THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION UNDER
SUCH ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION THEREFROM UNDER SUCH ACT.
THIS WARRANT AND SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THIS WARRANT.
PMC INTERNATIONAL, INC.
Common Stock Purchase Warrant
No. F-1 December 24, 1996
PMC International, Inc. (the "Company"), a Colorado corporation, for
value received, hereby certifies that Bedford Capital Financial Corporation
("Warrant Holder"), or registered assigns, is entitled to purchase from the
Company 130,000 duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock, par value $.01 per share (the "Common Stock"), of the
Company at the purchase price per share of $2.125, at any time or from time
to time prior to 7:00 P.M., New York City time, on December 24, 2001, all
subject to the terms, conditions and adjustments set forth below in this
warrant (the "Warrant", such term to include any such warrants issued in
substitution therefor).
Certain capitalized terms used in this Warrant are defined in Section
12; references to a "Section" are, unless otherwise specified, to one of the
sections of this Warrant.
1. EXERCISE OF WARRANT.
1.1. MANNER OF EXERCISE. This Warrant may be exercised by the
holder hereof, in whole or in part, during normal business hours on any
Business Day, by
surrender of this Warrant to the Company at its principal office, accompanied
by a subscription in substantially the form attached to this Warrant (or a
reasonable facsimile thereof) duly executed by such holder and accompanied by
payment, in cash, by certified or official bank check payable to the order of
the Company, or in the manner provided in Section 1.4 (or by any combination
of such methods), in the amount obtained by multiplying (a) the number of
shares of Common Stock (without giving effect to any adjustment thereof)
designated in such subscription by (b) $2.125, and such holder shall
thereupon be entitled to receive the number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock determined as
provided in Sections 2 through 4.
1.2 WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall
be deemed to have been effected immediately prior to the close of business on
the Business Day on which this Warrant shall have been surrendered to the
Company as provided in Section 1.1, and at such time the Person or Persons in
whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such exercise as provided in Section 1.3 shall
be deemed to have become the holder or holders of record thereof.
1.3 DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable
after each exercise of this Warrant, in whole or in part, and in any event
within five Business Days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in
the name of and delivered to the holder hereof or, subject to Section 9, as
such holder (upon payment by such holder of any applicable transfer taxes)
may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock to which such holder shall be entitled upon such exercise plus, in lieu
of any fractional share to which such holder would otherwise be entitled,
cash in an amount equal to the same fraction of the Market Price per share on
the Business Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces thereof
for the number of shares of Common Stock equal (without giving effect to any
adjustment thereof) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the holder upon
such exercise as provided in Section 1.1.
1.4 PAYMENT BY APPLICATION OF SHARES OTHERWISE ISSUABLE. Upon any
exercise of this Warrant, the holder hereof may, at its option, instruct the
Company, by written notice accompanying the surrender of this Warrant at the
time of such exercise, to apply to the payment required by Section 1.1 such
number of the shares of Common Stock otherwise issuable to such holder upon
such exercise as shall be specified in such notice, in which case an amount
equal to the excess of the aggregate Current Market Price of such specified
number of shares on the date
2
of exercise over the portion of the payment required by Section 1.1
attributable to such shares shall be deemed to have been paid to the Company
and the number of shares issuable upon such exercise shall be reduced by such
specified number.
(i) ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
GENERAL; WARRANT PRICE. The number of shares of Common Stock which the
holder of this Warrant shall be entitled to receive upon each exercise hereof
shall be determined by multiplying the number of shares of Common Stock which
would otherwise (but for the provisions of this Section 2) be issuable upon
such exercise, as designated by the holder hereof pursuant to Section 1.1, by
the fraction of which (a) the numerator is $2.125 and (b) the denominator is
the Warrant Price in effect on the date of such exercise. The "Warrant Price"
shall initially be $2.125 per share, shall be adjusted and readjusted from
time to time as provided in this Section 2 and, as so adjusted or readjusted,
shall remain in effect until a further adjustment or readjustment thereof is
required by this Section 2.
ADJUSTMENT OF WARRANT PRICE.
