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EXHIBIT 10.6
REPRESENTATIVE'S WARRANT AGREEMENT (the "Representative's Warrant
Agreement" or "Agreement"), dated as of ________, 1998, between Performance
Printing Corporation (the "Company") and FIRST LONDON SECURITIES CORPORATION
(the "Representative").
W I T N E S S E T H:
WHEREAS, the Representative has agreed, pursuant to that certain
underwriting agreement dated as of the date hereof by and between the Company
and the Representative (the "Underwriting Agreement"), to act as the
Representative of the Underwriters in connection with the Company's proposed
public offering (the "Public Offering") of up to 1,380,000 shares of the
Company's Common Stock at $____ per share (the "Common Stock IPO Price") and of
up to 1,380,000 Redeemable Common Stock Purchase Warrants (the "Public
Warrants") at $.125 per warrant (the "Warrant IPO Price"); and
WHEREAS, the Company proposes to issue to the Representative and/or
persons related to the Representative as those persons are defined in Rule 2710
of the NASD Conduct Rules (the "Holder"), 120,000 warrants ("Common Stock
Representative Warrants") to purchase 120,000 shares of the Company's Common
stock (the "Shares") and 120,000 warrants ("Warrant Representative Warrants")
to purchase 120,000 Common Stock Purchase Warrants ("Underlying Warrants")
exercisable to purchase 120,000 shares of the Company's Common Stock (the
"Underlying Warrant Shares"). The "Common Stock Representative Warrants" and
the "Warrant Representative Warrants" are collectively referred to as the
"Warrants". The "Shares," and the "Underlying Warrants" and the "Underlying
Warrant Shares" are collectively referred to as the "Warrant Securities"; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the holders ("Holders") in consideration for, and
as part of the compensation in connection with, the Representative acting as
representative pursuant to the Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of ONE HUNDRED AND NO CENTS ($100.00), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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1. Grant and Period.
The Public Offering has been registered under a Registration Statement
on Form SB-2 (File No. 333-______) (the "Registration Statement") and declared
effective by the Securities and Exchange Commission (the "SEC" or "Commission")
on ______, 1998 (the "Effective Date"). This Agreement is entered into
pursuant to the Underwriting Agreement between the Company and the
Representative, as representative of the Underwriters, in connection with the
Public Offering.
Pursuant to the Warrants, the Holders are hereby granted the right to
purchase from the Company, at any time during the period commencing one year
from the Effective Date and expiring four (4) years thereafter (the "Expiration
Time"), up to 120,000 Shares at an initial exercise price (subject to
adjustment as provided in Article 8 hereof) of $____ per share (120% of the
Common Stock IPO Price) (the "Share Exercise Price") and/or 120,000 Underlying
Warrants at an initial exercise price of $.15 per warrant (120% of the Warrant
IPO Price) (the "Underlying Warrant Exercise Price"), subject to the terms and
conditions of this Agreement. Each Underlying Warrant is exercisable to
purchase one (1) share of Common Stock at $____ (150% of the Common Stock IPO
Price) per share during the four (4) year period commencing one year from the
Effective Date.
Except as specifically otherwise provided herein, the Shares, the
Underlying Warrants and the Underlying Warrant Shares constituting the Warrant
Securities shall bear the same terms and conditions as such securities
described under the caption "Description of Securities" in the Registration
Statement, and as designated in the Company's Articles of Incorporation and any
amendments thereto, and the Underlying Warrants shall be governed by the terms
of the Warrant Agreement executed in connection with the Company's public
offering (the "Warrant Agreement"), except as provided herein, and the Holders
shall have registration rights under the Securities Act of 1933, as amended
(the "Act"), for the Shares, the Underlying Warrants, and the Underlying
Warrant Shares, as more fully described in Article 7 of this Representative's
Warrant Agreement. In the event of any extension of the expiration date or
reduction of the exercise price of the Public Warrants, the same such changes
to the Underlying Warrants shall be simultaneously effected, except that the
Underlying Warrants shall expire no later than five (5) years from the
Effective Date.
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificate") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth in the form
of Warrant Certificate, attached hereto and made a part hereof, with such
appropriate insertions,
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omissions, substitutions, and other variations as required or permitted by this
Agreement.
3. Exercise of Warrant.
3.1 Full Exercise.
(i) The Holder hereof may effect a cash exercise of the Common
Stock Representative Warrants and/or the Warrant Representative Warrants and/or
the Underlying Warrants by surrendering the Warrant Certificate, together with
a Subscription in the form of Exhibit "A" attached thereto, duly executed by
such Holder to the Company, at any time prior to the Expiration Time, at the
Company's principal office, accompanied by payment in cash or by certified or
official bank check payable to the order of the Company in the amount of the
aggregate purchase price (the "Aggregate Price"), subject to any adjustments
provided for in this Agreement. The aggregate price hereunder for each Holder
shall be equal to the exercise price as set forth in Article 6 hereof
multiplied by the number of Warrants, Underlying Warrants, Underlying Warrant
Shares or Shares that are the subject of each Holder's Warrant (as adjusted as
hereinafter provided).
(ii) The Holder hereof may effect a cashless exercise of the
Common Stock Representative Warrants and/or the Underlying Warrants by
delivering the Warrant Certificate to the Company together with a Subscription
in the form of Exhibit "B" attached thereto, duly executed by such Holder, in
which case no payment of cash will be required. Upon such cashless exercise,
the number of Shares to be purchased by each Holder hereof shall be determined
by dividing: (i) the number obtained by multiplying the number of Shares or
Underlying Warrant Shares, as the case may be, that are the subject of each
Holder's Warrant Certificate by the sum of (1) Share Exercise Price or the
Underlying Warrant Share Exercise Price, as the case may be, plus (2) the
amount, if any, by which the then Market Value (as hereinafter defined) exceeds
the Share Exercise Price or the Underlying Warrant Share Exercise Price, as
applicable; by (ii) the Share Exercise Price or the Underlying Warrant Share
Exercise Price, as applicable. In no event shall the Company be obligated to
issue any fractional securities and, at the time it causes a certificate or
certificates to be issued, it shall pay the Holder in lieu of any fractional
securities or shares to which such Holder would otherwise be entitled, by
Company check, in an amount equal to such fraction multiplied by the Market
Value. The Market Value shall be determined on a per share basis as of the
close of the business day preceding the exercise, which determination shall be
made as follows: (a) if the Common Stock is listed for trading on a national or
regional stock exchange or is included on the Nasdaq National Market or Small-
Cap Market, the average closing sale price quoted on such exchange or the
Nasdaq National Market or Small-Cap Market which is published in The Wall
Street Journal for
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the ten (10) trading days immediately preceding the date of exercise, or if no
trade of the Common Stock shall have been reported during such period, the last
sale price so quoted for the next day prior thereto on which a trade in the
Common Stock was so reported; or (b) if the Common Stock is not so listed,
admitted to trading or included, the average of the closing highest reported
bid and lowest reported ask price as quoted on the National Association of
Securities Dealer's OTC Bulletin Board or in the "pink sheets" published by the
National Daily Quotation Bureau for the first day immediately preceding the
date of exercise on which the Common Stock is traded.
3.2 Partial Exercise. The Warrant Securities referred to in Section
3.1 above also may be exercised from time to time in part by surrendering the
Warrant Certificate in the manner specified in Section 3.1 hereof, except that
with respect to a cash exercise, the purchase price payable shall be equal to
the number of Warrant Securities being purchased hereunder multiplied by the
per security purchase price, subject to any adjustments provided for in this
Agreement. Upon any such partial exercise, the Company, at its expense, will
forthwith issue to the Holder hereof a new Warrant Certificate or Warrants of
like tenor calling in the aggregate for the number of securities (as
constituted as of the date hereof) for which the Warrant Certificate shall not
have been exercised, issued in the name of the Holder hereof or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct.
4. Issuance of Certificates.
Upon the exercise of the Warrants or the Underlying Warrants, the
issuance of certificates for the shares of Common Stock and/or other securities
shall be made forthwith (and in any event within three (3) business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall (subject to the provisions of Articles 5 and 7 hereof) be
issued in the name of, or in such names as may be directed by, the Holder
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance
and delivery of any such certificates in a name other than that of the Holder
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the shares of
Common Stock and/or other securities shall be executed on behalf of the Company
by the manual or facsimile signature of the then present Chairman or Vice
Chairman or President or Chief Executive Officer of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then
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present Secretary or Assistant Secretary of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
5. Restriction On Transfer of Warrants.
The Holder of a Warrant Certificate, by acceptance thereof, covenants
and agrees that the Warrants may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, except (a) to
officers of the Representative or to officers and partners of the other
Underwriters or Selected Dealers participating in the Public Offering; (b) by
will; or (c) by operation of law.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Prices.
The initial exercise price of each Common Stock Representative Warrant
shall be $_____ per share (120% of the Common Stock IPO Price). The initial
exercise price of each Warrant Representative Warrant shall be $.15 per
Underlying Warrant (120% of the Warrant IPO Price). The initial exercise price
of each Underlying Warrant shall be $____ per share (150% of the Common Stock
IPO Price). The adjusted exercise price shall be the price which shall result
from time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Article 8 hereof. The Warrant Representative
Warrants and the Underlying Warrants are exercisable during the four (4) year
period commencing one year from the Effective Date.
6.2 Exercise Price.
The term "Exercise Price" herein shall mean the initial exercise price
or the adjusted exercise price, depending upon the context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933.
The Shares, the Underlying Warrants and the Underlying Warrant Shares
(collectively the "Registrable Securities") have been registered under the
Securities Act of 1933, as amended (the "Act"). Upon exercise, in part or in
whole, of the Warrants, certificates representing the Shares, the Underlying
Warrants or the Underlying Warrant Shares shall bear the following legend in
the event there is no current
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registration statement effective with the Commission at such time as to such
securities:
The securities represented by this certificate may not be offered or
sold except pursuant to (i) an effective registration statement under the Act,
(ii) to the extent applicable, Rule 144 under the Act (or any similar rule
under such Act relating to the disposition of securities), or (iii) an opinion
of counsel, if such opinion shall be reasonably satisfactory to counsel to the
issuer, that an exemption from registration under such Act and applicable state
securities laws is available.
7.2 Piggyback Registration.
If, at any time commencing after the Effective Date of the Public
Offering and expiring seven (7) years thereafter, the Company prepares and
files a post-effective amendment to the Registration Statement, or a new
registration statement, under the Act, or files a Notification on Form 1-A or
otherwise registers securities under the Act, or files a similar disclosure
document with the Commission (collectively the "Registration Documents") as to
any of its securities under the Act (other than under a registration statement
pursuant to Form S-8 or form S-4 or small business issue equivalent), it will
give written notice by registered mail, at least thirty (30) days prior to the
filing of each such Registration Document, to the Representative and to all
other Holders of the Registrable Securities of its intention to do so. If the
Representative and/or other Holders of the Registrable Securities notify the
Company within twenty (20) days after receipt of any such notice of its or
their desire to include any such Registrable Securities in such proposed
Registration Documents, the Company shall afford the Representative and such
Holders of such Registrable Securities the opportunity to have any Registrable
Securities registered under such Registration Documents or any other available
Registration Document.
Notwithstanding the provisions of this Section 7.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.2 (irrespective of whether a written request for inclusion of
any such securities shall have been made) to elect not to file any such
proposed registration statement, or to withdraw the same after the filing but
prior to the effective date thereof.
7.3 Demand Registration.
(a) In addition to the registration rights under Section 7.2, at any
time commencing one (1) year after the Effective Date of the Public Offering,
and expiring four (4) years thereafter, the Holders of any Registrable
Securities representing more than 50% of such securities shall have the right,
exercisable by written request to the
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Company, to have the Company prepare and file, on one occasion, with the
Commission a registration statement or any other appropriate disclosure
document so as to permit a public offering and sale for nine (9) consecutive
months (or such longer period of time as permitted by the Act) by any such
Holder of Registrable Securities; provided, however, that the provisions of
Section 7.4(b) hereof shall not apply to any such registration request and
registration and all costs incident thereto shall be at the expense of the
Holder or Holders participating in the offering pro-rata.
(b) Any written request by the Holders made pursuant to this Section
7.3 shall:
(i) specify the number of Registrable Securities which the
Holders intend to offer and sell and the minimum price at which the
Holders intend to offer and sell such securities;
(ii) state the intention of the Holders to offer such
securities for sale;
(iii) describe the intended method of distribution of such
securities; and
(iv) contain an undertaking on the part of the Holders to
provide all such information and materials concerning the Holders and
take all such action as may be reasonably required to permit the Company
to comply with all applicable requirements of the Commission and to
obtain acceleration of the effective date of the registration statement.
(c) In the event the Company receives from the Holders of any
Registrable Securities representing more than 50% of such securities at that
time outstanding, a request that the Company effect a registration on Form S-3
with respect to the Registrable Securities and if Form S-3 is available for
such offering, the Company shall, as soon as practicable, effect such
registration as would permit or facilitate the sale and distribution of the
Registrable Securities as are specified in the request. All expenses incurred
in connection with a registration requested pursuant to this Section shall be
borne by the Company. Registrations effected pursuant to this Section 7.3(c)
shall not be counted as registrations pursuant to Section 7.3(b) hereof.
7.4 Covenants of the Company With Respect to Registration.
In connection with any registration under Section 7.2 or 7.3 hereof, the
Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within forty-five (45) days of receipt of any demand pursuant to
Section 7.3, and shall
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use its best efforts to have any such registration statement declared effective
at the earliest practicable time. The Company will promptly notify each seller
of such Registrable Securities and confirm such advice in writing, (i) when
such registration statement becomes effective, (ii) when any post-effective
amendment to such registration statement becomes effective and (iii) of any
request by the SEC for any amendment or supplement to such registration
statement or any prospectus relating thereto or for additional information.
The Company shall furnish to each seller of such Registrable Securities
such number of copies of such registration statement and of each such amendment
and supplement thereto (in each case including each preliminary prospectus and
summary prospectus) in conformity with the requirements of the Act, and such
other documents as such seller may reasonably request in order to facilitate
the disposition of the Registrable Securities by such seller.
(b) The Company shall pay all costs (excluding transfer taxes, if
any, and fees and expenses of Holder's counsel and the Holder's pro-rata
portion of the selling discount or commissions), fees and expenses in
connection with all registration statements filed pursuant to Sections 7.2 and
7.3(c) hereof including, without limitation, the Company's legal and accounting
fees, printing expenses, blue sky fees and expenses. The Holder will pay all
costs, fees and expenses in connection with any registration statement filed
pursuant to Section 7.3(a). If the Company shall fail to comply with the
provisions of Section 7.3(a), the Company shall, in addition to any other
equitable or other relief available to the Holder, be liable for any or all
special and consequential damages sustained by the Holder requesting
registration of their Registrable Securities.
(c) The Company shall prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be reasonably necessary to keep such registration
statement effective for at least nine months (or such longer period as
permitted by the Act), and to comply with the provisions of the Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the seller or sellers of Registrable Securities set forth in
such registration statement. If at any time the SEC should institute or
threaten to institute any proceedings for the purpose of issuing a stop order
suspending the effectiveness of any such registration statement, the Company
will promptly notify each seller of such Registrable Securities and will use
all reasonable efforts to prevent the issuance of any such stop order or to
obtain the withdrawal thereof as soon as possible. The Company will use its
good faith reasonable efforts and take all reasonably necessary action which
may be required in qualifying or registering the Registrable Securities
included in a registration statement for offering
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and sale under the securities or blue sky laws of such states as reasonably are
required by the Holder, provided that the Company shall not be obligated to
execute or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.
The Company shall use its good faith reasonable efforts to cause such
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities of the
United States or any State thereof as may be reasonably necessary to enable the
seller or sellers thereof to consummate the disposition of such Registrable
Securities.
(d) The Company shall indemnify the Holder of the Registrable
Securities to be sold pursuant to any registration statement and each person,
if any, who controls such Holders within the meaning of Section 15 of the Act
or Section 20 (a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act,
the Exchange Act or otherwise, arising from such registration statement but
only to the same extent and with the same effect as the provisions pursuant to
which the Company has agreed to indemnify the Representative as contained in
the Underwriting Agreement.
(e) If requested by the Company prior to the filing of any
registration statement covering the Registrable Securities, each of the Holders
of the Registrable Securities to be sold pursuant to a registration statement,
and their successors and assigns, shall severally, and not jointly, indemnify
the Company, its officers and directors and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20 (a) of
the Exchange Act, against all loss, claim, damage or expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may become subject under
the Act, the Exchange Act or otherwise, arising from written information
furnished by such Holder, or their successors or assigns, for specific
inclusion in such registration statement to the same extent and with the same
effect as the provisions contained in the Underwriting Agreement pursuant to
which the Representative have agreed to indemnify the Company, except that the
maximum amount which may be recovered from each Holder pursuant to this
paragraph or otherwise shall be limited to the amount of net proceeds received
by the Holder from the sale of the Registrable Securities.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holders to exercise their Warrants or Underlying Warrants prior
to the filing of any registration statement or the effectiveness thereof.
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(g) The Company shall not permit the inclusion of any securities
other than the Registrable Securities to be included in any registration
statement filed pursuant to Section 7.3 hereof without the prior written
consent of the Holders of the Registrable Securities representing a majority of
such securities.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such 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 underwriters in underwritten public offerings of
securities.
(i) The Company shall deliver promptly to each Holder participating
in the offering requesting the correspondence and memoranda described below and
the managing underwriter copies of all correspondence between the Commission
and the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the registration
statement and permit each Holder and underwriter to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and
at such reasonable times and as often as any such Holder shall reasonably
request.
(j) With respect to a registration statement filed pursuant to
Section 7.3, the Company, if requested, shall enter into an underwriting
agreement with the managing underwriter, reasonably satisfactory to the
Company, selected for such underwriting by Holders holding a majority of the
Registrable Securities requested to be included in such underwriting. Such
agreement shall be satisfactory in form and substance to the Company, each
Holder and such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as
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are customarily contained in agreements of that type used by the managing
underwriter. The Holders, if required by the underwriter to be parties to any
underwriting agreement relating to an underwritten sale of their Registrable
Securities, may, at their option, require that any or all the representations,
warranties and covenants of the Company to or for the benefit of such
underwriters shall also be made to and for the benefit of such Holders. Such
Holders shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
(k) Notwithstanding the provisions of paragraph 7.2 or paragraph 7.3
of this Agreement, the Company shall not be required to effect or cause the
registration of Registrable Securities pursuant to paragraph 7.2 or paragraph
7.3 hereof if, within thirty (30) days after its receipt of a request to
register such Registrable Securities (i) counsel for the Company delivers an
opinion to the Holders requesting registration of such Registrable Securities,
in form and substance satisfactory to counsel to such Holder, to the effect
that the entire number of Registrable Securities proposed to be sold by such
Holder may otherwise be sold, in the manner proposed by such Holder, without
registration under the Securities Act, or (ii) the SEC shall have issued a no-
action position, in form and substance satisfactory to counsel for the Holder
requesting registration of such Registrable Securities, to the effect that the
entire number of Registrable Securities proposed to be sold by such Holder may
be sold by it, in the manner proposed by such Holder, without registration
under the Securities Act.
(l) After completion of the Public Offering, the Company shall not,
directly or indirectly, enter into any merger, business combination or
consolidation in which (a) the Company shall not be the surviving corporation
and (b) the stockholders of the Company are to receive, in whole or in part,
capital stock or other securities of the surviving corporation, unless the
surviving corporation shall, prior to such merger, business combination or
consolidation, agree in writing to assume the obligations of the Company under
this Agreement, and for that purpose references hereunder to "Registrable
Securities" shall be deemed to include the securities which the Holders would
be entitled to receive in exchange for Registrable Securities under any such
merger, business combination or consolidation, provided that to the extent such
securities to be received are convertible into shares of Common Stock of the
issuer thereof, then any such shares of Common Stock as are issued or issuable
upon conversion of said convertible securities shall also be included within
the definition of "Registrable Securities".
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8. Adjustments to Exercise Price and Number of Securities.
8.1 Adjustment for Dividends, Subdivisions, Combinations or
Reclassification.
In case the Company shall (a) pay a dividend or make a distribution in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (b) subdivide its outstanding shares of Common Stock into
a greater number of shares, (c) combine its outstanding shares of Common Stock
into a smaller number of shares, or (d) issue by reclassification of its shares
of Common Stock any shares of capital stock of the Company; then, and in each
such case, the per share Share Exercise Price, the Underlying Warrant Exercise
Price and the number of Warrants in effect immediately prior to such action
shall be adjusted so that the Holder of this Warrant thereafter upon the
exercise hereof shall be entitled to receive the number and kind of shares of
the Company which such Holder would have owned immediately following such
action had this warrant been exercised immediately prior thereto. An
adjustment made pursuant to this Section shall become effective immediately
after the record date in the case of a dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a result of an adjustment
made pursuant to this Section, the Holder shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company (whose determination shall be conclusive) shall
determine the allocation of the adjusted Exercise Price between or among shares
of such class of capital stock.
Immediately upon any adjustment of the exercise price of any Warrant
pursuant to this Section, the Company shall send written notice thereof to the
Holder of Warrant Certificates (by first class mail, postage prepaid), which
notice shall state the exercise price of any Warrant resulting from such
adjustment, and any increase or decrease in the number of Warrant Securities to
be acquired upon exercise of the Warrants, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
8.2 Adjustment For Reorganization, Merger or Consolidation.
In case of any reorganization of the Company or consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental Warrant agreement providing that the Holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and
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other securities and property receivable upon such consolidation or merger, by
a holder of the number of shares of Common Stock of the Company for which such
Warrant might have been exercised immediately prior to such reorganization,
consolidation, merger, conveyance, sale or transfer. Such supplemental Warrant
agreement shall provide for adjustments which shall be identical to the
adjustments provided in Section 8.1 and such registration rights and other
rights as provided in this Agreement. The Company shall not effect any such
consolidation, merger, or similar transaction as contemplated by this
paragraph, unless prior to or simultaneously with the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing, receiving, or leasing
such assets or other appropriate corporation or entity shall assume, by written
instrument executed and delivered to the Holders, the obligation to deliver to
the Holders, such shares of stock, securities, or assets as, in accordance with
the foregoing provisions, such holders may be entitled to purchase, and to
perform the other obligations of the Company under this Agreement. The above
provision of this Subsection shall similarly apply to successive consolidations
or successively whenever any event listed above shall occur.
8.3 Dividends and Other Distributions.
In the event that the Company shall at any time prior to the exercise of
all of the Warrants and/or Underlying Warrants distribute to its stockholders
any assets, property, rights, evidences of indebtedness, securities (other than
a distribution made as a cash dividend payable out of earnings or out of any
earned surplus legally available for dividends under the laws of the
jurisdictions of incorporation of the Company), whether issued by the Company
or by another, the Holders of the unexercised Warrants shall thereafter be
entitled, in addition to the shares of Common Stock or other securities and
property receivable upon the exercise thereof, to receive, upon the exercise of
such Warrants, the same property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been entitled to
receive at the time of such distribution as if the Warrants had been exercised
immediately prior to such distribution. At the time of any such distribution,
the Company shall make appropriate reserves to ensure the timely performance of
the provisions of this subsection or an adjustment to the Exercise Price, which
shall be effective as of the day following the record date for such
distribution.
