Option to Purchase
________Units
PARADIGM MUSIC ENTERTAINMENT COMPANY
Unit Purchase Option
Dated: ___________, 1997.
THIS CERTIFIES THAT _________________________ (herein
sometimes called the "Holder") is entitled to purchase from PARADIGM MUSIC
ENTERTAINMENT COMPANY, a Delaware corporation (hereinafter called the
"Company"), at the prices and during the periods as hereinafter specified, up to
_______ (_______) Units ("Units"), each Unit consisting of one share of the
Company's Class A Common Stock, $.01 par value, as now constituted ("Class A
Common Stock"), one Class A warrant ("Class A Warrants") and one Class B warrant
("Class B Warrants"). Each Class A Warrant is exercisable to purchase one share
of Class A Common Stock and one Class B Warrant at an exercise price of $6.50
from _______, 1998 to _______ , 2002, and each Class B Warrant is exercisable to
purchase one share of Class A Common Stock at an exercise price of $8.75 until
_______, 2002. The Class A Warrants and Class B Warrants are herein collectively
referred to as the "Warrants."
The Units have been registered under a Registration
Statement on Form SB-2, (File No. 333-_______) declared effective by the
Securities and Exchange Commission on _______, 1997 (the "Registration
Statement"). This Option, together with options of like tenor, constituting in
the aggregate options (the "Options") to purchase ________ Units, subject to
adjustment in accordance with Section 8 of this Option (the "Option Units"), was
originally issued pursuant to an underwriting agreement between the Company and
X.X. XXXXX INVESTMENT BANKING CORP., as underwriter (the "Underwriter") in
connection with a public offering (the "Offering") of 2,600,000 Units (the
"Public Units") through the Underwriter, in consideration of $_______ received
for the Options.
Except as specifically otherwise provided herein, the
Class A Common Stock and the Warrants issued pursuant to the option herein
granted (the "Option") shall bear the same terms and conditions as described
under the caption "Description of Securities" in the Registration Statement, and
the Warrants shall be governed by the terms of the Warrant Agreement dated as of
_______, 1997 executed in connection with such public offering (the "Warrant
Agreement"), except that (i) the Holder shall have registration rights under the
Securities Act of 1933, as amended (the "Act"), for the Option, the Class A
Common Stock and the Warrants included in the Option Units, and the shares of
Class A Common Stock underlying the Warrants, as more fully described in Section
6 of this Option and (ii) the Warrants issuable upon exercise of the Option will
not be subject to redemption by the Company. The Company will list the Class A
Common Stock underlying this Option and, at the Holder's request the Warrants,
on the Nasdaq Small Cap Market or such other exchange or market as the Class A
Common Stock or the Warrants included in the Public options (the "Public
Warrants") may then be listed or quoted. In the event of any extension of the
expiration date or reduction of the exercise price of the Public Warrants, the
same changes to the Warrants included in the Option Units shall be
simultaneously effected.
1. The rights represented by this Option shall be
exercised at the prices, subject to adjustment in accordance with Section 8 of
this Option (the "Exercise Price"), and during the periods as follows:
(a) During the period from _______, 1997
to _______, 1999 inclusive, the Holder shall have
no right to purchase any Option Units hereunder,
except that in the event of any merger,
consolidation or sale of all or substantially all
the capital stock or assets of the Company or in
the case of any statutory exchange of securities
with another corporation (including any exchange
effected in connection with a merger of another
corporation into the Company) subsequent to
_______, 1997, the Holder shall have the right to
exercise this Option and the Warrants included
herein at such time and receive the kind and
amount of shares of stock and other securities
and property (including cash) which a holder of
the number of shares of Class A Common Stock
underlying this Option and the Warrants included
in this Option would have owned or been entitled
to receive had this Option been exercised
immediately prior thereto.
(b) Between _______, 1999 and _______,
2002 inclusive, the Holder shall have the option
to purchase Option Units hereunder at a price of
$_______ per Unit.
