EXHIBIT C-13
STOCK OPTION AGREEMENT (PREFERRED)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 15, 1998 by and among The
▇▇▇▇▇▇▇ Companies, Inc., a Wisconsin corporation ("▇▇▇▇▇▇▇"), and PMC
International, Inc., a Colorado corporation (the "Company").
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties are entering into a convertible promissory note.
WHEREAS, as a condition to ▇▇▇▇▇▇▇'▇ willingness to enter into the
convertible promissory note, ▇▇▇▇▇▇▇ has requested that the Company agree, and
the Company has so agreed, to grant to ▇▇▇▇▇▇▇ an option with respect to certain
shares of the Company's $0.325 Cumulative Convertible Series A Preferred Stock,
no value ("Preferred Stock"), on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, to induce ▇▇▇▇▇▇▇ to enter into the convertible promissory
note, and in consideration of the mutual covenants and agreements set forth
herein, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants ▇▇▇▇▇▇▇ an irrevocable
option (the "Company Option") to purchase 111,818 shares of Preferred Stock as
of the date hereof, subject to adjustment as provided in Section 7 (such shares
being referred to herein as the "Company Shares"), of the Company (the "Company
Preferred Stock") in the manner set forth below at a price (the "Exercise
Price") per Company Share of $2.50 payable in cash.
2. Exercise of Option. The Company Option may be exercised by ▇▇▇▇▇▇▇, in
whole or in part, at any time or from time to time until the Company Option
expires, without expense to ▇▇▇▇▇▇▇. In the event ▇▇▇▇▇▇▇ wishes to exercise the
Company Option, ▇▇▇▇▇▇▇ shall deliver to the Company a written notice (an
"Exercise Notice") specifying the total number of Company Shares it wishes to
purchase. Each closing of a purchase of Company Shares (a "Closing") shall occur
at a place, on a date and at a time designated by ▇▇▇▇▇▇▇ in an Exercise Notice
delivered at least two business days prior to the date of the Closing. The
Company Option shall terminate December 31, 1999. Upon the giving by ▇▇▇▇▇▇▇ to
the Company of the Exercise Notice and the tender of the applicable aggregate
Exercise Price, ▇▇▇▇▇▇▇ shall be deemed to be the holder of record of the
Company Shares issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Company Shares shall not then be actually delivered to
▇▇▇▇▇▇▇.
3. Closing. At any Closing, (a) the Company will deliver to ▇▇▇▇▇▇▇ or
its designee a single certificate in definitive form representing the number of
the Company Shares designated by ▇▇▇▇▇▇▇ in its Exercise Notice, such
certificate to be registered in the name of ▇▇▇▇▇▇▇ and to bear the legend set
forth in Section 8, and (b) ▇▇▇▇▇▇▇ will deliver to the Company the aggregate
purchase price for the Company Shares so designated by wire transfer of
immediately available funds or certified check or bank check. The Company shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates in the name of ▇▇▇▇▇▇▇ or its designee.
4. Representations and Warranties of the Company. The Company represents
and warrants to ▇▇▇▇▇▇▇ that (a) the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado
and has the corporate power and authority to enter into this Agreement, and to
carry out its obligations hereunder, (b) the execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
the Company, constitutes a valid and binding obligation of the Company and,
assuming this Agreement constitutes a valid and binding obligation of ▇▇▇▇▇▇▇,
is enforceable against the Company in accordance with its terms, (d) the Company
has taken all necessary corporate action to authorize and reserve for issuance
and to permit it to issue, upon exercise of the Company Option, and at all times
from the date hereof through the expiration of the Company Option will have
reserved, authorized and unissued Company Shares equal to 111,818 of the
outstanding Shares of Preferred Stock dated hereof, such amount being subject to
adjustment as provided in Section 7, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable, (e) upon delivery of the Company Shares to ▇▇▇▇▇▇▇
upon the exercise of the Company Option, ▇▇▇▇▇▇▇ will acquire the Company Shares
free and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever, (f) the execution and delivery of this
Agreement by the Company does not, and the consummation by the Company of the
transactions contemplated hereby will not, violate, conflict with, or result in
a breach of any provision of, or constitute a default (with or without notice or
lapse of time, or both) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination, cancellation,
or acceleration of any obligation or the loss of a material benefit under or the
creation of a lien, pledge, security interest or other encumbrance on assets of
the Company or any of its subsidiaries.
