SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of December 24, 1996,
is among PMC International, Inc., a Colorado corporation (the "Company"),
Bedford Capital Financial Corporation, a corporation organized under the laws
of Liberia ("Bedford"), Xxxxxxx X. Xxxxxxxx, an individual ("Xxxxxxxx"), Xxxxx
X. Xxxxxx, an individual ("Xxxxxx") and Xxxxxxxx & Xxxxxx, LLC, a Colorado
limited liability company ("HoldCo").
RECITALS
A. Concurrent with the execution and delivery of this Agreement, the Company is
effecting the closing of a private placement (the "Offering") of its common
stock ("Common Stock") pursuant to the terms of the Private Placement
Memorandum dated November 11, 1996, as amended. Closing of the Offering is
conditioned upon effectiveness of the restructuring of the relationship of the
Company and its subsidiaries with Bedford as reflected in this Agreement and
the Restructuring Agreement dated as of the date hereof among Bedford, the
Company and the Company's subsidiaries.
X. Xxxxxxx, Xxxxxxxx, Xxxxxx and HoldCo, each of whom beneficially own Common
Stock, are entering into this Agreement to define the circumstances under which
each such party will vote his or its shares of Common Stock in favor of the
Company board of directors nominee or nominees of the other parties, and for
certain other purposes. Each person who now owns or hereafter acquires shares
of Common Stock subject to the provisions of this Agreement, including
initially Bedford, Xxxxxxxx, Xxxxxx and HoldCo, is sometimes referred to
hereinafter as a "Shareholder" and Xxxxxxxx, Xxxxxx and HoldCo are collectively
referred to hereinafter as "HoldCo Shareholders."
AGREEMENT
Section 1. Board of Directors.
(a) Composition. Until such time as this Agreement is terminated or amended,
the Company's Board of Directors shall consist of a maximum of seven persons.
(b) Bedford Nominee and Joint Nominee. For such time as Bedford
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beneficially owns (determined as provided in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any equivalent
successor rule, but excluding any shares as to which Bedford does not have a
pecuniary interest as provided in the rules adopted under Section 16 of the
Exchange Act) at least 10% of the Company's issued and outstanding Common Stock
(all outstanding in the money options and warrants issued by the Company being
assumed to have been exercised) Bedford shall be entitled to designate one
person to be nominated as director of the Company (the "Bedford Nominee"). In
addition, for such time as Bedford beneficially owns at least 5% of the
Company's issued and outstanding Common Stock (beneficial ownership and issued
and outstanding Common Stock being determined as specified above), Bedford and
the HoldCo Shareholders shall be entitled to designate one person to be
nominated as a director of the Company, such person to be reasonably acceptable
to Bedford and the HoldCo Shareholders (the "Joint Nominee"). Xxxx Xxxxxxxx is
deemed to be an acceptable Joint Nominee to Bedford and the HoldCo Shareholders
so long as he is willing to serve as such.
(c) HoldCo Shareholder Nominees. During the term of this Agreement, the HoldCo
Shareholders shall be entitled to designate three persons to be nominated as
directors of the Company, at least one of whom shall be a senior member of the
Company's management appointed as such after the date of this Agreement (the
"HoldCo Shareholders Nominee").
(d) Voting Shares. At every annual meeting of shareholders of the Company and
at every special meeting of the shareholders of the Company held for the
purpose of electing directors of the Company, or in connection with the taking
of any written consent to action in respect of the election of directors of the
Company, (i) Bedford shall vote its shares of Common Stock in favor of the
HoldCo Shareholder Nominees, (ii) Bedford and the HoldCo Shareholders shall
vote their shares of Common Stock in favor of the Joint Nominee, and (iii) for
such time as Bedford beneficially owns at least 10% of the Company's issued and
outstanding Common Stock (beneficial ownership and issued and outstanding
Common Stock being determined as specified above), the HoldCo Shareholders
shall vote their respective shares of Common Stock in favor of the Bedford
Nominee. All parties hereto agree to take such action as is reasonably
requested by any other party in order to effect the parties' intent with
respect to the election of directors and the other terms of this Agreement.
(e) New Shareholders. Bedford and the HoldCo Shareholders acknowledge that
purchasers of Common Stock in connection with the Offering (the "New
Shareholders") have been granted certain rights to nominate persons for
election to the Company's board of directors pursuant to Section 7.2 of their
respective subscription agreements
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with the Company (the "Subscription Agreements"), a copy of which is attached
hereto as Exhibit A. Bedford and the HoldCo Shareholders agree to vote their
respective shares of Common Stock or give written consents in favor of the
nominees designated by the New Shareholders pursuant to the terms of such
Section 7.2. of the Subscription Agreements.
(f) Bedford Shares. For purposes of this Section 1, the number of shares of
Common Stock owned by Bedford shall include (i) such number of the 3,000,000
shares of Common Stock owned as of or acquired by Bedford on or about December
24, 1996 in connection with the Restructuring (as such term is defined in the
Private Placement Memorandum of the Company dated November 11, 1996, as
supplemented December 23, 1996) as are subsequently distributed by Bedford to
executive officers or directors of Bedford, (ii) such number of shares of
Common Stock issued pursuant to Warrants to purchase up to 150,000 shares of
Common Stock acquired by Bedford in connection with the Restructuring and
subsequently distributed to executive officers and directors of Bedford, (iii)
such number of shares of Common Stock acquired by Bedford upon exercise of an
option given by the LLC, in each such case where beneficially owned (determined
as provided above) by such executive officers or directors as of the date of
determination.
Section 2. Restrictions on Transfer of Common Stock.
(a) Certain Transfers Prohibited. Except as provided in Section 2(b), no
Shareholder may sell, assign, pledge or otherwise transfer or encumber in any
manner or by any means whatsoever (collectively, a "Transfer") any shares of
Common Stock which such Shareholder may now own or may hereafter acquire,
unless the transferee shall agree in writing to be bound by the provisions of
this Agreement with respect to shares of Common Stock such transferee acquires.
Any purported Transfer in violation of this Agreement shall be void and
ineffective and shall not operate to Transfer any interest or title to the
purported transferee.
(b) Certain Sales and Transfers Permitted. The restrictions on Transfers
provided under Section 2(a) shall not be applicable with respect (i) to any
Transfer of Common Stock effected pursuant to a public sale or distribution,
(ii) to any Transfer to the Company or (iii) to a Transfer pursuant to a bona
fide pledge to an independent third party. For purposes hereof, the term
"public sale" shall mean any sale of Common Stock to the public pursuant to an
offering registered under the Securities Act of 1933, as amended (the
"Securities Act"), or to the public through a broker, dealer or market maker
pursuant to the provisions of Rule 144 adopted under the
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Securities Act.
Section 3. Restrictive Legend. The following legend shall be placed
on each certificate representing a Shareholder's shares of Common
Stock, including any certificates hereafter acquired by a Shareholder:
The shares represented by this certificate are subject to certain restrictions
on transfer and other agreements as set forth in a Shareholders Agreement,
dated effective as of December 24, 1996, among PMC International, Inc., Bedford
Capital Financial Corporation, Xxxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx and
Xxxxxxxx & Xxxxxx, LLC, copies of which are on file in the office of the
corporation.
Section 4. Termination. This Agreement shall terminate upon the earliest of (i)
written consent of the Shareholders; (ii) at such time as Bedford beneficially
owns less than 5% of the Company's issued and outstanding Common Stock
(beneficial ownership and issued and outstanding Common Stock being determined
as specified above); and (iii) December 20, 2006.
Section 5 Miscellaneous.
(a) Further Assurances. From time to time after the date of this Agreement, the
Shareholders shall execute and deliver such other instruments and documents and
shall take such other actions as the other Shareholders may reasonably request
to effectuate the transactions contemplated by this Agreement.
(b) Modification. This Agreement may be modified only by written
instrument properly executed by or on behalf of the Shareholders.
(c) Governing Law. This Agreement is a contract entered into in the State of
Colorado, and shall be construed and enforced in accordance with the laws of
the State of Colorado without reference to Colorado's conflicts of laws
principles.
(d) Jurisdiction and Venue. This Agreement shall be subject to the exclusive
jurisdiction of the courts of the City and County of Denver, Colorado or the
federal district courts located in the City and County of Denver. The
Shareholders agree that any breach of any term or condition of this Agreement
shall be deemed to be breach occurring in the State of Colorado by virtue of a
failure to perform any act required to be performed in the State of Colorado
and irrevocably and expressly agree to submit to the jurisdiction of the courts
of the City and County of Denver, Colorado and the federal district courts
located in the City and County of Denver, State of Colorado for the purpose of
resolving any disputes among the Shareholders relating to
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this Agreement or the transactions contemplated hereby. The parties irrevocably
waive, to the fullest extent permitted by law, any objection which they may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, or any judgment entered by any
court in respect hereof brought in the City and County of Denver, Colorado, and
further irrevocably waive any claim that any suit, action or proceeding brought
in the City and County of Denver, Colorado has been brought in an inconvenient
forum.
(e) Waiver. No waiver by any Shareholder, whether express or implied, of its
rights under any provision of this Agreement shall constitute a waiver of the
Shareholder's rights under such provisions at any other time or a waiver of the
Shareholder's rights under any other provision of this Agreement. No failure by
any Shareholder to take any action against any breach of this Agreement or
default by another party shall constitute a waiver of the former Shareholder's
right to enforce any provision of this Agreement or to take action against such
breach or default or any subsequent breach or default by the other Shareholder.
(f) Severability. If any one or more of the provisions contained in this
Agreement shall be declared invalid, illegal or unenforceable, the remainder of
the provisions of this Agreement shall remain in full force and effect, and the
provision held to be invalid, illegal or unenforceable shall be enforced as
nearly as possible according to its original terms and intent to eliminate such
invalidity, illegality or unenforceability.
(g) Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, including all counterparts received
by facsimile transmission, but all of which together shall constitute one and
the same instrument.
(h) Section Headings. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or
affect any provision hereof.
(i) Notices. All notices given hereunder shall be in writing, shall be given by
overnight courier service, telecopy, facsimile or copy delivered by hand, and,
(i) if delivered by overnight air courier service, shall be deemed received one
Business Day after having been deposited with such overnight air courier
service, postage prepaid, and (ii) if delivered by telex, telecopy or hand
delivery, shall be deemed received on the day the notice is sent, in each case
addressed as follows:
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If to Bedford, to:
Bedford Capital Financial Corporation
2nd Floor
Charlotte Hs.
Xxxxxx Street
Nassau, Bahamas
Attention: Xxxxxxx X. Xxxxxx, Chairman
and CEO and Xxxxxxx X. Xxxxx,
Treasurer and CFO
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxx, Johnson, Robinson, Xxxx & Ragonetti, P.C.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
If to the Company, to:
PMC International, Inc.
000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to:
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
If to Xxxxxxxx, to:
Xxxxxxx X. Xxxxxxxx
c/o PMC International, Inc.
000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
If to Xxxxxx, to:
Xxxxx X. Xxxxxx
c/o PMC International, Inc.
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000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
If to Xxxxxxxx & Xxxxxx, LLC
c/o, PMC international, Inc.
000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Any party may, by written notice so delivered to the others, change the address
or facsimile number to which delivery shall thereafter be made.
(j) Remedies Not Exclusive. No remedy conferred by any of the provisions of
this Agreement is intended to be exclusive of any other remedy. The election
of any one remedy by a party shall not constitute a waiver of the right to
pursue other available remedies.
(k) Successors and Assigns. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties and their successors, assigns,
transferees, heirs and legal representatives, including all persons who acquire
shares of Common Stock from a party subject to this Agreement.
(l) Prevailing Party. In the event of any litigation with regard to this
Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall immediately pay upon
demand, all reasonable fees and expenses of counsel for the prevailing party.
(m) Arbitration. The parties hereby agree that any legal suit, dispute, claim,
demand, controversy or cause of action of every kind and nature whatsoever,
known or unknown, fixed or contingent, that either may now have or at any time
in the future claim to have based in whole or in part, or arising from or out
of or that in any way is related to the negotiations, execution, interpretation
or enforcement of this Agreement (collectively, the "Disputes") shall be
completely and finally settled by submission of any such Disputes to
arbitration under the rules of the American Arbitration Association ("AAA")
then in effect. There shall be one arbitrator, and such arbitrator shall be
chosen by mutual agreement of the parties in accordance with AAA rules. Unless
the parties agree otherwise, the arbitration proceedings shall take place in
Denver, Colorado. Notice of demand for arbitration shall be filed in writing
with the other party to this
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Agreement and with the AAA. In no event shall the demand for arbitration be
made after the date when institution of legal or equitable proceedings based on
such Dispute would be barred by the applicable statute of limitations. The
findings of the arbitrator shall be final and binding on the parties. Judgment
on such award may be entered in any court of competent jurisdiction, or
application may be made to that court for a judicial acceptance of the award
and an order or enforcement, as the party seeking to enforce that award may
elect.
(n) Existing Shareholder Agreement. This Agreement replaces in its
entirety the Shareholders Agreement dated as of July 26, 1995, by the
Company, Bedford, Xxxxxxxx, Xxxxxx and HoldCo., which is hereby
terminated.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first written above.
PMC INTERNATIONAL, INC., a Colorado corporation
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx, President & CEO
BEDFORD CAPITAL FINANCIAL CORPORATION, a Liberia corporation
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx, Chairman,
President & CEO
By: /s/ XXXXX X. XXXXXX
-------------------------------------
Xxxxx X. Xxxxxx
XXXXXXXX & XXXXXX, LLC, a Colorado limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx, Manager
EXHIBIT A
Section 7.2 to the Subscription Agreements
Directorships. At a date (or dates) mutually acceptable to the Company, the
Subscriber and the Other Subscribers (which date shall be no more than 90 days
following the Closing unless the Subscriber and the Other Subscribers shall
agree), the Company shall cause its Board of Directors to be expanded by two
and shall appoint a director selected by the Subscriber and the Other
Subscribers (the "Subscribers' Director") and a director who is mutually
acceptable to the Company, the Subscriber and the Other Subscribers (the
"Mutually Acceptable Director"), which Mutually Acceptable Director shall
initially be Xxxxxx X. Xxxx. X. Xxxxxx Xxxx shall continue to serve as a member
of the Board of Directors until the earlier of such time as both the
Subscribers' Director and the Mutually acceptable Director have been appointed
as such or his voluntary resignation from the Board of Directors. The Company
agrees to nominate for director and solicit proxies or consents in favor of the
(a) Subscribers' Director
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for so long as the Subscriber and the Other Subscribers own, individually or in
the aggregate, 10% or more of the outstanding Common Stock and (b) Mutually
Acceptable Director for so long as the Subscriber and the Other Subscribers
own, individually or in the aggregate, 5% or more of the outstanding Common
Stock.
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