Exhibit 4.2
THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE
HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE
OPTION EXCEPT AS HEREIN PROVIDED.
NOT EXERCISABLE PRIOR TO ________ __, 1998. VOID AFTER 5:00 P.M. EASTERN
TIME, ________ __, 2002.
PURCHASE OPTION
FOR THE PURCHASE OF
150,000 SHARES OF COMMON STOCK
AND/OR
150,000 COMMON STOCK PURCHASE WARRANTS
OF
PIVOT RULES, INC.
(A DELAWARE CORPORATION)
1. Purchase Option.
THIS CERTIFIES THAT, in consideration of $100.00 duly paid
by or on behalf of GKN Securities Corp. ("Holder"), as registered owner of
this Purchase Option, to Pivot Rules, Inc. ("Company"), Holder is entitled, at
any time or from time to time at or after ________ __,1998 ("Commencement
Date"), and at or before 5:00 p.m., Eastern Time, ________ __, 2002
("Expiration Date"), but not thereafter, to subscribe for, purchase and
receive, in whole or in part, up to 150,000 shares of Common Stock of the
Company, $.01 par value ("Common Stock") and/or 150,000 Common Stock Purchase
Warrants, each to purchase one share of Common Stock ("Warrants")
during the period commencing on ________ __, 1998 and expiring ________ __,
2002, (five years from the effective date of the registration statement on
Form SB-2 No. 333-22895 ("Registration Statement") pursuant to which the
Company has registered shares of Common Stock and warrants to purchase Common
Stock ("Effective Date")). Each Warrant is the same as the warrants that have
been registered for sale to the public pursuant to the Registration Statement
("Public Warrants"). The shares of Common Stock and Warrants are sometimes
collectively referred to herein as the "Securities." The Holder can purchase,
upon exercise of the Purchase Option, either shares of Common Stock or
Warrants or both. If the Expiration Date is a day on which banking
institutions are authorized by law to close, then this Purchase Option may be
exercised on the next succeeding day which is not such a day in accordance
with the terms herein. During the period ending on the Expiration Date, the
Company agrees not to take any action that would terminate the Purchase
Option. This Purchase Option is initially exercisable at $_____ per share of
Common Stock and $_____ per Warrant purchased; provided, however, that upon
the occurrence of any of the events specified in Section 6 hereof, the rights
granted by this Purchase Option, including the exercise price and the number
of shares of Common Stock and Warrants to be received upon such exercise,
shall be adjusted as therein specified. The term "Exercise Price" shall mean
the initial exercise price or the adjusted exercise price, depending on the
context, of a share of Common Stock or a Warrant.
2. Exercise.
2.1. Exercise Form. In order to exercise this Purchase Option, the
exercise form attached hereto must be duly executed and completed and
delivered to the Company, together with this Purchase Option and payment of
the Exercise Price in cash or by certified check or official bank check for
the Securities being purchased. If the subscription rights represented hereby
shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration
Date, this Purchase Option shall become and be void without further force or
effect, and all rights represented hereby shall cease and expire.
2.2. Legend. Each certificate for Securities purchased under this
Purchase Option shall bear a legend as follows unless such Securities have
been registered under the Securities Act of 1933, as amended (the "Act"),:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933, as amended
("Act") or applicable state law. The securities may not be
offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the
Act, or pursuant to an exemption from registration under the
Act and applicable state law."
2.3. Cashless Exercise.
2.3.1. Determination of Amount. In lieu of the payment of
the Exercise Price in the manner required by Section 2.1, the Holder shall
have the right (but not the obligation) to pay the Exercise Price for the
Securities being purchased with this Purchase Option by the surrender to the
Company of any exercisable but unexercised portion of this Purchase Option
having a "Stock Value" or "Warrant Value" (as defined below), as the case may
be, at the close of trading on the last trading
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day immediately preceding the exercise of this Purchase Option, equal to the
Exercise Price multiplied by the number of Securities being purchased upon
exercise ("Cashless Exercise Right").
(i) Common Stock. Upon exercise of the Cashless
Exercise Right, the Company shall deliver to the Holder (without payment by
the Holder of any of the Exercise Price in cash) that number of shares of
Common Stock equal to the quotient obtained by dividing (x) the "Stock Value"
(as defined below) of the portion of the Purchase Option relating to the
purchase of Common Stock being surrendered at the time the Conversion Right is
exercised by (y) the Market Price. The "Stock Value" of the portion of the
Purchase Option being surrendered shall equal the remainder derived from
subtracting (a) the Exercise Price multiplied by the number of shares of
Common Stock being surrendered from (b) the Market Price of the Common Stock
multiplied by the number of shares of Common Stock being surrendered. As used
herein, the term "Market Price" at any date shall be deemed to be the average
last reported sale price of the Common Stock for the five days immediately
preceding such date, as officially reported by the principal securities
exchange on which the Common Stock is listed or admitted to trading, or, if
the Common Stock is not listed or admitted to trading on any national
securities exchange or if any such exchange on which the Common Stock is
listed is not its principal trading market, the last reported sale price as
furnished by the NASD through the Nasdaq National Market or SmallCap Market,
or, if applicable, the OTC Bulletin Board, or if the Common Stock is not
listed or admitted to trading on any of the foregoing markets, or similar
organization, as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
(ii) Warrants. Upon exercise of the Cashless
Exercise Right, the Company shall deliver to the Holder (without payment by
the Holder of any of the Exercise Price in cash) that number of Warrants equal
to the quotient obtained by dividing (x) the "Warrant Value" (as defined
below) of the portion of the Purchase Option relating to the purchase of the
Warrants being surrendered at the time the Cashless Exercise Right is
exercised by (y) the Market Price. The "Warrant Value" of the portion of the
Purchase Option being surrendered shall equal the remainder derived from
subtracting (a) the Exercise Price multiplied by the number of Warrants being
surrendered from (b) the Market Price of the Warrants multiplied by the number
of Warrants being surrendered. As used herein, the term "Market Price" at any
date shall be deemed to be the average last reported sale price of the
Warrants for the five days immediately preceding such date, as officially
reported by the principal securities exchange on which the Warrants are listed
or admitted to trading, or, if the Warrants are not listed or admitted to
trading on any national securities exchange or if any such exchange on which
the Warrants are listed is not its principal trading market, the last reported
sale price as furnished by the NASD through the Nasdaq National Market or
SmallCap Market, or, if applicable, the OTC Bulletin Board, or if the Warrants
are not listed or admitted to trading on any of the foregoing markets, or
similar organization, as determined in good faith by resolution of the Board
of Directors of the Company, based on the best information available to it.
(iii) Mechanics of Cashless Exercise. The Cashless
Exercise Right may be exercised by the Holder on any business day on or after
the Commencement Date and not later than the Expiration Date by delivering the
Purchase Option with a duly executed exercise form attached hereto with the
cashless exercise section completed to the Company, exercising the Cashless
Exercise Right and specifying the total number of shares of Common Stock
and/or Warrants the Holder will purchase pursuant to such Cashless Exercise
Right.
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3. Transfer.
3.1. General Restrictions. The registered Holder of this Purchase
Option, by its acceptance hereof, agrees that it will not sell, transfer or
assign or hypothecate this Purchase Option prior to the Commencement Date to
anyone other than (i) an officer of GKN Securities Corp. ("Underwriter") or an
officer or partner of any Selected Dealer in connection with the Company's
public offering with respect to which this Purchase Option has been issued, or
(ii) any Selected Dealer. On and after the Commencement Date, transfers to
others may be made subject to compliance with or exemptions from applicable
securities laws. In order to make any permitted assignment, the Holder must
deliver to the Company the assignment form attached hereto duly executed and
completed, together with the Purchase Option and payment of all transfer
taxes, if any, payable in connection therewith. The Company shall immediately
transfer this Purchase Option on the books of the Company and shall execute
and deliver a new Purchase Option or Purchase Options of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the
aggregate number of shares of Common Stock and Warrants purchasable hereunder
or such portion of such number as shall be contemplated by any such
assignment.