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5. Representations and Warranties of ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ represents and
warrants to the Company that (a) ▇▇▇▇▇▇▇ is a corporation duly organized,
validly existing and in good standing under the laws of the State of Wisconsin
and has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder, (b) the execution and delivery of this
Agreement by ▇▇▇▇▇▇▇ and the consummation by ▇▇▇▇▇▇▇ of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of ▇▇▇▇▇▇▇ and no other corporate proceedings on the part of ▇▇▇▇▇▇▇
are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
▇▇▇▇▇▇▇ and constitutes a valid and binding obligation of ▇▇▇▇▇▇▇, and, assuming
this Agreement constitutes a valid and binding obligation of Company, is
enforceable against ▇▇▇▇▇▇▇ in accordance with its terms.
6. Voting of Shares. ▇▇▇▇▇▇▇ shall vote any shares of capital stock
acquired by such party pursuant to this Agreement, or otherwise beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act")) as it sees fit.
7. Adjustment Upon Changes in Capitalization. Without limitation to any
restriction on the Company contained in this Agreement, in the event of any
change in Company Preferred Stock by reason of stock dividends, splitups,
mergers, recapitalizations, combinations, exchange of shares or the like, or the
sale of Preferred Stock or the grant of any option to anyone other than ▇▇▇▇▇▇▇,
the type and number of shares or securities subject to the Company Option, and
the purchase price per share provided in Section 1, shall be adjusted
appropriately to restore to ▇▇▇▇▇▇▇ its rights hereunder to purchase the
remaining amount of such Preferred Stock.
8. Restrictive Legends. Each certificate representing shares of Company
Preferred Stock issued to ▇▇▇▇▇▇▇ pursuant to the Option, shall include a legend
in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if ▇▇▇▇▇▇▇ shall have delivered
to the Company a copy of a letter from the staff of the Securities and Exchange
Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such legend is not required for
purposes of the Securities Act; and (ii) the reference to the provisions
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to this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference. In addition,
such certificates shall bear any other legend as may be required by law.
9. Binding Effect; No Assignment; No Third Party Beneficiaries. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Except as expressly
provided for in this Agreement, neither this Agreement nor the rights or the
obligations of either party hereto are assignable, except by operation of law,
or with the written consent of the other party. nothing contained in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective permitted assigns any rights or remedies
of any nature whatsoever by reason of this Agreement.
10. Specific Performance. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed in accordance
with their specific terms or are otherwise breached, immediate or irreparable
harm or injury would be caused for which money damages would not be an adequate
remedy. Accordingly, each party agrees that, in addition to other remedies, the
other party shall be entitled to an injunction restraining any violation or
threatened violation of the provisions of this Agreement. In the event that any
action should be brought in equity to enforce the provisions of the Agreement,
neither party will allege, and each party hereby waives the defense, that there
is adequate remedy at law.
11. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
thereof.
12. Further Assurances. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary or in order to consummate the transactions contemplated hereby.
13. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. In
the event any court or other competent authority holds any provisions of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith the execution and delivery of an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision and the economic
effects thereof. If for any reason any such court or regulatory agency
determines that ▇▇▇▇▇▇▇ is not permitted to acquire the full number of shares of
Company
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Preferred Stock provided in Section 1 hereof (as the same may be adjusted), it
is the express intention of the Company to allow ▇▇▇▇▇▇▇ to acquire or to
require the Company to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith, or not take any action required
herein, the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited to
money damages, for breach hereof or of any other provision of this Agreement or
part hereof as the result of such holding or order.
14. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if (i) delivered personally, or (ii) sent by
reputable overnight courier service, or (iii) telecopies (which is confirmed),
or (iv) five days after being mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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A. If to ▇▇▇▇▇▇▇, to:
The ▇▇▇▇▇▇▇ Companies, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: S. ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
B. If to the Company, to:
PMC International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇
with a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
Suite 4100, 1700 Lincoln
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
15. Governing Law; Choice of Forum. This Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin applicable
to agreements made and to be performed within such State.
16. Interpretation. When a reference is made in this Agreement to a
Section such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
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17. Expenses. Except as otherwise expressly provided herein, all costs
and expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses.
18. Extension of Time Periods. The time periods for exercise of certain
rights under the Agreement shall be extended to the extent necessary to avoid
any liability under Section 16(b) of the Exchange Act by reason of such
exercise.
19. Replacement of Company Option. Upon receipt by the Company of
evidence reasonably satisfactory to it on the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
THE ▇▇▇▇▇▇▇ COMPANIES, INC.
By: /s/ S. ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
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Name: S. ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
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Title: General Counsel
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PMC INTERNATIONAL, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇
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Title: CEO
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