EXHIBIT 4.2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE
SECURITIES NOR ANY INTEREST THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER.
WARRANT TO PURCHASE SHARES OF COMMON
STOCK OF UNIDIGITAL INC.
Warrant Certificate Number: W 00 Dated: 5/21/97
------ -------
This certifies that ________________ (the "Holder"), for value received is
entitled, subject to the terms set forth below, to purchase from UNIDIGITAL
INC., a Delaware corporation (the "Company"), ____ fully paid and nonassessable
shares of the Company's Common Stock, par value $0.01 per share (the "Stock") at
a price of $4.00 per share (the "Stock Purchase Price") at any time or from time
to time but not earlier than the Commencement Date (as defined below) or later
than 5:00 p.m. (New York Time) on the Expiration Date (as defined below), upon
surrender to the Company at its principal office at 20 West 20th Street, New
York, New York 10011, Attention: President (or at such other location as the
Company may advise Holder in writing) of this Warrant properly endorsed with the
form of Subscription Agreement attached hereto duly completed and signed and,
unless the Conversion Right (as defined below) set forth in Section 1(c) is
exercised, upon payment in cash or cashier's check of the aggregate Stock
Purchase Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof. The Stock
Purchase Price and the number of shares purchasable hereunder are subject to
adjustment as provided in Section 3 of this Warrant. This Warrant and all rights
hereunder, to the extent not exercised in the manner set forth herein shall
terminate and become null and void on the Expiration Date (as defined below).
"Commencement Date" shall mean the date of this Warrant. "Expiration Date" shall
mean the fifth anniversary of the Commencement Date.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares; Conversion
Right.
(a) This Warrant is exercisable in the manner set forth above at the
option of Holder at any time or from time to time but not earlier than the
Commencement Date or later than 5:00 p.m. (New York Time) on the Expiration Date
for all or a portion of the shares of Stock which may be purchased hereunder.
The Company agrees that the shares of Stock purchased under this Warrant shall
be and are deemed to be issued to Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares (unless the Conversion Right is
exercised). Subject to the provisions of Section 2, certificates for the shares
of Stock so purchased shall be delivered to Holder by
the Company's transfer agent at the Company's expense within a reasonable time
after the rights represented by this Warrant have been exercised. Each
stock certificate so delivered shall be in such denominations of Stock as may be
requested by Holder and shall be registered in the name of Holder or such other
name as shall be designated by Holder, subject to the limitations contained in
Sections 1(b) and 2. If, upon exercise of this Warrant, fewer than all of the
shares of Stock evidenced by this Warrant are purchased prior to the Expiration
Date of this Warrant, one or more new warrants substantially in the form of, and
on the terms in, this Warrant will be issued for the remaining number of shares
of Stock not purchased upon exercise of this Warrant.
(b) No shares of Stock will be issued pursuant to the exercise of this
Warrant unless such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange or automated
quotation system upon which the Stock may then be listed. Assuming such
compliance, for income tax purposes the Stock shall be considered transferred to
the Holder on the date on which this Warrant is exercised with respect to such
Stock.
(c) In lieu of the payment of the Stock Purchase Price, the Holder shall
have the right (but not the obligation), to require the Company to convert this
Warrant, in whole or in part, into shares of Stock (the "Conversion Right") as
provided for in this Section 1(c). Upon exercise of the Conversion Right, the
Company shall deliver to the Holder (without payment by the Holder of any of the
Stock Purchase Price) that number of shares of Stock equal to the quotient
obtained by dividing (x) the value of the Warrant at the time the Conversion
Right is exercised (determined by subtracting the aggregate Stock Purchase Price
in effect immediately prior to the exercise of the Conversion Right from the
aggregate Market Value (as defined in Section 1(e) below), for the shares of
Stock issuable upon exercise of the Warrant immediately prior to the exercise of
the Conversion Right) by (y) the Market Value of one share of Stock immediately
prior to the exercise of the Conversion Right.
(d) The Conversion Right may be exercised by the Holder on any business
day between (i) the Commencement Date and (ii) the Expiration Date by delivering
the Warrant Certificate with a duly executed Subscription Agreement in the form
attached hereto with the conversion section completed to the Company, exercising
the Conversion Right and specifying the total number of shares of Stock the
Holder will purchase pursuant to such conversion.
(e) For the sole purpose of determining the number of shares of the
Stock which shall be delivered to the Holder by the Company pursuant to the
Conversion Right as set forth in Section 1(c) above, Market Value shall mean the
average of the daily high and low price of a share of the Stock as listed on the
Nasdaq National Market (or such other exchange or quotation system on which the
Stock may then be listed) for the ten (10) days of trading immediately preceding
the date of exercise of such Conversion Right.
