underwritten public offering,
the managing underwriter, shall reasonably request, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business in any jurisdiction where it is not so qualified or to
take any action which would subject it to taxation or general service of
process in any jurisdiction where it is not otherwise subject to such taxation
or general service of process;
(e) notify Bedford promptly after it shall receive notice thereof, of the time
when such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statements has been filed;
(f) notify Bedford promptly of any request by the Commission for the
amending or supplementing of such registration statement or prospectus
or for additional information;
(g) prepare and file with the Commission, promptly upon the request of Bedford,
any amendments or supplements to such registration statement or prospectus
which, in the opinion of counsel for Bedford is required under the Securities
Act or the rules and regulations thereunder in connection with the distribution
of the Registrable Securities by Bedford;
(h) advise Bedford promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the Commission suspending the
effectiveness of a registration statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or obtain its withdrawal if a stop order should
be issued;
(i) not file any amendment or supplement to a registration statement or
prospectus to which Bedford shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material respects with the
requirements of the Securities Act or the rules and regulations thereunder,
after having been furnished with a copy thereof at least three business days
prior to the filing thereof;
(j) immediately notify Bedford at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus contained
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in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and, as expeditiously as
possible, amend or supplement such prospectus to eliminate the untrue statement
or the omission;
(k) use its best efforts (if the offering is underwritten) to furnish, at the
request of Bedford, on the date that securities are delivered to the
underwriters for sale pursuant to such registration; (i) an opinion dated such
date of counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to Bedford, stating that such registration
statement has become effective under the Securities Act and that (A) to the
best knowledge of such counsel, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act, and (B) the
registration statement, the related prospectus, and each amendment or
supplement thereof, comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need express no
opinion as to financial statements and financial and statistical data contained
therein) and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters and to
Bedford, stating that they are independent public accountants within the
meaning of the Securities Act, and that, in the opinion of such accountants,
the financial statements of the Company included in the registration statement
or the prospectus, or any amendment or supplement thereof, comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act;
(l) make available for inspection by Bedford, any underwriter participating in
any distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by Bedford or such underwriter, all
financial and other records, pertinent corporate documents and properties of
the Company and its subsidiaries, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all information
reasonably requested by Bedford or such underwriter, attorney, accountant or
agent in connection with such registration statement;
(m) use its best efforts to cause all such securities to be listed on such
securities exchange on which similar securities issued by the Company are then
listed;
(n) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission.
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4. Registration Expenses and Indemnification.
(a) All Registration Expenses incurred in connection with (i) a Demand
Registration or (ii) a Piggyback Registration will be borne by the Company. As
used herein, "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including, without
limitation, all registration and filing fees, fees and expenses of compliance
with federal and state securities or blue sky laws, securities laws of any
foreign jurisdictions, printing expenses, messenger and delivery expenses and
fees and disbursements of counsel for Bedford and all independent certified
public accountants, underwriters (excluding discounts and commissions
attributable to the sale of Registrable Securities) and other persons retained
by Bedford or the Company.
(b) The Company agrees to indemnify, to the extent permitted by law, Bedford
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statement therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by Bedford expressly for use
therein or by Bedford's failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto in conformity with
applicable federal and state securities laws after the Company has furnished
Bedford with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company will indemnify such underwriters, their
officers and directors and each person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of Bedford.
(c) In connection with any registration statement in which Bedford is
participating, Bedford shall furnish to the Company in writing such information
and affidavits as the Company reasonably requests for use in connection with
any such registration statement or prospectus and, to the extent permitted by
law, will indemnify the Company, its directors and officers and each person who
controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the
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statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished
in writing by Bedford; provided that the liability of Bedford will be in
proportion to and limited to the net amount received by Bedford from the sale
of the Registrable Securities pursuant to such registration statement.
(d) Any party entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party and its
legal counsel a conflict of interest may exist between such indemnified party
and any other of such indemnified parties with respect to such claim.
(e) The indemnification provided for under this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling person of such
indemnified party and will survive the offering of any registrable securities
of the Company in a registration statement, and otherwise.
(f) If the indemnification provided for in this Section 4 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, liability, claim, damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statement or omissions that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information
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supplied by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(g) Notwithstanding the foregoing, to the extent that the provisions of
indemnification and contribution contained in an underwriting agreement entered
into in connection with an underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
5. Miscellaneous.
(a) All notices given hereunder shall be in writing, shall be given by
overnight courier service, telecopy, facsimile or copy delivered by hand, and,
(i) if delivered by overnight air courier service, shall be deemed received one
business day after having been deposited with such overnight air courier
service, postage prepaid, and (ii) if delivered by telex, telecopy or hand
delivery, shall be deemed received on the day the notice is sent, in each case
addressed as follows:
If to Bedford, to it at:
Bedford Capital Financial Corporation
2nd Floor
Charlotte Hs.
Shirly Street
Nassau, Bahamas
Attention: Richard C. Mauran, Chairman and CEO
and Suzanne J. Black, Treasurer and CFO
With a copy to:
Karen L. Barsch, Esq.
Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
950 Seventeenth Street, Suite 1600
Denver, Colorado 80202
If to the Company, to it at:
PMC International, Inc.
555 17th Street
Suite 1400
Denver, Colorado 80202
Attention: Chief Executive Officer
With a copy to:
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Holme Roberts & Owen LLP
1700 Lincoln
Suite 4100
Denver, CO 80206
Attention: Francis R. Wheeler
Any party may, by written notice so delivered to the others, change the address
or facsimile number to which delivery shall thereafter be made.
(b) This Agreement may be executed in any number of counterparts which
together, including those received by facsimile transmission which shall be
effective as originals, shall constitute but one and the same instrument.
(c) This Agreement constitutes and incorporates the entire agreement between
the parties concerning the subject matter hereof and supersedes and cancels any
prior or contemporaneous agreements, verbal or written, between the parties
concerning the subject matter hereof.
(d) No amendment or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by each of Bedford and
the Company.
(e) The invalidity, illegality or unenforceability of any provision of this
Agreement shall not in any way affect or impair the legality or enforceability
of the remaining provisions hereof.
(f) All references in this Agreement to Sections and other subdivisions are to
Sections and other subdivisions of this Agreement unless expressly provided
otherwise. The words "this Agreement", "this instrument", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited.
(g) The obligations of the Company to effect registrations of securities
hereunder shall terminate at such time as Bedford beneficially owns less than
5% of the Company's issued and outstanding Common Stock (determined as provided
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or any equivalent successor rule but excluding Common Stock as
to which Bedford does not have any pecuniary interest determined as provided in
the rules adopted under Section 16 of the Exchange Act).
(h) This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
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(i) This agreement shall be governed by and construed in accordance with the
laws of the state of Colorado. Each party hereby consents to venue and
jurisdiction in the District Court in and for the City and County of Denver,
State of Colorado and in the United States District Court for the District of
Colorado with respect to any claim arising out of or in connection with this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first
written above.
PMC INTERNATIONAL, INC., a Colorado corporation
By: /s/ Kenneth S. Phillips
BEDFORD FINANCIAL CAPITAL CORPORATION, a corporation organized under
the laws of Liberia
By: /s/ J.W. Nevil Thomas
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THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
UNDER SUCH ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION THEREFROM UNDER SUCH
ACT. THIS WARRANT AND SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH
THE CONDITIONS SPECIFIED IN THIS WARRANT.
PMC INTERNATIONAL, INC.
Common Stock Purchase Warrant
No. N-6 November 22, 1996
PMC International, Inc. (the "Company"), a Colorado corporation, for
value received, hereby certifies that Bedford Capital Financial, Inc.
("Bedford"), or registered assigns, is entitled to purchase from the Company
6,250 duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock, par value $.01 per share (the "Common Stock"), of the Company
at the purchase price per share of $1.625, at any time or from time to time
prior to 7:00 P.M., New York City time, on November 22, 2001, all subject to
the terms, conditions and adjustments set forth below in this warrant (the
"Warrant", such term to include any such warrants issued in substitution
therefor).
Certain capitalized terms used in this Warrant are defined in Section
12; references to a "Section" are, unless otherwise specified, to one of the
sections of this Warrant.
1. EXERCISE OF WARRANT. 1.1. MANNER OF EXERCISE. This Warrant may be
exercised by the holder hereof, in whole or in part, during normal business
hours on any Business Day, by surrender of this Warrant to the Company at its
principal office, accompanied by a subscription in substantially the form
attached to this Warrant (or a reasonable facsimile thereof) duly executed by
such holder and accompanied by payment, in cash, by certified or official
bank check payable to the order of the Company, or in the manner provided in
Section 1.4 (or by any combination of such methods), in the amount obtained
by multiplying (A) the number of shares of Common Stock (without giving
effect to any adjustment thereof) designated in such subscription by (B)
$1.625, and such holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock determined as provided in Sections 2 through 4.
1.2 WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on
the Business Day on which this Warrant shall have been surrendered to the
Company as provided in Section 1.1, and at such time the Person or Persons in
whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such exercise as provided in Section 1.3 shall
be deemed to have become the holder or holders of record thereof.
