Option to Purchase
120,000 Shares
ECOMAT, INC.
PURCHASE OPTION
Dated: , 1996
THIS CERTIFIES that PATTERSON TRAVIS, INC., 12835 E. Arapahoe
RD #2 Ste 800, Englewood, CO 80112-6728 (hereinafter sometimes
referred to as the "Holder"), is entitled to purchase from Ecomat,
Inc., a Delaware corporation (hereinafter referred to as the
"Company"), at the prices and during the periods as hereinafter
specified, up to 120,000 shares of Common Stock, $.0001 par value, as
now constituted ("Common Stock" or "Shares").
The Shares have been registered under a Registration
Statement on Form SB-2 (File No. 333-1524) declared effective by the
Securities and Exchange Commission on , 1996 (the "Registration
Statement"). This Option (the "Option") to purchase 120,000 Shares(the
"Option Shares") was originally issued pursuant to an underwriting
agreement between the Company and Patterson Travis, Inc., as
underwriter (the "Underwriter"), in connection with a public offering
of 1,200,000 Shares (the "Public Shares") through the Underwriter, in
consideration of $.001 per Option Share.
Except as specifically otherwise provided herein, the Common
Stock issued pursuant to this Option shall bear the same terms and
conditions as described under the caption "Description of Securities"
in the Registration Statement, and except that the holder shall have
registration rights under the Securities Act of 1933, as amended (the
"Act"), for the Option, and the Common Stock, as more fully described
in paragraph 6 of this Option.
1. The rights represented by this Option shall be exercised
at the prices, subject to adjustment in accordance with paragraph
8 of this Option, and during the periods as follows:
(a) Between , 1997 and , 2001, inclusive,
the Holder shall have the option to purchase Shares hereunder at a price of
$6.00 per Share (subject to adjustment pursuant to paragraph 8 hereof) (the
"Exercise Price").
(b) After , 2001 (five (5) years from the
Effective Date), the Holder shall have no right to purchase any
Shares hereunder.
2. 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); (ii) payment to the
Company of the Exercise Price then in effect for the number of Shares
specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) delivery to the
Company of a duly executed agreement signed by the person(s)'
designated in the purchase form to the effect that such person(s)
agree(s) to be bound by the provisions of paragraph 6 and
subparagraphs (b), (c) and (d) of paragraph 7 hereof. This Option
shall be deemed to have been exercised, in whole or in part to the
extent specified, 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 paragraph 2, and the person or
persons in whose name or names the certificates for shares of Common
Stock shall be issuable upon such exercise shall become the holder or
holders of record of such Common Stock at that time and date. The
Common Stock and the certificates for the Common Stock so purchased
shall be delivered to the Holder within a reasonable time, not
exceeding ten (10) days, after the rights represented by this Option
shall have been so exercised.
3. For a period of one (1) year from the Effective Date, this
Option shall not be transferred, sold, assigned, or hypothecated,
except that it 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 during such period. Any such assignment shall be effected by
the Holder (i) executing the form
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of assignment at the end hereof and (ii) surrendering this Option for
cancellation at the office or agency of the Company referred to in
paragraph 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 paragraph 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 Shares as are purchasable hereunder.
4. The Company covenants and agrees that all shares of Common
Stock which may be issued hereunder 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 Common Stock to provide
for the exercise of this Option.
5. This Option shall not entitle the Holder to any voting,
dividend, or other rights as a stockholder of the Company.
6. (a) During the period set forth in paragraph l(a) hereof,
the Company shall advise the Holder or its transferee, whether the
Holder holds the Option or has exercised the Option and holds Shares,
by written notice at least 30 days 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 (other than a registration statement on Form S-4
or S-8 or any successor forms thereto), and will for a period of seven
(7) 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
Shares underlying the Option, or the Common Stock (the "Registrable
Securities"). The Company shall 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, use its
reasonable efforts to register and qualify any of the Registrable
Securities for sale in such states as such Holder designates provided
that the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or
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execute a general consent to service of process in any jurisdiction in
any action and do any and all other acts and things which may be
reasonably necessary or desirable to enable such Holders to consummate
the public sale or other disposition of the Registrable Securities,
and furnish indemnification in the manner provided in paragraph 7
hereof. The Holder shall furnish information and indemnification as
set forth in paragraph 7 except that the maximum amount which may be
recovered from the Holder shall be limited to the amount of proceeds
received by the Holder from the sale of the Registrable Securities.
