RESTRUCTURING AGREEMENT
This RESTRUCTURING AGREEMENT (this "Agreement"), dated as of December 24, 1996,
is between Bedford Capital Financial Corporation, a corporation organized under
the laws of Liberia ("Bedford"), PMC International Inc., a Colorado corporation
(the "Company"), Portfolio Management Consultants, Inc., a Colorado corporation
("PMC"), Portfolio Brokerage Services Inc., a Colorado corporation ("PBS"), and
Portfolio Technology Services, Inc. a Colorado corporation ("PTS").
RECITALS
A. Bedford, the Company, PMC, PBS and PTS are parties to the Investment
Agreement, dated as of July 26, 1995 (the "Investment Agreement"), pursuant to
which Bedford loaned a total of $3,000,000 to the Company (the "Loans")
evidenced by certain promissory notes of the Company (the "Notes"). The Loans
are secured by Security and Pledge Agreements between Bedford and each of the
Company and PTS, each dated as of July 26, 1995 (the "Security Agreements") and
a Non-Recourse Guaranty and Pledge Agreement between Bedford and PBS dated as
of July 26, 1995 (the "Pledge Agreement"). In connection with the Loans,
Bedford received warrants (the "Warrants") to purchase up to 3,000,000 shares
of the Company's Common Stock, par value $.01 ("Common Stock").
B. Concurrent with the execution and delivery of this Agreement, the Company
is effecting the closing of a private placement of its Common Stock (the
"Offering") pursuant to the terms of the Private Placement Memorandum dated
November 11, 1996 (as amended and supplemented from time to time, the
"Memorandum"). Closing of the Offering is conditioned upon effectiveness of the
restructuring of the relationship of the Company and its subsidiaries with
Bedford reflected in this Agreement (the "Restructuring").
C. Concurrent with the execution and delivery of this Agreement, Bedford and
the Company are amending and restating the Registration Rights Agreement dated
as of July 26, 1996 (the "Registration Rights Agreement").
▇. ▇▇▇▇▇▇▇ has assigned a portion of the Loans and the Warrants to
certain persons associated with it. References to Bedford has holder
of the Loans and the Warrants include such assignees.
E. In order to facilitate the Closing, the parties desire to complete the
Restructuring on the terms set forth herein. Undefined capitalized terms used
in this Agreement shall have the meaning given
1
to such terms in the Investment Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
Repayment of The Loans; Exercise and
Cancellation of Warrants; Return of Notes
Section 1.1 Repayment of the Loans. Upon execution and delivery of this
Agreement, the Company is paying to Bedford by wire transfer of immediately
available funds an amount equal to the sum of (i) all interest accrued on the
Loans through the date hereof, plus (ii) principal in amount equal to
$1,976,250.
Section 1.2 Exercise and Cancellation of Warrants; Issuance of Additional
Warrants. Upon execution and delivery of this Agreement, (i) Bedford is
exercising Warrants to purchase 1,023,750 shares of Common Stock, (ii) Bedford
is delivering to the Company and the Company is accepting for cancellation the
remaining Warrants not being exercised pursuant to clause (i) of this Section
1.2 in exchange for the issuance and delivery of 976,250 shares of Common Stock
and (iii) the Company is executing and delivering to Bedford a new Warrant to
purchase 150,000 shares of Common Stock at an exercise price of $2.125 per
share. In payment of the exercise price of these Warrants, Bedford is
delivering and the Company is accepting delivery of the unpaid portion of the
Notes to the extent of their outstanding principal balance. The Company is
issuing and delivering to Bedford certificates representing such shares, which
shall be duly issued and authorized, fully paid and non-assessable.
Section 1.3 Cancellation of Notes and Warrants. Bedford is delivering to the
Company for cancellation all Notes and Warrants, such cancellation to be
effective upon consummation of the transactions contemplated by Sections 1.1
and 1.2.
ARTICLE 2
Termination of Investment Agreement and
Related Agreements; Release of Liens
2
Section 2.1 Termination of Investment Agreement and Related Agreements. Except
as specified in Section 2.3, the Investment Agreement and all agreements
executed by Bedford pursuant to or in connection with the Investment Agreement
including, without limitation, the Security Agreements, the Pledge Agreement
and all other Security Documents, and all obligations of the parties
thereunder, are hereby terminated, and notwithstanding any provision to the
contrary in any such agreement, no provision of any such agreement will survive
such termination.
Section 2.2 Release of Liens. Bedford will, and will cause all other holders of
the Notes to, cooperate in good faith and execute such documents as the Company
reasonably requires to effect the release of all liens or other security
interests of such parties over or affecting the Collateral under the Security
Documents.
Section 2.3 Other Agreements. This Agreement does not affect the Rights
Agreement, which is being amended concurrently herewith and which shall remain
in effect, as amended, following consummation of the transactions contemplated
hereby and shall terminate only in accordance with its terms. In addition,
Bedford, the Company and certain shareholders of the Company are as of the date
hereof executing and delivering a Shareholders Agreement to replace the
shareholders agreement entered into by Bedford and the Company, among others,
in connection with the Investment Agreement.
ARTICLE 3
Representations and Warranties of the Parties
Each of the parties represents and warrants to the other parties that (i) it
has full power and authority to enter into this Agreement, (ii) it has duly
authorized the execution and delivery of this Agreement, and the performance
and observance of its terms, (iii) this Agreement constitutes legal, valid and
binding obligations of such party, enforceable against it in accordance with
its terms, and (iv) no consent, approval, exemption, authorization or order of
or other action by, and no notice to or filing with, any third party is
required in connection with the execution, delivery or performance by such
party of this Agreement or to consummate any transactions contemplated hereby,
except for filings required under the applicable securities laws.
3
ARTICLE 4
Miscellaneous
4.1 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:
If to Bedford or to any holder of a Note, to:
Bedford Capital Financial Corporation
2nd Floor
Charlotte Hs.
▇▇▇▇▇▇ Street
Nassau, Bahamas
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and CEO
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Treasurer and CFO
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇, Johnson, Robinson, ▇▇▇▇ & Ragonetti, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Company, PMC, PBS, or PTS, to:
PMC International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
With a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
4
Any party may, by written notice so delivered to the others, change the address
or facsimile number to which delivery shall thereafter be made.
4.2 Counterpart Execution; Bedford Representation. This Agreement may be
executed in any number of counterparts which together, including those received
by facsimile transmission which shall be effective as originals, shall
constitute but one and the same instrument. This Agreement shall become
effective upon execution by the parties, provided that Bedford's execution
shall constitute execution on behalf of itself and each holder of a Note for
purposes of this Section 4.2. Bedford hereby represents and warrants that it
has full authority and approval to execute this Agreement on behalf of each
holder of a Note and acknowledges that the Company is relying on such
representation. Bedford will fully indemnify and hold the Company harmless for
any damage or expense incurred by the Company resulting directly or indirectly
from the inaccuracy of the Representations of Bedford in this Paragraph 4.2.
4.3 Entire Agreement. This Agreement constitutes and incorporates the entire
agreement between the parties concerning the subject matter hereof and
supersedes and cancels any prior or contemporaneous agreements, verbal or
written, between the parties concerning the subject matter hereof.
4.4 Amendments; Waiver. No amendment or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing
and signed by each of Bedford and the Company.
4.5 Inconsistent Provisions; Severability. The invalidity,
illegality or unenforceability of any provision of this Agreement
shall not in any way affect or impair the legality or enforceability
of the remaining provisions hereof.
4.6 References and Titles. All references in this Agreement to Sections and
other subdivisions are to Sections and other subdivisions of this Agreement
unless expressly provided otherwise. The words "this Agreement", "this
instrument", "herein", "hereof", "hereby", "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited.
4.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
4.8 Governing Law; Jurisdiction. This Agreement shall be governed by
5
and construed in accordance with the laws of the state of Colorado. Each party
hereby consents to venue and jurisdiction in the District Court in and for the
City and County of Denver, State of Colorado and in the United States District
Court for the District of Colorado with respect to any claim arising out of or
in connection with this Agreement.
EXECUTED to be effective as of the day and year first above written.
BEDFORD CAPITAL FINANCIAL CORPORATION,
By: /s/ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Chairman, President & CEO
PMC INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President & CEO
PORTFOLIO MANAGEMENT CONSULTANTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
PORTFOLIO BROKERAGE SERVICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
President
PORTFOLIO TECHNOLOGY SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, EVP
6