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1.3 DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable after
each exercise of this Warrant, in whole or in part, and in any event within
five Business Days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the holder hereof or, subject to Section 9, as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct,
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock to
which such holder shall be entitled upon such exercise plus, in lieu of any
fractional share to which such holder would otherwise be entitled, cash in
an amount equal to the same fraction of the Market Price per share on the
Business Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or Warrants
of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal (without giving effect to any
adjustment thereof) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the holder upon
such exercise as provided in Section 1.1.
1.4 PAYMENT BY APPLICATION OF SHARES OTHERWISE ISSUABLE. Upon any
exercise of this Warrant, the holder hereof may, at its option, instruct the
Company, by written notice accompanying the surrender of this Warrant at the
time of such exercise, to apply to the payment required by Section 1.1 such
number of the shares of Common Stock otherwise issuable to such holder upon
such exercise as shall be specified in such notice, in which case an amount
equal to the excess of the aggregate Current Market Price of such specified
number of shares on the date of exercise over the portion of the payment
required by Section 1.1 attributable to such shares shall be deemed to have
been paid to the Company and the number of shares issuable upon such exercise
shall be reduced by such specified number.
2. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE. 2.1 GENERAL;
WARRANT PRICE. The number of shares of Common Stock which the holder of this
Warrant shall be entitled to receive upon each exercise hereof shall be
determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this Section 2) be issuable upon such
exercise, as designated by the holder hereof pursuant to Section 1.1, by the
fraction of which (A) the numerator is $1.625 and (B) the denominator is the
Warrant Price in effect on the date of such exercise. The "Warrant Price"
shall initially be $1.625 per share, shall be adjusted and readjusted from
time to time as provided in this Section 2 and, as so adjusted or readjusted,
shall remain in effect until a further adjustment or readjustment thereof is
required by this Section 2.
2.2 ADJUSTMENT OF WARRANT PRICE.
2.2.1 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In case the
Company at any time or from time to time after the date hereof shall issue or
sell Additional Shares of
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Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 2.3 or 2.4) without consideration or for a consideration
per share less than the Current Market Price, then, and in each such case,
subject to Section 2.7, such Warrant Price shall be reduced, concurrently
with such issue or sale, to a price (calculated to the nearest .001 of a
cent) determined by multiplying such Warrant Price by a fraction
(a) the numerator of which shall be (I) the number of shares of
Common Stock outstanding immediately prior to such issue or sale plus
(II) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase at
such Current Market Price, and
(b) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale,
PROVIDED that, for the purposes of this Section 2.2.1, (X) immediately after
any Additional Shares of Common Stock are deemed to have been issued pursuant
to Section 2.3 or 2.4, such Additional Shares shall be deemed to be outstanding,
and (Y) treasury shares shall not be deemed to be outstanding.
2.2.2 EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case the Company at
any time or from time to time after the date hereof shall declare, order, pay or
make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property by way
of dividend or spin-off, reclassification, recapitalization or similar corporate
rearrangement) on the Common Stock, other than dividends or distributions
payable in Additional Shares of Common Stock and other than cash dividends or
other cash distributions, which do not constitute Extraordinary Cash
Dividends, then, and in each such case, subject to Section 2.7, the Warrant
Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of any class of securities entitled to
receive such dividend or distribution shall be reduced, effective as of the
close of business on such record date, to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Warrant Price by a fraction
(x) the numerator of which shall be the Current Market Price in
effect on such record date or, if the Common Stock trades on an ex-
dividend basis, on the date prior to the commencement of ex-dividend
trading, less an amount equal to the fair market value of such dividend
or distribution as of the payment date of such dividends or distributions
(as determined in good faith by the Board of Directors of the Company)
applicable to one share of Common Stock, and
(y) the denominator of which shall be such Current Market Price.
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2.3. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been fixed, as of the
close of business on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), PROVIDED that such Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 2.5) of such shares would be less than the Current Market
Price immediately prior to such issue, sale, grant or assumption or
immediately prior to the close of business on such record date (or, if the
Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), as the case may be, and PROVIDED,
FURTHER, that in any such case in which Additional Shares of Common Stock are
deemed to be issued
(a) no further adjustment of the Warrant Price shall be made upon
the subsequent issue or sale of Convertible Securities or shares of Common
Stock upon the exercise of such Options or the conversion or exchange of
such Convertible Securities;
(b) if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof (by change of rate or otherwise), the Warrant Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement
of ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options, or the rights of conversion or
exchange under such Convertible Securities, which are outstanding at such
time;
(c) upon the expiration (or purchase by the Company and cancellation
or retirement) of any such Options which shall not have been exercised or
the expiration of any rights of conversion or exchange under any such
Convertible Securities which (or purchase by the Company and cancellation
or retirement of any such Convertible Securities the rights of conversion
or exchange under which) shall not have been exercised, the Warrant Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement
of ex-dividend
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trading, as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or Convertible
Securities, the only Additional Shares of Common Stock issued or
sold were the Additional Shares of Common Stock, if any, actually
issued or sold upon the exercise of such Options or the conversion
or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the
Company for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration actually received by
the Company upon such exercise, or for the issue or sale of all such
Convertible Securities which were actually converted or exchanged,
plus the additional consideration, if any, actually received by the
Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued or sold upon the
exercise of such Options were issued at the time of the issue, sale,
grant or assumption of such Options, and the consideration received by
the Company for the Additional Shares of Common Stock deemed to have
then been issued was the consideration actually received by the
Company for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to have been
received by the Company (pursuant to Section 2.5) upon the issue or
sale of such Convertible Securities with respect to which such Options
were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Warrant Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Options or Convertible Securities;
and
(e) in the case of any such Options which expire by their terms not
more than 45 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment
shall be made in the manner provided in subdivision (c) above.
2.4. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case the Company
at any time or from time to time after the date hereof shall declare or pay
any dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number
of shares of Common Stock (by reclassification or
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<PAGE>
otherwise than by payment of a dividend in Common Stock), then, and in each
such case, Additional Shares of Common Stock shall be deemed to have been
issued (A) in the case of any such dividend, immediately after the close of
business on the record date for the determination of holders of any class of
securities entitled to receive such dividend, or (B) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
2.5. COMPUTATION OF CONSIDERATION. For the purposes of this Section 2,
(a) the consideration for the issue or sale of any Additional Shares
of Common Stock shall, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, be computed at the net
amount of cash received by the Company, without deducting any expenses
paid or incurred by the Company or any commissions or compensations
paid or concessions or discounts allowed to underwriters, dealers or
others performing similar services in connection with such issue or
sale,
(ii) insofar as it consists of property (including securities)
other than cash, be computed at the fair value thereof at the time of
such issue or sale, as determined in good faith by the Board of
Directors of the Company, and
(iii) in case Additional Shares of Common Stock are issued or
sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be the portion of such
consideration so received, computed as provided in clauses (i) and
(ii) above, allocable to such Additional Shares of Common Stock, all
as determined in good faith by the Board of Directors of the Company;
(b) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 2.3, relating to Options and Convertible Securities,
shall be deemed to have been issued for a consideration per share
determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible Securities in question, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration to
protect against dilution) payable to the Company upon the exercise in
full of such Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible
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Securities, in each case computing such consideration as provided in
the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number to
protect against dilution) issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 2.4, relating to stock dividends, stock splits, etc.,
shall be deemed to have been issued for no consideration.
2.6. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding shares
of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7. MINIMUM ADJUSTMENT OF WARRANT PRICE. If the amount of any adjustment
of the Warrant Price required pursuant to this Section 2 would be less than one
percent (1%) of the Warrant Price in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent (1%) of such
Warrant Price.
3. CONSOLIDATION, MERGER, ETC. ADJUSTMENTS FOR CONSOLIDATION, MERGER,
SALE OF ASSETS, REORGANIZATION, ETC. In case the Company after the date
hereof (A) shall consolidate with or merge into any other Person and shall
not be the continuing or surviving corporation of such consolidation or
merger, or (B) shall permit any other Person to consolidate with or merge
into the Company and the Company shall be the continuing or surviving Person
but, in connection with such consolidation or merger, the Common Stock shall
be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (C) shall transfer all or
substantially all of its properties or assets to any other Person in a
transaction or series of transactions in connection with which the Common
Stock shall be changed into or exchanged for stock or other securities of any
other Person or cash or any other property, or (D) shall effect a capital
reorganization or reclassification of the Common Stock (other than a capital
reorganization or reclassification resulting in the issue of Additional
Shares of Common Stock for which adjustment in the Warrant Price is provided
in Section 2.2.1 or 2.2.2), then, and in the case of each such transaction,
proper provision shall be made so that, upon the basis and the terms
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and in the manner provided in this Warrant, the holder of this Warrant, upon
the exercise hereof at any time after the consummation of such transaction,
shall be entitled to receive (at the aggregate Warrant Price in effect at the
time of such consummation for all Common Stock issuable upon such exercise
immediately prior to such consummation), in lieu of the Common Stock issuable
upon such exercise prior to such consummation, the highest amount of
securities, cash or other property to which such holder would actually have
been entitled as a shareholder upon such consummation if such holder had
exercised the rights represented by this Warrant immediately prior thereto,
subject to adjustments (subsequent to such consummation) as nearly equivalent
as possible to the adjustments provided for in Sections 2 through 4, PROVIDED
that if a purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than 50% of the outstanding shares of Common
Stock, and if the holder of such Warrants so designates in a notice given to
the Company on or before the date immediately preceding the date of the
consummation of such transaction, the holder of such Warrants shall be
entitled to receive the highest amount of securities, cash or other property
to which such holder would actually have been entitled as a shareholder if
the holder of such Warrants had exercised such Warrants prior to the
expiration of such purchase, tender or exchange offer and accepted such
offer, subject to adjustments (from and after the consummation of such
purchase, tender or exchange offer) as nearly equivalent as possible to the
adjustments provided for in Sections 2 through 4.
