1
Exhibit 10.12
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 [Holder] ("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 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.
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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.
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.
(i) Adjustment of Common Stock Issuable Upon Exercise. General;
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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 additional stock or other securities or property by way of dividend
or spin-off, reclassification, recapitalization or similar corporate
rearrangement)
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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
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(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 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
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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.
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
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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 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
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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.
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. 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
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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 (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
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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 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
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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 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).
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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. 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 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
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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
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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.
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 Xxxxx, Xxxxxxxx & Xxxxx, 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 Xxxxx
Xxxxxx 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
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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.
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
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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 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.
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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 [Holder] dated as of December 24, 1996.
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
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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:
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.
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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:
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