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In case the Company
at any time or from time to time after the date hereof shall issue or sell
Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 2.3 or 2.4) without
consideration or for a consideration per share less than the Current Market
Price, then, and in each such case, subject to Section 2.7, such Warrant
Price shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction
(c) the numerator of which shall be (i) the number of shares
of Common Stock outstanding immediately prior to such issue or sale plus (ii)
the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of
Common Stock so issued or sold would purchase at such Current Market Price,
and
(d) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale,
PROVIDED that, for the purposes of this Section 2.2.1, (x) immediately after
any Additional Shares of Common Stock are deemed to have been issued pursuant
to Section 2.3 or 2.4, such Additional Shares shall be deemed to be
outstanding, and (y) treasury shares shall not be deemed to be outstanding.
(i) EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case
the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or
3
additional stock or other securities or property by way of dividend or
spin-off, reclassification, recapitalization or similar corporate
rearrangement) on the Common Stock, other than dividends or distributions
payable in Additional Shares of Common Stock and other than cash dividends or
other cash distributions, which do not constitute Extraordinary Cash
Dividends, then, and in each such case, subject to Section 2.7, the Warrant
Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of any class of securities entitled to
receive such dividend or distribution shall be reduced, effective as of the
close of business on such record date, to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Warrant Price by a fraction
(x) the numerator of which shall be the Current Market Price in effect
on such record date or, if the Common Stock trades on an ex-dividend basis,
on the date prior to the commencement of ex-dividend trading, less an
amount equal to the fair market value of such dividend or distribution as
of the payment date of such dividends or distributions (as determined in
good faith by the Board of Directors of the Company) applicable to one
share of Common Stock, and
(y) the denominator of which shall be such Current Market Price.
1.2. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been fixed, as of the
close of business on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), PROVIDED that such Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 2.5) of such shares would be less than the Current Market
Price immediately prior to such issue, sale, grant or assumption or
immediately prior to the close of business on such record date (or, if the
Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), as the case may be, and PROVIDED,
FURTHER, that in any such case in which Additional Shares of Common Stock are
deemed to be issued
(a) no further adjustment of the Warrant Price shall be made upon
the subsequent issue or sale of Convertible Securities or shares of
Common Stock upon the exercise of such Options or the conversion or
exchange of such Convertible Securities;
4
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have
been exercised or the expiration of any rights of conversion or exchange
under any such Convertible Securities which (or purchase by the Company
and cancellation or retirement of any such Convertible Securities the
rights of conversion or exchange under which) shall not have been
exercised, the Warrant Price computed upon the original issue, sale,
grant or assumption thereof (or upon the occurrence of the record date,
or date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration (or such cancellation or
retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or Convertible
Securities, the only Additional Shares of Common Stock issued or
sold were the Additional Shares of Common Stock, if any, actually
issued or sold upon the exercise of such Options or the conversion
or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the
Company for the issue, sale, grant or assumption of all such
Options, whether or not exercised, plus the consideration actually
received by the Company upon such exercise, or for the issue or
sale of all such Convertible Securities which were actually
converted or exchanged, plus the additional consideration, if any,
actually received by the Company upon such conversion or exchange,
and
(ii) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued or sold upon
the exercise of such Options were issued at the time of the issue,
sale, grant or assumption of such Options, and the consideration
received by the Company for the Additional Shares of Common Stock
deemed to have then been issued was the consideration actually
received by the Company for the issue, sale, grant or assumption of
all such Options, whether or not exercised, plus the consideration
deemed to have been
5
received by the Company (pursuant to Section 2.5) upon the issue or
sale of such Convertible Securities with respect to which such
Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Warrant Price by an amount
in excess of the amount of the adjustment thereof originally made
in respect of the issue, sale, grant or assumption of such Options
or Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 45 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Warrant Price shall be
made until the expiration or exercise of all such Options,
whereupon such adjustment shall be made in the manner provided in
subdivision (c) above.
1.3. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case the
Company at any time or from time to time after the date hereof shall declare
or pay any dividend on the Common Stock payable in Common Stock, or shall
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in Common Stock), then, and in each such case,
Additional Shares of Common Stock shall be deemed to have been issued (a) in
the case of any such dividend, immediately after the close of business on the
record date for the determination of holders of any class of securities
entitled to receive such dividend, or (b) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
1.4. COMPUTATION OF CONSIDERATION. For the purposes of this
Section 2,
(a) the consideration for the issue or sale of any Additional Shares
of Common Stock shall, irrespective of the accounting treatment of
such consideration,
(i) insofar as it consists of cash, be computed at the net
amount of cash received by the Company, without deducting any
expenses paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property (including securities)
other than cash, be computed at the fair value thereof at the time
of such issue or sale, as determined in good faith by the Board of
Directors of the Company, and
6
(iii) in case Additional Shares of Common Stock are issued or
sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be the portion of
such consideration so received, computed as provided in clauses (i)
and (ii) above, allocable to such Additional Shares of Common
Stock, all as determined in good faith by the Board of Directors of
the Company;
(b) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 2.3, relating to Options and Convertible Securities,
shall be deemed to have been issued for a consideration per share
determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption
of the Options or Convertible Securities in question, plus the
minimum aggregate amount of additional consideration (as set forth
in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration to protect against dilution) payable to the Company
upon the exercise in full of such Options or the conversion or
exchange of such Convertible Securities or, in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such consideration
as provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number to protect against dilution) issuable upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities; and
(c) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 2.4, relating to stock dividends, stock splits, etc.,
shall be deemed to have been issued for no consideration.
1.5. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of shares of Common Stock, the Warrant
Price in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
7
1.6. MINIMUM ADJUSTMENT OF WARRANT PRICE. If the amount of any
adjustment of the Warrant Price required pursuant to this Section 2 would be
less than one percent (1%) of the Warrant Price in effect at the time such
adjustment is otherwise so required to be made, such amount shall be carried
forward and adjustment with respect thereto made at the time of and together
with any subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least one percent
(1%) of such Warrant Price.
2. CONSOLIDATION, MERGER, ETC.
2.1 ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (b)
shall permit any other Person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving Person but, in
connection with such consolidation or merger, the Common Stock shall be
changed into or exchanged for stock or other securities of any other Person
or cash or any other property, or (c) shall transfer all or substantially all
of its properties or assets to any other Person in a transaction or series of
transactions in connection with which the Common Stock shall be changed into
or exchanged for stock or other securities of any other Person or cash or any
other property, or (d) shall effect a capital reorganization or
reclassification of the Common Stock (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common Stock
for which adjustment in the Warrant Price is provided in Section 2.2.1 or
2.2.2), then, and in the case of each such transaction, proper provision
shall be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the holder of this Warrant, upon the exercise
hereof at any time after the consummation of such transaction, shall be
entitled to receive (at the aggregate Warrant Price in effect at the time of
such consummation for all Common Stock issuable upon such exercise
immediately prior to such consummation), in lieu of the Common Stock issuable
upon such exercise prior to such consummation, the highest amount of
securities, cash or other property to which such holder would actually have
been entitled as a shareholder upon such consummation if such holder had
exercised the rights represented by this Warrant immediately prior thereto,
subject to adjustments (subsequent to such consummation) as nearly equivalent
as possible to the adjustments provided for in Sections 2 through 4, PROVIDED
that if a purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than 50% of the outstanding shares of Common
Stock, and if the holder of such Warrants so designates in a notice given to
the Company on or before the date immediately preceding the date of the
consummation of such transaction, the holder of such Warrants shall be
entitled to receive the highest amount of securities, cash or other property
to which such holder would actually have been entitled as a shareholder if
the holder of such Warrants had exercised such Warrants prior to the
expiration of such purchase, tender or exchange offer and accepted such
offer, subject to adjustments (from and after the consummation of such
purchase, tender or exchange offer) as nearly equivalent as possible to the
adjustments provided for in Sections 2 through 4.
2.2. ASSUMPTION OF OBLIGATIONS. Notwithstanding anything contained
in the Warrants to the contrary, the Company will not effect any of the
transactions described in clauses
8
(a) through (d) of Section 3.1 unless, prior to the consummation thereof,
each Person (other than the Company) which may be required to deliver any
stock, securities, cash or property upon the exercise of this Warrant as
provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the holder of this Warrant, (a) the obligations
of the Company under this Warrant (and if the Company shall survive the
consummation of such transaction, such assumption shall be in addition to,
and shall not release the Company from, any continuing obligations of the
Company under this Warrant), (b) the obligations of the Company under the
Registration Rights Agreement and (c) the obligation to deliver to such
holder such shares of stock, securities, cash or property as, in accordance
with the foregoing provisions of this Section 3, such holder may be entitled
to receive, and such Person shall have similarly delivered to such holder an
opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such holder, stating that this Warrant shall thereafter
continue in full force and effect and the terms hereof (including, without
limitation, all of the provisions of this Section 3) shall be applicable to
the stock, securities, cash or property which such Person may be required to
deliver upon any exercise of this Warrant or the exercise of any rights
pursuant hereto.
3. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the
provisions of Section 2 or Section 3 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such sections, then, in each such case, the Company shall
appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion upon the adjustment, if any, on a basis consistent
with the essential intent and principles established in Sections 2 and 3,
necessary to preserve, without dilution, the purchase rights represented by
this Warrant. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the holder of this Warrant and shall make the adjustments
described therein.
4. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
articles or certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will not permit the par value of any shares of stock receivable upon the
exercise of this Warrant to exceed the amount payable therefor upon such
exercise, (b) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of the Warrants from time to
time outstanding, and (c) will not take any action which results in any
adjustment of the Warrant Price if the total number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would
exceed the total number of shares of Common Stock then authorized
9
by the Company's articles or certificate of incorporation and available for
the purpose of issue upon such exercise.
5. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock issuable upon the
exercise of this Warrant, the Company at its expense will promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant
and cause independent certified public accountants of recognized national
standing (which may be the regular auditors of the Company) selected by the
Company to verify such computation (other than any computation of the fair
value of property as determined in good faith by the Board of Directors of
the Company) and prepare a report setting forth such adjustment or
readjustment and showing in reasonable detail the method of calculation
thereof and the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or to be received by
the Company for any Additional Shares of Common Stock issued or sold or
deemed to have been issued, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the Warrant Price in effect
immediately prior to such issue or sale and as adjusted and readjusted (if
required by Section 2) on account thereof. The Company will forthwith mail a
copy of each such report to each holder of a Warrant and will, upon the
written request at any time of any holder of a Warrant, furnish to such
holder a like report setting forth the Warrant Price at the time in effect
and showing in reasonable detail how it was calculated. The Company will also
keep copies of all such reports at its principal office and will cause the
same to be available for inspection at such office during normal business
hours by any holder of a Warrant or any prospective purchaser of a Warrant
designated by the holder thereof.
6. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or
any transfer of all or substantially all the properties or assets of the
Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose
of such dividend, distribution or
10
right, and the amount and character of such dividend, distribution or right,
and (ii) the date or expected date on which any such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place and the time, if any
such time is to be fixed, as of which the holders of record of Common Stock
shall be entitled to exchange their shares of Common Stock for the securities
or other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation
or winding-up. Such notice shall be mailed at least 20 days prior to the date
therein specified, in the case of any date referred to in the foregoing
subdivision (i), and at least 90 days prior to the date therein specified, in
the case of the date referred to in the foregoing subdivision (ii).
7. REGISTRATION OF COMMON STOCK. The shares of Common Stock issuable
upon exercise of this Warrant shall constitute Registrable Securities (as
such term is defined in the Registration Rights Agreement). Each holder of
this Warrant shall be entitled to all of the benefits afforded to a holder of
any such Registrable Securities under the Registration Rights Agreement and
such holder, by its acceptance of this Warrant, agrees to be bound by and to
comply with the terms and conditions of the Registration Rights Agreement
applicable to such holder as a holder of such Registrable Securities. At any
such time as Common Stock is listed on any national securities exchange, the
Company will, at its expense, obtain promptly and maintain the approval for
listing on each such exchange, upon official notice of issuance, the shares
of Common Stock issuable upon exercise of the then outstanding Warrants and
maintain the listing of such shares after their issuance.
