EXHIBIT 10.12
OPTION AGREEMENT
Option Agreement effective as of January 29, 1997 between PC411, Inc., a
Delaware corporation (the "Company"), and Direct Assist Holding Inc., a Delaware
corporation (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company and the Optionee are parties to a Preferred Stock
Purchase Agreement dated as of May 10, 1995, pursuant to which the Optionee
purchased from the Company and the Company sold and issued to the Optionee 1,820
shares of Cumulative Convertible Preferred Stock, Series A, par value $.01 per
share (the "Preferred Shares"), of the Company, at a purchase price of $550 per
share;
WHEREAS, the Company and New Valley Corporation, the parent of the Optionee
("New Valley"), entered into a certain Loan and Security Agreement dated as of
June 27, 1996, as amended, pursuant to which New Valley has agreed to extend
credit to the Company in an aggregate principal amount not to exceed $750,000
(the "Loan Facility"); and
WHEREAS, in consideration of the Optionee's investment in the Company
through the purchase of the Preferred Shares and the Loan Facility, the Company,
among other things, desires to grant to the Optionee irrevocable options (the
"OPTIONS") to acquire 500,000 shares (after giving effect to the contemplated
172.7336-for-1 stock split) of the Company's common stock, par value $.01 per
share (the "Common Stock"), upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
1. DEFINITIONS.
As used herein, the following terms have the following meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Commission" shall mean the Securities and Exchange Commission.
(c) "Common Stock" has the meaning set forth in the recitals.
(d) "Company" has the meaning set forth in the preamble.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
(f) "Exercise Price" has the meaning set forth in Section 2.
(g) "Fair Market Value" per share of Common Stock as of a particular
date shall mean (i) if the shares of Common Stock are then listed on a national
securities exchange, the closing sales price per share of Common Stock on the
national securities exchange on which the Common Stock is principally traded for
the last preceding date on which there was a sale of such Common Stock on such
exchange, or (ii) if the shares of Common Stock are then traded in an
over-the-counter market, the closing bid price for the shares of Common Stock in
such over-the-counter market for the last preceding date on which there was a
sale of such Common Stock in such market, or (iii) if the shares of Common Stock
are not then listed on a national securities exchange or trade in an
over-the-counter market, such value as the Board, in its sole discretion, shall
determine.
(h) "IPO" means the first firm commitment underwritten public
offering of securities of the Company pursuant to a registration statement filed
by the Company under the Securities Act.
(i) "Loan Facility" has the meaning set forth in the recitals.
(j) "New Valley" has the meaning set forth in the recitals.
(k) "Options" has the meaning set forth in the recitals.
(l) "Optionee" has the meaning set forth in the preamble.
(m) "Securities Act" shall mean that Securities Act of 1933, as
amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
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(n) "Shares" shall mean the shares of Common Stock issuable upon
exercise of the Options.
(o) "Termination Date" has the meaning set forth in Section 2.
2. TERMS AND CONDITIONS OF OPTIONS.
(a) NUMBER OF SHARES. The Company hereby grants the Options to the
Optionee to acquire 500,000 shares of Common Stock upon payment of the Exercise
Price.
(b) EXERCISE PRICE. The Exercise Price per Share shall be equal to
105% of the IPO price per share of Common Stock. The Exercise Price shall be
subject to adjustment as provided in Section 3 hereof.
(c) MEDIUM AND TIME OF PAYMENT. The Exercise Price shall be paid in
full, at the time of exercise, in cash or by delivery by Optionee to the Company
of shares of Common Stock then owned by Optionee having a Fair Market Value
equal to such Exercise Price, or in a combination of cash and Common Stock. In
the event of any exercise of the Options, the certificate(s) for the Shares so
purchased, registered in the name of the person entitled to receive the same,
shall be delivered to the Optionee within a reasonable time, not exceeding ten
business days, after the Options or any portion thereof are exercised. The
person in whose name any certificate(s) for Shares are issued upon any exercise
of the Options shall for all purposes be deemed to have become the holder of
record of such Shares on the date on which the Options or any portion thereof
were exercised and payment of the Exercise Price made, irrespective of the date
of delivery of such certificate(s), except that, if the date of such surrender
and payment is a date when the stock transfer books of the Company are closed,
such person shall be deemed to have become the holder of record of such Shares
at the close of business on the next succeeding date on which the stock transfer
books are open.
(d) WRITTEN NOTICE OF EXERCISE. The Options shall become
exerciseable upon consummation of an IPO by delivering to the Secretary of the
Company, at its principal office, a written notice of exercise which shall
specify the number of Shares for which the Options are being exercised and shall
be accompanied by payment of the full Exercise Price of such Shares.
(e) DATE OF GRANT AND EXPIRATION. The Company hereby grants the
Options to the Optionee as of January 29, 1997. The Options shall expire at the
close of business on March 31, 2007 (the "Termination Date"). In no event shall
the Options be exerciseable after the Termination Date.
3. EFFECT OF CERTAIN CHANGES.
(a) In the event of any extraordinary dividend, stock dividend,
recapitalization, merger, consolidation, stock split, warrant or rights
issuance, or combination or exchange of such shares, or other similar
transactions, each of the number of Shares, and the
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Exercise Price, as appropriate, shall be equitably adjusted to reflect such
event and preserve the value of such Options; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated.
(b) If the Company is merged into or consolidated with any other
corporation, or if it sells all or substantially all of its assets to any other
corporation, then either the Company shall cause provisions to be made for the
continuance of the Options after such event or for the substitution for the
Options of an option covering the number and class of securities and/or cash or
other property which the Optionee would have been entitled to receive in such
merger or consolidation by virtue of such merger, consolidation or sale if the
Optionee had been the holder of record of a number of shares of Common Stock of
the Company equal to the number of Shares covered by the unexercised Options.
In no event, however, shall such Options be exerciseable after the Termination
Date.
4. INVESTMENT REPRESENTATION AND LEGEND ON CERTIFICATES.
The Optionee agrees that until such time as a registration statement
under the Securities Act becomes effective with respect to the Options and/or
the Shares or an exemption from registration thereunder is available for them,
the Optionee is taking the Options and will take the Shares for investment and
not for resale or distribution. The Company shall have the right to place upon
the face of any stock certificate or certificates evidencing Shares such legend
as the Board may prescribe for the purpose of preventing disposition of such
Shares in violation of the Securities Act.
5. EXPENSES.
The Company shall pay all original issue and transfer taxes with
respect to the issuance and transfer of the Options and the Shares pursuant
hereto and all other fees and expenses necessarily incurred by the Company in
connection therewith.
6. TRANSFERABILITY OF OPTIONS.
Subject to Section 4 hereof, the Options granted hereby shall be
transferable at the sole and absolute discretion of the Optionee.
7. RIGHTS AS A STOCKHOLDER.
The Optionee shall have no rights as a stockholder with respect to any
Shares until the date of the issuance of a stock certificate to it for such
shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distribution of other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 3 hereof.
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8. REGISTRATION RIGHTS.
The Company hereby agrees that, upon the Optionee's (and/or any
transferee's) written request, it will prepare and file a registration statement
with respect to the Shares acquired upon the exercise of the Options. The
Company further agrees: (i) to the extent permitted by law, to indemnify and
hold harmless the Optionee (and/or any transferee) against liabilities in
connection with the registration and offering of the Shares, including
liabilities arising under the Securities Act, the Exchange Act or any comparable
state securities laws; and (ii) to pay all fees and expenses incident to the
registration of such Shares, except selling commissions and fees and expenses of
counsel and any other professional advisors, if any, to the Optionee (and/or any
transferee).
9. MISCELLANEOUS.
(a) All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given (a) when delivered in
person, (b) the day following dispatch by an overnight courier service (such as
Federal Express or UPS, etc.) or (c) five (5) days after dispatch by certified
or registered first class mail, postage prepaid, return receipt requested, to
the party to whom the same is so given or made:
If to the Company,
addressed to: PC411, Inc.
0000 X. Xx Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: President
with a copy to: Morse, Zenick, Rose & Lander, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx, Esq.
If to the Optionee,
addressed to: Direct Assist Holding Inc.
000 X.X. Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: President
(b) Unless the context otherwise requires, words in the singular
include the plural, and words in the plural include the singular.
(c) This Agreement may not be amended or modified or otherwise
altered except pursuant to an instrument, in writing, signed by each of the
parties.
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(d) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(e) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
10. GOVERNING LAW.
The Agreement and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Delaware, without regard to
principles of conflicts of laws.
PC411, INC.
By:_________________________
Name:
Title:
DIRECT ASSIST HOLDING INC.
By:_________________________
Name:
Title:
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