NEITHER THIS OPTION NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS OPTION HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER THE SECURITIES LAWS OF ANY STATE, AND NEITHER THIS OPTION NOR SUCH
SHARES MAY BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THAT ACT AND THE
LAWS OF SUCH STATES UNDER WHOSE LAWS A TRANSFER OF SECURITIES WOULD BE SUBJECT
TO A REGISTRATION REQUIREMENT OR AN OPINION OF COUNSEL TO THE COMPANY IS
OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION.
THIS OPTION IS SUBJECT TO FORFEITURE AS SET FORTH HEREIN.
Void after 5:00 p.m., Eastern Standard Time, on December 31, 2001.
OPTION TO PURCHASE COMMON STOCK
OF
COMPUTER MARKETPLACE, INC.
FOR VALUE RECEIVED, COMPUTER MARKETPLACE, INC., a Delaware corporation
(the "Company"), hereby certifies that Victoria Holdings, Inc. ("Victoria
Holdings"), or its permitted assigns, is entitled to purchase from the Company,
at any time or from time to time commencing on December 31, 1996 and prior to
5:00 p.m., Eastern Standard Time, on December 31, 2001, a total of six million
(6,000,000) fully paid and nonassessable shares of common stock, par value
$.0001 per share, of the Company for an aggregate purchase price of $1,000,000
(computed on the basis of $.166667 per share), subject to the terms and
conditions hereinafter set forth. (Hereinafter, (i) said Common Stock, together
with any other equity securities which may be issued by the Company with respect
thereto or in substitution therefor, is referred to as the "Common Stock," (ii)
the shares of Common Stock purchasable hereunder are referred to as the "Option
Shares," (iii) the aggregate purchase price payable hereunder for all the Option
Shares is referred to as the "Aggregate Option Price," (iv) the price payable
hereunder for each of the Option Shares is referred to as the "Per Share Option
Price," (v) this Option, and all options hereafter issued in exchange or
substitution for this Option are referred to as the "Option" and (vi) the holder
of this Option is referred to as the "Holder.") The Per Share Option Price is
subject to adjustment as hereinafter provided. In the event of any such
adjustment, the number of Option Shares shall be adjusted by dividing the
Aggregate Option Price by the Per Share Option Price in effect immediately after
such adjustment.
1
This Option has been issued pursuant to the Consulting Agreement, dated
as of December 9, 1996, between the Company and Victoria Holdings (the
"Consulting Agreement").
1. Exercise of Option. This Option may be exercised, in whole at any
time or in part from time to time commencing on December 31, 1996 and prior to
5:00 p.m., Eastern Standard Time, on December 31, 2001, by the Holder by the
surrender of this Option (with the subscription form at the end hereof duly
executed) to the Company at the address set forth in Subsection 10(a) hereof,
together with proper payment of the Aggregate Option Price, or the proportionate
part thereof if this Option is exercised in part.
The Aggregate Option Price or Per Share Option Price shall be paid in
cash. Payment for Option Shares shall be made by certified or official bank
check payable to the order of the Company. If this Option is exercised in part,
this Option must be exercised for a minimum of one thousand (1,000) shares of
Common Stock, and the Holder is entitled to receive a new Option covering the
number of Option Shares in respect to which this Option has not been exercised
and setting forth the proportionate part of the Aggregate Option Price
applicable to such Option Shares. Upon such surrender of this Option, the
Company will (a) issue a certificate or certificates in the name of the Holder
for the largest number of whole shares of Common Stock to which the Holder shall
be entitled and, if this Option is exercised in whole, in lieu of any fractional
share of Common Stock to which the Holder shall be entitled, cash equal to the
fair value of such fractional share (determined in such reasonable manner as the
Board of Directors of the Company shall determine), and (b) deliver the
proportionate part thereof if this Option is exercised in part, pursuant to the
provisions of this Option.
Notwithstanding anything contained herein to the contrary, the Company
agrees, at the request of the Holder, to allow the cashless exercise hereof
through a brokerage firm acceptable to the Company whereby the Holder (to the
extent permitted by, and subject to, applicable law) can exercise this Option,
or a portion thereof, without making a direct payment of the Aggregate Option
Price or Per Share Option Price to the Company.
No right granted herein shall be exercisable after 5:00 p.m., Eastern
Standard Time, on the fifth anniversary of the date hereof.
2. Commencement of Exercisability; Forfeiture. This Option will become
exercisable, in its entirety, commencing on December 31, 1996.
3. Reservation of Option Shares. The Company agrees that until the
expiration of this Option, the Company will at all times have authorized and in
reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Option, the shares of Common Stock as from time to time shall
be receivable upon the exercise of this Option.
4. Anti-Dilution Provisions.
(a) If, at any time or from time to time after the date of
this Option, the
2
Company shall distribute to the holders of the Common Stock (i) securities,
other than shares of Common Stock, or (ii) property, other than cash, without
payment therefor, with respect to the Common Stock, then, and in each such case,
the Holder, upon the exercise of this Option, shall be entitled to receive the
securities and properties which the Holder would have held on the date of such
exercise if, on the date of such distribution, the Holder had been the holder of
record of the number of shares of Common Stock subscribed for upon such exercise
and, during the period from the date of such distribution to and including the
date of such exercise, had retained such shares and the securities and
properties receivable by the Holder during such period. Notice of each such
distribution shall be forthwith mailed to the Holder.
(b) In case the Company shall hereafter (i) pay a dividend or
make a distribution on its capital stock in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock into a greater number of
shares, (iii) combine the outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of the Common Stock any
shares of capital stock of the Company, the Per Share Option Price in effect
immediately prior to such action shall be adjusted so that if the Holder
surrendered this Option for exercise immediately thereafter the Holder would be
entitled to receive the number of shares of Common Stock or other capital stock
of the Company which he would have owned immediately following such action had
such Option been exercised immediately prior thereto. An adjustment made
pursuant to this subsection (b) shall become effective immediately after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
subsection (b), the Holder shall become entitled to receive shares of two or
more classes of capital stock or shares of Common Stock and other capital stock
of the Company, the Board of Directors of the Company (whose determination shall
be conclusive and shall be described in a written notice to the Holder promptly
after such adjustment) shall determine the allocation of the adjusted Per Share
Option Price between or among shares of such classes of capital stock or shares
of Common Stock and other capital stock.
(c) In case of any consolidation or merger to which the
Company is a party other than a merger or consolidation in which the Company is
the continuing corporation, or in case of any sale or conveyance to another
entity of the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company), the Holder shall have the right thereafter
to convert this Option into the kind and amount of securities, cash or other
property which he would have owned or would have been entitled to receive
immediately after such consolidation, merger, statutory exchange, sale or
conveyance had such Option been converted immediately prior to the effective
date of such consolidation, merger, statutory exchange, sale or conveyance and
in any such case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Section 4 with respect to the
rights and interests thereafter of the Holder to the end that the provisions set
forth in this Section 4 shall thereafter correspondingly be made applicable, as
nearly as may reasonably be, in relation to any shares of stock or other
securities or property thereafter deliverable on the conversion of this Option.
The above provisions of this subsection (c) shall similarly apply to successive
consolidations, mergers,
3
statutory exchanges, sales or conveyances. Notice of any such consolidation,
merger, statutory exchange, sale or conveyance and of said provisions so
proposed to be made, shall be mailed to the Holder not less than 30 days prior
to such event. A sale of all or substantially all of the assets of the Company
for a consideration consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.
(d) If the Company shall at any time after the date of this Option
issue shares of Common Stock or rights, options or warrants to subscribe for or
purchase shares of Common Stock, or securities convertible into, or exchangeable
for, Common Stock (excluding shares, rights, options, warrants or convertible or
exchangeable securities issued or issuable in any of the transactions with
respect to which an adjustment rate is provided pursuant to clause (a), (b) or
(c) above), at a price per share (determined, in the case of such rights,
options, warrants or convertible or exchangeable securities, by dividing (i) the
total amount received or receivable by the Company in consideration of the sale
and issuance of such rights, options, warrants, or convertible, exercisable or
exchangeable securities, plus the maximum aggregate consideration payable to the
Company upon exercise, conversion or exchange thereof, by (ii) the maximum
number of shares issuable upon conversion, exercise or exchange as the case may
be, of such rights, options, warrants or convertible or exchangeable securities)
less than forty percent (40%) of the current Per Share Option Price in effect at
such time, then the Per Share Option Price shall be changed to a price
determined by multiplying the Per Share Option Price in effect immediately prior
thereto by a fraction, the numerator of which shall be the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such issuance and (2)
the number of shares of Common Stock which could be purchased at the current Per
Share Option Price using the aggregate consideration received or receivable by
the Company in consideration of such sale and/or issuance (including any amounts
payable to the Company upon exercise, conversion or exchange of any rights,
options, warrants or convertible or exchangeable securities) and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such issuance and/or sale.
For the purposes of such adjustment, the maximum number of
shares of Common Stock which the holders of any such rights, options, warrants
or convertible or exchangeable securities shall be entitled to initially
subscribe for or purchase or convert or exchange such securities into shall be
deemed to be issued and outstanding as of the date of such issuance, and the
consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such rights, options, warrants or
convertible or exchangeable securities, plus the maximum aggregate consideration
or premiums stated in such rights, options, warrants, or convertible or
exchangeable securities to be paid for the shares issuable thereby. No further
adjustment of the Per Share Option Price shall be made as a result of the actual
issuance of shares of Common Stock upon exercise of such rights, options or
warrants or on conversion or exchange of such convertible or exchangeable
securities. Upon the expiration or the termination of such rights, options, or
warrants, or the termination of such right to convert or exchange, the Per Share
Option Price shall be readjusted to such Per Share Option Price as would have
been obtained had the adjustments made upon the issuance of such rights,
options, warrants or convertible or exchangeable securities been made upon the
basis of the delivery of only the number of shares of Common Stock actually
delivered upon the
4
exercise of such rights, options, or warrants or upon the conversion or exchange
of any such securities. In case the Company shall issue shares of Common Stock
or any such rights, options, warrants or convertible or exchangeable securities
for a consideration consisting, in whole or in part, of property other than cash
or its equivalent, then the "price per share" and the "consideration received by
the Company" for purposes of the first sentence of this Section 4(d) shall be
determined in good faith by the Company in its sole discretion.
Such adjustment shall become effective on the date of such
issuance. Shares of Common Stock owned by or held for the account of the Company
or any majority owned subsidiary shall not be deemed outstanding for the purpose
of any such computation.
Notwithstanding anything contained herein to the contrary, in
no event shall any adjustment be made with respect to the issuance of any
securities of the Company (i) in connection with the exercise of any options or
warrants outstanding as of the date of this Option, (ii) to any officer,
director, employee or consultant of the Company, whether or not such issuance is
pursuant to any stock option or other incentive compensation or employee benefit
plans adopted by the Company, (iii) to Victoria Holdings pursuant to the
Consulting Agreement and any amendments thereto or otherwise, and (v) to
shareholders of any other company which merges into the Company or from which
the Company acquires assets and some or all of the consideration for such merger
or acquisition consists of securities of the Company (except for any adjustments
required pursuant to clause (c) of this Section 4).
(e) No adjustment in the Per Share Option Price shall be
required unless such adjustment would require an increase or decrease of at
least $0.10 in such price, provided, however, that any adjustments which by
reason of this clause (e) are not required to be made shall be carried forward
cumulatively and taken into account in any subsequent calculation.
(f) In any case in which this Section 4 shall require that an
adjustment as a result of any event become effective from and after a record
date, the Company may elect to defer until the occurrence of such event (i) the
issuance to the Holder exercised after such record date and before the
occurrence of such event of the additional shares of Common Stock issuable upon
such exercise over and above the shares issuable immediately prior to adjustment
and (ii) the payment to the Holder of any amount in cash in lieu of a fractional
share of Common Stock; provided, however, that the Company shall deliver to the
Holder a due bill or other appropriate instrument evidencing the Holder's right
to receive such additional Common Stock or such payment in lieu of such
fractional shares.
(g) Whenever the Per Share Option Price is adjusted as
provided in this Section 4 and upon any modification of the rights of the Holder
in accordance with this Section 4, the Company shall promptly prepare a
certificate of an officer of the Company setting forth the Per Share Option
Price and the number of Option Shares after such adjustment or modification, a
brief statement of the facts requiring such adjustment or modification and the
manner of computing the same and cause a copy of such certificate to be mailed
to the Holder.
5
(h) If the Board of Directors of the Company shall declare any
dividend or other distribution in cash with respect to the Common Stock, other
than out of earned surplus, the Company shall mail notice thereof to the Holder
not less than 15 days prior to the record date fixed for determining
stockholders entitled to participate in such dividend or other distribution.
5. Fully Paid Stock; Taxes. The Company agrees that the shares of
Common Stock represented by each and every certificate for Option Shares
delivered on the exercise of this Option shall, at the time of such delivery, be
validly issued and outstanding, fully paid and nonassessable, and not subject to
preemptive rights, and the Company will take all such actions as may be
necessary to assure that the par value or stated value, if any, per share of the
Common Stock is at all times equal to or less than the then Per Share Option
Price. The Company further covenants and agrees that it will pay, when due and
payable, any and all federal and state stamp, original issue or similar taxes
that may be payable in respect of the issue of any Option Shares or certificates
therefor.
6. Transfer.
(a) Securities Laws. Neither this Option nor the Option Shares
issuable upon the exercise hereof have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), or under any state securities laws
and unless so registered may not be transferred, sold, pledged, hypothecated or
otherwise disposed of unless an exemption from such registration is available.
In the event the Holder desires to transfer this Option or any of the Option
Shares issued, the Holder must give the Company prior written notice of such
proposed transfer including the name and address of the proposed transferee.
Such transfer may be made only either (i) upon publication by the Securities and
Exchange Commission (the "Commission") of a ruling, interpretation, opinion or
"no action letter" based upon facts presented to said Commission, or (ii) upon
receipt by the Company of an opinion of counsel to the Company in either case to
the effect that the proposed transfer will not violate the provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations promulgated under either such act or any
state securities laws, or in the case of clause (ii) above, to the effect that
the Option or the Option Shares to be sold or transferred has been registered
under the Securities Act and that there is in effect a current prospectus
meeting the requirements of Subsection 10(a) of the Securities Act, which is
being or will be delivered to the purchaser or transferee at or prior to the
time of delivery of the certificates evidencing the Option or the Option Shares
to be sold or transferred.
(b) Lockup Agreements with Underwriters. In the event of a
public offering of the Company's securities, the Holder agrees to enter into an
agreement with the Underwriter or Underwriters' Representative for such offering
restricting the sale, transfer or other disposition of this Option or the Option
Shares to the extent that such agreement is required to be executed by the other
security holders of the Company generally.
(c) Conditions to Transfer. Prior to any such proposed
transfer, and as a condition thereto, if such transfer is not made pursuant to
an effective registration statement under the
6
Securities Act, the Holder will, if requested by the Company, deliver to the
Company (i) an investment covenant signed by the proposed transferee, (ii) an
agreement by such transferee to the restrictive investment legend set forth on
the certificate or certificates representing the securities acquired by such
transferee, (iii) an agreement by such transferee that the Company may place a
"stop transfer order" with its transfer agent or registrar and (iv) an agreement
by the transferee to indemnity the Company to the same extent as set forth in
the next succeeding paragraph.
(d) Indemnity. The Holder acknowledges that the Holder
understands the meaning and legal consequences of this Section 6, and the Holder
hereby agrees to indemnity and hold harmless the Company and each of its
representatives, officers and directors from and against any and all loss,
damage or liability (including all attorney' fees and costs incurred in
enforcing this indemnity provision) due to or arising out of (i) the inaccuracy
of any representation or the breach of any warranty of the Holder contained in,
or any other breach of, this Option, (ii) any transfer of this Option or any of
the Option Shares in violation of the Securities Act, the Exchange Act or the
rules and regulations promulgated under either of such acts or any state
securities laws, (iii) any transfer of this Option or (iv) any untrue statement
or omission to state any material fact in connection with the investment
representations or with respect to the facts and representations supplied by the
Holder to counsel to the Company upon which its opinion as to a proposed
transfer shall have been based.
(e) Transfer. Except as restricted hereby, this Option and the
Option Shares issued may be transferred by the Holder in whole or in part at any
time or from time to time. Upon surrender of this Option to the Company with
assignment documentation duly executed and funds sufficient to pay any transfer
tax, and upon compliance with the foregoing provisions, the Company shall,
without charge, execute and deliver a new Option in the name of the assignee
named in such instrument of assignment, and this Option shall promptly be
canceled. Any assignment, transfer, pledge, hypothecation or other disposition
of this Option attempted contrary to the provisions of this Option, or any levy
of execution, attachment or other process attempted upon this Option, shall be
null and void and without effect.
(f) Legend and Stop Transfer Orders. Unless the Option Shares
have been registered under the Securities Act, upon exercise of any part of this
Option and the issuance of any of the Option Shares, the Company shall instruct
its transfer agent to enter "stop transfer orders" with respect to such shares,
and all certificates representing Option Shares shall bear on the face thereof
substantially the following legend, insofar as is consistent with New York law:
"The shares of common stock represented by this
certificate have not been registered under the
Securities Act of 1933, as amended, or under the
securities laws of any state, and may not be sold,
offered for sale, assigned, transferred or otherwise
disposed of unless registered pursuant to the
provisions of that Act and the laws of such states
under whose laws a transfer of securities would be
subject to a registration requirement
7
or an opinion of counsel to the Company is obtained
stating that such disposition is in compliance with
an available exemption from such registration."
7. Registration Rights. The Holder shall have registration rights with
respect to the Option Shares as set forth in Appendix B to the Consulting
Agreement.
8. Loss, etc, of Option. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Option, and of
indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and cancellation of this Option, if mutilated, the Company
shall execute and deliver to the Holder a new Option of like date, tenor and
denomination.
9. Option Holder Not Stockholder. Except as otherwise provided herein,
this Option does not confer upon the Holder any right to vote, or to consent to,
or receive notice as a stockholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder of the
Company, prior to the exercise hereof.
10. Communication. No notice or other communication under this Option
shall be effective unless the same is in writing and is mailed by first-class
mail, postage prepaid, addressed to:
(a) the Company at 0000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, or
such other address as the Company has designated in writing to the Holder, or
(b) the Holder at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxxxxxxx,
Xxxxxxx 00000, or such other address as- the Holder has designated in writing to
the Company.
11. Headings. The headings of this Option have been inserted as a
matter of convenience and shall not affect the construction hereof.
12. Applicable Law. This Option shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
principles of conflicts of law thereof.
8
IN WITNESS WHEREOF, COMPUTER MARKETPLACE, INC. has caused this Option
to be signed by its Chairman of the Board, President and Chief Executive Officer
this 31st day of December, 1996.
COMPUTER MARKETPLACE, INC.
By: /s/ X. Xxxxx Xxxxx
---------------------------------
Name: X. Xxxxx Xxxxx
Title: Chairman of the Board and
Chief Executive Officer
9
SUBSCRIPTION
The undersigned, _________________________________________________ ,
pursuant to the provisions of the foregoing Option, hereby agrees to subscribe
for the purchase of ____________________ shares of Common Stock of COMPUTER
MARKETPLACE, INC. covered by said Option, and makes payment therefor in full in
cash at the price per share provided by said Option.
Dated Signature
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Address
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ASSIGNMENT
FOR VALUE RECEIVED ______________________ hereby sells, assigns and
transfers unto ___________________ the foregoing Option and all rights evidenced
thereby, and does irrevocably constitute and appoint
_______________________________, attorney, to transfer said Option on the books
of COMPUTER MARKETPLACE, INC.
Dated Signature
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Address
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PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby assigns and
transfers unto _______________________________ the right to purchase
____________________ shares of Common Stock of COMPUTER MARKETPLACE, INC.
covered by the foregoing Option, and a proportionate part of said Option and the
rights evidenced thereby, and does irrevocably constitute and appoint
__________________________, attorney, to transfer that part of said Option on
the books of COMPUTER MARKETPLACE, INC.
Dated Signature
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Address
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