8. RESTRICTIONS ON TRANSFER.
8.1 RESTRICTIVE LEGENDS. Except as otherwise permitted by this
Section 9, each certificate for Common Stock issued upon the exercise of any
Warrant, and each certificate issued upon the transfer of any such Common
Stock, shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
may be transferred only in compliance with the conditions specified in the
Common Stock Purchase Warrant issued by PMC International, Inc. A complete
and correct copy of the form of such Warrant is available for inspection at
the principal office of PMC International, Inc. and will be furnished to
the holder of such shares upon written request and without charge."
8.2. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior to
any transfer of any Warrant, the holder thereof will give written notice to
the Company of such holder's intention to effect such transfer and shall
deliver an opinion of counsel (which may be counsel to the Company), in form
and substance reasonably satisfactory to the Company, to the effect that the
proposed transfer may be effected without registration of such Warrant or
Common Stock issued
11
upon the exercise of any Warrant under the Securities Act or applicable state
securities laws. Each certificate issued upon or in connection with the
transfer of any Warrant or Common Stock issued upon the exercise of any
Warrant shall bear the appropriate restrictive legend set forth on the face
of this Warrant or in Section 9.1, unless in the opinion of such counsel such
legend is no longer required to insure compliance with the Securities Act.
The Company will pay the reasonable fees and disbursements of counsel (other
than house counsel) in connection with any and all opinions rendered by such
counsel pursuant to this Section 9.2.
8.3. TERMINATION OF RESTRICTIONS. The restrictions imposed by this
Section 9 upon the transferability of any Warrant or Common Stock issued upon
the exercise of any Warrant shall cease and terminate as to any particular
Warrant or Common Stock issued upon the exercise of any Warrant (a) when such
securities shall have been effectively registered under the Securities Act,
or (b) when, in the opinion of counsel in form and substance reasonably
satisfactory to the Company, such restrictions are no longer required in
order to insure compliance with the Securities Act. Whenever such
restrictions shall cease and terminate as to any Warrant or Common Stock
issued upon the exercise of any Warrant, the holder thereof shall be entitled
to receive from the Company, without expense (other than applicable transfer
taxes, if any), new securities of like tenor not bearing the applicable
legends required by Section 9.1.
9. RESERVATION OF STOCK, ETC. The Company will at all times reserve and
keep available, solely for issuance and delivery upon exercise of the
Warrants, the number of shares of Common Stock from time to time issuable
upon exercise of all Warrants at the time outstanding. All shares of Common
Stock issuable upon exercise of any Warrants shall be duly authorized and,
when issued upon such exercise, shall be validly issued and, in the case of
shares, fully paid and nonassessable with no liability on the part of the
holders thereof.
10. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
10.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. The Company will
keep at its principal office a register in which the Company will provide for
the registration of Warrants and the registration of transfers of Warrants.
The Company may treat the Person in whose name any Warrant is registered on
such register as the owner thereof for all other purposes, and the Company
shall not be affected by any notice to the contrary, except that, if and when
any Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer thereof as the owner of such Warrant for all
purposes. Subject to Section 9, a Warrant, if properly assigned, may be
exercised by a new holder without a new Warrant first having been issued.
10.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon surrender of any
Warrant for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will (subject to compliance with
Section 9, if applicable) execute and deliver in exchange therefor a new
Warrant or Warrants of like tenor, in the name of such holder or as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct, calling in the
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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 Company in proportion to their stock holdings in such entity
immediately prior to such merger, upon such merger
13
(d) shares issued by the Company in the Offering (including any
shares that may be issued as a result of the Company failing to comply
with certain provisions of the Registration Rights Agreement);
(e) shares issued in a bona fide public offering pursuant to a firm
commitment underwriting, but only if and to the extent that the
consideration received by the Company in respect of each share so issued
(as determined pursuant to Section 2.5) equals or exceeds 95% of the
Current Market Price;
(f) shares issued in a bona fide private placement through a
placement agent which is a member firm of the NASD or by the Company,
but only if and to the extent that the consideration received by the
Company in respect of each share so issued (as determined pursuant to
Section 2.5) equals or exceeds 90% of the Current Market Price;
(g) such additional number of shares as may become issuable upon
the exercise of any of the securities referred to in the foregoing
clauses (a) and (b) by reason of adjustments required pursuant to
anti-dilution provisions applicable to such securities as in effect on
the date hereof.
BUSINESS DAY: Any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in Denver, Colorado are authorized by
law to be closed. Any reference to "days" (unless Business Days are
specified) shall mean calendar days.
COMMON STOCK: As defined in the introduction to this Warrant, such term
to include any stock into which such Common Stock shall have been changed or
any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to
all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference.
COMPANY: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of
the Company hereunder in compliance with Section 3.
CONVERTIBLE SECURITIES: Any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
CURRENT MARKET PRICE: On any date specified herein, the average daily
Market Price during the period of the most recent 20 days, ending on such
date, on which the national securities exchanges were open for trading,
except that if no Common Stock is then listed or
14
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price shall be the Market Price
on such date.
EXTRAORDINARY CASH DIVIDEND: Any cash dividend or distribution with
respect to the Common Stock the amount of which exceeds, when aggregated with
all other such dividends or distributions paid on the Common Stock over the
365-day period immediately preceding the record date for such dividend or
distribution, on a per share basis, the lesser of (i) 25% of the consolidated
net income of the Company for the four fiscal quarters immediately preceding
the record date for such dividend or distribution and (ii) 8% of the average
of the Market Prices of the Common Stock on each trading day during the
365-day period referred to above.
MARKET PRICE: On any date specified herein, the amount per share of the
Common Stock, equal to (a) the last sale price of such Common Stock, regular
way, on such date or, if no such sale takes place on such date, the average
of the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which
such Common Stock is then listed or admitted to trading, or (b) if such
Common Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system security by
the NASD, the last trading price of the Common Stock on such date, or (c) if
there shall have been no trading on such date or if the Common Stock is not
so designated, the average of the closing bid and asked prices of the Common
Stock on such date as shown by the NASD automated quotation system, or (d) if
such Common Stock is not then listed or admitted to trading on any national
exchange or quoted in the over-the-counter market, the higher of (x) the book
value thereof as determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company as of
the last day of any month ending within 60 days preceding the date as of
which the determination is to be made or (y) the fair value thereof
determined in good faith by the Board of Directors of the Company as of a
date which is within 18 days of the date as of which the determination is to
be made.
NASD: The National Association of Securities Dealers, Inc.
OPTIONS: Rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
PERSON: A corporation, an association, a partnership, an organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.
PRIVATE PLACEMENT MEMORANDUM: The Private Placement Memorandum of the
Company, dated as of November 11, 1996, and any amendments or supplements
thereto.
REGISTRATION RIGHTS AGREEMENT: The Registration Rights Agreement between
the company and Bedford Capital Financial Corporation dated as of December 24,
1996.
15
SECURITIES ACT: The Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Securities and Exchange
Commission thereunder, all as the same shall be in effect at the time.
WARRANT PRICE: As defined in Section 2.1.
WARRANT: As defined in the introduction to this Warrant.
12. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
13. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this
Warrant shall be construed as conferring upon the holder hereof any rights as
a stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.
14. NOTICES. All notices and other communications under this Warrant
shall be in writing and shall be delivered, or mailed by registered or
certified mail, return receipt requested, by a nationally recognized
overnight courier, postage prepaid, addressed (a) if to any holder of any
Warrant, at the registered address of such holder as set forth in the
register kept at the principal office of the Company, or (b) if to the
Company, to the attention of its President at its principal office, PROVIDED
that the exercise of any Warrant shall be effective in the manner provided in
Section 1.
15. AMENDMENTS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought.
17. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
18. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF COLORADO, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first set forth above.
PMC INTERNATIONAL, INC.
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------------
Xxxxxxx X. Xxxxxxxx
President and CEO
17
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:
--------------------------------
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.