8.4 Adjustment in Number of Securities.
Upon each adjustment of the Exercise Price pursuant to the provisions of
this Article 8, the number of securities issuable upon the exercise of each
Warrant and/or Underlying Warrant shall be adjusted to the nearest full amount
by multiplying a number equal to the exercise price in effect immediately prior
to such adjustment by
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the number of securities issuable upon exercise of the Warrants and the
Underlying Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
8.5 No Adjustment of Exercise Price in Certain Cases.
No adjustment of the Exercise Price shall be made if the amount of said
adjustment shall be less than 5 cents ($.05) per Security, provided, however,
that in such case any adjustment that would otherwise be required then to be
made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with any adjustment so
carried forward, shall amount to at least 5 cents ($.05) per Share.
8.6 Accountant's Certificate of Adjustment.
In each case of an adjustment or readjustment of the Share Exercise
Price, Underlying Warrant Exercise Price or the number of any securities
issuable upon exercise of the Warrants or Underlying Warrants, the Company, at
its expense, shall cause independent certified public accountants of recognized
standing selected by the Company (who may be the independent certified public
accountants then auditing the books of the Company) to compute such adjustment
or readjustment in accordance herewith and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to any Holder of the Warrants or Underlying Warrants at
the Holder's address as shown on the Company's books. The certificate shall
set forth such adjustment or readjustment, showing in detail the facts upon
which such adjustment or readjustment is based including, but not limited to, a
statement of (i) the Share Exercise Price or the Underlying Warrant Share
Exercise Price at the time in effect, and (ii) the number of additional
securities and the type and amount, if any, of other property which at the time
would be received upon exercise of the Warrants or Underlying Warrants.
8.7 Adjustment of Underlying Warrant Exercise Price.
With respect to any of the Underlying Warrants whether or not the
Underlying Warrants have been exercised (or are exercisable) and whether or not
the Underlying Warrants are issued and outstanding, the Underlying Warrant
exercise price and the number of shares of Common Stock underlying such
Underlying Warrants shall be automatically adjusted in accordance with the
Warrant Agreement between the Company and the Company's transfer agent, upon
occurrence of any of the events relating to adjustments described therein.
Thereafter, the Underlying Warrants shall be exercisable at such adjusted
Underlying Warrant Share Exercise Price for such adjusted number of Underlying
Warrant Shares or other securities, properties or rights.
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9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of securities in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interest.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock upon the exercise of the Warrants or
Underlying Warrants, nor shall it be required to issue script or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests may be eliminated, at the Company's option, by rounding
any fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights, or in lieu thereof paying cash equal to such
fractional interest multiplied by the current value of a share of Common Stock.
11. Reservation and Listing.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants and the Underlying Warrants, such number of shares of
Common Stock or other securities, properties or rights as shall be issuable
upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants or the Underlying Warrants, and payment of the
exercise price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid, non-
assessable and not subject to the preemptive rights of any stockholder. As
long as the Warrants and Underlying Warrants shall be outstanding, the Company
shall use its best efforts to cause all shares of Common Stock issuable upon
the exercise of the Warrants and the Underlying Warrants to be listed and
quoted (subject to official notice of issuance) on all securities Exchanges and
Systems on which the Common Stock and/or the Public Warrants may then be listed
and/or quoted, including Xxxxxx.
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00. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holders of the Warrants or Underlying Warrants the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders, for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any
time prior to the expiration of the warrants and Underlying Warrants and their
exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date of the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notices shall
specify such record date or the date of closing the transfer books, as the case
may be. Failure to give such notice or any defect therein shall not affect the
validity of any action taken in connection with the declaration or payment of
any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
13. Underlying Warrants.
The form of the certificate representing the Underlying Warrants (and
the form of election to purchase shares of Common Stock upon the exercise of
the Underlying Warrants and the form of assignment printed on the reverse
thereof) shall be
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substantially as set forth in the exhibits to the Warrant Agreement. Subject
to the terms of this Agreement, one (1) Underlying Warrant shall evidence the
right to initially purchase one (1) fully-paid and non-assessable share of
Common Stock at an initial purchase price of $_______ during the four (4) year
period commencing one year after the Effective Date of the Registration
Statement, at which time the Underlying Warrants, unless the exercise period
has been extended, shall expire. The exercise price of the Underlying Warrants
and the number of shares of Common Stock issuable upon the exercise of the
Underlying Warrants are subject to adjustment, whether or not the Warrants have
been exercised and the Underlying Warrants have been issued, in the manner and
upon the occurrence of the events set forth in the Warrant Agreement, which is
hereby incorporated herein by reference and made a part hereof as if set forth
in its entirety herein. Subject to the provisions of this Agreement and upon
issuance of the Underlying Warrants, each registered holder of such Underlying
Warrant shall have the right to purchase from the Company (and the Company
shall issue to such registered holders) up to the number of fully-paid and non-
assessable shares of Common Stock (subject to adjustment as provided in the
Warrant Agreement) set forth in such Warrant Certificate, free and clear of all
preemptive rights of stockholders, provided that such registered Holder
complies with the terms governing exercise of the Underlying Warrant set forth
in the Warrant Agreement, and pays the applicable exercise price, determined in
accordance with the terms of the Warrant Agreement. Upon exercise of the
Underlying Warrants, the Company shall forthwith issue to the registered Holder
of any such Underlying Warrant in his name or in such name as may be directed
by him, certificates for the number of shares of Common Stock so purchased.
Except as otherwise provided herein and in this Agreement, the Underlying
Warrants shall be governed in all respects by the terms of the Warrant
Agreement. The Underlying Warrants shall be transferable in the manner
provided in the Warrant Agreement, and upon any such transfer, a new Underlying
Warrant certificate shall be issued promptly to the transferee. The Company
covenants to send to each Holder, irrespective of whether or not the Warrants
have been exercised, any and all notices required by the Warrant Agreement to
be sent to holders of Underlying Warrants.
14. Notices.
All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed to have been duly given when personally
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of any of the Registrable
Securities, to the address of such Holder as shown on the books of the Company;
or
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(b) If to the Company, to the address set forth below or to
such other address as the Company may designate by notice to the Holders.
Xxxx X. Xxxxx
Chief Executive Officer
Performance Printing Corporation
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
With a copy to: Xxxxxx Xxxxx
Xxxxx and Xxxxxxx, P.C.
5420 LBJ Freeway
0000 Xxxxxxx Xxxxxx XX
Xxxxxx, Xxxxx 00000
15. Entire Agreement: Modification.
This Agreement (and the Underwriting Agreement and Warrant Agreement to
the extent applicable) contain the entire understanding between the parties
hereto with respect to the subject matter hereof, and the terms and provisions
of this Agreement may not be modified, waived or amended except in a writing
executed by the Company and the Holders of at least a majority of Registrable
Securities (based on underlying numbers of shares of Common Stock). Notice of
any modification, waiver or amendment shall be promptly provided to any Holder
not consenting to such modification, waiver or amendment.
16. Successors.
All the covenants and provisions of this Agreement shall be binding upon
and inure to the benefit of the Company, the Holders and their respective
successors and assigns hereunder.
17. Termination.
This Agreement shall terminate at the close of business on __________,
2005. Notwithstanding the foregoing, the indemnification provisions of Section
7 shall survive such termination.
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18. Governing Law; Submission to Jurisdiction.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Texas and for all
purposes shall be construed in accordance with the laws of said State without
giving effect to the rules of said State governing the conflicts of laws. The
Company, the Representative and the Holders hereby agree that any action,
proceeding or claim arising out of, or relating in any way to, this Agreement
shall be brought and enforced in a federal or state court of competent
jurisdiction with venue only in the State District court in Dallas, County,
Texas or the United States District Court for the Northern District of Texas,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Representative and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the
Representative and the Holders (at the option of the party bringing such
action, proceeding or claim) may be served by transmitting a copy thereof, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 14 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the party
so served in any action, proceeding or claim.
19. Severability.
If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
20. Captions.
The caption headings of the Sections of this Agreement are for
convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive
effect.
21. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Representative and any other
registered Holder of the Warrant Certificates or Registrable Securities any
legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Representative and any other Holder of the Warrant Certificates or Registrable
Securities.
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22. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
Performance Printing Corporation
By:
--------------------------------
Xxxx X. Xxxxx
Chief Executive Officer
Attest:
_____________________________
Xxxxxxx X. Xxxxx, Secretary
FIRST LONDON SECURITIES CORPORATION
By:
--------------------------------
Xxxxxxx Xxxxxxx, President
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EXHIBIT A
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WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M, EASTERN TIME ON _______, 2003
NO. W-______
________ Common Stock ___________ Warrant
Representative Representative
Warrants Warrants
or
___________ Underlying
Warrants
This Warrant Certificate certifies that ___________________, or
registered assigns, is the registered holder of _____________ Common Stock
Representative Warrants and/or ________ Warrant Representative Warrants and/or
_________________ Underlying Warrants of Performance Printing Corporation (the
"Company"). Each Common Stock Representative Warrant permits the Holder hereof
to purchase initially, at any time from _________, 1999 ("Purchase Date") until
5:00 p.m. Eastern Time on ______, 2003 ("Expiration Date"), one (1) share of
the Company's Common Stock at the initial exercise price, subject to adjustment
in certain events (the "Exercise Price"), of $.15 per share (120% of the public
warrant offering price). Each Warrant Representative Warrant permits the
Holder hereof to purchase initially, at any time from the Purchase Date until
four (4) years from the Purchase Date, one (1) Underlying
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Warrant at the Exercise Price of $.15 per Underlying Warrant (120% of the
public warrant offering price). Each Underlying Warrant permits the Holder
thereof to purchase, at any time from the Purchase Date until four (4) years
from the Purchase Date, one (1) share of the Company's Common Stock at the
Exercise Price of $_____ per share (150% of the public share offering price).