2. Shares to Be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all shares of Stock which may be issued upon the exercise of
this Warrant (the "Warrant Shares") and all shares of common stock issuable upon
conversion of the Warrant Shares (the
-2-
"Conversion Shares") will, upon issuance, be duly authorized, validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder and free of all taxes (other than income taxes which may be
applicable to Holder), liens and charges with respect to the issue thereof. The
Company covenants that it will reserve and keep available a sufficient number of
shares of its authorized but unissued Stock for such exercise and sufficient
shares of common stock for such conversion. The Company will take all such
reasonable action as may be necessary to assure that such shares of Stock may be
issued as provided herein without violation of any applicable law or regulation,
or of any requirements of any domestic securities exchange or automated
quotation system upon which the Stock may be listed.
3. Adjustment of Stock Purchase Price and Number of Shares. The Stock
Purchase Price and, in some cases, the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 3.
3.1 Subdivision or Combination of Stock and Stock Dividend. In case the
Company shall at any time subdivide its outstanding shares of Stock into a
greater number of shares or declare a dividend upon its Stock payable solely in
shares of Stock, the Stock Purchase Price in effect immediately prior to such
subdivision or declaration shall be proportionately reduced, and the number of
shares issuable upon exercise of the Warrant shall be proportionately increased.
Conversely, in case the outstanding shares of Stock of the Company shall be
combined into a smaller number of shares, the Stock Purchase Price in effect
immediately prior to such combination shall be proportionately increased, and
the number of shares issuable upon exercise of the Warrant shall be
proportionately reduced.
3.2 Notice of Adjustment. Promptly after adjustment of the Stock
Purchase Price or any increase or decrease in the number of shares purchasable
upon the exercise of this Warrant, the Company shall give written notice
thereof, by first class mail, postage prepaid, addressed to the Holder at the
address of such Holder as shown on the books of the Company. The notice shall be
signed by an authorized officer of the Company and shall state the effective
date of the adjustment and the Stock Purchase Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
3.3 Other Notices. If at any time:
(a) the Company shall declare any cash dividend upon its Stock;
(b) the Company shall declare any dividend upon its Stock payable in
stock (other than a dividend payable solely in shares of Stock) or make any
special dividend or other distribution to the holders of its Stock;
-3-
(c) there shall be any consolidation or merger of the Company with
another corporation, or a sale of all or substantially all of the Company's
assets to another corporation; or
(d) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, (i)
at least 10 days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up, (ii) at least 10 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger or sale, and (iii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, at least 10 days' written notice
of the date when the same shall take place. Any notice given in accordance with
clause (i) above shall also specify, in the case of any such dividend,
distribution or option rights, the date on which the holders of Stock shall be
entitled thereto. Any notice given in accordance with clause (iii) above shall
also specify the date on which the holders of Stock shall be entitled to
exchange their Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, as the case may be. If the Holder of the Warrant does
not exercise this Warrant prior to the occurrence of an event described above,
except as provided in Sections 3.1 and 3.4, the Holder shall not be entitled to
receive the benefits accruing to existing holders of the Stock pursuant to such
event.
3.4 Changes in Stock. In case at any time prior to the Expiration Date,
the Company shall be a party to any transaction (including, without limitation,
a merger, consolidation, sale of all or substantially all of the Company's
assets or recapitalization of the Stock) in which the previously outstanding
Stock shall be changed into or exchanged for different securities of the Company
or common stock or other securities of another corporation or interests in a
noncorporate entity or other property (including cash) or any combination of any
of the foregoing (each such transaction being herein called the "Transaction"
and the date of consummation of the Transaction being herein called the
"Consummation Date"), then, as a condition of the consummation of the
Transaction, lawful and adequate provisions shall be made so that each Holder,
upon the exercise hereof at any time on or after the Consummation Date, shall be
entitled to receive, and this Warrant shall thereafter represent the right to
receive, in lieu of the Stock issuable upon such exercise prior to the
Consummation Date, the highest amount of securities or other property to which
such Holder would actually have been entitled as a stockholder upon the
consummation of the Transaction if such Holder had exercised such Warrant
immediately prior thereto. The provisions of this Section 3.4 shall similarly
apply to successive Transactions.