(c) After _________, 2002 the Holder
shall have no right to purchase any Units
hereunder.
2. (a) The rights represented by this Option may be
exercised at any time within the period above specified, in whole or in part, by
(i) the surrender of this Option (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); and (ii) payment to the Company of the exercise price then in effect
for the number of Option Units specified in the above-mentioned purchase form
together with applicable stock transfer taxes, if any. This Option shall be
deemed to have been exercised, in whole or in part to the extent specified,
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immediately prior to the close of business on the date this Option is
surrendered and payment is made in accordance with the foregoing provisions of
this Section 2, and the person or persons in whose name or names the
certificates for shares of Class A Common Stock and Warrants shall be issuable
upon such exercise shall become the holder or holders of record of such Class A
Common Stock and Warrants at that time and date. The certificates for the Class
A Common Stock and Warrants so purchased shall be delivered to the Holder as
soon as practicable but not later than ten (10) days after the rights
represented by this Option shall have been so exercised.
(b) At any time during the period above
specified, during which this Option may be exercised, the Holder may, at its
option, exchange this Option, in whole or in part (an "Option Exchange"), into
the number of Option Units determined in accordance with this Section (b), by
surrendering this Option at the principal office of the Company or at the office
of its stock transfer agent, accompanied by a notice stating such Xxxxxx's
intent to effect such exchange, the number of Option Units into which this
Option is to be exchanged and the date on which the Holder requests that such
Option Exchange occur (the "Notice of Exchange"). The Option Exchange shall take
place on the date specified in the Notice of Exchange or, if later, the date the
Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the shares of Class A Common Stock and Warrants issuable upon
such Option Exchange and, if applicable, a new Option of like tenor evidencing
the balance of the Option Units remaining subject to this Option, shall be
issued as of the Exchange Date and delivered to the Holder within seven (7) days
following the Exchange Date. In connection with any Option Exchange, this Option
shall represent the right to subscribe for and acquire the number of Option
Units (rounded to the next highest integer) equal to (x) the number of Option
Units specified by the Holder in its Notice of Exchange up to the maximum number
of Option Units subject to this option (the "Total Number") less (y) the number
of Option Units equal to the quotient obtained by dividing (A) the product of
the Total Number and the existing Exercise Price by (B) the Fair Market Value.
"Fair Market Value" shall mean first, if there is a trading market as indicated
in Subsection (i) below for the Units, such Fair Market Value of the Units and
if there is no such trading market in the Units, then Fair Market Value shall
have the meaning indicated in Subsections (ii) through (v) below for the
aggregate value of all shares of Class A Common Stock and Warrants which
comprise a Unit:
(i) If the Units are listed on a national
securities exchange or listed or admitted to unlisted
trading privileges on such exchange or listed for trading
on the Nasdaq National Market or the Nasdaq Small Cap
Market, the Fair Market Value shall be the average of the
last reported sale prices or the average of the means of
the last reported bid and asked prices, respectively, of
the Units on such exchange or market for the twenty (20)
business days ending on the last business day prior to the
Exchange Date; or
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(ii) If the Class A Common Stock or Warrants are
listed on a national securities exchange or admitted to
unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market or the Nasdaq Small
Cap Market, the Fair Market Value shall be the average of
the last reported sale prices or the average of the means
of the last reported bid and asked prices, respectively,
of Class A Common Stock or Warrants, respectively, on such
exchange or market for the twenty (20) business days
ending on the last business day prior to the Exchange
Date; or
(iii) If the Class A Common Stock or Warrants are
not so listed or admitted to unlisted trading privileges,
the Fair Market Value shall be the average of the means of
the last reported bid and asked prices of the Class A
Common Stock or Warrants, respectively, for the twenty
(20) business days ending on the last business day prior
to the Exchange Date; or
(iv) If the Class A Common Stock is not so listed
or admitted to unlisted trading privileges and bid and
asked prices are not so reported, the Fair Market Value
shall be an amount, not less than book value thereof as at
the end of the most recent fiscal year of the Company
ending prior to the Exchange Date, determined in such
reasonable manner as may be prescribed by the Board of
Directors of the Company; or
(v) If the Warrants are not so listed or admitted
to unlisted trading privileges, and bid and asked prices
are not so reported for Warrants, then Fair Market Value
for the Warrants shall be an amount equal to the
difference between (i) the Fair Market Value of the shares
of Class A Common Stock and Warrants which may be received
upon the exercise of the Warrants, as determined herein,
and (ii) [the Warrant Exercise Price].
