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Exhibit 10.3
PMC INTERNATIONAL, INC.
PRIVATE OFFERING OF SECURITIES
SUBSCRIPTION AGREEMENT
(New Bridge Loan)
THIS SUBSCRIPTION AGREEMENT (the "Agreement"), dated as of November
22, 1996, is between PMC International, Inc., a Colorado corporation
(the "Company"), and the Subscriber whose name appears on the
signature page hereto (the "Subscriber").
WHEREAS, the Company is offering (the "Offering") Units of Securities
("Units") for up to $250,000, each Unit comprised of a Promissory Note
("Note") with a principal amount of $1,000 (which Note may be issued
in multiple denominations thereof in proportion to the number of Units
subscribed for by the Subscriber) and warrants ("Warrants") to
purchase 100 shares (which Warrant may be issued in multiple
denominations thereof in proportion to the number of Units subscribed
for by the Subscriber) of the Company's common stock, par value $.01
per share (the "Common Stock"), at a price of $1.625 per share.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto hereby agree as follows:
1. Subscription. Subject to the terms and conditions contained
herein, I hereby agree to purchase and the Company agrees to sell
_______ Units offered by the Company in accordance with the terms
described herein and in the Note and Warrant to be executed in
connection herewith. This subscription may be rejected by the Company
in whole or in part in the sole discretion of the Company. Subject to
the terms and conditions of this Agreement, the sales of the Units to
be purchased by the Subscriber (the "Closing") shall take place by
delivery of documents to or for the benefit of the Subscriber on
November 22, 1996, or on such other business day thereafter as may be
agreed upon by the Company and the Subscriber (the "Closing Date").
At the Closing the Company will deliver the Notes and Warrants
registered in the Subscriber's name (or in the name of the
Subscriber's nominee), representing the aggregate number of Units to
be purchased by the Subscriber, against delivery by the Subscriber to
the Company of immediately available funds in the amount of the
purchase price therefor.
2. Representations and Warranties of the Subscriber. The Subscriber
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represents and warrants to the Company that:
a. The Units and underlying securities are being purchased by it for
investment only, for its own account and not with a view to the offer
or sale in connection therewith, or the distribution thereof.
b. The Subscriber will not take, or cause to be taken, any action in
connection with the Offering of the Units that would cause it to be
deemed an underwriter of the Units or underlying securities, as
defined in Section 2(11) of the Securities Act of 1933, as amended
(the "Act").
c. The Subscriber has received and read a copy of the Private
Placement Memorandum, dated November 11, 1996, with respect to the
Company's offering of up to $10 million of Common Stock (the
"Memorandum").
d. The Subscriber has had an opportunity to ask questions of, and
receive answers from the officers of the Company to verify the
accuracy and completeness of the information made available to it.
e. By virtue of the Subscriber's pre-existing relationship with the
Company, the Subscriber's net worth or by reason of the Subscriber's
knowledge and experience in financial and business matters in general,
and investments in particular, the Subscriber is capable of evaluating
the merits and risks of an investment in the Units. The Subscriber's
overall commitment with respect to the Units herein is not
disproportionate to its net worth and will not cause such overall
commitment to become excessive.
f. The Subscriber's present financial condition is such that it is
under no present or contemplated future need to dispose of any portion
of the Units to satisfy any existing or contemplated undertaking, need
or indebtedness.
g. All the representations, warranties and acknowledgments of the
Subscriber contained in this Subscription Agreement are true, accurate
and complete as of the date hereof.
h. The address set forth below is the Subscriber's true and correct
residence and it has no present intention of becoming a resident or
any other state or jurisdiction at this time.
i. The Subscriber acknowledges and is aware of the following:
i) The Units are a speculative investment which involve a high degree
of risk of loss by the Subscriber of its investment in the Units.
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ii) There are substantial restrictions on the transferability of the
Units and underlying securities; the Units and underlying securities
cannot be transferred unless they are registered under the Act and any
applicable state laws and regulations, or an exemption from such
registration is available and established to the satisfaction of the
Company; upon the execution and delivery of the Registration Rights
Agreement (as defined below) as provided for herein, the Subscriber
will have rights to require that the securities comprising the Units
be registered under the Act as set forth in such Registration Rights
Agreement; while a public market currently exists for the Common Stock
of the Company, the Subscriber may have to hold the Units and
underlying securities indefinitely and it may not be possible for the
Subscriber to liquidate its investment in the Company; and there is no
guarantee that a public market will continue to exist for the Common
Stock, or even if it does exist, that the trading volume will be
sufficient.
iii) The Company has experienced operating losses since inception.
There can be no assurance that the Company will achieve profitable
operations in the future.
iv) If the Subscriber is not an individual, the undersigned
represents and warrants that the individual signing on behalf of the
entity has full legal power and authority to purchase the Units
subscribed for herein and execute the documents relating thereto.
Upon request of the Company the undersigned will provide written
documentation thereof.
3. Accredited or Other Special Investors. The Subscriber is (initial
all applicable responses):
____ A member of management of the Company.
____ An affiliate of the Company.
____ A small business investment Company licensed by the U.S. Small
Business Administration under the Small Business Investment Company
Act of 1958.
____ A business development Company as defined in the Investment
Company Act of 1940.
____ A national or state-chartered commercial bank, whether acting in
an individual or fiduciary capacity.
____ A broker or dealer registered pursuant to Section 15 of the
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Securities Exchange Act of 1934.
____ An insurance Company as defined in Section 2(13) of the Act.
____ An investment Company registered under the Investment Company
Act of 1940.
____ An employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, where the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, insurance Company, or registered
investment advisor, or an employee benefit plan which has total assets
in excess of $5,000,000.
____ A private business development Company as defined in Section
202(1)(22) of the Investment Advisors Act of 1940.
____ An organization described in Section 501(c)(3) of the Internal
Revenue Code, a business trust, a corporation or a partnership with
total assets in excess of $5,000,000.
____ A natural person (as opposed to a corporation, partnership,
trust or other legal entity) whose net worth, or joint net worth
together with his/her spouse, exceed $1,000,000.
____ Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Section
506(b)(2)(ii) of Regulation D.
____ A natural person (as opposed to a corporation, partnership,
trust or other legal entity) whose individual income was in excess of
$200,000 in each of the two most recent years (or whose joint income
with such person's spouse was at least $300,000 during such years) and
who reasonably expects an income in excess of such amount in the
current year.
____ A corporation, partnership, trust or other legal entity (as
opposed to a natural person) and all of such entity's equity owners
fall into one or more of the categories enumerated above.
4. Restrictions on Transferability. The Subscriber hereby agrees
that the Units and underlying securities being purchased by it shall
be stamped or otherwise imprinted with a conspicuous legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
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REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN SECTION 4 OF THE
SUBSCRIPTION AGREEMENT DATED AS OF NOVEMBER 22, 1996, COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF PMC INTERNATIONAL,
INC."
The Subscriber further agrees that the Units and underlying securities
may also be stamped with any other legend(s) required by applicable
state securities laws (the "State Acts").
Prior to any transfer of any Units or underlying securities which is
not registered under an effective registration statement under the
Act, 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
Units or underlying securities under the Act or applicable State Acts.
Each certificate issued upon or in connection with the transfer of any
Units or underlying securities shall bear the appropriate restrictive
legend set forth above, unless in the opinion of such counsel such
legend is no longer required to insure compliance with the 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.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Subscriber as follows:
a. Organization, Standing and Qualification. Each of the Company and
its Subsidiaries (as hereinafter defined) (i) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation; (ii) has all requisite corporate power
and authority to own or lease and operate its properties and to carry
on its business as now conducted and as proposed to be conducted; and
(iii) is duly qualified or licensed to do business as a foreign
corporation and is in good standing in all jurisdictions in which it
is required to be so qualified or licensed except where the failure to
be so licensed or qualified would not have a material adverse affect
on the Company and its Subsidiaries taken as a whole. As used in this
Agreement, the term "Subsidiaries" means Portfolio Management
Consultants, Inc., Portfolio Brokerage Services, Inc. and Portfolio
Technology Services, Inc. and the term "Subsidiary" refers to each of
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such entities individually. The Company does not own any capital
stock in any entity other than the Subsidiaries.
b. Capitalization.
i) The issuance and sale of the Units has been duly authorized by the
Company, and upon conversion of the Notes and/or exercise of the
Warrants, as the case may be, in accordance with the terms thereof,
the shares of Common Stock issuable in respect thereof will be validly
issued, fully paid and non-assessable.
ii) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock, no par value (the Preferred Stock"). As of the date of this
Agreement, there are (x) 5,555,713 shares of Common Stock issued and
outstanding and no shares of Common Stock held in the Company's
treasury, (y) no shares of Common Stock reserved for issuance upon
exercise of outstanding stock options, warrants or otherwise except
for (i) 2,534,000 shares of Common Stock reserved for issuance upon
exercise of options granted by the Company, (ii) 5,100,000 shares of
Common Stock reserved for issuance upon exercise of warrants issued by
the Company, and (iii) 233,750 shares of Common Stock reserved for
issuance upon the exchange of certain Preferred Stock for Common Stock
and (z) 349,017 shares of Preferred Stock issued and outstanding, and
no shares of the Preferred Stock held in the Company's treasury or
reserved for issuance upon exercise of outstanding stock options or
otherwise. All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. Except (x) for agreements relating to the Offering of
the Units, or (y) as described in the Memorandum, the Company does not
have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of capital stock or any
other equity security of the Company or any securities representing
the right to purchase or otherwise receive any shares of capital stock
or any other equity security of the Company.
iii) All of the outstanding shares of capital stock of the
Subsidiaries have been duly authorized and validly issued and are
fully paid and nonassessable, and all such shares are owned directly
or indirectly by the Company free and clear of any lien, charge,
encumbrance or security interest whatsoever, except for the security
interests of Bedford Capital Financial Corporation ("Bedford") in all
outstanding stock of the Subsidiaries, the security interest of
certain bridge loan lenders to the Company (the "Old Bridge Lenders")
therein and any security interest to be granted to Subscribers in the
Offering. No Subsidiary has or is bound by any outstanding
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subscriptions, options, warrants, calls, commitments or agreements of
any character calling for the purchase or issuance of any shares of
capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such
Subsidiary.
c. Authorization and Validity of Agreements.
i) Each of this Agreement, the Note, the Warrant and the Collateral
Assignment and Security Agreement, dated as of November 22, 1996,
between the Company and the Subscribers for Units in the Offering
(the "Security Agreement") has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally or by general
principles of equity. All corporate proceedings on the part of the
Company necessary to approve this Agreement and to consummate the
transactions contemplated hereby have been taken prior to the date of
this Agreement.
ii) The Registration Rights Agreement has been duly authorized and,
when executed and delivered by the Company in accordance with the
terms hereof, will constitute a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
d. No Conflict with Other Instruments; No Approvals Required Except
as Have Been Obtained. Delivery and performance of this Agreement,
the Note, the Warrant and the Security Agreement by the Company and
the consummation by the Company of the transactions contemplated
hereby and thereby will not violate, with or without the giving of
notice or the lapse of time, or both, or require any registration,
qualification, approval or filing under, any provision of law,
statute, ordinance or regulation applicable to the Company, and will
not conflict with, or require any consent or approval under, or result
in the breach or termination of any provision of, or constitute a
default under, or result in the acceleration of the performance of the
obligations of the Company under, or result in the creation of any
claim, lien, charge or encumbrance upon any of the properties, assets
or businesses of the Company or any of the Subsidiaries pursuant to
the Articles of Incorporation or By-Laws of the Company or any of its
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Subsidiaries, as the case may be, or any order, judgment, decree, law,
ordinance or regulation applicable to the Company or any contract,
instrument, agreement or restriction to which the Company or any of
the Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their assets or properties is bound, except for
the approval of Bedford which has been obtained. Neither the Company
nor any of its Subsidiaries nor any of their respective assets or
properties is subject to any charter, by-law, contract or other
instrument or agreement, order, judgment, decree, law, statute,
ordinance or regulation or any other restriction of any kind or
character that would prevent the Company from entering into this
Agreement, the Note, the Warrant or the Security Agreement or from
consummating the transactions contemplated hereby or thereby in
accordance with the terms hereof or thereof.
e. No Material Adverse Change. Since September 30, 1996, except as
described in or contemplated by the Memorandum, there has not been any
material adverse change in the business, prospects, assets,
liabilities, results of operations or financial condition of the
Company or any of its Subsidiaries.
f. Financial Statements.
i) Except as otherwise stated in the notes thereto, the financial
statements of the Company and its Subsidiaries attached to the
Memorandum have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis and
fairly present the financial position, results of operations and
changes in financial position of the Company and its Subsidiaries as
of the dates and for the periods indicated. The selected financial
data relating to the Company and its Subsidiaries included in the
Memorandum have been compiled on a basis consistent with that of the
audited consolidated financial statements of the Company and its
Subsidiaries included in the Company's Form 10-KSB included as an
exhibit to the Memorandum and fairly present the information shown
therein. Except as reflected in such financial statements and the
notes thereto and except as described in the Memorandum under the
caption "The Company--Corporate History--New Bridge Loan," neither the
Company nor any of its Subsidiaries have any liabilities absolute or
contingent, that are, individually or in the aggregate, material to
the Company and its Subsidiaries, other than ordinary course
liabilities incurred since the last date of such financial statements
in connection with the transactions contemplated by the Memorandum or
with conduct of the business of the Company or any of its Subsidiaries
that are not, individually or in the aggregate, material to the
Company and its Subsidiaries.
ii) Nothing has come to the attention of the Company which causes it
to believe that the information contained in the Memorandum under the
caption "Financial Projections" is not reasonably based upon
information available to the management of the Company as of the date
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of the Memorandum and at the time of Closing. The Company believes
that the projections of financial results contained in the Memorandum
were prepared on a reasonable basis and the underlying assumptions
provide a reasonable basis for such forecast.
g. Full Disclosure. None of the Memorandum, this Agreement, the
Note, the Warrant or the Security Agreement or the Schedules hereto
(except for the Subscriber's representations and warranties set forth
herein), contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which
they were made, not misleading except that no representation or
warranty is made with respect to the projections set forth in the
Memorandum under the caption "Financial Projections" other than as set
forth above. There is no fact known to the Company which the Company
has not disclosed to the Subscriber in the Memorandum or herein which
materially adversely affects, or which could reasonably be expected to
materially adversely affect, the business, prospects, assets,
liabilities, results of operations or financial condition of the
Company and its Subsidiaries taken as a whole or the ability of the
Company to perform it obligations under this Agreement, the Note, the
Warrant or the Security Agreement.
h. Litigation.
i) Except as described in the Memorandum, there is no action, suit,
proceeding or investigation pending, or to the best knowledge of the
Company, threatened, against or affecting the Company or any of its
Subsidiaries in any court or before any governmental authority or
arbitration board or tribunal, which could, individually or in the
aggregate, reasonably be expected to have a material adverse effect on
the business, assets, liabilities, results of operations or financial
condition of the Company and its Subsidiaries taken as a whole or that
could adversely affect the consummation of the transactions
contemplated hereby or by the Note, the Warrant, the Security
Agreement or the Registration Rights Agreement.
ii) Except as described in the Memorandum, neither the Company nor
any of its Subsidiaries is subject to, or in any material way affected
by, any judgment, order, decree, rule or regulation of any court,
governmental authority or arbitration board or tribunal which has
materially adversely affected or which could reasonably be expected to
materially adversely affect the business, assets, liabilities, results
of operations or financial condition of the Company and its
Subsidiaries taken as a whole or that could adversely affect the
consummation of the transactions contemplated hereby or by the Note,
the Warrant, the Security Agreement or the Registration Rights
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Agreement.
i. Taxes. The Company and its Subsidiaries have filed all United
States federal income tax returns and all other tax returns that are
required to be filed by it and all such tax returns are true, correct
and complete in all material respects. The Company and its
Subsidiaries have paid all taxes for the periods covered by such
returns, except for such taxes being diligently contested in good
faith and by appropriate proceedings and adequately reserved for in
accordance with GAAP on the Company's balance sheet as of September
30, 1996. No claims for additional taxes (as hereinafter defined),
interest or penalties are now being asserted or threatened against the
Company or any of its Subsidiaries by any taxing authority except for
such claims that, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the business,
assets, liabilities, results of operations or financial condition of
the Company and its Subsidiaries taken as a whole or are reserved for
in accordance with GAAP on the Company's balance sheet as of September
30, 1996. For purposes of this Agreement, the term "taxes" shall mean
all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross receipts, excise, property, sales,
use, occupation, transfer, license, payroll, withholding, social
security and franchise taxes, imposed by the United States, or any
state, local of foreign government or subdivision or agency thereof;
and such term shall include any interest, penalties or additions to
tax attributable to such assessments. For purposes of this Agreement
the term "tax return" shall mean any report, return or other
information required to be supplied to taxing authority in connection
with taxes.
j. Compliance with Laws. Neither the Company nor any of its
Subsidiaries is, or after giving effect to the transactions
contemplated hereby and by the Note, the Warrant, the Security
Agreement or the Registration Rights Agreement and the transactions
described in the Memorandum under the caption "The Restructuring" and
"The Company -- ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLC"), will be, in material
violation of any statutes, laws, ordinances, rules or regulations, or
any judgment, order or decree (Federal, state, local or foreign) to
which any of them is, or will be, subject or has failed to obtain any
material licenses, permits, franchises or other governmental
authorizations necessary to the ownership or operation of its
properties or the conduct of its business.
k. Private Offering. Neither the Company, its Subsidiaries nor, to
the best knowledge of the Company, any person authorized to act on
behalf of the Company has taken any action which would require
registration of the offering and sale of the Units pursuant to this
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Agreement or the other agreements relating to the sale of the Units
under the Securities Act or would violate applicable state securities
or "blue sky" laws or any rules, regulations or policies adopted
thereunder. The Company has not taken and agrees that it will not,
and will not authorize anyone to, take any action so as require the
issuance and sale of the Units to be registered under the Securities
Act.
l. SEC Reports. Since January 1, 1992, the Company has filed all
annual, quarterly and other reports required to be filed by it with
the SEC under Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). As of the dates filed, such
reports complied as to form in all material respects with the
requirements of the Exchange Act and did not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
m. Intellectual Property. Each of the Company and its Subsidiaries
owns or possesses all material patents, trademarks, service marks,
trade names, copyrights, licenses, and other rights, in each case free
from burdensome restrictions (excluding the security interests therein
of Bedford and the Old Bridge Lenders), which are necessary for the
ownership, maintenance and operation of its properties and assets, and
neither the Company nor any of its Subsidiaries is in violation of any
provision thereof in any material respect.
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n. Investment Company Act. The Company is not required to register
as an investment company under the Investment Company Act of 1940, as
amended.
6. Conditions to Subscriber's Obligations. The Subscriber's
obligation to purchase and pay for the Units to be sold to such
Subscriber at the Closing shall be subject to the fulfillment, prior
to or at the Closing, of the following conditions:
a. Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall have been
true and correct in all material respects when made and shall be true
and correct in all material respects on and as of the Closing Date, as
if made on and as of the Closing Date.
b. Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or
at the Closing.
c. Opinion of Counsel. The Subscribers shall have received an
opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq, counsel for the Company, as to the
matters set forth in Exhibit A hereto, addressed to the Subscribers
and dated as of the Closing Date.
7. Conditions to the Company's Obligations. The Company's obligation
to issue and sell the Units under this Agreement as to any Subscriber
shall be subject to the fulfillment, prior to or at the Closing, of
the following conditions:
a. Representations and Warranties. The representations and
warranties of such Subscriber contained in this Agreement shall have
been true and correct in all material respects when made and shall be
true and correct in all material respects on and as of the Closing
Date, as if made on and as of the Closing Date.
b. Payment for the Units. Such Subscriber shall have delivered to
the Company and the Company shall have received full payment in
immediately available funds in respect of such Subscriber's purchase
of the Units.
8. Registration Rights Agreement. As soon as practicable after the
date hereof (but, in any event, no earlier than December 15, 1996),
the Company shall enter into a registration rights agreement (the
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"Registration Rights Agreement") for the benefit of the Subscribers in
customary form reasonably acceptable to the Company and the
Subscriber.
9. Survival. All representations, warranties and agreements
contained in this Agreement or made in writing by or on behalf of the
Company or by the Subscriber in connection with the transactions
contemplated by this Agreement shall survive the execution and
delivery of this Agreement, any investigation at any time made by the
Subscriber or any other holder of the Units on the Subscriber's
behalf, the purchase of the Units under this Agreement and any
disposition or payment of the Units. All statements contained in any
certificate or other instrument delivered by or on behalf of either
party hereto pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement shall be deemed
representations and warranties such party under this Agreement.
10. Termination of Agreement. This Agreement may be terminated and
the transactions contemplated herein abandoned by the written
agreement of the Company and the Subscriber.
11. Amendment; Waiver. No provision of this Agreement may be
amended, waived or otherwise modified except by an instrument in
writing executed by the parties hereto.
12. Notices. Any notices or other communications required or
permitted hereby shall be sufficiently given if sent by registered or
certified mail, postage prepaid, return receipt requested, and, if to
the Company, at the address to which this letter Subscription
Agreement is addressed, and, if to the Subscriber, at the address set
forth below the Subscriber's signature hereto, or to such other
addresses as either the Company or the Subscriber shall designate to
the other by notice in writing.
13. Successors and Assigns. This Subscription Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
to the successors and assigns of the Company and the Subscriber.
14. Reliance Upon Representations. Each of the Subscriber and the
Company understand that the other party is relying upon the accuracy
of the representations and warranties which the other party has made
in this Agreement. Each of the Subscriber and the Company agrees to
indemnify the other party and any control persons of such entity, for
any loss they may suffer as the result of any breach of any warranty,
representation or statement of facts which such indemnifying party has
made in connection with the transactions contemplated hereby.
15. Applicable Law. This Subscription Agreement shall be governed by
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and construed in accordance with the laws of the State of Colorado
without regard to the principles of conflict of laws and, to the
extent it involves any United States statute, in accordance with the
laws of the United States.
16. Integration; Severability.
a. This Agreement embodies the entire agreement and understanding
between the Subscriber and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof.
b. Any provision of this Agreement that is prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition, unenforceability or
lack of authorization without invalidating the remaining provisions
hereof or effecting the validity, unenforceability or legality of such
provision in any other jurisdiction.
17. Appointment of Agent. The Subscriber understands that in
connection with the purchase of Units, the Agent on behalf of the
Subscriber will be granted a lien together with all other investors in
this Offering, on certain assets of the Company as security for the
Note (the "Lien"). In order to facilitate the creation and perfection
of the Lien, the Subscriber hereby appoints ▇▇▇▇▇ ▇. Gloss of
Lakewood, Colorado ("Agent"), to act as Subscriber's attorney-in-fact
for the purpose of perfecting the Lien, enforcing the Lien,
subordinating the Lien and releasing the Lien. The Subscriber
understands and agrees that the Agent will be acting in such capacity
with respect to each such investor ("Investors") in the Offering and
understands and authorizes the Company to compensate the Agent for
Agent's time incurred in connection with agreeing to become Agent, as
well as for filing, releasing and subordinating the Lien following his
appointment as Agent and acceptance thereof. The Subscriber also
understands and agrees that any other matters undertaken by the Agent
must be paid for by the Investors (if not reimbursed by the Company)
and that if such matters are undertaken Subscriber will be required to
enter into a separate written agreement with the Agent. The
Subscriber agrees, authorizes and instructs the Agent to act as
follows in connection with the Lien:
a. Agent shall be empowered to execute, on the Subscriber's behalf,
security documents deemed necessary and appropriate by Agent for the
perfection of the Lien and to execute all documents deemed necessary
or advisable to fulfill Investors' obligations under the security
documents, including, without limitation, executing documents
necessary to effectuate the subordination of Investors' Lien to the
senior lien of Bedford, the junior lien to the Old Bridge Lenders and
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to bank or financial institution operating lines of credit, if any,
provided the consent of each holder of the Notes shall be required for
the Agent to enter into any agreement relating to any subordination or
release of any collateral securing the Notes. All such documents
shall be referred to as "Security Documents". Subscriber hereby
consents and authorizes the Agent to enter into that certain
Subordination Agreement of even date herewith between the Company,
Bedford Capital Financial Corporation the Agent.
b. Should there be an Event of Default under the Notes, then the
Agent, at the direction of the Majority Noteholders, will take actions
deemed necessary or advisable to enforce the Lien and to the extent
feasible, obtain proceeds for the benefit of the Investors; pay such
proceeds to the Investors, based upon the respective percentages of
the Investor's ownership of the total principal balance of the Notes
outstanding. Such efforts of Agent will continue until all amounts
due the Investors pursuant to the terms of the Notes have been paid in
full.
c. When all amounts under the Notes have been paid in full to the
Investors, the Agent shall deliver to the Company a release of the
Investors' Lien and then the Agent shall be discharged.
d. Any right the Investors may have pursuant to the Security
Documents may be exercised by the Agent on behalf of the Investors and
the Subscriber hereby appoints the Agent as its attorney-in-fact, with
power of substitution, and with complete authority to do all things
necessary for the collection of the Notes and the enforcement of the
Lien; to demand and receive of and from any person all property,
debts, and demands belonging and owing to the Investors pursuant to
the Notes and the Security Documents. The Subscriber authorizes the
Agent to perform and act in the manner specified by the Security
Documents, it being understood, however, that the Agent is only acting
on behalf of the Investors. The Agent may execute and exercise any of
the rights or powers vested in him or perform any such duties either
himself or by or through his attorneys, agent or employees.
e. The Agent acts hereunder as agent and in a ministerial capacity
for the Subscriber and the other Investors, and his duties shall be
determined solely by the provisions of this document and the Security
Documents. The Subscriber expressly acknowledges, understands and
agrees that it is not looking to or relying upon Agent for any advice
with respect to an investment in the Offering or any other matter
related thereto, including, without limitation, securities laws
implications or compliance issues. The Agent shall not be deemed to
make any representations as to the validity or value or authorization
of the Notes or the Lien. The Agent shall not be liable for any act
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or omission in connection with this agency except for his own gross
negligence or willful misconduct.
f. The Agent shall be under no obligation to institute any action,
suit or legal proceeding or take any other action likely to involve
expense unless the Investors shall furnish the Agent with reasonable
security and indemnity for any costs and expenses which may be
incurred, but this provision shall not affect the power of the Agent
to take such action as the Agent may consider proper, whether with or
without any such security or indemnity. All rights of action under
this Agency may be enforced by the Agent without the possession of any
of the Notes or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding
instituted by the Agent shall be brought in his name as Agent, and any
recovery of judgment shall be for the ratable benefit of the
investors, as their respective rights or interests may appear.
g. The Agent will not incur any liability or responsibility for any
action taken in reliance on any notice, resolution, waiver, consent,
order, certificate, or other paper, document or instrument reasonably
believed by him to be genuine and to have been signed, sent or
presented by the proper party or parties. The Agent may at any time
consult with counsel satisfactory to him and shall incur no liability
or responsibility for any action taken, suffered or omitted by him in
good faith in accordance with the opinion or advice of such counsel.
h. At any time that the Agent requests specific written instructions
from the Investors, or if the Agent requests that oral instructions be
followed by written instructions, the Investors, within three (3) days
of receiving such request for written instructions, shall prepare and
transmit such instructions to the Agent. The failure of the Investors
to so transmit such requested instructions shall relieve the Agent
from any liability pertaining to any action which was the subject of
the requested instruction and which action was taken by the Agent in
good faith. Any notice, statement, instruction, request, direction,
order or demand of the Investors shall be sufficiently evidenced by an
instrument signed by Investors having Notes constituting in the
aggregate more than 50% of the then outstanding aggregate principal
balance of the Notes. Agent shall be entitled to rely upon a
certificate executed by an officer of the Company certifying as to the
outstanding principal balance under the Notes. The Agent shall not be
liable for any action taken, suffered or omitted by him in accordance
with such notice, statement, instruction, request, direction, order or
demand.
i. The Subscriber, jointly and severally with the other Investors,
agrees to reimburse the Agent for his reasonable expenses hereunder;
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and further agrees to indemnify the Agent and save him harmless
against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the
Agent in the execution of his duties hereunder except losses, expenses
and liabilities arising as a result of the Agent's gross negligence or
willful misconduct.
j. The Investors having Notes constituting in the aggregate more than
50% of the then outstanding aggregate principal amount of the Notes,
may, for whatever reason, replace the Agent with a new agent on 10
business days prior written notice to the Agent without however
affecting the liabilities, responsibilities or obligations accruing
hereunder prior to such termination. The new agent will succeed to
all of the rights and obligations of the Agent.
k. The Agent may resign by giving written notice to the Investors.
l. This agency appointment shall be governed and construed under the
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laws of the State of Colorado.
[Signature Page for Entity]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PMC INTERNATIONAL, INC.
By:
Name:
___________________________________
Name of Entity (Print or Type)
By: _______________________________
Name:
Address of Subscriber:
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[Signature Page for Individual]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PMC INTERNATIONAL, INC.
By:
Name:
___________________________________
Signature of Individual Subscriber
___________________________________
Name of Individual Subscriber
Address of Subscriber:
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