Any exercise of Common Stock Representative Warrants and/or Warrant
Representative Warrants and/or Underlying Warrants shall be effected by
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the Representative's Warrant Agreement dated as of _________, 1998,
between the Company and First London Securities Corporation (the
"Representative's Warrant Agreement"). Payment of the Exercise Price shall be
made by certified check or official bank check in New York Clearing House funds
payable to the order of the Company in the event there is no cashless exercise
pursuant to Section 3.1(ii) of the Representative's Warrant Agreement. The
Common Stock Representative Warrants, the Warrant Representative Warrants and
the Underlying Warrants are collectively referred to as "Warrants".
No Warrant may be exercised after 5:00 p.m., Eastern Time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Representative's Warrant
Agreement, which Representative's Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation or rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.
The Representative's Warrant Agreement provides that upon the occurrence
of certain events, the exercise price and the type and/or number of the
Company's securities issuable thereupon may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the holder, issue
a new Warrant Certificate evidencing the adjustment in the exercise price and
the number and/or type of securities issuable upon the exercise of the
Warrants; provided, however, that the failure of the Company to issue such new
Warrant Certificates shall not in any way change, alter, or otherwise impair,
the rights of the holder as set forth in the Representative's Warrant
Agreement.
Upon due presentment for registration or transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates
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of like tenor and evidencing in the aggregate a like number of Warrants shall
be issued to the transferees) in exchange for this Warrant Certificate, subject
to the limitations provided herein and in the Representative's Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the Holder hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Representative's Warrant Agreement shall have the meanings assigned to them in
the Representative's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of _______, 1998
Performance Printing Corporation
By:
________________________________
Xxxx X. Xxxxx
Chief Executive Officer
(Seal)
Attest:
________________________________
Xxxxxxx X. Xxxxx, Secretary
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FORM OF SUBSCRIPTION (CASH EXERCISE)
(To be signed only upon exercise of Warrant)
TO: Performance Printing Corporation
The undersigned, the Holder of Warrant Certificate number ____ (the
"Warrant"), representing ______________ Common Stock Representative Warrants
and/or __________ Warrant Representative Warrants and/or _______________
Underlying Warrants of Performance Printing Corporation (the "Company"), which
Warrant Certificate is being delivered herewith, hereby irrevocably elects to
exercise the purchase right provided by the Warrant Certificate for, and to
purchase thereunder, _____________ Shares and/or _____________ Underlying
Warrants of the Company, and herewith makes payment of $____________ therefor,
and requests that the certificates for such securities be issued in the name
of, and delivered to,
__________________________________________________________ ________ whose
address is ____________________________________, all in accordance with the
Representative's Warrant Agreement and the Warrant Certificate.
Dated:____________________________
__________________________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant Certificate)
__________________________________
__________________________________
(Address)
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EXHIBIT "B"
FORM OF SUBSCRIPTION (CASHLESS EXERCISE)
TO: Performance Printing Corporation
The undersigned, the Holder of Warrant Certificate number ____ (the
"Warrant"), representing ___________ Common Stock Representative Warrants
and/or _________________ Underlying Warrants of Performance Printing
Corporation (the "Company"), which Warrant is being delivered herewith, hereby
irrevocably elects the cashless exercise of the purchase right provided by the
Representative's Warrant Agreement and the Warrant Certificate for, and to
purchase thereunder, Shares of the Company in accordance with the formula
provided at Section Three (3) of the Representative's Warrant Agreement. The
undersigned requests that the certificates for such Shares be issued in the
name of, and delivered to,
_____________________________________________________ whose address is,
______________________________________________________________ all in
accordance with the Warrant Certificate.
Dated:____________________________
__________________________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant Certificate)
__________________________________
__________________________________
(Address)
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(FORM OF ASSIGNMENT)
(To be exercised by the registered holder if such
holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED____________________________________________________________
hereby sells, assigns and transfers unto
(Print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
_______________________ Attorney, to transfer the within Warrant Certificate
on the books of the within-named Company, and full power of substitution.
Dated: Signature:
_______________________ ______________________________
(Signature must conform in all
respects to name of holder as
specified on the fact of the
Warrant Certificate)
______________________________
(Insert Social Security or
Other Identifying Number of
Assignee)
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