3.2. Restrictions Imposed by the Act. This Purchase Option and the
Securities underlying this Purchase Option shall not be transferred unless and
until (i) the Company has received the opinion of counsel for the Holder that
this Purchase Option or the Securities, as the case may be, may be transferred
pursuant to an exemption from registration under the Act and applicable state
law, the availability of which is established to the reasonable satisfaction
of the Company (the Company hereby agreeing that the written opinion of
Graubard Xxxxxx & Xxxxxx shall be deemed satisfactory evidence of the
availability of an exemption), or (ii) a registration statement relating to
such Purchase Option or Securities, as the case may be, has been filed by the
Company and declared effective by the Securities and Exchange Commission and
is in compliance with applicable state law.
4. New Purchase Options to be Issued.
4.1. Partial Exercise or Transfer. Subject to the restrictions in
Section 3 hereof, this Purchase Option may be exercised or assigned in whole
or in part. In the event of the exercise or assignment hereof in part only,
upon surrender of this Purchase Option for cancellation, together with the
duly executed exercise or assignment form and funds sufficient to pay any
Exercise Price and/or transfer tax, the Company shall cause to be delivered to
the Holder without charge a new Purchase Option of like tenor to this Purchase
Option in the name of the Holder evidencing the right of the Holder to
purchase the aggregate number of shares of Common Stock and Warrants
purchasable hereunder as to which this Purchase Option has not been exercised
or assigned.
4.2. Lost Certificate. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Purchase Option and of reasonably satisfactory indemnification, the Company
shall execute and deliver a new Purchase Option of like tenor and date. Any
such new Purchase Option executed and delivered as a result of such loss,
theft, mutilation or destruction shall constitute a substitute contractual
obligation on the part of the Company.
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5. Registration Rights.
5.1. Demand Registration.
5.1.1. Grant of Right. The Company, upon written demand
("Initial Demand Notice") of the Holder(s) of at least 51% of the Purchase
Options and/or the underlying shares of Common Stock and Warrants considered
together ("Majority Holders"), agrees to register, on one occasion, all or any
portion of the Purchase Options requested by the Majority Holders in the
Initial Demand Notice and all of the Securities underlying such Purchase
Options, including the Common Stock, the Warrants and the Common Stock
underlying the Warrants (collectively the "Registrable Securities"). On such
occasion, the Company will file a Registration Statement covering the
Registrable Securities within sixty days after receipt of the Initial Demand
Notice and use its best efforts to have such registration statement declared
effective promptly thereafter. If the Company fails to comply with the
provisions of this Section 5.1.1, the Company shall, in addition to any other
equitable or other relief available to the Holder(s), be liable for any and
all incidental, special and consequential damages sustained by the Holder(s).
The demand for registration may be made at any time during a period of four
years beginning one year from the Effective Date. The Company covenants and
agrees to give written notice of its receipt of any Initial Demand Notice by
any Holder(s) to all other registered Holders of the Purchase Options and/or
the Registrable Securities within ten days from the date of the receipt of any
such Initial Demand Notice.
5.1.2. Terms. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, but the Holders shall pay
any and all underwriting commissions and the expenses of any legal counsel
selected by the Holders to represent them in connection with the sale of the
Registrable Securities. The Company agrees to use its best efforts to cause
the filing required herein to become effective promptly and to qualify or
register the Registrable Securities in such States as are reasonably requested
by the Holder(s); provided, however, that in no event shall the Company be
required to register the Registrable Securities in a State in which such
registration would cause (i) the Company to be obligated to register or
license to do business in such State, or (ii) the principal stockholders of
the Company to be obligated to escrow their shares of capital stock of the
Company. The Company shall cause any registration statement filed pursuant to
the demand rights granted under Section 5.1.1 to remain effective for a period
of at least nine consecutive months from the date that the Holders of the
Registrable Securities covered by such registration statement are first given
the opportunity to sell all of such securities.