-4-
4. Investment Representations.
(a) By receipt of this Warrant, by its execution and by its exercise in
whole or in part, the Holder represents to the Company the following:
(i) the Holder understands that this Warrant and any Stock purchased
upon its exercise are securities, the issuance of which requires compliance with
federal and state securities laws;
(ii) the Holder is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire such
securities;
(iii) the Holder is acquiring these securities for investment for the
Holder's own account only and not with a view to, or for resale in connection
with, any "distribution" thereof within the meaning of the Securities Act of
1933, as amended (the "Act");
(iv) the Holder acknowledges and understands that the securities
constitute "restricted securities" under the Act and must be held indefinitely
unless they are subsequently registered under the Act or an exemption from such
registration is available. The Holder further acknowledges and understands that
the Company is under no obligation hereunder to register the securities (other
than pursuant to the Registration Rights Agreement (as defined below));
(v) the Holder has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in this Warrant;
(vi) the Holder has received all of the information the Holder has
requested from the Company and considers necessary or appropriate for deciding
whether to purchase this Warrant;
(vii) the Holder has the ability to bear the economic risks of his
prospective investment;
(viii) the Holder is able, without materially impairing his financial
condition, to hold this Warrant for an indefinite period of time and to suffer
complete loss on his investment;
(ix) the Holder understands and agrees that (A) he may be unable to
readily liquidate his investment in this Warrant and that the Warrant Shares and
the Conversion Shares must be held indefinitely unless a subsequent disposition
thereof is registered or qualified under the Act and applicable state securities
or Blue Sky laws or is exempt from such registration or qualification, and that
the Company is not required to register the same or to take any action or
-5-
make such an exemption available except to the extent provided pursuant
to the Registration Rights Agreement and (B) the exemption from registration
under the Act afforded by Rule 144 promulgated by the Securities and Exchange
Commission ("Rule 144") depends upon the satisfaction of various conditions by
the undersigned and the Company and that, if applicable, Rule 144 affords the
basis for sales under certain circumstances in limited amounts, and that if such
exemption is utilized by the undersigned, such conditions must be fully complied
with by the undersigned and the Company, as required by Rule 144; and
(x) the Holder either (A) is familiar with the definition of and the
Holder is an "accredited investor" within the meaning of such term under Rule
501 of Regulation D promulgated under the Act, or (B) is providing
representations and warranties reasonably satisfactory to the Company and its
counsel, to the effect that the sale and issuance of Warrant may be made without
registration under the Act or any applicable state securities and Blue Sky laws.
(b) The Holder agrees, in connection with any underwritten public
offering of the Company's securities, (1) not to sell, make short sale of, loan,
grant any options for the purchase of, or otherwise dispose of any shares of
Stock of the Company held by Holder (other than those shares included in such
registration or any other effective registration) without the prior written
consent of the Company or the underwriters managing such underwritten public
offering of the Company's securities for six months from the effective date of
such registration, and (2) further agrees to execute any agreement reflecting
the obligation of the Holder set forth in (1) above as may be requested by the
underwriters at the time of the public offering.
5. Issue Tax. The issuance of certificates for shares of Stock upon the
exercise of the Warrant shall be made without charge to the holder of the
Warrant for any issue tax in respect 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 certificate in a name
other than that of the then holder of the Warrant being exercised.
6. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the holder
hereof the right to vote or to consent or to receive notice as a stockholder in
respect of meetings of stockholders for the election of directors of the Company
or any other matters or any rights whatsoever as a stockholder of the Company.
Except for the adjustment to the Stock Purchase Price pursuant to Section 3.1 in
the event of a dividend on the Stock payable in shares of Stock, no dividends or
interest shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised. No provisions hereof, in
the absence of affirmative action by the holder to purchase shares of Stock, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Stock Purchase Price or
as a stockholder of the Company whether such liability is asserted by the
Company or by its creditors.
-6-
7. Restrictions on Transferability of Securities; Compliance With
Securities Act.
7.1 Restrictions on Transferability. The Warrant Shares and the
Conversion Shares shall not be transferable in the absence of the effectiveness
of a registration statement with respect to such securities under the Act, or an
exemption therefrom. This Warrant may not be transferred in any manner other
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of the Holder only by the Holder. The terms of this Warrant
shall be binding upon the executors, administrators, heirs, successors and
assigns of the Holder.
7.2 Restrictive Legend. In the absence of the effectiveness of
registration under the Act or an exemption therefrom as contemplated by Section
7.1, each certificate representing the Warrant Shares, the Conversion Shares or
any other securities issued in respect of the Warrant Shares or the Conversion
Shares upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall be stamped or otherwise imprinted with a
legend substantially in the following form (in addition to any legend required
under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR
ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT OR SUCH LAWS AND THE
RULES AND REGULATIONS THEREUNDER.
8. Registration Rights. The Warrant Shares and the Conversion Shares are
subject to the rights and obligations set forth in that certain Registration
Rights Agreement by and between the Company and the Holder of even date herewith
(the "Registration Rights Agreement").
9. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
10. Notices. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be delivered
or shall be sent by certified or registered mall, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefor in the first paragraph of this Warrant.
11. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York without reference to the
principles of conflicts of laws.
-7-
12. Lost Warrants or Stock Certificates. The Company represents and
warrants to Holder that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any Warrant or stock
certificate representing the Warrant Shares or the Conversion Shares and in the
case of any such loss, theft, destruction or mutilation, upon receipt of an
indemnity and, if requested, bond reasonably satisfactory to the Company, or in
the case of any such mutilation, upon surrender and cancellation of such Warrant
or stock certificate, the Company at its expense will make and deliver a new
Warrant or stock certificate, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
13. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share pay
the holder entitled to such fraction a sum in cash equal to the fair market
value of any such fractional interest as it shall appear on the public market,
or if there is no public market for such shares, then as shall be reasonably
determined by the Company.
* * * * * * * * * *
-8-
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer, thereunto duly authorized as of the date first written above.
UNIDIGITAL INC.
By:
----------------------------------
William E. Dye
President and Chief Executive
Officer
-9-
FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered
upon exercise of Warrant)
UNIDIGITAL INC.
20 West 20th Street
New York, New York 10011
Attention: President
The undersigned, the holder of the within Warrant (Warrant Certificate
Number __________), hereby irrevocably elects to exercise the purchase right
represented by such Warrant for, and to purchase thereunder,_______________
shares of Common Stock, par value $0.01 per share (the "Stock"), of UNIDIGITAL
INC. (the "Company") and subject to the following paragraph, herewith makes
payment of ___________________ Dollars ($________) therefor and requests that
the certificates for such shares be issued in the name of, and delivered to,
_____________ whose address is _____________________________________________.
The undersigned does/does not (circle one) request the exercise of the
within Warrant pursuant to the cashless exercise right set forth in Section 1(c)
of the Warrant.
If the exercise of this Warrant is not covered by a registration statement
effective under the Securities Act of 1933, as amended (the "Securities Act"),
the undersigned represents that:
(i) the undersigned is acquiring such Stock for investment for his own
account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not assigned or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;
(iii) the undersigned has received all of the information the
undersigned has requested from the Company and considers necessary or
appropriate for deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks of his
prospective investment;
(v) the undersigned is able, without materially impairing his financial
condition, to hold the shares of Stock for an indefinite period of time and to
suffer complete loss on his investment;
(vi) the undersigned understands and agrees that (A) he may be unable to
readily liquidate his investment in the shares of Stock and that the shares
must be held indefinitely unless a subsequent disposition thereof is registered
or qualified under the Securities Act and applicable state securities or Blue
Sky laws or is exempt from such registration or qualification, and that the
Company is not required to register the same or to take any action or make such
an exemption available except to the extent provided in the within Warrant and
(B) the exemption from registration under the Securities Act afforded by Rule
144 promulgated by the Securities and Exchange Commission ("Rule 144") depends
upon the satisfaction of various conditions by the undersigned and the Company
and that, if applicable, Rule 144 affords the basis for sales under certain
circumstances in limited amounts, and that if such exemption is utilized by the
undersigned, such conditions must be fully complied with by the undersigned and
the Company, as required by Rule 144;
(vii) the undersigned either (A) is familiar with the definition of and
the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Securities Act, or (B) is
providing representations and warranties reasonably satisfactory to the Company
and its counsel, to the effect that the sale and issuance of Stock upon exercise
of such Warrant may be made without registration under the Securities Act or any
applicable state securities and Blue Sky laws; and
(viii) the address set forth below is the true and correct address of
the undersigned's residence.
DATED: _______________
------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
------------------------------------
------------------------------------
(Address)
-2-
SCHEDULE OF HOLDERS
-------------------
Principal Number of
Holder Amount of Note Warrants
------ -------------- --------
Lawrence & Company Inc. $1,000,000 100,000
Trans Euro Investments Ltd. 500,000 50,000
Alcamin Anstalt Vaduz 300,000 30,000
I. Michael Goodman/Agis Associates L.L.C. 200,000 20,000
Henry Harris 200,000 20,000
David Wachsman 150,000 15,000
Harvey Silverman 150,000 15,000
Douglas Schwarzwaelder 100,000 10,000
---------- -------
TOTAL: $2,600,000 260,000
========== =======