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EXHIBIT 10.3
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 units (the "Units")
at $5.125 per Unit (the "Unit IPO Price"); and
WHEREAS, each Unit is comprised of one share of common stock (the
"Common Stock") and one Redeemable Common Stock Purchase Warrant (the "Public
Warrants"); 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 (the
"Representative's Warrants") to purchase 120,000 Units (the "Representative's
Units"), each Unit being comprised of one share of the Common Stock (the
"Shares") and one Redeemable Common Stock Purchase Warrant ("Underlying
Warrants") exercisable to purchase 120,000 shares of the Company's Common Stock
(the "Underlying Warrant Shares"). The "Representative's Warrants" and the
"Representative's Units" are collectively referred to as the "Representative's
Securities." The "Representative's Units", the "Shares," the "Underlying
Warrants" and the "Underlying Warrant Shares" are collectively referred to as
the "Warrant Securities"; and
WHEREAS, the Representative's 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, relating to the purchase
of the Representative's Warrants, 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 Representative's 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 Units at an initial exercise
price (subject to adjustment as provided in Article 8 hereof) of $6.15 per share
(the "Unit Exercise Price"). Each Underlying Warrant is exercisable to purchase
one (1) share of Common Stock at $7.50 (the "Underlying Warrant Share Exercise
Price") per Underlying Warrant during the four (4) year period commencing one
year from the Effective Date.
Except as specifically otherwise provided herein, the Representative's
Units, the Shares, the Underlying Warrants and the Underlying Warrant Shares
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 Units, 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, omissions, substitutions, and other variations as
required or permitted by this Agreement.
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3. Exercise of Representative's Warrant.
3.1 Full Exercise.
(i) The Holder hereof may effect a cash exercise of the
Representative's 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 Securities that are
the subject of such exercise (as adjusted as hereinafter provided).
(ii) The Holder hereof may effect a cashless exercise of the
Representative's 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
Units to be purchased by each Holder hereof shall be determined by dividing: (i)
the number obtained by multiplying the number of Units that are the subject of
each Holder's Representative's Warrants Certificate by the sum of (1) Unit
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 Unit Exercise Price or the Underlying Warrant Share
Exercise Price, as applicable; by (ii) the Unit 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 security basis
as of the close of the business day preceding the exercise, which determination
shall be made as follows: (a) if the Units (or if the Units have become
detachable, the Common Stock and/or Warrants) are 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 the ten (10) trading days immediately preceding the date of
exercise, or if no trade of such securities 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 securities was so reported; or (b) if the securities 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
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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 securities are traded. Appropriate adjustments will be
made if the Units are separated and the Shares and the Underlying Warrants trade
independently.
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 Representative's Warrants or the Underlying
Warrants, the issuance of certificates for the Units or 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 Units or
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 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.
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5. Restriction On Transfer of Warrants.
The Holder of a Warrant Certificate, by acceptance thereof, covenants
and agrees that the Representative's 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 Representative's Warrants shall be
$6.15 per Warrant. The initial exercise price of each Underlying Warrant shall
be $7.50 per share. 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
Representative's 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 Units, 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 Representative's Warrants, certificates representing the
Units (or if the Units have become detachable, the Shares and the Underlying
Warrants) or, upon the exercise of the Underlying Warrants, the Underlying
Warrant Shares, shall bear the following legend in the event there is no current
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
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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 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.
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(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 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.
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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 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.
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(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.
(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),
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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 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.
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(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 Unit Unit Exercise Price, the Underlying Warrant Exercise
Price and the number of Representatives' 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 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
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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 Representative's 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 Representative's
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 Representative's 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 Representative's 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
Representative's 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 the number of securities issuable
upon exercise of the Representative's Warrants and the Underlying Warrants
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
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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 Unit Exercise
Price, Underlying Warrant Exercise Price or the number of any securities
issuable upon exercise of the Representative's 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
Representative's 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 Representative's 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 Warrant Share Exercise Price 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 Representative's
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 Representative's 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 Representative's 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 Representative's 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 Representative's 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 Representative's 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 substantially as set forth in the exhibits to the Warrant Agreement.
Subject to the
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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 Representative's 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
(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.
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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 __________,
2003. 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-______
___________ Representative's ___________ Representative's
Warrants Units
or
___________ Underlying
Warrants
This Warrant Certificate certifies that ___________________, or
registered assigns, is the registered holder of _____________ Representative's
Warrants and/or ________ Representative's Units and/or _________________
Underlying Warrants of Performance Printing Corporation (the "Company"). Each
Representative's 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 Unit, each Unit consisting of one share of
the Company's Common Stock and one Redeemable Common Stock Purchase Warrant. The
Representative's Warrant has an initial exercise price, subject to adjustment in
certain events (the "Unit Exercise Price"), of $6.15 per Unit. Each
Representative's Warrant permits the Holder hereof to purchase initially, at any
time from the Purchase Date until four (4) years from the Purchase Date, one
Unit. Each Underlying Warrant permits the Holder thereof to purchase, at any
time from the Purchase Date until four (4) years from the Purchase
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Date, one (1) share of the Company's Common Stock at the Exercise Price of $7.50
per share.
Any exercise of Representative's Warrants and/or Representative's Units
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 Representative's Warrants, the
Representative's Units 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 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
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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 ______________ Representative's Warrants and/or
__________ Representative's Units 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,
_________ Units or _____________ Shares and/or _____________ Underlying Warrants
(if the Units become detachable) 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 ___________ Representative's 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,
Units or Shares, as applicable, 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 Units or 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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