5.2. "Piggy-Back" Registration.
5.2.1. Grant of Right. In addition to the demand right of
registration, the Holders of the Purchase Options shall have the right for a
period of six years commencing one year from the Effective Date to include the
Registrable Securities as part of any other registration of securities filed
by the Company (other than in connection with a transaction contemplated by
Rule 145(a) promulgated under the Act or pursuant to Form S-8 or any
equivalent form).
5.2.2. Terms. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, but the Holders shall pay
any and all underwriting commissions and the expenses of any legal counsel
selected by the Holders to represent them in connection with the sale
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of the Registrable Securities. In the event of such a proposed registration,
the Company shall furnish the then Holders of outstanding Registrable
Securities with not less than thirty days written notice prior to the proposed
date of filing of such registration statement. Such notice to the Holders
shall continue to be given for each registration statement filed by the
Company until such time as all of the Registrable Securities have been sold by
the Holder. The holders of the Registrable Securities shall exercise the
"piggy-back" rights provided for herein by giving written notice, within
twenty days of the receipt of the Company's notice of its intention to file a
registration statement. The Company shall cause any registration statement
filed pursuant to the above "piggyback" rights to remain effective for at
least nine months from the date that the Holders of the Registrable Securities
are first given the opportunity to sell all of such securities.
5.3. General Terms.
5.3.1. Indemnification. The Company shall indemnify the
Holder(s) of the Registrable Securities to be sold pursuant to any
registration statement hereunder 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 reasonable attorneys'
fees and other 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
Underwriter contained in Section 5 of the Underwriting Agreement between the
Underwriter and the Company, dated the Effective Date. The Holder(s) of the
Registrable Securities to be sold pursuant to such registration statement, and
their successors and assigns, shall severally, and not jointly, indemnify the
Company, against all loss, claim, damage, expense or liability (including all
reasonable attorneys' fees and other 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 information furnished by or on behalf of such Holders, or their
successors or assigns, in writing, for specific inclusion in such registration
statement to the same extent and with the same effect as the provisions
contained in Section 5 of the Underwriting Agreement pursuant to which the
Underwriter has agreed to indemnify the Company.
5.3.2. Exercise of Warrants. Nothing contained in this
Purchase Option shall be construed as requiring the Holder(s) to exercise
their Purchase Options or Warrants prior to or after the initial filing of any
registration statement or the effectiveness thereof.
5.3.3. Exclusivity. 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 5.1 hereof
without the prior written consent of the Majority Holders of the Registrable
Securities.
5.3.4. Documents Delivered to Holders. The Company shall
furnish to each Holder participating in any of the foregoing offerings and to
each underwriter of any such offering, 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 any underwriting
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agreement related thereto), 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. The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to 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.
5.3.5. Underwriting Agreement. The Company shall enter into
an underwriting agreement with the underwriter representing the Holders whose
Registrable Securities are being registered pursuant to this Section 5. Such
underwriter must be reasonably acceptable to the Company. Such agreement shall
be reasonably satisfactory in form and substance to the Company, each Holder
and such underwriter, 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 underwriter. The Holders shall be parties
to any underwriting agreement relating to an underwritten sale of their
Registrable Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriter 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 underwriter except as they may relate
to such Holders, their shares and their intended methods of distribution.
5.3.6. Documents to be Delivered by Xxxxxx(s). Each of the
Holder(s) participating in any of the foregoing offerings shall furnish to the
Company a completed and executed questionnaire provided by the Company
requesting information customarily sought of selling security holders.
6. Adjustments.
6.1. Adjustments to Exercise Price and Number of Securities. The
Exercise Price and the number of shares of Common Stock underlying the
Purchase Option (and underlying the Warrants underlying the Purchase Option)
shall be subject to adjustment from time to time as hereinafter set forth:
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6.1.1. Stock Dividends, Recapitalization, Reclassification,
Split-Ups. If after the date hereof, and subject to the provisions of Section
6.3 below, the number of outstanding shares of Common Stock is increased by a
stock dividend payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common Stock or other
similar event, then, on the effective date thereof, the number of shares of
Common Stock and Warrants issuable on exercise of the Purchase Option shall be
increased in proportion to such increase in outstanding shares; provided,
however, that nothing in this section is intended to provide for adjustment
with respect to the Warrants beyond that provided for in the Warrant Agreement
between the Company and American Stock Transfer & Trust Company. For example,
if the Company declares a two-for-one stock dividend and at the time of such
dividend this Purchase Option is for the purchase of 1,000 shares at $8.80 per
share and 1,000 Warrants at $0.16 per Warrant (each Warrant exercisable for
$5.50 per share), upon effectiveness of the dividend, the Purchase Option will
be adjusted to allow for the purchase of 2,000 shares at $4.40 per share and
2,000 Warrants at $0.08 (each Warrant exercisable for $2.75 per share).
6.1.2. Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 6.3, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification
of shares of Common Stock or other similar event, then, upon the effective
date thereof, the number of shares of Common Stock issuable on exercise of the
Purchase Option and the Warrants underlying the Purchase Option shall be
decreased in proportion to such decrease in outstanding shares.
6.1.3. Adjustments in Exercise Price. Whenever the number of
shares of Common Stock or Warrants upon the exercise of this Purchase Option
is adjusted, as provided in this Section 6.1, the Exercise Price shall be
adjusted (to the nearest cent) by multiplying such Exercise Price immediately
prior to such adjustment by a fraction (x) the numerator of which shall be the
number of shares of Common Stock or Warrants, as the case may be, purchasable
upon the exercise of this Purchase Option immediately prior to such
adjustment, and (y) the denominator of which shall be the number of shares of
Common Stock or Warrants, as the case may be, so purchasable immediately
thereafter.
6.1.4. Replacement of Securities upon Reorganization, etc.
In case of any reclassification or reorganization of the outstanding shares of
Common Stock other than a change covered by Section 6.1.1 hereof or which
solely affects the par value of such shares of Common Stock, or in the case of
any merger or consolidation of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), or in the case of
any sale or conveyance to another corporation or entity of the property of the
Company as an entirety or substantially as an entirety in connection with
which the Company is dissolved, the Holder of this Purchase Option shall have
the right thereafter (until the expiration of the right of exercise of this
Purchase Option) to receive upon the exercise hereof, for the same aggregate
Exercise Price payable hereunder immediately prior to such event, the kind and
amount of shares of stock or other securities or property (including cash)
receivable upon such reclassification, reorganization, merger or
consolidation, or upon a dissolution following any such sale or other
transfer, by a Holder of the number of shares of Common Stock of the Company
obtainable upon exercise of this Purchase Option immediately prior to such
event; and if any reclassification also
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results in a change in shares of Common Stock covered by Section 6.1.1, then
such adjustment shall be made pursuant to Sections 6.1.1, 6.1.3 and this
Section 6.1.4. The provisions of this Section 6.1.4 shall similarly apply to
successive reclassifications, reorganizations, mergers or consolidations,
sales or other transfers.
6.1.5. Changes in Form of Purchase Option. This form of
Purchase Option need not be changed because of any change pursuant to this
Section, and Purchase Options issued after such change may state the same
Exercise Price and the same number of shares of Common Stock and Warrants as
are stated in the Purchase Options initially issued pursuant to this
Agreement. The acceptance by any Holder of the issuance of new Purchase
Options reflecting a required or permissive change shall not be deemed to
waive any rights to a prior adjustment or the computation thereof.
6.2. [Intentionally Omitted]
6.3. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common
Stock or Warrants upon the exercise or transfer of the Purchase Option, nor
shall it be required to issue scrip or pay cash in lieu of any fractional
interests, it being the intent of the parties that all fractional interests
shall be eliminated by rounding any fraction up or down to the nearest whole
number of Warrants, shares of Common Stock or other securities, properties or
rights.
7. 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 exercise of the Purchase Options or the 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 Purchase Options 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 and non-assessable and
not subject to preemptive rights of any stockholder. The Company further
covenants and agrees that upon exercise of the Warrants underlying the
Purchase Options and payment of the respective Warrant exercise price
therefor, all shares of Common Stock and other securities issuable upon such
exercises shall be duly and validly issued, fully paid and non-assessable and
not subject to preemptive rights of any stockholder. As long as the Purchase
Options shall be outstanding, the Company shall use its best efforts to cause
all (i) shares of Common Stock issuable upon exercise of the Purchase Options
and the Warrants, and (ii) the Warrants underlying the Purchase Options to be
listed (subject to official notice of issuance) on all securities exchanges
(or, if applicable on Nasdaq) on which the Common Stock or the Public Warrants
issued to the public in connection herewith are then listed and/or quoted.
8. Certain Notice Requirements.
8.1. Xxxxxx's Right to Receive Notice. Nothing herein shall be
construed as conferring upon the Holders the right to vote or consent or to
receive notice as a stockholder 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 Purchase Options and
their exercise, any of the events described in Section 8.2 shall occur, then,
in one or more of said events, the Company shall give written notice of such
event at least fifteen days prior to the date fixed as a record date or the
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date of closing the transfer books for the determination of the stockholders
entitled to such dividend, distribution, conversion or exchange of securities
or subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of the closing of the transfer books, as the case may be.
8.2. Events Requiring Notice. The Company shall be required to give
the notice described in this Section 8 upon one or more of the following
events: (i) if 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 retained earnings, as indicated by
the accounting treatment of such dividend or distribution on the books of the
Company, or (ii) 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 (iii) 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 shall be proposed.
8.3. Notice of Change in Exercise Price. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send notice to the Holders of such event and change ("Price Notice").
The Price Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company's President and Chief Financial Officer.
8.4. Transmittal of Notices. All notices, requests, consents and
other communications under this Purchase Option shall be in writing and shall
be deemed to have been duly made on the date of delivery if delivered
personally or sent by overnight courier, with acknowledgment of receipt to the
party to which notice is given, or on the fifth day after mailing if mailed to
the party to whom notice is to be given, by registered or certified mail,
return receipt requested, postage prepaid and properly addressed as follows:
(i) if to the registered Holder of the Purchase Option, to the address of such
Holder as shown on the books of the Company, or (ii) if to the Company, to its
principal executive office.
9. Miscellaneous.
9.1. Amendments. The Company and the Underwriter may from time to
time supplement or amend this Purchase Option without the approval of any of
the Holders in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Underwriter may deem
necessary or desirable and which the Company and the Underwriter deem shall
not adversely affect the interest of the Holders. All other modifications or
amendments shall require the written consent of the party against whom
enforcement of the modification or amendment is sought.
9.2. Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Purchase
Option.
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9.3. Entire Agreement. This Purchase Option (together with the other
agreements and documents being delivered pursuant to or in connection with
this Purchase Option) constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof, and supersedes all prior agreements
and understandings of the parties, oral and written, with respect to the
subject matter hereof.
9.4. Binding Effect. This Purchase Option shall inure solely to the
benefit of and shall be binding upon, the Holder and the Company and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or
claim under or in respect of or by virtue of this Purchase Option or any
provisions herein contained.
9.5. Governing Law; Submission to Jurisdiction. This Purchase Option
shall be governed by and construed and enforced in accordance with the laws of
the State of New York, without giving effect to conflict of laws. The Company
hereby agrees that any action, proceeding or claim against it arising out of,
or relating in any way to this Purchase Option shall be brought and enforced
in the courts of the State of New York or of the United States of America for
the Southern District of New York, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives
any objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. Any process or summons to be served upon the Company 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 8 hereof. Such mailing shall be deemed personal service and
shall be legal and binding upon the Company in any action, proceeding or
claim. The Company agrees that the prevailing party(ies) in any such action
shall be entitled to recover from the other party(ies) all of its reasonable
attorneys' fees and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
9.6. Waiver, Etc. The failure of the Company or the Holder to at any
time enforce any of the provisions of this Purchase Option shall not be deemed
or construed to be a waiver of any such provision, nor to in any way affect
the validity of this Purchase Option or any provision hereof or the right of
the Company or any Holder to thereafter enforce each and every provision of
this Purchase Option. No waiver of any breach, non-compliance or
non-fulfillment of any of the provisions of this Purchase Option shall be
effective unless set forth in a written instrument executed by the party or
parties against whom or which enforcement of such waiver is sought; and no
waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
9.7. Execution in Counterparts. This Purchase Option may be executed
in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts has been signed by each of the
parties hereto and delivered to each of the other parties hereto.
IN WITNESS WHEREOF, the Company has caused this Purchase Option to be
signed by its duly authorized officer as of the ____ day of ________, 1997.
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PIVOT RULES, INC.
By:
--------------------------------------
Name: X. Xxxxxxx Xxxxx
Title: Chief Executive Officer
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Form to be used to exercise Purchase Option:
PIVOT RULES, INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Date:_________________, 19__
The undersigned hereby elects irrevocably to exercise the
within Purchase Option and to purchase ____ shares of Common Stock and
Warrants to purchase shares of Common Stock of Pivot Rules, Inc. and hereby
makes payment of $____________ (at the rate of $ per share of Common Stock and
$ per Warrant) in payment of the Exercise Price pursuant thereto. Please issue
the Common Stock and Warrants as to which this Purchase Option is exercised in
accordance with the instructions given below.
or
The undersigned hereby elects irrevocably to exercise the
within Purchase Option and to purchase shares of Common Stock and Warrants to
purchase ___________ shares of Common Stock of Pivot Rules, Inc. by surrender
of the unexercised portion of the within Purchase Option (with a "Value" of $
based on a "Market Price" of $ ). Please issue the Common Stock and Warrants
comprising the Securities in accordance with the instructions given below.
-------------------------------
Signature
------------------------------
Signature Guaranteed
NOTICE: THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE WITHIN PURCHASE OPTION IN EVERY
PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND
MUST BE GUARANTEED BY A BANK, OTHER THAN A SAVINGS BANK, OR BY A TRUST COMPANY
OR BY A FIRM HAVING MEMBERSHIP ON A REGISTERED NATIONAL SECURITIES EXCHANGE.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name
------------------------------------------------------------
(Print in Block Letters)
Address
------------------------------------------------------------
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Form to be used to assign Purchase Option:
ASSIGNMENT
(To be executed by the registered Holder to effect a
transfer of the within Purchase Option):
FOR VALUE RECEIVED,____________________________________ does
hereby sell, assign and transfer unto _______________________________ the
right to purchase _______________________ shares of Common Stock and/or
Warrants to purchase _______________________ shares of Common Stock of Pivot
Rules, Inc. ("Company") evidenced by the within Purchase Option and does
hereby authorize the Company to transfer such right on the books of the
Company.
Dated:___________________, 19__
------------------------------
Signature
NOTICE: THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE WITHIN PURCHASE OPTION IN EVERY
PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
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