3.2. ASSUMPTION OF OBLIGATIONS. Notwithstanding anything contained in
the Warrants to the contrary, the Company will not effect any of the
transactions described in clauses (a) through (d) of Section 3.1 unless,
prior to the consummation thereof, each Person (other than the Company) which
may be required to deliver any stock, securities, cash or property upon the
exercise of this Warrant as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory to, the holder of this
Warrant, (A) the obligations of the Company under this Warrant (and if the
Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any
continuing obligations of the Company under this Warrant), (B) the obligations
of the Company under the Registration Rights Agreement and (C) the obligation
to deliver to such holder such shares of stock, securities, cash or property
as, in accordance with the foregoing provisions of this Section 3, such
holder may be entitled to receive, and such Person shall have similarly
delivered to such holder an opinion of counsel for such Person, which counsel
shall be reasonably satisfactory to such holder, stating that this Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this Section 3)
shall be applicable to the stock, securities, cash or property which such
Person may be required to deliver upon any exercise of this Warrant or the
exercise of any rights pursuant hereto.
4. OTHER DILUTIVE EVENTS. In case any event shall occur as to which
the provisions of Section 2 or Section 3 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such sections, then, in each such case, the Company shall
appoint a firm of independent certified public accountants of recognized
national standing (which may be the
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regular auditors of the Company), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in Sections 2 and 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon receipt of
such opinion, the Company will promptly mail a copy thereof to the holder of
this Warrant and shall make the adjustments described therein.
5. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
its articles or certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (A)
will not permit the par value of any shares of stock receivable upon the
exercise of this Warrant to exceed the amount payable therefor upon such
exercise, (B) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of the Warrants from time to
time outstanding, and (C) will not take any action which results in any
adjustment of the Warrant Price if the total number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would
exceed the total number of shares of Common Stock then authorized by the
Company's articles or certificate of incorporation and available for the
purpose of issue upon such exercise.
6. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock issuable upon the
exercise of this Warrant, the Company at its expense will promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant
and cause independent certified public accountants of recognized national
standing (which may be the regular auditors of the Company) selected by the
Company to verify such computation (other than any computation of the fair
value of property as determined in good faith by the Board of Directors of
the Company) and prepare a report setting forth such adjustment or
readjustment and showing in reasonable detail the method of calculation
thereof and the facts upon which such adjustment or readjustment is based,
including a statement of (A) the consideration received or to be received by
the Company for any Additional Shares of Common Stock issued or sold or
deemed to have been issued, (B) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (C) the Warrant Price in effect
immediately prior to such issue or sale and as adjusted and readjusted (if
required by Section 2) on account thereof. The Company will forthwith mail a
copy of each such report to each holder of a Warrant and will, upon the
written request at any time of any holder of a Warrant, furnish to such
holder a like report setting forth the Warrant Price at the time in effect
and showing in reasonable detail how it was calculated. The Company will also
keep copies of all such reports at its principal office and will cause the
same to be available for inspection at such office during
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normal business hours by any holder of a Warrant or any prospective purchaser
of a Warrant designated by the holder thereof.
7. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right
to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the properties or assets of the
Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which
any such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up is to take place and
the time, if any such time is to be fixed, as of which the holders of record
of Common Stock shall be entitled to exchange their shares of Common Stock
for the securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
20 days prior to the date therein specified, in the case of any date referred
to in the foregoing subdivision (i), and at least 90 days prior to the date
therein specified, in the case of the date referred to in the foregoing
subdivision (ii).
8. REGISTRATION OF COMMON STOCK. The shares of Common Stock issuable
upon exercise of this Warrant shall constitute Registrable Securities (as
such term is defined in the Registration Rights Agreement). Each holder of
this Warrant shall be entitled to all of the benefits afforded to a holder of
any such Registrable Securities under the Registration Rights Agreement and
such holder, by its acceptance of this Warrant, agrees to be bound by and to
comply with the terms and conditions of the Registration Rights Agreement
applicable to such holder as a holder of such Registrable Securities. At any
such time as Common Stock is listed on any national securities exchange, the
Company will, at its expense, obtain promptly and maintain the approval for
listing on each such exchange, upon official notice of issuance, the shares
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of Common Stock issuable upon exercise of the then outstanding Warrants and
maintain the listing of such shares after their issuance.
9. RESTRICTIONS ON TRANSFER. 9.1. RESTRICTIVE LEGENDS. Except as
otherwise permitted by this Section 9, each certificate for Common Stock
issued upon the exercise of any Warrant, and each certificate issued upon the
transfer of any such Common Stock, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred
in the absence of such registration or an exemption therefrom under
such Act. Such shares may be transferred only in compliance with the
conditions specified in the Common Stock Purchase Warrant issued by
PMC International, Inc. A complete and correct copy of the form of
such Warrant is available for inspection at the principal office of
PMC International, Inc. and will be furnished to the holder of such
shares upon written request and without charge."
9.2. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior to any
transfer of any Warrant, the holder thereof will give written notice to the
Company of such holder's intention to effect such transfer and shall deliver
an opinion of counsel (which may be counsel to the Company), in form and
substance reasonably satisfactory to the Company, to the effect that the
proposed transfer may be effected without registration of such Warrant or
Common Stock issued upon the exercise of any Warrant under the Securities Act
or applicable state securities laws. Each certificate issued upon or in
connection with the transfer of any Warrant or Common Stock issued upon the
exercise of any Warrant shall bear the appropriate restrictive legend set
forth on the face of this Warrant or in Section 9.1, unless in the opinion of
such counsel such legend is no longer required to insure compliance with the
Securities Act. The Company will pay the reasonable fees and disbursements of
counsel (other than house counsel) in connection with any and all opinions
rendered by such counsel pursuant to this Section 9.2.
9.3. TERMINATION OF RESTRICTIONS. The restrictions imposed by this
Section 9 upon the transferability of any Warrant or Common Stock issued upon
the exercise of any Warrant shall cease and terminate as to any particular
Warrant or Common Stock issued upon the exercise of any Warrant (A) when such
securities shall have been effectively registered under the Securities Act,
or (B) when, in the opinion of counsel in form and substance reasonably
satisfactory to the Company, such restrictions are no longer required in
order to insure compliance with the Securities Act. Whenever such
restrictions shall cease and terminate as to any Warrant or Common Stock
issued upon the exercise of any Warrant, the holder thereof shall be entitled
to receive from the Company, without expense (other than applicable transfer
taxes, if any), new securities of like tenor not bearing the applicable
legends required by Section 9.1.
11
<PAGE>
10. RESERVATION OF STOCK, ETC. The Company will at all times reserve
and keep available, solely for issuance and delivery upon exercise of the
Warrants, the number of shares of Common Stock from time to time issuable
upon exercise of all Warrants at the time outstanding. All shares of Common
Stock issuable upon exercise of any Warrants shall be duly authorized and,
when issued upon such exercise, shall be validly issued and, in the case of
shares, fully paid and nonassessable with no liability on the part of the
holders thereof.
11. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
11.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. The Company will keep
at its principal office a register in which the Company will provide for the
registration of Warrants and the registration of transfers of Warrants. The
Company may treat the Person in whose name any Warrant is registered on such
register as the owner thereof for all other purposes, and the Company shall
not be affected by any notice to the contrary, except that, if and when any
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer thereof as the owner of such Warrant for all
purposes. Subject to Section 9, a Warrant, if properly assigned, may be
exercised by a new holder without a new Warrant first having been issued.
11.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon surrender of any Warrant
for registration of transfer or for exchange to the Company at its principal
office, the Company at its expense will (subject to compliance with Section
9, if applicable) execute and deliver in exchange therefor a new Warrant or
Warrants of like tenor, in the name of such holder or as such holder (upon
payment by such holder of any applicable transfer taxes) may direct, calling
in the aggregate on the face or faces thereof for the number of shares of
Common Stock called for on the face or faces of the Warrant or Warrants so
surrendered.
11.3 REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
any Warrant and, in the case of any such loss, theft or destruction of any
Warrant, upon delivery of an indemnity bond in such reasonable amount as the
Company may determine, or, in the case of any such mutilation, upon the
surrender of such Warrant for cancellation to the Company at its principal
office, the Company at its expense will execute and deliver, in lieu thereof,
a new Warrant of like tenor.
12. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
ADDITIONAL SHARES OF COMMON STOCK: All shares (including treasury
shares) of Common Stock issued or sold (or, pursuant to Section 2.3 or 2.4,
deemed to be issued) by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than
12
<PAGE>
(a) shares issued upon: the exercise of this Warrant; the exercise
of any other Warrants issued by the Company in connection with the New
Bridge Loan (as such term is defined in the Private Placement Memorandum);
the Restructuring (as such term is defined in the Private Placement
Memorandum); or as compensation to Keefe, Bruyette & Woods, Inc. in
connection with the Offering (as such term is defined in the Private
Placement Memorandum); the exercise of Options and warrants issued by the
Company in connection with debt financings of the Company that are
outstanding as of the date hereof; and the exchange of shares of the
Company's Series A Preferred Stock (whether occurring before or after the
date hereof);
(b) up to (i) 1,000,000 shares issued upon exercise of Options
granted to David Andrus but only if and to the extent granted as
contemplated by the Private Placement Memorandum (without any amendments or
supplements thereto) and (ii) 1,750,000 shares issued upon exercise of
Options granted to the Company's employees, consultants or directors under
bona fide benefit plans adopted by the Board of Directors and approved by
the holders of Common Stock when required by law, but only if and to the
extent that the exercise price in respect of any Option equals or exceeds
the Market Price on the date of the grant of such Option;
(c) shares issued to shareholders of any entity which merges into the
Company in proportion to their stock holdings in such entity immediately prior
to such merger, upon such merger
(d) shares issued by the Company in the Offering (including any
shares that may be issued as a result of the Company failing to comply with
certain provisions of the Registration Rights Agreement);
(e) shares issued in a bona fide public offering pursuant to a firm
commitment underwriting, but only if and to the extent that the
consideration received by the Company in respect of each share so issued
(as determined pursuant to Section 2.5) equals or exceeds 95% of the
Current Market Price;
(f) shares issued in a bona fide private placement through a
placement agent which is a member firm of the NASD or by the Company, but
only if and to the extent that the consideration received by the Company
in respect of each share so issued (as determined pursuant to Section 2.5)
equals or exceeds 90% of the Current Market Price;
(g) such additional number of shares as may become issuable upon the
exercise of any of the securities referred to in the foregoing clauses (a)
and (b) by reason of adjustments required pursuant to anti-dilution
provisions applicable to such securities as in effect on the date hereof.
13
<PAGE>
BUSINESS DAY: Any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in Denver, Colorado are authorized by
law to be closed. Any reference to "days" (unless Business Days are
specified) shall mean calendar days.
COMMON STOCK: As defined in the introduction to this Warrant, such term
to include any stock into which such Common Stock shall have been changed or
any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to
all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference.
COMPANY: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of
the Company hereunder in compliance with Section 3.
CONVERTIBLE SECURITIES: Any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
CURRENT MARKET PRICE: On any date specified herein, the average daily
Market Price during the period of the most recent 20 days, ending on such
date, on which the national securities exchanges were open for trading,
except that if no Common Stock is then listed or admitted to trading on any
national securities exchange or quoted in the over-the-counter market, the
Current Market Price shall be the Market Price on such date.
EXTRAORDINARY CASH DIVIDEND: Any cash dividend or distribution with
respect to the Common Stock the amount of which exceeds, when aggregated with
all other such dividends or distributions paid on the Common Stock over the
365-day period immediately preceding the record date for such dividend or
distribution, on a per share basis, the lesser of (i) 25% of the consolidated
net income of the Company for the four fiscal quarters immediately preceding
the record date for such dividend or distribution and (ii) 8% of the average
of the Market Prices of the Common Stock on each trading day during the
365-day period referred to above.
MARKET PRICE: On any date specified herein, the amount per share of the
Common Stock, equal to (A) the last sale price of such Common Stock, regular
way, on such date or, if no such sale takes place on such date, the average of
the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which such
Common Stock is then listed or admitted to trading, or (B) if such Common Stock
is not then listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the NASD, the last
trading price of the Common Stock on such date, or (C) if there shall have been
no trading on such date or if the Common Stock is not so designated, the average
of the closing bid and asked prices of the Common Stock on such date
14
<PAGE>
as shown by the NASD automated quotation system, or (D) if such Common Stock
is not then listed or admitted to trading on any national exchange or quoted
in the over-the-counter market, the higher of (X) the book value thereof as
determined by any firm of independent public accountants of recognized
standing selected by the Board of Directors of the Company as of the last day
of any month ending within 60 days preceding the date as of which the
determination is to be made or (Y) the fair value thereof determined in good
faith by the Board of Directors of the Company as of a date which is within
18 days of the date as of which the determination is to be made.
NASD: The National Association of Securities Dealers, Inc.
OPTIONS: Rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
PERSON: A corporation, an association, a partnership, an organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.
PRIVATE PLACEMENT MEMORANDUM: The Private Placement Memorandum of the
Company, dated as of November 11, 1996, and any amendments or supplements
thereto.
REGISTRATION RIGHTS AGREEMENT: The Registration Rights Agreement
to be entered into by Bedford and the Comapny, which agreement shall be
satisfactory in form and substance to each of Bedford and the Company.
SECURITIES ACT: The Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Securities and Exchange
Commission thereunder, all as the same shall be in effect at the time.
WARRANT PRICE: As defined in Section 2.1.
WARRANT: As defined in the introduction to this Warrant.
13. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this
Warrant shall be construed as conferring upon the holder hereof any rights as
a stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing
15
<PAGE>
any liabilities on such holder as a stockholder of the Company, whether such
obligation or liabilities are asserted by the Company or by creditors of the
Company.
15. NOTICES. All notices and other communications under this Warrant
shall be in writing and shall be delivered, or mailed by registered or
certified mail, return receipt requested, by a nationally recognized
overnight courier, postage prepaid, addressed (A) if to any holder of any
Warrant, at the registered address of such holder as set forth in the
register kept at the principal office of the Company, or (B) if to the
Company, to the attention of its President at its principal office, PROVIDED
that the exercise of any Warrant shall be effective in the manner provided in
Section 1.
16. AMENDMENTS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought.
17. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
18. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF COLORADO, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first set forth above.
PMC INTERNATIONAL, INC.
By: /s/ DAVID L. ANDRUS
-----------------------------------
Name: David L. Andrus
Title: V.P.
16
<PAGE>
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To PMC International, Inc.,
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, __________* shares of
Common Stock of PMC International, Inc. and herewith makes payment of $______
therefor, and requests that the certificates for such shares be issued in the
name of, and delivered to _________________________________, whose address is
______________________.
Dated:
--------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
--------------------------------------
(Street Address)
--------------------------------------
(City)(State)(Zip Code)
- - -------------------
* Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which this
Warrant is being exercised), in either case without making any adjustment for
Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of partial exercise, a new Warrant
or Warrants will be issued and delivered, representing the unexercised portion
of the Warrant, to the holder surrendering the Warrant.
<PAGE>
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ___________________________________
the right represented by such Warrant to purchase ___________ shares of Common
Stock of PMC International, Inc. to which such Warrant relates, and appoints
___________________________________ Attorney to make such transfer on the
books of PMC International, Inc. maintained for such purpose, with full power
of substitution in the premises.
Dated:
--------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
--------------------------------------
(Street Address)
--------------------------------------
(City)(State)(Zip Code)
Signed in the presence of:
- - ----------------------------------
<PAGE>
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION UNDER
SUCH ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION THEREFROM UNDER SUCH ACT.
THIS WARRANT AND SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THIS WARRANT.
PMC INTERNATIONAL, INC.
Common Stock Purchase Warrant
No. F-1 December 24, 1996
PMC International, Inc. (the "Company"), a Colorado corporation, for
value received, hereby certifies that Bedford Capital Financial Corporation
("Warrant Holder"), or registered assigns, is entitled to purchase from the
Company 130,000 duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock, par value $.01 per share (the "Common Stock"), of the
Company at the purchase price per share of $2.125, at any time or from time
to time prior to 7:00 P.M., New York City time, on December 24, 2001, all
subject to the terms, conditions and adjustments set forth below in this
warrant (the "Warrant", such term to include any such warrants issued in
substitution therefor).
Certain capitalized terms used in this Warrant are defined in Section
12; references to a "Section" are, unless otherwise specified, to one of the
sections of this Warrant.
1. EXERCISE OF WARRANT.
1.1. MANNER OF EXERCISE. This Warrant may be exercised by the
holder hereof, in whole or in part, during normal business hours on any
Business Day, by
<PAGE>
surrender of this Warrant to the Company at its principal office, accompanied
by a subscription in substantially the form attached to this Warrant (or a
reasonable facsimile thereof) duly executed by such holder and accompanied by
payment, in cash, by certified or official bank check payable to the order of
the Company, or in the manner provided in Section 1.4 (or by any combination
of such methods), in the amount obtained by multiplying (a) the number of
shares of Common Stock (without giving effect to any adjustment thereof)
designated in such subscription by (b) $2.125, and such holder shall
thereupon be entitled to receive the number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock determined as
provided in Sections 2 through 4.
1.2 WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall
be deemed to have been effected immediately prior to the close of business on
the Business Day on which this Warrant shall have been surrendered to the
Company as provided in Section 1.1, and at such time the Person or Persons in
whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such exercise as provided in Section 1.3 shall
be deemed to have become the holder or holders of record thereof.
1.3 DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable
after each exercise of this Warrant, in whole or in part, and in any event
within five Business Days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in
the name of and delivered to the holder hereof or, subject to Section 9, as
such holder (upon payment by such holder of any applicable transfer taxes)
may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock to which such holder shall be entitled upon such exercise plus, in lieu
of any fractional share to which such holder would otherwise be entitled,
cash in an amount equal to the same fraction of the Market Price per share on
the Business Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces thereof
for the number of shares of Common Stock equal (without giving effect to any
adjustment thereof) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the holder upon
such exercise as provided in Section 1.1.
1.4 PAYMENT BY APPLICATION OF SHARES OTHERWISE ISSUABLE. Upon any
exercise of this Warrant, the holder hereof may, at its option, instruct the
Company, by written notice accompanying the surrender of this Warrant at the
time of such exercise, to apply to the payment required by Section 1.1 such
number of the shares of Common Stock otherwise issuable to such holder upon
such exercise as shall be specified in such notice, in which case an amount
equal to the excess of the aggregate Current Market Price of such specified
number of shares on the date
2
<PAGE>
of exercise over the portion of the payment required by Section 1.1
attributable to such shares shall be deemed to have been paid to the Company
and the number of shares issuable upon such exercise shall be reduced by such
specified number.
(i) ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
GENERAL; WARRANT PRICE. The number of shares of Common Stock which the
holder of this Warrant shall be entitled to receive upon each exercise hereof
shall be determined by multiplying the number of shares of Common Stock which
would otherwise (but for the provisions of this Section 2) be issuable upon
such exercise, as designated by the holder hereof pursuant to Section 1.1, by
the fraction of which (a) the numerator is $2.125 and (b) the denominator is
the Warrant Price in effect on the date of such exercise. The "Warrant Price"
shall initially be $2.125 per share, shall be adjusted and readjusted from
time to time as provided in this Section 2 and, as so adjusted or readjusted,
shall remain in effect until a further adjustment or readjustment thereof is
required by this Section 2.
ADJUSTMENT OF WARRANT PRICE.
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In case the Company
at any time or from time to time after the date hereof shall issue or sell
Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 2.3 or 2.4) without
consideration or for a consideration per share less than the Current Market
Price, then, and in each such case, subject to Section 2.7, such Warrant
Price shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction
(c) the numerator of which shall be (i) the number of shares
of Common Stock outstanding immediately prior to such issue or sale plus (ii)
the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of
Common Stock so issued or sold would purchase at such Current Market Price,
and
(d) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale,
PROVIDED that, for the purposes of this Section 2.2.1, (x) immediately after
any Additional Shares of Common Stock are deemed to have been issued pursuant
to Section 2.3 or 2.4, such Additional Shares shall be deemed to be
outstanding, and (y) treasury shares shall not be deemed to be outstanding.
(i) EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case
the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or
3
<PAGE>
additional stock or other securities or property by way of dividend or
spin-off, reclassification, recapitalization or similar corporate
rearrangement) on the Common Stock, other than dividends or distributions
payable in Additional Shares of Common Stock and other than cash dividends or
other cash distributions, which do not constitute Extraordinary Cash
Dividends, then, and in each such case, subject to Section 2.7, the Warrant
Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of any class of securities entitled to
receive such dividend or distribution shall be reduced, effective as of the
close of business on such record date, to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Warrant Price by a fraction
(x) the numerator of which shall be the Current Market Price in effect
on such record date or, if the Common Stock trades on an ex-dividend basis,
on the date prior to the commencement of ex-dividend trading, less an
amount equal to the fair market value of such dividend or distribution as
of the payment date of such dividends or distributions (as determined in
good faith by the Board of Directors of the Company) applicable to one
share of Common Stock, and
(y) the denominator of which shall be such Current Market Price.
1.2. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been fixed, as of the
close of business on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), PROVIDED that such Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 2.5) of such shares would be less than the Current Market
Price immediately prior to such issue, sale, grant or assumption or
immediately prior to the close of business on such record date (or, if the
Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), as the case may be, and PROVIDED,
FURTHER, that in any such case in which Additional Shares of Common Stock are
deemed to be issued
(a) no further adjustment of the Warrant Price shall be made upon
the subsequent issue or sale of Convertible Securities or shares of
Common Stock upon the exercise of such Options or the conversion or
exchange of such Convertible Securities;
4
<PAGE>
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have
been exercised or the expiration of any rights of conversion or exchange
under any such Convertible Securities which (or purchase by the Company
and cancellation or retirement of any such Convertible Securities the
rights of conversion or exchange under which) shall not have been
exercised, the Warrant Price computed upon the original issue, sale,
grant or assumption thereof (or upon the occurrence of the record date,
or date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration (or such cancellation or
retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or Convertible
Securities, the only Additional Shares of Common Stock issued or
sold were the Additional Shares of Common Stock, if any, actually
issued or sold upon the exercise of such Options or the conversion
or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the
Company for the issue, sale, grant or assumption of all such
Options, whether or not exercised, plus the consideration actually
received by the Company upon such exercise, or for the issue or
sale of all such Convertible Securities which were actually
converted or exchanged, plus the additional consideration, if any,
actually received by the Company upon such conversion or exchange,
and
(ii) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued or sold upon
the exercise of such Options were issued at the time of the issue,
sale, grant or assumption of such Options, and the consideration
received by the Company for the Additional Shares of Common Stock
deemed to have then been issued was the consideration actually
received by the Company for the issue, sale, grant or assumption of
all such Options, whether or not exercised, plus the consideration
deemed to have been
5
<PAGE>
received by the Company (pursuant to Section 2.5) upon the issue or
sale of such Convertible Securities with respect to which such
Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Warrant Price by an amount
in excess of the amount of the adjustment thereof originally made
in respect of the issue, sale, grant or assumption of such Options
or Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 45 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Warrant Price shall be
made until the expiration or exercise of all such Options,
whereupon such adjustment shall be made in the manner provided in
subdivision (c) above.
1.3. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case the
Company at any time or from time to time after the date hereof shall declare
or pay any dividend on the Common Stock payable in Common Stock, or shall
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in Common Stock), then, and in each such case,
Additional Shares of Common Stock shall be deemed to have been issued (a) in
the case of any such dividend, immediately after the close of business on the
record date for the determination of holders of any class of securities
entitled to receive such dividend, or (b) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
1.4. COMPUTATION OF CONSIDERATION. For the purposes of this
Section 2,
(a) the consideration for the issue or sale of any Additional Shares
of Common Stock shall, irrespective of the accounting treatment of
such consideration,
(i) insofar as it consists of cash, be computed at the net
amount of cash received by the Company, without deducting any
expenses paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property (including securities)
other than cash, be computed at the fair value thereof at the time
of such issue or sale, as determined in good faith by the Board of
Directors of the Company, and
6
<PAGE>
(iii) in case Additional Shares of Common Stock are issued or
sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be the portion of
such consideration so received, computed as provided in clauses (i)
and (ii) above, allocable to such Additional Shares of Common
Stock, all as determined in good faith by the Board of Directors of
the Company;
(b) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 2.3, relating to Options and Convertible Securities,
shall be deemed to have been issued for a consideration per share
determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption
of the Options or Convertible Securities in question, plus the
minimum aggregate amount of additional consideration (as set forth
in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration to protect against dilution) payable to the Company
upon the exercise in full of such Options or the conversion or
exchange of such Convertible Securities or, in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such consideration
as provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number to protect against dilution) issuable upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities; and
(c) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 2.4, relating to stock dividends, stock splits, etc.,
shall be deemed to have been issued for no consideration.
1.5. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of shares of Common Stock, the Warrant
Price in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
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<PAGE>
1.6. MINIMUM ADJUSTMENT OF WARRANT PRICE. If the amount of any
adjustment of the Warrant Price required pursuant to this Section 2 would be
less than one percent (1%) of the Warrant Price in effect at the time such
adjustment is otherwise so required to be made, such amount shall be carried
forward and adjustment with respect thereto made at the time of and together
with any subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least one percent
(1%) of such Warrant Price.
2. CONSOLIDATION, MERGER, ETC.
2.1 ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (b)
shall permit any other Person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving Person but, in
connection with such consolidation or merger, the Common Stock shall be
changed into or exchanged for stock or other securities of any other Person
or cash or any other property, or (c) shall transfer all or substantially all
of its properties or assets to any other Person in a transaction or series of
transactions in connection with which the Common Stock shall be changed into
or exchanged for stock or other securities of any other Person or cash or any
other property, or (d) shall effect a capital reorganization or
reclassification of the Common Stock (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common Stock
for which adjustment in the Warrant Price is provided in Section 2.2.1 or
2.2.2), then, and in the case of each such transaction, proper provision
shall be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the holder of this Warrant, upon the exercise
hereof at any time after the consummation of such transaction, shall be
entitled to receive (at the aggregate Warrant Price in effect at the time of
such consummation for all Common Stock issuable upon such exercise
immediately prior to such consummation), in lieu of the Common Stock issuable
upon such exercise prior to such consummation, the highest amount of
securities, cash or other property to which such holder would actually have
been entitled as a shareholder upon such consummation if such holder had
exercised the rights represented by this Warrant immediately prior thereto,
subject to adjustments (subsequent to such consummation) as nearly equivalent
as possible to the adjustments provided for in Sections 2 through 4, PROVIDED
that if a purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than 50% of the outstanding shares of Common
Stock, and if the holder of such Warrants so designates in a notice given to
the Company on or before the date immediately preceding the date of the
consummation of such transaction, the holder of such Warrants shall be
entitled to receive the highest amount of securities, cash or other property
to which such holder would actually have been entitled as a shareholder if
the holder of such Warrants had exercised such Warrants prior to the
expiration of such purchase, tender or exchange offer and accepted such
offer, subject to adjustments (from and after the consummation of such
purchase, tender or exchange offer) as nearly equivalent as possible to the
adjustments provided for in Sections 2 through 4.
2.2. ASSUMPTION OF OBLIGATIONS. Notwithstanding anything contained
in the Warrants to the contrary, the Company will not effect any of the
transactions described in clauses
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(a) through (d) of Section 3.1 unless, prior to the consummation thereof,
each Person (other than the Company) which may be required to deliver any
stock, securities, cash or property upon the exercise of this Warrant as
provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the holder of this Warrant, (a) the obligations
of the Company under this Warrant (and if the Company shall survive the
consummation of such transaction, such assumption shall be in addition to,
and shall not release the Company from, any continuing obligations of the
Company under this Warrant), (b) the obligations of the Company under the
Registration Rights Agreement and (c) the obligation to deliver to such
holder such shares of stock, securities, cash or property as, in accordance
with the foregoing provisions of this Section 3, such holder may be entitled
to receive, and such Person shall have similarly delivered to such holder an
opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such holder, stating that this Warrant shall thereafter
continue in full force and effect and the terms hereof (including, without
limitation, all of the provisions of this Section 3) shall be applicable to
the stock, securities, cash or property which such Person may be required to
deliver upon any exercise of this Warrant or the exercise of any rights
pursuant hereto.
3. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the
provisions of Section 2 or Section 3 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such sections, then, in each such case, the Company shall
appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion upon the adjustment, if any, on a basis consistent
with the essential intent and principles established in Sections 2 and 3,
necessary to preserve, without dilution, the purchase rights represented by
this Warrant. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the holder of this Warrant and shall make the adjustments
described therein.
4. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
articles or certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will not permit the par value of any shares of stock receivable upon the
exercise of this Warrant to exceed the amount payable therefor upon such
exercise, (b) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of the Warrants from time to
time outstanding, and (c) will not take any action which results in any
adjustment of the Warrant Price if the total number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would
exceed the total number of shares of Common Stock then authorized
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<PAGE>
by the Company's articles or certificate of incorporation and available for
the purpose of issue upon such exercise.
5. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock issuable upon the
exercise of this Warrant, the Company at its expense will promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant
and cause independent certified public accountants of recognized national
standing (which may be the regular auditors of the Company) selected by the
Company to verify such computation (other than any computation of the fair
value of property as determined in good faith by the Board of Directors of
the Company) and prepare a report setting forth such adjustment or
readjustment and showing in reasonable detail the method of calculation
thereof and the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or to be received by
the Company for any Additional Shares of Common Stock issued or sold or
deemed to have been issued, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the Warrant Price in effect
immediately prior to such issue or sale and as adjusted and readjusted (if
required by Section 2) on account thereof. The Company will forthwith mail a
copy of each such report to each holder of a Warrant and will, upon the
written request at any time of any holder of a Warrant, furnish to such
holder a like report setting forth the Warrant Price at the time in effect
and showing in reasonable detail how it was calculated. The Company will also
keep copies of all such reports at its principal office and will cause the
same to be available for inspection at such office during normal business
hours by any holder of a Warrant or any prospective purchaser of a Warrant
designated by the holder thereof.
6. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or
any transfer of all or substantially all the properties or assets of the
Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose
of such dividend, distribution or
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right, and the amount and character of such dividend, distribution or right,
and (ii) the date or expected date on which any such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place and the time, if any
such time is to be fixed, as of which the holders of record of Common Stock
shall be entitled to exchange their shares of Common Stock for the securities
or other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation
or winding-up. Such notice shall be mailed at least 20 days prior to the date
therein specified, in the case of any date referred to in the foregoing
subdivision (i), and at least 90 days prior to the date therein specified, in
the case of the date referred to in the foregoing subdivision (ii).
7. REGISTRATION OF COMMON STOCK. The shares of Common Stock issuable
upon exercise of this Warrant shall constitute Registrable Securities (as
such term is defined in the Registration Rights Agreement). Each holder of
this Warrant shall be entitled to all of the benefits afforded to a holder of
any such Registrable Securities under the Registration Rights Agreement and
such holder, by its acceptance of this Warrant, agrees to be bound by and to
comply with the terms and conditions of the Registration Rights Agreement
applicable to such holder as a holder of such Registrable Securities. At any
such time as Common Stock is listed on any national securities exchange, the
Company will, at its expense, obtain promptly and maintain the approval for
listing on each such exchange, upon official notice of issuance, the shares
of Common Stock issuable upon exercise of the then outstanding Warrants and
maintain the listing of such shares after their issuance.
8. RESTRICTIONS ON TRANSFER.
8.1 RESTRICTIVE LEGENDS. Except as otherwise permitted by this
Section 9, each certificate for Common Stock issued upon the exercise of any
Warrant, and each certificate issued upon the transfer of any such Common
Stock, shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
may be transferred only in compliance with the conditions specified in the
Common Stock Purchase Warrant issued by PMC International, Inc. A complete
and correct copy of the form of such Warrant is available for inspection at
the principal office of PMC International, Inc. and will be furnished to
the holder of such shares upon written request and without charge."
8.2. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior to
any transfer of any Warrant, the holder thereof will give written notice to
the Company of such holder's intention to effect such transfer and shall
deliver an opinion of counsel (which may be counsel to the Company), in form
and substance reasonably satisfactory to the Company, to the effect that the
proposed transfer may be effected without registration of such Warrant or
Common Stock issued
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<PAGE>
upon the exercise of any Warrant under the Securities Act or applicable state
securities laws. Each certificate issued upon or in connection with the
transfer of any Warrant or Common Stock issued upon the exercise of any
Warrant shall bear the appropriate restrictive legend set forth on the face
of this Warrant or in Section 9.1, unless in the opinion of such counsel such
legend is no longer required to insure compliance with the Securities Act.
The Company will pay the reasonable fees and disbursements of counsel (other
than house counsel) in connection with any and all opinions rendered by such
counsel pursuant to this Section 9.2.
8.3. TERMINATION OF RESTRICTIONS. The restrictions imposed by this
Section 9 upon the transferability of any Warrant or Common Stock issued upon
the exercise of any Warrant shall cease and terminate as to any particular
Warrant or Common Stock issued upon the exercise of any Warrant (a) when such
securities shall have been effectively registered under the Securities Act,
or (b) when, in the opinion of counsel in form and substance reasonably
satisfactory to the Company, such restrictions are no longer required in
order to insure compliance with the Securities Act. Whenever such
restrictions shall cease and terminate as to any Warrant or Common Stock
issued upon the exercise of any Warrant, the holder thereof shall be entitled
to receive from the Company, without expense (other than applicable transfer
taxes, if any), new securities of like tenor not bearing the applicable
legends required by Section 9.1.
9. RESERVATION OF STOCK, ETC. The Company will at all times reserve and
keep available, solely for issuance and delivery upon exercise of the
Warrants, the number of shares of Common Stock from time to time issuable
upon exercise of all Warrants at the time outstanding. All shares of Common
Stock issuable upon exercise of any Warrants shall be duly authorized and,
when issued upon such exercise, shall be validly issued and, in the case of
shares, fully paid and nonassessable with no liability on the part of the
holders thereof.
10. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
10.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. The Company will
keep at its principal office a register in which the Company will provide for
the registration of Warrants and the registration of transfers of Warrants.
The Company may treat the Person in whose name any Warrant is registered on
such register as the owner thereof for all other purposes, and the Company
shall not be affected by any notice to the contrary, except that, if and when
any Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer thereof as the owner of such Warrant for all
purposes. Subject to Section 9, a Warrant, if properly assigned, may be
exercised by a new holder without a new Warrant first having been issued.
10.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon surrender of any
Warrant for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will (subject to compliance with
Section 9, if applicable) execute and deliver in exchange therefor a new
Warrant or Warrants of like tenor, in the name of such holder or as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct, calling in the
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<PAGE>
aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants so
surrendered.
10.3 REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
any Warrant and, in the case of any such loss, theft or destruction of any
Warrant, upon delivery of an indemnity bond in such reasonable amount as the
Company may determine, or, in the case of any such mutilation, upon the
surrender of such Warrant for cancellation to the Company at its principal
office, the Company at its expense will execute and deliver, in lieu thereof,
a new Warrant of like tenor.
11. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
ADDITIONAL SHARES OF COMMON STOCK: All shares (including treasury
shares) of Common Stock issued or sold (or, pursuant to Section 2.3 or 2.4,
deemed to be issued) by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than
(a) shares issued upon: the exercise of this Warrant; the exercise
of any other Warrants issued by the Company in connection with the New
Bridge Loan (as such term is defined in the Private Placement
Memorandum); the Restructuring (as such term is defined in the Private
Placement Memorandum); or as compensation to Keefe, Bruyette & Woods,
Inc. in connection with the Offering (as such term is defined in the
Private Placement Memorandum); the exercise of Options and warrants
issued by the Company in connection with debt financings of the Company
that are outstanding as of the date hereof; and the exchange of shares
of the Company's Series A Preferred Stock (whether occurring before or
after the date hereof);
(b) up to (i) 1,000,000 shares issued upon exercise of Options
granted to David Andrus but only if and to the extent granted as
contemplated by the Private Placement Memorandum (without any amendments
or supplements thereto) and (ii) 1,750,000 shares issued upon exercise
of Options granted to the Company's employees, consultants or directors
under bona fide benefit plans adopted by the Board of Directors and
approved by the holders of Common Stock when required by law, but only
if and to the extent that the exercise price in respect of any Option
equals or exceeds the Market Price on the date of the grant of such
Option;
(c) shares issued to shareholders of any entity which merges into
the Company in proportion to their stock holdings in such entity
immediately prior to such merger, upon such merger
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<PAGE>
(d) shares issued by the Company in the Offering (including any
shares that may be issued as a result of the Company failing to comply
with certain provisions of the Registration Rights Agreement);
(e) shares issued in a bona fide public offering pursuant to a firm
commitment underwriting, but only if and to the extent that the
consideration received by the Company in respect of each share so issued
(as determined pursuant to Section 2.5) equals or exceeds 95% of the
Current Market Price;
(f) shares issued in a bona fide private placement through a
placement agent which is a member firm of the NASD or by the Company,
but only if and to the extent that the consideration received by the
Company in respect of each share so issued (as determined pursuant to
Section 2.5) equals or exceeds 90% of the Current Market Price;
(g) such additional number of shares as may become issuable upon
the exercise of any of the securities referred to in the foregoing
clauses (a) and (b) by reason of adjustments required pursuant to
anti-dilution provisions applicable to such securities as in effect on
the date hereof.
BUSINESS DAY: Any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in Denver, Colorado are authorized by
law to be closed. Any reference to "days" (unless Business Days are
specified) shall mean calendar days.
COMMON STOCK: As defined in the introduction to this Warrant, such term
to include any stock into which such Common Stock shall have been changed or
any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to
all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference.
COMPANY: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of
the Company hereunder in compliance with Section 3.
CONVERTIBLE SECURITIES: Any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
CURRENT MARKET PRICE: On any date specified herein, the average daily
Market Price during the period of the most recent 20 days, ending on such
date, on which the national securities exchanges were open for trading,
except that if no Common Stock is then listed or
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<PAGE>
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price shall be the Market Price
on such date.
EXTRAORDINARY CASH DIVIDEND: Any cash dividend or distribution with
respect to the Common Stock the amount of which exceeds, when aggregated with
all other such dividends or distributions paid on the Common Stock over the
365-day period immediately preceding the record date for such dividend or
distribution, on a per share basis, the lesser of (i) 25% of the consolidated
net income of the Company for the four fiscal quarters immediately preceding
the record date for such dividend or distribution and (ii) 8% of the average
of the Market Prices of the Common Stock on each trading day during the
365-day period referred to above.
MARKET PRICE: On any date specified herein, the amount per share of the
Common Stock, equal to (a) the last sale price of such Common Stock, regular
way, on such date or, if no such sale takes place on such date, the average
of the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which
such Common Stock is then listed or admitted to trading, or (b) if such
Common Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system security by
the NASD, the last trading price of the Common Stock on such date, or (c) if
there shall have been no trading on such date or if the Common Stock is not
so designated, the average of the closing bid and asked prices of the Common
Stock on such date as shown by the NASD automated quotation system, or (d) if
such Common Stock is not then listed or admitted to trading on any national
exchange or quoted in the over-the-counter market, the higher of (x) the book
value thereof as determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company as of
the last day of any month ending within 60 days preceding the date as of
which the determination is to be made or (y) the fair value thereof
determined in good faith by the Board of Directors of the Company as of a
date which is within 18 days of the date as of which the determination is to
be made.
NASD: The National Association of Securities Dealers, Inc.
OPTIONS: Rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
PERSON: A corporation, an association, a partnership, an organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.
PRIVATE PLACEMENT MEMORANDUM: The Private Placement Memorandum of the
Company, dated as of November 11, 1996, and any amendments or supplements
thereto.
REGISTRATION RIGHTS AGREEMENT: The Registration Rights Agreement between
the company and Bedford Capital Financial Corporation dated as of December 24,
1996.
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SECURITIES ACT: The Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Securities and Exchange
Commission thereunder, all as the same shall be in effect at the time.
WARRANT PRICE: As defined in Section 2.1.
WARRANT: As defined in the introduction to this Warrant.
12. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
13. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this
Warrant shall be construed as conferring upon the holder hereof any rights as
a stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.
14. NOTICES. All notices and other communications under this Warrant
shall be in writing and shall be delivered, or mailed by registered or
certified mail, return receipt requested, by a nationally recognized
overnight courier, postage prepaid, addressed (a) if to any holder of any
Warrant, at the registered address of such holder as set forth in the
register kept at the principal office of the Company, or (b) if to the
Company, to the attention of its President at its principal office, PROVIDED
that the exercise of any Warrant shall be effective in the manner provided in
Section 1.
15. AMENDMENTS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought.
17. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
18. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF COLORADO, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first set forth above.
PMC INTERNATIONAL, INC.
By: /s/ KENNETH S. PHILLIPS
---------------------------------
Kenneth S. Phillips
President and CEO
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FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _____________ ____________ the right
represented by such Warrant to purchase ______ shares of Common Stock of PMC
International, Inc. to which such Warrant relates, and appoints
_____________________________ Attorney to make such transfer on the books of
PMC International, Inc. maintained for such purpose, with full power of
substitution in the premises.
Dated: ---------------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of Warrant)
---------------------------------------------
(Street Address)
---------------------------------------------
(City)(State)(Zip Code)
Signed in the presence of:
- - --------------------------------
<PAGE>
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To PMC International, Inc.,
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, ______* shares of
Common Stock of PMC International, Inc. and herewith makes payment of $______
therefor, and requests that the certificates for such shares be issued in the
name of, and delivered to ________________________, whose address is
______________________.
Dated: ---------------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of Warrant)
---------------------------------------------
(Street Address)
---------------------------------------------
(City)(State)(Zip Code)
- - ---------------------------
* Insert here the number of shares called for on the face of this Warrant (or,
in the case of a partial exercise, the portion thereof as to which this Warrant
is being exercised), in either case without making any adjustment for
Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of partial exercise, a new Warrant
or Warrants will be issued and delivered, representing the unexercised portion
of the Warrant, to the holder surrendering the Warrant.
<PAGE>
EXHIBIT 13
FIRST AMENDMENT TO BEDFORD OPTION AGREEMENT
THIS FIRST AMENDMENT TO BEDFORD OPTION AGREEMENT (this "AMENDMENT") is made
and entered into as of the 15th day of October, 1996, by and between PHILLIPS &
ANDRUS, LLC, a Colorado limited liability company (the "COMPANY") and BEDFORD
CAPITAL FINANCIAL CORPORATION, a corporation organized under the laws of Liberia
("BEDFORD").
RECITALS
A. The Company and Bedford entered into that certain Phillips & Andrus,
LLC Bedford Option Agreement dated July 26, 1995 (the "OPTION AGREEMENT")
pursuant to which the Company granted Bedford an option to purchase 335,000
shares of the common stock of PMC International, Inc., a Colorado corporation
("PMCI") owned by the LLC.
B. The Company and Bedford now desire to amend the Option Agreement as
more fully set forth below.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Bedford hereby
agree as follows:
1. DEFINITIONS. Except as specifically defined herein, defined terms
shall have the same meaning as set forth in the Option Agreement.
2. OPTION GRANT.
(a) Subparagraph 1(a) of the Option Agreement is hereby amended by
(i) deleting the number and words "335,000 (the "OPTION SHARES")" and inserting
in lieu thereof "235,000 (collectively, and portions thereof for which Bedford
has elected to purchase are hereinafter referred to as the "OPTION SHARES")"
(ii) deleting the words "an aggregate purchase price (the "PURCHASE PRICE") of
$410,637.85" and inserting in lieu thereof "a purchase price ("PURCHASE PRICE")
of $1.226 per share" and (iii) adding to the end of such Subparagraph the
following: "Subject to the terms of the Pledge Agreement and the right of
Bedford to possession of the shares upon curing a default under paragraph 3
below, the Company shall at all times own and reserve that number of shares of
the common stock of PMCI which is equal to the number of Option Shares remaining
subject to purchase by Bedford under this Agreement and all other options
granted by the Company."
(b) Subsection 1(b) is hereby deleted in its entirety and the
following is inserted in lieu thereof:
<PAGE>
"(b) The Option is exercisable as to all, or any portion (in
increments of 1,000 shares), of the Option Shares immediately
upon the execution of this Agreement and shall be exercisable
thereafter at any time, and from time to time, on or prior to
July 26, 2000 (the "EXPIRATION DATE")."
(c) Subsection 1(c) is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"Bedford shall, on or prior to such date, give the Company notice
of its intent to exercise the Option, such notice to state the
date the Option will be exercised (the "EXERCISE DATE"), and the
number of Option Shares to be purchased pursuant to such notice,
and if Bedford fails to give such notice on or prior to the
Expiration Date, the Option shall terminate automatically as to
the unpurchased Option Shares and shall not be exercisable
thereafter. Each closing (each a "CLOSING") of the purchase of
the Option Shares pursuant to each notice shall take place at
such time and place as the parties shall mutually agree. At each
Closing, the Company shall deliver to Bedford (i) a stock
assignment transferring the Option Shares to Bedford free and
clear of all liens, encumbrances and other restrictions except
for the Shareholder Agreement among PMCI and certain of its
Shareholders, of even date herewith; (ii) an instrument
satisfactory in form to evidence full release of the lien of the
Pledge Agreement (or any substitute lien permitted by paragraph 5
hereof) upon the Option Shares; and (iii) a stock certificate
evidencing the Option Shares. At the Closing, Bedford shall
deliver to the Company the full amount of the Purchase Price for
the number of Option Shares being purchased in cash, check or
other readily available funds."
(d) Subsection 3 is hereby amended by inserting the following at the
end of such Subsection:
"Notwithstanding the foregoing, Phillips and Andrus shall not
cure a default of the Geman Note, except through the Company by a
contribution to capital and the PMCI Stock, if any, released from
the Pledge Agreement pursuant to such cure shall not be
distributed out of the Company until such time as (i) the Company
owns 235,000 shares of PMCI Stock, free and clear of all liens
and encumbrances,
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<PAGE>
other than the Shareholders Agreement, reserved solely for exercise
under this Agreement (the "RESERVED SHARES") and (ii) all
indebtedness of the Company to Bedford shall have been paid in
full. If and when all indebtedness of the Company to Bedford shall
have been paid in full, the Reserved Shares may be distributed by
the Company, subject to this Agreement and subject to the consent
of Bedford, which consent shall not be unreasonably withheld.
3. NO FURTHER AMENDMENT. Except as amended and modified by this
Amendment, the Option Agreement remains unmodified and in full force and effect
as of the date hereof.
4. COUNTERPARTS; FACSIMILE SIGNATURES. This Amendment may be executed in
one or more identical counterparts, each of which shall be deemed an original,
and all of which when taken together shall constitute one and the same
instrument. Signatures by facsimile transmission shall constitute the due and
valid constitution of this Amendment by the parties.
IN WITNESS WHEREOF, this Amendment has been executed by the parties as of
the day and year first set forth above.
PHILLIPS & ANDRUS, LLC, a Colorado limited
liability company
By: /S/KENNETH S. PHILLIPS/S/
------------------------------------------
Kenneth S. Phillips, Manager
BEDFORD CAPITAL FINANCIAL CORPORATION, a
corporation organized under the laws of Liberia
By: /S/ J.M. NEVIL THOMAS /S/
------------------------------------------
Title: Assistant Secretary
---------------------------------------
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<PAGE>
EXHIBIT 14
SECOND AMENDMENT TO OPTION AGREEMENT
THIS SECOND AMENDMENT TO OPTION AGREEMENT (this "AMENDMENT") is made and
entered into as of the 7th day of January, 1997, by and between PHILLIPS &
ANDRUS, LLC, a Colorado limited liability company (the "COMPANY") and Bedford
Capital Financial Corporation, a corporation organized under the laws of Liberia
("BEDFORD").
RECITALS
A. The Company and Bedford entered into that certain Phillips & Andrus,
LLC Option Agreement dated July 26, 1995, as amended by that certain First
Amendment to Option Agreement dated October 15, 1996 (collectively, the "OPTION
AGREEMENT") pursuant to which the Company granted Bedford an option to purchase
235,000 shares of the common stock of PMC International, Inc., a Colorado
corporation ("PMCI") owned by the LLC.
B. The Company and Bedford now desire to amend the Option Agreement as
more fully set forth below.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Bedford hereby
agree as follows:
1. DEFINITIONS. Except as specifically defined herein, defined terms
shall have the same meanings as set forth in the Option Agreement.
2. CONSENTS. Bedford hereby consents to (i) the assignment and
assumption of the Option Agreement, as hereby amended, to and by KP3, LLC, a
Colorado limited liability company ("NEW LLC"), (ii) the sale of the Reserved
Shares to New LLC and (iii) the pledge of the Option Shares to secure the New
LLC's obligations in connection with any Permitted Indebtedness (as defined
below).
3. AMENDMENTS. The Option Agreement is hereby amended as follows:
(a) Section 1(a) is hereby amended by inserting the word
"outstanding" immediately prior to the words "options granted" in the last
sentence of such subsection.
<PAGE>
(b) Section 1(c) is hereby amended by deleting the words "of even
date herewith" and inserting "December 24, 1996" in lieu thereof.
(c) Sections 2, 3, 4 and 5 are hereby deleted in their entirety and
the following is inserted in lieu thereof:
"2. PAYMENT OF PERMITTED INDEBTEDNESS. Immediately upon the Closing
by Bedford of the Option, the Company shall cause the funds
representing the Purchase Price to be applied to payment of the
Geman Note or any other Permitted Indebtedness (as defined below)
which encumbers the Option Shares."
"3. DEFAULT IN PAYMENT OF PERMITTED INDEBTEDNESS. Upon receipt by
the Company of a notice of default of its obligations under any
Permitted Indebtedness (as defined below), the Company shall
immediately give the Bedford notice of such default. In the
event that the Company shall default in its obligations under any
Permitted Indebtedness, Bedford shall be entitled to cure such
default, if and to the extent, the Company and/or PMCI fails to
do so within any applicable time periods set forth in the
documentation related to the Permitted Indebtedness. If Bedford
provides funds with which to cure a default in the payment of
principal and interest, it shall be entitled to receive any
shares of PMCI Stock which are released from the applicable
pledge agreement by reason of such payment or performance or
shall be deemed to have loaned the amount of such payment to the
Company in the event that no PMCI Stock is released from the
pledge agreement as a result of such payment, as in the case of
the payment of an installment of interest."
"4. RESTRICTIONS ON BUSINESS ACTIVITIES. The Company hereby
represents and warrants that its sole business activity is
limited to its holding of PMCI Stock (i) for transfer to Bedford,
William L. Atkinson, Apex Investment Fund, Ltd., Canmerge
Consultants, Ltd., Devonshire Trust and Stradwick Investments
Canada, Ltd., each of which has been granted
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<PAGE>
options to purchase PMCI Stock, (ii) for sale to third
parties, and (iii) for distribution to the members of the
Company. The Company hereby covenants and agrees that unless
and until the Option is exercised and closed or expires,
(a) notwithstanding the foregoing, it shall not sell the Option
Shares without the prior written consent of Bedford and (b) it
shall not engage in any other business activity or acquire any
assets other than the PMCI Stock (or such assets as are necessary
to pay the Permitted Indebtedness (defined below) and to
administer and consummate the transaction described above with
respect to the PMCI Stock)."
"5. RESTRICTIONS ON BORROWING. While the Option is outstanding, the
Company shall not incur any indebtedness except as necessary to
facilitate payment of (i) the Geman Note, (ii) indebtedness
incurred to pay interest on the Geman Note, (iii) any
indebtedness incurred to repay principal under the Geman Note
("SUBSTITUTE INDEBTEDNESS"), (iv) any indebtedness incurred to
pay interest on the Substitute Indebtedness and (v) any
indebtedness incurred as a result of refinancing of the
Substitute Indebtedness, provided the indebtedness incurred in
connection with such refinancing does not exceed the principal
and interest outstanding under the Substitute Indebtedness
(collectively, the "PERMITTED INDEBTEDNESS"). Any Permitted
Indebtedness or obligations relating to Permitted Indebtedness
that are secured by the Option Shares shall provide for the
release of the Option Shares from the pledge relating thereto
upon application of the Purchase Price to the Permitted
Indebtedness."
4. NO FURTHER AMENDMENT. Except as amended and modified by this
Amendment, the Option Agreement remains unmodified and in full force and effect
as of the date hereof.
5. COUNTERPARTS; FACSIMILE SIGNATURES. This Amendment may be executed in
one or more identical counterparts, each of which shall be deemed an original,
and all of which when taken together shall constitute one and the same
instrument. Signatures
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<PAGE>
by facsimile transmission shall constitute the due and valid execution of
this Amendment by the parties.
IN WITNESS WHEREOF, this Amendment has been executed by the parties as of
the day and year first set forth above.
PHILLIPS & ANDRUS, LLC, a Colorado limited
liability company
By: /s/ KENNETH S. PHILLIPS
--------------------------------------------
Kenneth S. Phillips, Manager
"BEDFORD"
BEDFORD CAPITAL FINANCIAL
CORPORATION, a corporation organized
under the laws of Liberia
By: /s/ J.M. NEVIL THOMAS
--------------------------------------------
Title: Assistant Secretary
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