[Execution Copy]
OPTION AGREEMENT
OPTION AGREEMENT, dated as of August 6, 1998, by and between
MELLON BANK, N.A., AS TRUSTEE UNDER THE WESTINGHOUSE ELECTRIC CORPORATION MASTER
TRUST AGREEMENT FOR THE WESTINGHOUSE PENSION PLAN ("Grantor"), having an address
at 3700 One Mellon Bank Center, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 and BAY HARBOUR
MANAGEMENT, L.C. acting for its managed accounts, ("Grantee"), a Florida limited
liability company having an address at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
In exchange for good and valuable consideration, Grantor
hereby grants to Grantee options to purchase shares of common stock (the
"Stock") of Tops Appliance City, Inc. (the "Corporation"), a New Jersey
corporation, from Grantor on the terms contained herein.
1. Grantor hereby grants to Grantee the right to purchase from
Grantor Three Hundred Thousand (300,000) shares of Stock by written notice given
during the period beginning the date hereof and expiring on the date which is
three hundred sixty (360) days next following the date hereof.
2. If and to the extent that the foregoing Option is exercised on
or before a date which is ninety (90) days next following the date hereof (the
"Ninetieth Day") the exercise price per share of Stock shall be Three Dollars
and Fifty Cents ($3.50). If and to the extent that the foregoing Option is
exercised after the Ninetieth Day, but before the expiration of the Option, the
exercise price per share of Stock shall be Four Dollars ($4.00).
3. In the event that the Grantee desires to exercise the option,
it must provide written notice to the Grantor which notice must specify the
desired exercise date and must state the number of shares of Stock to be
acquired. The purchase of the shares shall take place ten (10) business days
after such notice is given. The notice must specify an exercise date prior to
the expiration of the option; for the purpose of determining the exercise price
under paragraph (1) the date of exercise shall be the exercise date specified in
the notice.
4. Grantor represents and warrants to Grantee as follows:
(a) Grantor shall transfer to Grantee good and marketable
title to any shares of Stock to be acquired by Grantee free and clear of all
liens, claims, debts, charges, restrictions, or encumbrances of any kind, other
than such as may cause any, through or under Buyer and other than the
restrictions contemplated by paragraph 5(e) and 5(f) hereof.
(b) Grantor has full power and legal right to sell,
transfer and deliver the Stock to Grantee in accordance with the terms of this
Agreement, and otherwise to execute and deliver this Agreement and to consummate
and close the transactions provided for in this Agreement in the manner and upon
the terms herein specified.
(c) This Agreement has been duly executed and delivered
by Grantor and, assuming due authorization, execution and delivery by Grantee,
constitutes a legal, valid and binding obligation of Grantor, enforceable
against Grantor in accordance with its terms, subject, as to validity, binding
effect and enforcement remedies, to applicable bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and to
equitable principles.
(d) There is not pending, nor to Grantor's knowledge is
there threatened, any suit, action or administrative, arbitration or other
proceeding which could adversely affect the ability of Grantor to perform any of
its obligations under this Agreement.
(e) The execution, delivery, and performance of this
Agreement, the granting of the options set forth in Paragraphs 1 and 2 and
delivery of the Stock does not and will not violate or conflict with (i) any
applicable provision of law, statute, rule or regulation, or any order, judgment
or decree of any court, arbitrator, governmental agency or the National
Association of Securities Dealers, Inc. ("NASD"), or (ii) any contract,
agreement or instrument to which Grantor is a party.
(f) All clearances, approvals, authorizations and
consents, orders of, and designations by, any Governmental Entity (as defined
below) or NASD, required under the laws of the United States or the regulations
of NASD for or in connection with the issue and delivery of the Stock, and
compliance with the terms of this Agreement have been obtained and complied with
and are in full force and effect.
(g) Grantor shall defend, indemnify and hold harmless
Grantee from and against any loss or liability arising from any breach of the
representations and warranties with respect to Grantor contained in this
Agreement.
5. Grantee represents and warrants to Grantor as follows:
(a) Grantee has the full power and legal right to
purchase the shares of Stock from Grantor in accordance with the terms of this
Agreement, and otherwise to execute and deliver this Agreement and to consummate
and close the transactions provided for in this Agreement in the manner and upon
the terms herein specified, and this Agreement and the transactions contemplated
hereby will not result in the violation of any other agreement to which Grantee
is a party or by which it is bound.
(b) In purchasing the shares of Stock hereunder and in
acquiring the within options, Grantee is not relying on any representation or
warranty made by Grantor (other than those made herein by Grantor).
(c) This Agreement has been duly executed and delivered
by Grantee and, assuming due authorization, execution and delivery by Grantor,
constitutes a legal, valid and binding obligation of Grantee, enforceable
against Grantee in accordance with its terms, subject, as to validity, binding
effect and enforcement remedies, to applicable bankruptcy, insolvency,
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reorganization and other laws affecting creditors' rights generally, and to
equitable principles.
(d) There is not pending, nor to Grantee's knowledge is
there threatened, any suit, action or administrative, arbitration or other
proceeding which could adversely affect the ability of Grantee to perform any of
its obligations under this Agreement.
(e) Grantee has extensive experience in investing in
equity securities and possesses the financial sophistication to evaluate an
investment in the shares of Stock. Grantee has had access to all information
deemed by it to be necessary or appropriate to make a decision to purchase the
shares of Stock. To the extent that Grantee exercises any of the within options,
Grantee represents that it is purchasing the shares of Stock for investment
purposes only and not with a view towards reselling or otherwise distributing
the shares of Stock.
(f) Grantee acknowledges that, as of the date hereof, any
shares of Stock which it receives hereunder are not registered under the
Securities Act of 1933, as amended, or under any State securities laws and that
certain restrictions exist with regard to the resale of such shares of Stock.
Grantee agrees that the certificates representing the shares of Stock, to be
issued to Grantee upon transfer of such shares, will bear the following legend:
The securities represented hereby have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or
any State securities laws. Neither this security nor any interest
or participation herein may be reoffered, sold, assigned,
transferred, pledged, encumbered or otherwise disposed of in the
absence of such registration or unless such transaction is exempt
from, or not subject to, registration.
(g) Grantee shall defend, indemnify and hold harmless
Grantor from and against any loss or liability arising from any breach of the
representations and warranties with respect to Grantee contained in this
Agreement.
(h) Grantee has no notice of any liens, claims, debts,
charges, restrictions or encumbrances of any kind affecting the Stock, other
than (x) the restrictions contemplated by paragraphs 5(e), 5(f) and 4(a) hereof
and (y) restrictions applicable to restricted securities imposed under the
federal and state securities laws.
6. The representations made by the parties in Paragraphs 4 and 5
shall survive the exercise of any option hereunder for a period of two (2) years
from the date on which Grantee becomes the record holder of such shares of
Stock. The obligations to defend, indemnify and hold harmless any person
pursuant to Paragraphs 4 and 5 shall terminate when the applicable
representation or warranty terminates pursuant to this Paragraph 6; provided,
however, that such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which the person to be indemnified or
the related party thereto shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice of such claim (stating in
reasonable detail the basis of such claim) to the indemnifying party.
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7. At the time of the closing of an exercise hereunder, the
following transactions shall occur, all of which shall be deemed to occur
simultaneously:
(a) Grantor will deliver or cause to be delivered to
Grantee a share certificate or certificates for the shares of Stock subject to
such exercise, duly endorsed for transfer with stock powers affixed thereto and
evidence of the authority of the signatory of the stock power; and
(b) Grantee will deliver or cause to be delivered to
Grantor an amount equal to the exercise price in respect of the shares of Stock
being acquired by Grantor.
8. Each of Grantor and Grantee hereby represents and warrants
that there is no corporation, firm or persons entitled to receive from it a
brokerage commission or finder's fee in connection with this Agreement or the
transactions provided for herein. Each of Grantor and Grantee agrees to
indemnify and save the other party hereto harmless from and against any claim
for brokerage commission or finder's fee based on any retention or alleged
retention of a broker or finder by it. This provision shall survive the exercise
of the option hereunder.
9. All notices and other communications to be made hereunder
shall be in writing and shall be deemed to have been given when the same are
either (i) personally delivered or mailed, registered or certified mail, first
class postage prepaid return receipt requested, or (ii) delivered by a reputable
private overnight courier service utilizing a written receipt or other written
proof of delivery to the applicable party at the address set forth above. The
substance of any such notice shall be deemed to have been fully acknowledged in
the event of refusal of acceptance by the party to whom the notice is addressed.
10. In the event any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect other
provisions hereof, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision never had been contained herein.
11. This Agreement shall be construed in accordance with the laws
of the State of New York without giving effect to the conflict of law principles
thereof.
12. No party may assign its rights or obligations under this
Agreement without the prior written consent of other party hereto.
13. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
14. This Agreement contains the entire understanding and
agreement of the parties hereto with respect to the matters contained herein,
and may not be amended or supplemented at any time unless by a writing executed
by each of the said parties.
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15. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which collectively shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
GRANTOR:
MELLON BANK, N.A., as Trustee under
the Westinghouse Electric Corporation
Master Trust Agreement for the
Westinghouse Pension Plan
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Vice President
GRANTEE:
BAY HARBOUR MANAGEMENT, L.C.,
for its managed accounts,
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Principal & Portfolio Manager