The Company shall use its best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to
permit the holders of Registrable Securities requested to be included
in the registration to include such securities in such underwritten
offering on the same terms and conditions as any similar securities of
the Company included therein. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such offering advises the
holders of Registrable Securities that the total amount of securities
which they intend to include in such offering is such as to materially
and adversely affect the success of such offering, then the amount of
securities to be offered for the accounts of holders of Registrable
Securities shall be eliminated, reduced, or limited to the extent
necessary to reduce the total amount of securities to be included in
such offering to the amount, if any, recommended by such managing
underwriter or underwriters (any such reduction or limitation in the
total amount of Registrable Securities to be included in such offering
to be borne by the holders of Registrable Securities proposed to be
included therein pro rata). The Holder will pay its own legal fees and
expenses and any underwriting discounts and commissions on the
securities sold by such Holder and shall not be responsible for any
other expenses of such registration.
(b) If any 50% holder (as defined below) shall give
notice to the Company at any time during the period set forth in
paragraph l(a) hereof to the effect that such holder desires to
register under the Act this Option, or the Shares, 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 45 days after receipt of such notice, file
a post-effective amendment to the current Registration Statement or a
new registration statement pursuant to the Act, to the end that the
Option, or the Shares may be publicly sold under the Act as promptly
as practicable thereafter and the Company will
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use its best efforts to cause such registration to become and remain
effective for a period of 120 days (including the taking of such steps
as are reasonably 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% holder (which for purposes hereof shall
mean any direct or indirect transferee of such holder) 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 with respect to the Registrable Securities on only one
occasion during the term of this Option. 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 Shares
issuable upon exercise of the Option and even though the Holder has
not given notice of exercise of the Option. The 50% holder may, at its
option, request such post-effective amendment or new registration
statement during the described period with respect to the Option, or
separately as to the Common Stock and such registration rights may be
exercised by the 50% holder prior to or subsequent to the exercise of
the Option. Within ten business days after receiving any such notice
pursuant to this subsection (b) of paragraph 6, 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. Each holder electing to include its
Registrable Securities in any such offering shall provide written
notice to the Company within twenty (20) days after receipt of notice
from the Company. The failure to provide such notice to the Company
shall be deemed conclusive evidence of such holder's election not to
include its Registrable Securities in such offering. Each holder
electing to include its Registrable Securities 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. All costs and expenses of the first
such post-effective amendment or new registration statement 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.
In addition to the rights granted to 50% holders
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pursuant to this section 6(b), any holder(s) shall have such rights,
however, all expenses shall be borne by such holder(s).
The Company shall be entitled to postpone the filing
of any registration statement pursuant to this Section 6(b) otherwise
required to be prepared and filed by it if (i) the Company is engaged
in a material acquisition, reorganization, or divestiture, (ii) the
Company is currently engaged in a self-tender or exchange offer and
the filing of a registration statement would cause a violation of Rule
10b-6 under the Securities Exchange Act of 1934, (iii) the Company is
engaged in an underwritten offering and the managing underwriter has
advised the Company in writing that such a registration statement
would have a material adverse effect on the consummation of such
offering or (iv) the Company is subject to an underwriter's lock-up as
a result of an underwritten public offering and such underwriter has
refused in writing, the Company's request to waive such lock-up. In
the event of such postponement, the Company shall be required to file
the registration statement pursuant to this Section 6(b), within 60
days of the consummation of the event requiring such postponement.
The Company will use its best efforts to 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. The Company shall supply prospectuses, and such other
documents as the Holder may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities,
use its best efforts to register and qualify any of the Registrable
Securities for sale in such states as such holder designates, provided
that the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or execute a general consent to
service of process in any jurisdiction in any action and furnish
indemnification in the manner provided in paragraph 7 hereof. The
demand registration rights granted hereunder will expire no later than
five (5) years from the effective date of this offering.
(c) The term "50% holder" as used in this paragraph
6 shall mean the holder of more than 50% of the Common Stock
(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 Common Stock held by
such owner or owners.
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7. (a) Whenever pursuant to paragraph 6 a registration
statement relating to the Option or any shares issued or issuable upon
the exercise of any Options, is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each holder
of the 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) which 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 which 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 or any other Distributing Holder, for use in the preparation
thereof.
(b) The Distributing Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who
have signed said registration statement and such amendments and
supplements thereto, each person, if any, who controls the Company
(within the meaning of the Act) against any losses, claims, damages,
or liabilities, joint and several, to which the Company or any such
director, officer, or controlling person may become subject, under the
Act or otherwise, insofar as such losses,
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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 for use in the preparation thereof; and will reimburse the
Company or any such director, officer, or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or
action.
(c) Promptly after receipt by an indemnified party
under this paragraph 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 Paragraph 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 paragraph 7 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof.
8. The Exercise Price in effect at any time and the number
and kind of securities purchasable upon the exercise of this Option
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 Common Stock in
shares of Common Stock, (ii) subdivide or reclassify its outstanding
shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify its outstanding shares of 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 Common Stock outstanding after giving effect
to such action, and the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such action.
(b) In case the Company shall fix a record date for
the issuance of rights or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price (the
"Subscription Price") (or having a conversion price per share) less
than the current market price of the Common Stock (as defined in
Subsection (e) below) on the record date mentioned below, the Exercise
Price shall be adjusted so that the same shall equal the price
determined by multiplying the number of shares then comprising an
Option Share by the product of the Exercise Price in effect
immediately prior to the date of such issuance multiplied by a
fraction, the numerator of which shall be the sum of the number of
shares of Common Stock outstanding on the record date mentioned below
and the number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible
securities so offered) would purchase at such current market price per
share of the Common Stock, and the denominator of which shall be the
sum of the number of shares of Common Stock outstanding on such record
date and the number of additional shares of Common Stock offered for
subscription or purchase (or into which the convertible securities so
offered are convertible). Such adjustment shall be made successively
whenever such rights or warrants are issued and shall become effective
immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants; and to the
extent that shares of Common Stock are not delivered (or securities
convertible into Common Stock are not delivered) after the expiration
of such rights or warrants the Exercise Price shall be readjusted to
the Exercise
9
Price which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute
to the holders of its Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions and-dividends or
distributions referred to in Subsection (a) above) or subscription
rights or warrants (excluding those referred to in Subsection (b)
above), then in each such case the Exercise Price in effect thereafter
shall be determined by multiplying the number of shares then
comprising an Option Share by the product of the Exercise Price in
effect immediately prior thereto multiplied by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding multiplied by the current market price per share of Common
Stock (as defined in Subsection (e) below), less the fair market value
(as determined by the Company's Board of Directors) of said assets or
evidences of indebtedness so distributed or of such rights or
warrants, and the denominator of which shall be the total number of
shares of Common Stock outstanding multiplied by such current market
price per share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Such adjustment
shall be made whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(d) Whenever the Exercise Price payable upon
exercise of this Option is adjusted pursuant to Subsections (a), (b)
or (c) above, the number of Option Shares purchasable upon exercise of
this Option shall simultaneously be adjusted by multiplying the number
of Option Shares initially issuable upon exercise of this Option by
the Exercise Price in effect on the date hereof and dividing the
product so obtained by the Exercise Price, as adjusted.
(e) For the purpose of any computation under
Subsections (b) or (c)above, the current market price per share of
Common Stock at any date shall be deemed to be the average of the
daily closing prices for 20 consecutive business days before such
date. The closing price for each day shall be the last sale price
regular way
10
or, in case no such reported sale takes place on such day, the average
of the last reported bid and asked prices regular way, in either case
on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or admitted
to trading on such exchange, the average of the highest reported bid
and lowest reported asked prices as reported by NASDAQ, or other
similar organization if NASDAQ is no longer reporting such
information, or if not so available, the fair market price as
determined by the Board of Directors.
(f) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or decrease
of at least ten cents ($0.10) in such price; provided, however, that
any adjustments which by reason of this Subsection (f) 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 Common Stock, or any
subdivision, reclassification or combination of Common Stock,
hereafter made by the Company shall not result in any Federal Income
tax liability to the holders of Common Stock or securities convertible
into Common Stock.
(g) 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 Shares issuable upon exercise of this Option and, if requested,
information describing the transactions giving rise to such
adjustments, to be mailed to the Holder, 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.
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(h) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (a) above, the Holder
thereafter shall become entitled to receive any shares of the Company,
other than 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 Common Stock
contained in Subsections (a) to (f), inclusive above.
9. This Agreement shall be governed by and in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, Ecomat, Inc. has caused this Option to be
signed by its duly authorized officers under its corporate seal, and
this Option to be dated _____________________, 1996.
ECOMAT, INC.
By: _________________________
Its
(Corporate Seal)
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PURCHASE FORM
(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,
Shares of Ecomat, Inc., and herewith makes payment of
$______________ therefor, and requests that the certificates for
shares of Common Stock be issued in the name(s) of, and delivered to
________________________ whose address(es) is
(are)_________________________________________.
Dated:
TRANSFER FORM
(To be signed only upon transfer of the Option)
For value received, the undersigned hereby sells, assigns,
and transfers unto _________________________________ the right to
purchase Shares represented by the foregoing Option to the extent of
_____ Shares, and appoints _________________________________ attorney
to transfer such rights on the books of Ecomat, Inc., with full power
of substitution in the premises.
Dated:
By: ______________________________
Address:
______________________________
______________________________
______________________________
In the presence of: