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.
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
2
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.
3
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
4
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
5
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
6
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
7
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
8
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
9
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
10
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
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
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(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
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.
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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
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
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/ XXXXX X. XXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: V.P.
16
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.
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:
----------------------------------
