DELTA COMPUTEC INC.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
February 19, 1997
SECOND AMENDED AND RESTATED MAY 1995 STOCK OPTION AGREMENT
XXXXXX X. XXXXXXX - 5,720,237 Common Shares
Xx. Xxxxxx X. Xxxxxxx
000 Xxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Xxx. Xxxxxxx:
This letter agreement, issued in accordance with a certain Option Transfer
Document (the "Option Transfer Document", annexed hereto), constitutes a Second
Amended and Restated Stock Option Agreement (the "Second Restated May 1995
Option Agreement") between Delta Computec Inc. ("Delta"), and Xxxxxx X. Xxxxxxx
(the "Optionee" or "Xxxxxx Xxxxxxx"), and this Second Restated May 1995Option
Agreement supersedes in part a certain Stock Option Agreement dated May 1, 1995,
between Delta and Xxxxxx X. Xxxxxxx XX (the "Original May 1995 Option
Agreement"), which entitled Xxxxxx X. Xxxxxxx XX ("Xxxxxx Xxxxxxx") to acquire
up to 11,440,475 common shares of Delta. The common shares covered by this
Second Restated May 1995 Option Agreement constitute a portion of the common
shares as to which the Original May 1995 Option Agreement applied.
Pursuant to a certain Pledge Security Agreement (the "Pledge Security
Agreement") between Delta, Xxxxxx Xxxxxxx and National Canada Finance Corp.
("NCFC"), the former commercial lender to Delta, which constituted a portion of
the NCFC Restructuring which was described in a Form 8-K Current Report of Delta
dated October 24, 1996 (the "NCFC Restructuring"), among other matters, under
certain circumstances, if there is a default under the $750,000 Amended and
Restated Promissory Note from Delta to NCFC in the face amount of $750,000 dated
October 10, 1996, Xxxxxx Xxxxxxx agreed to assign to NCFC a portion of an
Amended and Restated Stock Option Agreement for the number of common shares of
Delta which, when added to the 480,000 common shares of Delta currently pledged
by Xxxxxx Xxxxxxx to NCFC, would give NCFC the right to 17 1/2% of the issued
and outstanding common shares of Delta. In order to effectuate the assignment to
NCFC, a form of Amended and Restated Stock Option Agreement (the "First Restated
May 1995 Option Agreement") was annexed as an exhibit to the Pledge Security
Agreement.
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Pursuant to the Option Transfer Document, Xxxxxx Xxxxxxx agreed to
transfer to his spouse, Xxxxxx Xxxxxxx, the portion of the Original May 1995
Option Agreement which would entitle Xxxxxx Xxxxxxx to purchase up to 5,720,237
common shares of Delta, while retaining for Xxxxxx Xxxxxxx the right to purchase
5,720,238 common shares of Delta. Pursuant to a certain Securities Transfer
Document (the "Securities Transfer Document", a copy of which is attached
hereto), Xxxxxx Xxxxxxx has agreed to fulfill half of Xxxxxx Xxxxxxx'x
obligations to NCFC pursuant to the Pledge Security Agreement (whether or not
Xxxxxx Xxxxxxx has exercised her portion of this Second Restated May 1995 Option
Agreement).
The Original May 1995 Option Agreement was originally issued as
consideration for Xxxxxx Xxxxxxx agreeing to assist Delta (and its affiliated
companies) in their relationship with NCFC, and as further consideration for
Xxxxxx Xxxxxxx'x agreement to provide the Xxxxxxx Commitment to Delta as set
forth in a letter agreement between Delta and Xxxxxx Xxxxxxx of May 1, 1995 (the
"Xxxxxxx Commitment Letter"). The First Restated May 1995 Option Agreement was
agreed to be issued as further consideration for Xxxxxxx purchasing a portion of
Delta's obligation to NCFC as of October 10, 1996, pursuant to the NCFC
Restructuring. It is acknowledged that the First Restated May 1995 Option
Agreement was part of a negotiated transaction between Delta and Xxxxxx Xxxxxxx
and was not issued to Optionee as an incentive to service or continued service
to Delta by Optionee.
This Second Restated May 1995 Option Agreement is hereby granted to
Optionee on the following terms and conditions:
1. From May 20, 1995 through May 20, 1999,, Optionee shall have, and is
hereby granted, an option (the "Option") to purchase up to 5,720,237 common
shares, subject to adjustment as described below (the "Option Shares"), of
Delta. The Optionee may exercise the Option in whole or in part from time to
time but not in amounts less than 100,000 common shares per exercise.
2. The cash exercise price (the "Cash Exercise Price") for the exercise of
the Option and for the purchase of the Option Shares, shall be ($5.00). The Cash
Exercise Price is to be paid by certified or bank check or money order payable
to the order of Delta. The consideration provided to Delta by Xxxxxx Xxxxxxx
pursuant to the transactions set forth in the Xxxxxxx Commitment Letter (the
"Xxxxxxx Consideration") is also a portion of the exercise price of the Option.
3. The Board of Directors of Delta has determined that the fair market
value of the Xxxxxxx Consideration plus the Cash Exercise Price exceeds the fair
value and the par value of the Option Shares, although no representation is made
that the Option Shares will not be assessable.
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4. Delta acknowledges that it has reserved for issuance a sufficient
number of Delta's authorized and unissued common shares, representing the Option
Shares and that it will keep the Option Shares reserved during the life of this
Second Restated May 1995 Option Agreement.
5. The Optionee may exercise this Option by sending to Delta a written
notice of exercise which notice is received at any time prior to May 20, 1999.
As soon as is reasonably pracicable after any exercise of the Option as herein
provided, Delta shall deliver or cause to be delivered at the office of Delta,
certificates representing the number of common shares of Delta as to which this
Second Restated May 1995 Option Agreement may be exercised in accordance with
the provisions of this Second Restated May 1995 Option Agreement and a check or
money order in respect of the payment of the Cash Exercise Price.
6. This Second Restated May 1995 Option Agreement, and the Option Shares,
are each restricted securities and are subject to the provisions of paragraphs
9, 10 and 11 of the Xxxxxxx Commitment Letter, a copy of which is annexed
hereto.
7. Delta agrees to pay any and all fees or costs associated with the
exercise of the Option, including, if necessary, any listing fee for the Option
Shares with the National Association of Securities Dealers, Inc., and any and
all state, federal or other fees or costs associated therewith.
8. If, and whenever, before the expiration of the Option, Delta shall
effect a subdivision or consolidation of its common shares, or the payment of a
share dividend on its common shares without receipt of consideration by Delta,
the number of Option Shares with respect to which this Option may thereafter be
exercised: (i) in the event of an increase in the number of outstanding common
shares, shall be proportionately increased; and (ii) in the event of a reduction
in the number of outstanding common shares, shall be proportionately reduced.
9. This Second Restated May 1995 Option Agreement is binding on, and shall
inure to the benefit of, Delta and the Optionee, and each of their successors
and assigns. This Second Restated May 1995 Option Agreement shall not terminate
in the event of the death or disability of Xxxxxx Xxxxxxx or of Xxxxxx Xxxxxxx
or as a result of Xxxxxx Xxxxxxx ceasing to be an officer or director of Delta.
This Second Amended May 1995 Option Agreement, and the Option granted hereby, is
transferrable, if Optionee is an individual, by will or by the laws of descent
and distribution, but is otherwise not transferrable without the prior written
consent of Delta, which consent will not be unnecessarily withheld. Delta hereby
grants its consent to the assignment of all or a portion of this Second Restated
May 1995 Option Agreement to NCFC provided that, at the time of such assignment,
Optionee, NCFC and Delta each execute that
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certain Assignment Agreement drafted October 10, 1996, to which a copy of the
First Restated May 1995 Option Agreement is annexed as an exhibit. In addition,
Delta hereby consents to the assignment of this Second Restated May 1995 Option
Agreement by NCFC at and after such time as it may be exercisable.
10. This Second Restated May 1995 Option Agreement supersedes: (i) the
Original May 1995 Option Agreement between Xxxxxxx and Delta; and (ii) any and
all prior discussions and negotiations with regard to the subject matter hereof
and may only by amended by a writing executed by Delta and Optionee. This Second
Restated May 1995 Option Agreement is subject to the applicable provisions of
the Option Transfer Document and the Securities Transfer Document.
11. This Second Restated May 1995 Option Agreement will be governed by the
laws of the State of New York without consideration of its conflicts of laws
principles.
Very truly yours,
DELTA COMPUTEC INC.
By: /s/ Xxxx XxXxxx
--------------------------
Xxxx XxXxxx
President
Accepted and agreed to:
/s/Xxxxxx X. Xxxxxxx XX ("Optionee")
-----------------------
Xxxxxx X. Xxxxxxx XX
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