3. Neither this Option nor the underlying securities shall
be transferred, sold, assigned, or hypothecated for a period of two years
commencing from the date hereof except that they may be transferred to
successors of the Holder, and may be assigned in whole or in part to any person
who is an officer of the Holder, any member participating in the selling group
relating to the Offering or any officer of such selling group member. Any such
assignment shall be effected by the Holder (i) executing the form of assignment
at the end hereof and (ii) surrendering this Option for cancellation at the
office or agency of the Company referred to in Section 2 hereof, accompanied by
a certificate (signed by an officer of the Holder if the Holder is a
corporation), stating that each transferee is a permitted transferee under this
Section 3 hereof; whereupon the Company shall issue, in the name or names
specified by the Holder (including the Holder) a new Option or Options of like
tenor and representing in the aggregate rights to purchase the same number of
Option Units as are purchasable hereunder.
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4. The Company covenants and agrees that all shares of
Class A Common Stock which may be issued as part of the Option Units purchased
hereunder and the Class A Common Stock which may be issued upon exercise of the
Warrants will, upon issuance, be duly and validly issued, fully paid and
nonassessable and no personal liability will attach to the holder thereof. The
Company further covenants and agrees that during the periods within which this
Option may be exercised, the Company will at all times have authorized and
reserved a sufficient number of shares of its Class A Common Stock to provide
for the exercise of this Option and that it will have authorized and reserved a
sufficient number of shares of Class A Common Stock for issuance upon exercise
of the Warrants included in the Option Units.
5. This Option shall not entitle the Holder to any voting
rights or any other rights, or subject to the Holder to any liabilities, as a
stockholder of the Company.
6. (a) The Company shall advise the Holder or its
transferee, whether the Holder holds the Option or has exercised the Option and
holds Option Units or any of the securities underlying the Option Units, by
written notice at least four weeks prior to the filing of any post-effective
amendment to the Registration Statement or of any new registration statement or
post-effective amendment thereto under the Act covering any securities of the
Company, for its own account or for the account of others, and will for a period
of seven years from the effective date of the Registration Statement, upon the
request of the Holder, include in any such post-effective amendment or
registration statement, such information as may be required to permit a public
offering of the Option, all or any of the Option Units, the Class A Common Stock
or Warrants included in the Option Units or the Class A Common Stock issuable
upon the exercise of the Warrants (the "Registrable Securities"); provided,
however, the right of any Holder to include its Registrable Securities in any
such post-effective amendment or registration statement may be waived by the
written consent of X.X. Xxxxx Investment Banking Corp., X.X. Xxxxx & Co. Inc. or
X. Xxxxxx Xxxxx.
(b) If any 50% holder (as defined below) [or X.X.
Xxxxx Investment Banking Corp., if applicable] shall give notice to the Company
at any time to the effect that such holder desires to register under the Act
this Option, the Option Units or any of the underlying securities contained in
the Option Units under such circumstances that a public distribution (within the
meaning of the Act) of any such securities will be involved then the Company
will promptly, but no later than two weeks after receipt of such notice, file a
post-effective amendment to the current Registration Statement or a new
registration statement on Form S-1 or such other form as the holder requests
pursuant to the Act, to the end that the Option, the Option Units and/or any of
the securities underlying the Option Units may be publicly sold under the Act as
promptly as practicable thereafter and the Company will use its best efforts to
cause such registration to become and remain effective (including the taking of
such steps as are necessary to obtain the removal of any stop order); provided,
that such holder shall furnish the Company with appropriate information in
connection therewith as the Company may reasonably request in writing. The 50%
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holder [or X.X. Xxxxx Investment Banking Corp., if applicable] may, at its
option, request the filing of a post-effective amendment to the current
Registration Statement or a new registration statement under the Act on two
occasions during the three year period beginning two years from the effective
date of the Registration Statement. The Holder may, at its option request the
registration of the Option and/or any of the securities underlying the Option in
a registration statement made by the Company as contemplated by Section 6(a) or
in connection with a request made pursuant to this Section 6(b) prior to
acquisition of the Option Units issuable upon exercise of the Option and even
though the Holder has not given notice of exercise of the Option. The 50% holder
[or X.X. Xxxxx Investment Banking Corp., if applicable] may, at its option,
request such post-effective amendment or new registration statement during the
described period with respect to the Option, the Option Units as a unit, or
separately as to the Class A Common Stock and/or Warrants included in the Option
Units and/or the Class A Common Stock issuable upon the exercise of the
Warrants, and such registration rights may be exercised by the 50% holder [or
X.X. Xxxxx Investment Banking Corp., if applicable] prior to or subsequent to
the exercise of the Option.
Within ten days after receiving any such notice pursuant
to this Section 6(b), the Company shall give notice to the other holders of the
Options, advising that the Company is proceeding with such post-effective
amendment or registration statement and offering to include therein the
securities underlying the Options of the other holders, provided that they shall
furnish the Company with such appropriate information (relating to the
intentions of such holders) in connection therewith as the Company shall
reasonably request in writing. In the event the registration statement is not
filed within the period specified herein and in the event the registration
statement is not declared effective under the Act prior to ________, 2002, then,
at the holders' request, the Company shall purchase the Options from the holder
for a per option price equal to the difference between (i) the Fair Market Value
of the Class A Common Stock on the date of notice multiplied by the number of
shares of Class A Common Stock issuable upon exercise of the Option and the
underlying Warrants and (ii) the average per share purchase price of the Option
and each share of Class A Common Stock underlying the Option. All costs and
expenses of the post-effective amendment or new registration statement under
this paragraph 6(b) shall be borne by the Company, except that the holders shall
bear the fees of their own counsel and any underwriting discounts or commissions
applicable to any of the securities sold by them. If the Company determines to
include securities to be sold by it in any registration statement originally
requested pursuant to this Section 6(b), such registration shall instead be
deemed to have been a registration under Section 6(a) and not under this Section
6(b).
The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at least six
months (and for up to an additional three months if requested by the Holder)
from the effective date thereof.
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(c) The term "50% holder" as used in this Section
6 shall mean the holder of at least 50% of the Class A Common Stock and the
Warrants underlying the Options (considered in the aggregate) and shall include
any owner or combination of owners of such securities, which ownership shall be
calculated by determining the number of shares of Class A Common Stock held by
such owner or owners as well as the number of shares then issuable upon exercise
of the Warrants.
(d) Whenever pursuant to Section 6 a registration
statement relating to any Registrable Securities is filed under the Act, amended
or supplemented, the Company shall (i) supply prospectuses and such other
documents as the Holder may request in order to facilitate the public sale or
other disposition of the Registrable Securities, (ii) use its best efforts to
register and qualify any of the Registrable Securities for sale in such states
as such Holder designates, (iii) furnish indemnification in the manner provided
in Section 7 hereof, (iv) notify each Holder of Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and, at the request of any such Holder, prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not included an
untrue statement of a material fact or omit to state material fact required to
be stated therein or necessary to make the statements therein not misleading and
(v) do any and all other acts and things which may be necessary or desirable to
enable such Holders to consummate the public sale or other disposition of the
Registrable Securities, The Holder shall furnish appropriate information in
connection therewith and indemnification as set forth in Section 7.
(e) 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 6(b) hereof without the prior
written consent of the 50% holder [or X.X. Xxxxx Investment Banking Corp., if
applicable].
(f) 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
(or, if such registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and (ii) if
such registration includes an underwritten public offering, a "cold comfort"
letter dated the effective date of such registration statement and 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
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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.
(g) The Company shall 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 reasonable
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such investigation shall
include access to non-confidential 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
as any such Holder shall reasonably request.
7. (a) Whenever pursuant to Section 6 a registration
statement (as amended or supplemented) relating to the Registrable Securities is
filed under the Act, the Company will indemnify and hold harmless each holder of
the Registrable Securities covered by such registration statement, amendment or
supplement (such holder being hereinafter called the "Distributing Holder"), and
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the meaning of the
Act) any such underwriter, against any losses, claims, damages or liabilities,
joint or several, to which the Distributing Holder, any such controlling person
or any such underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse the Distributing
Holder and each such controlling person and underwriter for any legal or other
expenses reasonably incurred by the Distributing Holder or such controlling
person or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder specifically for use in the
preparation thereof.
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(b) If requested by the Company prior to the
filing of any registration statement covering the Registrable Securities, each
Distributing Holder will agree, severally but not jointly, to indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue
or alleged untrue statement of any material fact contained in said registration
statement, said preliminary prospectus, said final prospectus, or said amendment
or supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in said registration
statement, said preliminary prospectus, said final prospectus or said amendment
or supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder specifically for use in the preparation
thereof; except that the maximum amount which may be recovered from the
Distributing Holder pursuant to this Section 7 or otherwise shall be limited to
the amount of net proceeds received by the Distributing Holder from the sale of
the Registrable Securities.
(c) Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section 7.
(d) In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(8) In addition to the provisions of Section 1(a) of this
Option, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of the Options shall be subject to
adjustment from time to time upon the happening of certain events as follows:
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(a) In case the Company shall (i) declare a
dividend or make a distribution on its outstanding shares
of Class A Common Stock in shares of Class A Common Stock,
(ii) subdivide or reclassify its outstanding shares of
Class A Common Stock into a greater number of shares, or
(iii) combine or reclassify its outstanding shares of
Class A Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date
for such dividend or distribution or of the effective date
of such subdivision, combination or reclassification shall
be adjusted so that it shall equal the price determined by
multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of
Class A Common Stock outstanding after giving effect to
such action, and the numerator of which shall be the
number of shares of Class A Common Stock outstanding
immediately prior to such action. Such adjustment shall be
made successively whenever any event listed above shall
occur.
(b) Whenever the Exercise Price payable upon
exercise of each Option is adjusted pursuant to Subsection
(a) above, (i) the number of shares of Class A Common
Stock included in an Option Unit shall simultaneously be
adjusted by multiplying the number of shares of Class A
Common Stock included in Option Unit immediately prior to
such adjustment by the Exercise Price in effect
immediately prior to such adjustment and dividing the
product so obtained by the Exercise Price, as adjusted and
(ii) the number of shares of Class A Common Stock or other
securities issuable upon exercise of the Warrants included
in the Option Units and the exercise price of such
Warrants shall be adjusted in accordance with the
applicable terms of the Warrant Agreement.
(c) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase
or decrease of at least five cents ($0.05) in such price;
provided, however, that any adjustments which by reason of
this Subsection (c) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations
under this Section 8 shall be made to the nearest cent or
to the nearest one-hundredth of a share, as the case may
be. Anything in this Section 8 to the contrary
notwithstanding, the Company shall be entitled, but shall
not be required, to make such changes in the Exercise
Price, in addition to those required by this Section 8, as
it shall determine, in its sole discretion, to be
advisable in order that any dividend or distribution in
shares of Class A Common Stock, or any subdivision,
reclassification or combination of Class A Common Stock,
hereafter made by the Company shall not result in any
Federal Income tax liability to the holders of Class A
Common Stock or securities convertible into Class A Common
Stock (including Warrants issuable upon exercise of this
Option).
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(d) Whenever the Exercise Price is adjusted, as
herein provided, the Company shall promptly but no later
than 10 days after any request for such an adjustment by
the Holder, cause a notice setting forth the adjusted
Exercise Price and adjusted number of Option Units
issuable upon exercise of each Option and, if requested,
information describing the transactions giving rise to
such adjustments, to be mailed to the Holders, at the
address set forth herein, and shall cause a certified copy
thereof to be mailed to its transfer agent, if any. The
Company may retain a firm of independent certified public
accountants selected by the Board of Directors (who may be
the regular accountants employed by the Company) to make
any computation required by this Section 8, and a
certificate signed by such firm shall be conclusive
evidence of the correctness of such adjustment.
(e) In the event that at any time, as a result of
an adjustment made pursuant to Subsection (a) above, the
Holder of this Option thereafter shall become entitled to
receive any shares of the Company, other than Class A
Common Stock, thereafter the number of such other shares
so receivable upon exercise of this Option shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the
provisions with respect to the Class A Common Stock
contained in Subsections (a) through (d), inclusive above.
(f) In case any event shall occur as to which the
other provisions of this Section 8 or Section 1(a) hereof
are not strictly applicable but as to which the failure to
make any adjustment would not fairly protect the purchase
rights represented by this Option in accordance with the
essential intent and principles hereof then, in each such
case, the Holders of Options representing the right to
purchase a majority of the Option Units may appoint a firm
of independent public accountants reasonably acceptable to
the Company, which shall give their opinion as to the
adjustment, if any, on a basis consistent with the
essential intent and principles established herein,
necessary to preserve the purchase rights represented by
the Options. Upon receipt of such opinion, the Company
will promptly mail a copy thereof to the Holder of this
Option and shall make the adjustments described therein.
The fees and expenses of such independent public
accountants shall be borne by the Company.
9. This Agreement shall be governed by and in accordance
with the laws of the State of New York, without giving effect to the principles
of conflicts of law thereof.
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IN WITNESS WHEREOF, the Company has caused this Option
to be signed by its duly authorized officers under its corporate seal, and this
Option to be dated ____________, 1997.
PARADIGM MUSIC ENTERTAINMENT
COMPANY
By:
---------------------------------------
Name:
Title:
(Corporate Seal)
Attest:
----------------------------
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PURCHASE FORM
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(To be signed only upon exercise of option)
The undersigned, the holder of the foregoing Option,
hereby irrevocably elects to exercise the purchase rights represented by such
Option for, and to purchase thereunder, _______ Units of PARADIGM MUSIC
ENTERTAINMENT COMPANY (the "Company"), each Unit consisting of one share of
Class A Common Stock, $.01 par value, of the Company, one Class A Warrant to
purchase one share of Class A Common Stock and one Class B Warrant, and one
Class B Warrant and herewith makes payment of $_________ thereof
Dated: , 19 .
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Instructions for Registration of Stock
and Warrants
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Print Name
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Address
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Signature
OPTION EXCHANGE
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The undersigned, pursuant to the provisions of the
foregoing Option, hereby elects to exchange its Option for _________ Units of
PARADIGM MUSIC ENTERTAINMENT COMPANY (the "Company"), each Unit consisting of
one share of Class A Common Stock, $.01 par value, of the Company, one Class A
Warrant to purchase one share of Class A Common Stock and one Class B Warrant,
and one Class B Warrant, pursuant to the Option Exchange provisions of the
Option.
Dated: , 19 .
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Print Name
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Address
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Signature
TRANSFER FORM
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(To be signed only upon transfer of the Option)
For value received, the undersigned hereby sells, assigns,
and transfers unto the right to purchase Units represented by the foregoing
Option to the extent of Units , and appoints _____________ attorney to transfer
such rights on the books of PARADIGM MUSIC ENTERTAINMENT COMPANY, with full
power of substitution in the premises.
Dated: , 19 .
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[HOLDER]
By:
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Address
In the presence of:
