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Exhibit 10.5
PMC International, Inc.
REGISTRATION RIGHTS AGREEMENT
Dated as of December 23, 1996
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TABLE OF CONTENTS
Section Page
1. Definitions 1
2. Registration under Securities Act, etc. 4
2.1 Filing and Maintenance of Shelf Registration 4
(a) Filing 4
(b) Registration Statement Form 4
(c) Expenses 5
(d) Underwritten Offering 5
2.2 Registration on Request 5
(a) Request 5
(b) Registration Statement Form 6
(c) Expenses 6
2.3 Registration Procedures 6
2.4 Underwritten Offerings 12
(a) Requested Underwritten Offerings 12
(b) Priority in Requested Underwritten Offering 12
(c) Holdback Agreement 13
(d) Participation in Underwritten Offerings 13
2.5 Indemnification 14
(a) Indemnification by the Company 14
(b) Indemnification by the Holders 15
(c) Notices of Claims, etc 15
(d) Indemnification Payments 16
(e) Contribution 16
3. Rule 144 17
4. Amendments and Waivers 17
5. Nominees for Beneficial Owners 18
6. Notices 18
7. Assignment 18
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8. Descriptive Headings 19
9. Governing Law 19
10. Counterparts 19
11. Entire Agreement 19
12. Severability 19
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of December 23, 1996, among PMC
International, Inc., a Colorado corporation (the "Company"), ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc. ("KBW"), certain holders of the Company's warrants issued in
November, 1996 (the "Warrant Holders") and each of the subscribers referred to
below (individually, a "Subscriber" and collectively, the "Subscribers"). The
Warrant Holders and the Subscribers are listed on Schedule A to this Agreement.
WHEREAS, the Company is a party to the separate Subscription Agreements (the
"Subscription Agreements") with each of the Subscribers pursuant to which the
Company has agreed, among other things, to issue shares of its common stock,
par value $.01 per share (the "Common Stock"), to each of the Subscribers;
WHEREAS, in connection with the November 1996 bridge financing by, and the
restructuring of, the Company, the Company has issued warrants (the "Warrants")
to purchase shares of Common Stock to certain parties to this Agreement; and
WHEREAS, as a condition to the closing of the issuance of the Common Stock
under the Subscription Agreements and to the issuance of the Warrants, the
Company has agreed to provide registration rights with respect to the Common
Stock as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Additional Common Stock: Any and all shares of Common Stock issued to
the Subscribers pursuant to Section 7.1 of the Subscription Agreement.
Closing Date: The date of the closing of the issuance of the Common
Stock pursuant to the Subscription Agreements.
Commission: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
Common Stock: As defined in the recitals hereto.
Company: As defined in the introductory paragraph of this Agreement.
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Exchange Act: The Securities Exchange Act of 1934, as amended, or any similar
Federal statute, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Exchange Act shall include a reference to the comparable
section, if any, of any such similar Federal statute.
Initiating Holders: Any holder or holders of Registrable Securities holding at
least 25% of the Registrable Securities, and initiating a request pursuant to
Section 2.1(d) to effect the underwritten offering of Registrable Securities.
Inspector: As defined in Section 2.3(j).
KBW: As defined in the introductory paragraph of this Agreement.
NASD: National Association of Securities Dealers, Inc.
Person: A corporation, an association, a partnership, an
organization, business, an individual, a governmental or political
subdivision thereof or a governmental agency.
Primary Registrable Securities: Any and all shares of Common Stock issued to
Subscribers pursuant to the Subscription Agreements and any shares of
Additional Common Stock and any securities issued or issuable with respect to
any Common Stock or Additional Common Stock referred to above by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
As to any particular Primary Registrable Securities, once issued such
securities shall cease to be Primary Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall have
been distributed to the public pursuant to Rule 144, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
Registrable Securities: Any and all Primary Registrable Securities
and Secondary Registrable Securities.
Registration Expenses: All expenses incident to the Company's performance of or
compliance with Section 2, including, without
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limitation, all registration filing and NASD fees, all stock exchange listing
fees, all fees and expenses of complying with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualification of any of the Registrable Securities), all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees
and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to performance and compliance, the reasonable
fees and disbursements of a single counsel retained by the holder or holders of
a majority (by number of shares) of the Registrable Securities being
registered; the fees and expenses of a "qualified independent underwriter" if
required by Rule 2720 adopted pursuant to Article VII of the ByLaws of the NASD
in connection with the offering of any of the Registrable Securities; premiums
and other costs of policies of insurance against liabilities arising out of the
public offering of the Registrable Securities being registered and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions and transfer
taxes, if any, in respect of the Registrable Securities, which shall be payable
by each holder thereof.
Registration Statement: As defined in Section 2.1.
Rule 10b-6. Rule 10b-6 promulgated under the Exchange Act as shall be in effect
at the time and any successor provision under the Exchange Act.
Rule 144: Rule 144 promulgated under the Securities Act as shall be in effect
at the time and any successor provision under the Securities Act.
Secondary Registrable Securities: Any and all shares of Common Stock issued or
issuable upon exercise of the Warrants or issuable with respect to such Common
Stock by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Secondary Registrable
Securities, once issued such securities shall cease to be Secondary Registrable
Securities when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been distributed to the public pursuant to Rule
144, (c) they shall have been otherwise transferred, new certificates for them
not bearing a legend restricting further transfer shall have been delivered by
the Company and subsequent disposition of them shall not require registration
or
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qualification of them under the Securities Act or any similar state law then in
force, or (d) they shall have ceased to be outstanding.
Securities Act: The Securities Act of 1933, as amended, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as of
the same shall be in effect at the time. References to a particular section of
the Securities Act shall include a reference to the comparable section, if any,
of any such similar Federal statute.
Subscriber: As defined in the introductory paragraph.
Subscription Agreement: As defined in the recitals hereto.
Warrants: As defined in the recitals hereto.
2. Registration under Securities Act, etc.
2.1 Filing and Maintenance of Shelf Registration.
(a) Filing. The Company shall file within 45 calendar days following the
Closing Date a "shelf registration" statement (the "Registration Statement")
covering the Registrable Securities and all shares of Common Stock which the
Company may elect to register on behalf of other Persons and shall use its best
efforts to have such Registration Statement declared effective by the
Commission. The Company agrees to use its best efforts to keep the Registration
Statement continuously effective for the period commencing on the date of
effectiveness and ending on the earlier to occur of (i) the date when each of
the Primary Registrable Securities ceases to be Primary Registrable Securities
and (ii) the date when each of the Primary Registrable Securities not otherwise
transferred or sold pursuant to the Registration Statement may be sold or
distributed by the holder thereof in reliance upon Rule 144 (giving effect to
all conditions thereof, including, without limitation, the volume limitations
contained in Rule 144(e)).
(b) Registration Statement Form. The Registration Statement under this
Section 2.1 shall be on such appropriate registration form of the Commission as
shall be selected by the Company and as shall permit the disposition of such
Registrable Securities in accordance with the intended method or methods of
disposition (including an underwritten offering).
(c) Expenses. The Company shall pay all Registration Expenses in connection
with the registration contemplated by this Section 2.1. Each holder of
Registrable Securities shall pay all underwriting
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discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such holder's Registrable Securities pursuant to the
Registration Statement.
(d) Underwritten Offering. One or more Initiating Holders may, at any two
times while the Registration Statement is effective, request that the Company
amend or supplement the Registration Statement to effect an underwritten
offering. The Company shall provide prompt notice of such request to the
holders of all Registrable Securities, and shall as promptly as practicable
amend or supplement the Registration Statement to the extent required to permit
the disposition in accordance with such request.
2.2 Registration on Request.
(a) Request. At any time or from time to time after the Registration
Statement is no longer effective and prior to such time as each of the
Secondary Registrable Securities ceases to be Secondary Registrable Securities,
upon the written request of any holder of Secondary Registrable Securities that
cannot be sold or distributed by the holder thereof in reliance upon Rule 144
(giving effect to all conditions thereof, including, without limitation, the
volume limitations contained in Rule 144(e)), requesting that the Company
effect the registration under the Securities Act of such holders' Secondary
Registrable Securities that cannot be so sold or distributed, the Company will
promptly give written notice of such requested registration to all registered
holders of Secondary Registrable Securities, and thereupon the Company will,
subject to the terms of this Agreement, use its best efforts to effect the
registration under the Securities Act of:
(i) the Secondary Registrable Securities which the Company has
been so requested to register by the holder initiating such request
for disposition; and
(ii) all other Secondary Registrable Securities that cannot be sold or
distributed by the holder thereof in reliance upon Rule 144 (giving effect to
all conditions thereof, including, without limitation, the volume limitations
contained in Rule 144(e)) the holders of which shall have made a written
request to the Company for registration thereof within 30 days after the giving
of such written notice by the Company; and
(iii) all shares of Common Stock and other securities which the Company may
elect to register in connection with the offering of Secondary Registrable
Securities pursuant to this Section 2.2,
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all to the extent requisite to permit the disposition of the Secondary
Registrable Securities and the Common Stock and other securities, if any, so to
be registered. The Company agrees to use its best efforts to keep the
registration statement filed pursuant to this Section 2.2 continuously
effective for the period commencing on the date of effectiveness and ending on
the earlier to occur of (i) the date when each of the Secondary Registrable
Securities ceases to be Secondary Registrable Securities and (ii) the date when
each of the Secondary Registrable Securities not otherwise transferred or sold
pursuant to such registration statement may be sold or distributed by the
holder thereof in reliance upon Rule 144 (giving effect to all conditions
thereof, including, without limitation, the volume limitations contained in
Rule 144(e)).
(b) Registration Statement Form. Registration under this Section 2.2 shall
be on such appropriate registration form of the Commission as shall be selected
by the Company and as shall permit the disposition of such Secondary
Registrable Securities in accordance with the intended method or methods of
disposition.
(c) Expenses. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this Section
2.2.
2.3 Registration Procedures. In connection with the Company's
obligations to effect the registration of any Registrable Securities
under the Securities Act as provided in this Section 2, the Company
shall, as expeditiously as possible:
(a) prepare and file with the Commission, within any applicable time
periods specified in this Section 2, the requisite registration statement to
effect such registration and thereafter use its best efforts to cause such
registration statement to become and remain effective in accordance with
Section 2 hereof; provided, however, that before filing such registration
statement or any amendments thereto, the Company shall furnish to the counsel
selected by the holders of Registrable Securities which are to be included in
such registration copies of all such documents proposed to be filed, which
documents shall be subject to the review of such counsel;
(b) prepare and file with the Commission such amendments and supplements
to such registration statements and prospectuses used in connection therewith
as may be necessary to keep such registration statements effective for the
applicable periods specified in this Section 2 and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statements during such applicable
periods;
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(c) furnish, without charge, to each holder of Registrable Securities
covered by such registration statement and each underwriter, if any, of the
securities being sold by such holder such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as such holder and underwriter, if any, may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such holder; the Company consents to the
use of the prospectus or any amendment or supplement thereto by any such holder
and underwriter in connection with the offering and sale of Registrable
Securities covered by such prospectus and any amendment or supplement thereto;
(d) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement under
such other securities laws or blue sky laws of such jurisdictions as any holder
thereof and any underwriter of the securities being sold by such holder shall
reasonably request, to keep such registrations or qualifications in effect for
so long as such registration statement remains in effect, and take any other
action which may be reasonably necessary or advisable to enable such holder and
underwriter, if any, to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements
of this subdivision (d) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the holder
or holders thereof to consummate the disposition of such Registrable
Securities;
(f) furnish to each holder of Registrable Securities covered by such
registration statement a signed counterpart, addressed to such holder and the
underwriters, if any, of:
(i) an opinion of counsel for the Company, dated the effective date of
such registration statement (or, if such registration includes an underwritten
public offering, an opinion dated the date of the closing under the
underwriting agreement),
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reasonably satisfactory in form and substance to such holder, and
(ii) a "comfort" letter (or, in the case of any such Person which does
not satisfy the conditions for receipt of a "comfort" letter specified in
Statement on Auditing Standards No. 72, an "agreed upon procedures" letter),
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter of like kind
dated the date of the closing under the underwriting agreement), signed by the
independent public accountants who have certified the Company's financial
statements included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities (with, in the case of an "agreed
upon procedures" letter, such modifications or deletions as may be required
under Statement on Auditing Standards No. 35) and, in the case of the
accountants' letter, such other financial matters, and, in the case of the
legal opinion, such other legal matters, as such holder (or the underwriters,
if any) may reasonably request;
(g) notify the holders of Registrable Securities covered by such
Registration Statement and the managing underwriter or underwriters, if any,
promptly and confirm such advice in writing promptly thereafter:
(i) when the registration statement, the prospectus or any prospectus
supplement related thereto or post-effective amendment to the registration
statement has been filed, and, with respect to the registration statement or
any post-effective amendment thereto, when the same has become effective;
(ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement or the initiation of any
proceedings by any Person for that purpose;
(iv) if at any time the representations and warranties of the
Company made as contemplated by Section 2.4(a) below cease to be true
and correct;
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(v) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose; and
(h) notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon the Company's discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, and at the request of
any such holder promptly prepare and furnish to such holder and each
underwriter, if any, a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
the light of the circumstances under which they were made not misleading;
provided, however, that the Company may delay effecting or causing to be
effected a supplement or post-effective amendment to the registration statement
or the related prospectus, for a period not to exceed 90 days in any 365-day
period; provided, further, that (i) the Company shall notify the holders of
Registrable Securities in writing both of its intention to effect such delay
and of the date on which such supplement or post-effective amendment has been
filed with the Commission or declared effective, as the case may be, and (ii)
the period during which the registration statement shall be maintained
effective pursuant to this Agreement shall be extended as described below;
(i) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement at the
earliest possible moment;
(j) subject to entering into confidentiality arrangements in form and
substance reasonably satisfactory to the Company, make available for inspection
by a representative or representatives of the holders of Registrable Securities
covered by such registration statement, any underwriter participating in any
disposition pursuant to the registration statement and any attorney or
accountant retained by such holders or underwriter (each, an "Inspector"), all
financial
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and other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection with such
registration in order to permit a reasonable investigation within the meaning
of Section 11 of the Securities Act;
(k) use its best efforts to list all Registrable Securities covered by
such registration statement on any securities exchange on which any of the
securities of the same class as the Registrable Securities are then listed;
(l) provide a transfer agent and registrar for all Registrable Securities
covered by such registration statement not later than the effective date of
such registration statement;
(m) cooperate with the holders of Registrable Securities covered by such
registration statement and the underwriter, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends; and enable such Registrable
Securities to be in such denominations and registered in such names as the
holders or the underwriter, if any, may reasonably request at least three
business days prior to any sale of Registrable Securities;
(n) otherwise use all best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securityholders,
as soon as reasonably practicable, an earnings statement covering the period of
at least 12 months, but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder.
As a condition to the registration by the Company of a holder's Registrable
Securities, the Company may require such holder to furnish the Company such
information regarding such holder and the distribution of such securities as
the Company may from time to time reasonably request in writing.
The Company shall not file any registration statement or amendment thereto or
any prospectus or any supplement thereto (including such documents incorporated
by reference and proposed to be filed after the initial filing of the
registration statement) to which the holders of at least a majority of the
Registrable Securities covered by such registration statement or the
underwriter or underwriters, if any, shall reasonably object, provided that the
Company may file such document in a form required by law or upon the advice of
its counsel.
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Each holder of Registrable Securities agrees that, upon receipt of any notice
from the Company of the occurrence of any event of the kind described in
subdivision (h) of this Section 2.3, such holder shall forthwith discontinue
such holder's disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (h) of this Section 2.3 and, if so directed by the
Company, shall deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such holder's possession of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the period of time for which the Company shall be required to keep the
applicable registration statement effective shall be extended by the length of
the period from and including the date when each holder of any Registrable
Securities covered by such registration statement shall have received such
notice to the date on which each such holder has received the copies of the
supplemented or amended prospectus contemplated by paragraph (h) of this
Section 2.3. Each holder of Registrable Securities agrees that it will comply
at all times with the requirements of Rule 10b-6.
2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If the holders of the Registrable
Securities elect to effect an underwritten offering pursuant to Section 2.1(d),
the managing underwriter or underwriters for such underwritten offering shall
be selected by the Company and shall be reasonably acceptable to the holders of
at least a majority (by number of shares) of the Registrable Securities
participating in any such underwritten offering. If requested by the
underwriters for any such underwritten offering, the Company shall enter into
an underwriting agreement with such underwriters for such offering, such
agreement to contain such representations and warranties by the Company and
such other terms as are generally prevailing in agreements of this type,
including, without limitation, indemnities. The holders of the Registrable
Securities shall cooperate with the Company in the negotiation of the
underwriting agreement. The holders of Registrable Securities to be distributed
by such underwriters shall be parties to any such underwriting agreement and
such holders may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders. Any such
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holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations and warranties or agreements regarding
such holder, such holder's Registrable Securities and such holder's intended
method of distribution and any other representation required by law or by the
underwriters for such underwritten offering.
(b) Priority in Requested Underwritten Offering. If the holders of the
Registrable Securities elect to effect an underwritten offering pursuant to
Section 2.1(d) and, in connection therewith, the managing underwriter advises
each holder of Registrable Securities requesting to participate in such
underwritten offering and the Company in writing that, in its opinion, the
number of securities requested to be included in such underwritten offering
(including securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities so
requested to be included in such offering, the Company shall include in such
offering, to the extent of the number which the Company is so advised can be
sold in such offering, (i) first, Registrable Securities requested to be
included in such offering by the holder or holders of Registrable Securities
thereof, pro rata among such holders requesting inclusion in such offering on
the basis of the number of such securities requested to be included by such
holders, subject to any rights of Bedford Capital Financial Corporation
("Bedford") to participate in such underwritten offering pursuant to the
Registration Rights Agreement, dated as of July 26, 1995, between the Company
and Bedford, as amended, and (ii) second, if and only if all Registrable
Securities requested to be included in such underwritten offering by the
holders thereof are so included, other securities of the Company requested to
be included in such offering by the holders thereof, pro rata among such
holders requesting inclusion in such offering on the basis of the number of
such securities requested to be included by such holders.
(c) Holdback Agreement. Except to the extent required by any agreement in
existence as of the date of this Agreement, the Company agrees not to effect
any public sale or distribution of or otherwise dispose of its equity
securities or securities convertible into or exchangeable or exercisable for
any of such securities during the seven days prior to the date any underwritten
registration pursuant to Section 2.1(d) has become effective and during the
period ending on the earlier of (A) 90 days after any underwritten registration
pursuant to Section 2.1(d) has become effective, (B) the day on which the
underwriting syndicate of such offering shall have been disbanded, and (C) such
date as the Company, the managing underwriter and the holders of the
Registrable Securities shall otherwise agree, except as part of such
underwritten registration and except in connection with a
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stock option plan, stock purchase plan, managing directors' plan, savings or
similar plan, or an acquisition of a business, merger or exchange of stock for
stock.
(d) Participation in Underwritten Offerings. No holder of Registrable
Securities may participate in any underwritten offering hereunder unless such
holder (i) agrees to sell such holder's securities on the basis provided in any
underwriting arrangements approved, subject to the terms and conditions hereof,
by the holders of a majority (by number of shares) of Registrable Securities to
be included in such underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and other documents (other
than powers of attorney) required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no underwriting agreement (or
other agreement in connection with such offering) shall require any holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations and
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and any other
representation required by law or by the underwriters for such underwritten
offering.
2.5 Indemnification.
(a) Indemnification by the Company. The Company shall, and hereby does agree
to, indemnify and hold harmless each holder of any Registrable Securities
covered by any registration statement filed pursuant to Section 2, such
holder's directors and officers, each other Person, if any, who controls such
holder within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such holder or any such
director or officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company shall
reimburse such holder and each such director, officer and controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided, however,
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that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by such holder specifically stating that it is for use in the
preparation thereof; and; provided further, however, that the Company shall not
be liable in any such case to any Person who sells Registrable Securities
pursuant to a registration statement filed pursuant to Section 2 or to any
other Person, if any, who controls such selling Person, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such selling Person's failure to send
or give a copy of the final prospectus, as the same may be then supplemented or
amended, to the Person asserting the existence of an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such
holder.
(b) Indemnification by the Holders. The Company may require, as a condition
to including any Registrable Securities in any registration statement filed
pursuant to this Section 2, that the Company shall have received an undertaking
satisfactory to it from the prospective seller of such Registrable Securities,
to indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 2.5) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Any such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or any such
director, officer or controlling
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person and shall survive the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this Section 2.5, such indemnified
party shall, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 2.5, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that the indemnifying party may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
(d) Indemnification Payments. The indemnification required by this Section
2.5 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in the preceding
subdivisions of this Section 2.5 is unavailable to an indemnified party in
respect of any expense, loss, claim, damage or liability referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such expense,
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loss, claim, damage or liability (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
holder on the other from the distribution of the Registrable Securities or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the holder on the other in connection with the
statements or omissions which resulted in such expense, loss, damage or
liability, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the holder on the other in
connection with the distribution of the Registrable Securities shall be deemed
to be in the same proportion as the total net proceeds received by the Company
from the initial sale and issuance of the Registrable Securities by the Company
bear to the gain, if any, realized by the selling holder. The relative fault of
the Company on the one hand and of the holder on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state a material fact relates to
information supplied by the Company or by the holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided, however, that the foregoing contribution
agreement shall not inure to the benefit of any indemnified party if
indemnification would be unavailable to such indemnified party by reason of the
provisions contained in the first sentence of subdivision (a) of this Section
2.5, and in no event shall the obligation of any indemnifying party to
contribute under this subdivision (e) exceed the amount that such indemnifying
party would have been obligated to pay by way of indemnification if the
indemnification provided for under subdivisions (a) or (b) of this Section 2.5
had been available under the circumstances.
The Company and the holders of Registrable Securities agree that it would not
be just and equitable if contribution pursuant to this subdivision (e) were
determined by pro rata allocation (even if the holders were treated as one
entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in subdivision (c) of this Section 2.5, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
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No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
3. Rule 144. The Company shall timely file the reports required to be filed by
it under the Securities Act and the Exchange Act (including but not limited to
the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144) and the rules and regulations adopted by the
Commission thereunder and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company shall deliver to such holder a written statement as to
whether it has complied with the requirements of this Section 3.
4. Amendments and Waivers. This Agreement may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required
to be performed by it, only if the Company shall have obtained the written
consent to such amendment, action or omission to act, of the holders of a
majority (by number of shares) of the Registrable Securities. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 4, whether or not such Registrable
Securities shall have been marked to indicate such consent.
5. Nominees for Beneficial Owners. In the event that any Registrable Securities
are held by a nominee for the beneficial owner thereof, the beneficial owner
thereof may, at its election, be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or holders
of Registrable Securities pursuant to this Agreement or any determination of
any number or percentage of shares of Registrable Securities held by any holder
or holders of Registrable Securities contemplated by this Agreement. If the
beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
6. Notices. Except as otherwise provided in this Agreement, all notices,
requests and other communications to any Person provided for hereunder shall be
in writing and shall be given to such Person (a) in the case of a party hereto
other than the Company, addressed to such party in the manner set forth in the
applicable Subscription Agreement
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or at such other address as such party shall have furnished to the Company in
writing, (b) in the case of KBW, at Two World ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, to the attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice
President, (c) in the case of any other holder of Registrable Securities, at
the address that such holder shall have furnished to the Company in writing,
or, until any such other holder so furnishes to the Company an address, then to
and at the address of the last holder of such Registrable Securities who has
furnished an address to the Company, or (d) in the case of the Company, at
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to the
attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, or at such other address, or to
the attention of such other officer, as the Company shall have furnished to
each holder of Registrable Securities at the time outstanding. Each such
notice, request or other communication shall be effective (i) if given by mail,
72 hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (ii) if given by any other means
(including, without limitation, by air courier), when delivered at the address
specified above, provided that any such notice, request or communication to any
holder of Registrable Securities shall not be effective until received.
7. Assignment. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns. In addition, and whether or not any express assignment shall have been
made, the provisions of this Agreement which are for the benefit of the parties
hereto other than the Company shall also be for the benefit of and enforceable
by any subsequent holder of any Registrable Securities, subject to the
provisions respecting the minimum numbers or percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein.
8. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAWS OF THE STATE OF COLORADO WITHOUT REFERENCE TO THE PRINCIPLES
OF CONFLICTS OF LAWS.
10. Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original,
but all such counterparts shall together constitute one and the same
instrument.
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11. Entire Agreement. This Agreement embodies the entire agreement
and understanding between the Company and each other party hereto
relating to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter.
12. Severability. If any provision of this Agreement, or the application of
such provisions to any Person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered by their respective officers thereunto duly authorized as of the date
first above written.
PMC INTERNATIONAL, INC.
By:
----------------------------------
Name:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By:
Name:
--------------------------------------
Name of Entity (Print or Type)
By:
----------------------------------
Name:
-------------------------------------
Signature of Individual Subscriber
--------------------------------------
Name of Individual Subscriber
Address of Subscriber:
------------------------------
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SCHEDULE A
Warrant Holders and Subscribers
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