[Execution Copy]
OPTION AGREEMENT
OPTION AGREEMENT, dated July 17, 1998, by and between THE
XXXXXXX FAMILY LIMITED PARTNERSHIP ("Grantor"), having an address at c/o Xxxxxx
Xxxxxxx, 000 Xxxxxxx Xxxx Xxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 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 Two Hundred Thousand (200,000) shares of Stock by written notice given
during the period beginning the date hereof and expiring on the date which is
ninety (90) days next following the date hereof (the "Ninetieth Day") for an
exercise price per share of Stock of Three Dollars and Fifty Cents ($3.50).
2. Grantor hereby grants to Grantee the right to purchase from
Grantor Two Hundred Thousand (200,000) shares of Stock by written notice during
the period beginning the day next following the Ninetieth Day and expiring on
the date which is two hundred seventy (270) days next following the Ninetieth
Day for an exercise price per share of Stock of Four ($4.00) Dollars; provided,
however, that the option provided in this Paragraph 2 shall be null, void and of
no force or effect in the event that the Grantee exercises any option pursuant
to Paragraph 1 hereof.
3. In the event that the Grantee desires to exercise any of the
within options, it must provide written notice to the Grantor which notice must
state the number of shares of Stock to be acquired. Any such notice must be
delivered prior to the date on which the options set forth in Paragraph 1 and 2,
respectively, expire. The purchase of the shares shall take place ten (10)
business days after such notice is given.
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
transferred hereunder, free and clear of all
liens, claims, debts, charges, restrictions, or
encumbrances of any kind.
(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 his obligations under
this Agreement.
(e) Grantor understands that the law firm of
Greenbaum, Rowe, Xxxxx, Xxxxx, Xxxxx & Xxxxxx LLP
is counsel to the Corporation, and not in any way
counsel to Grantor, for the purpose of this
Agreement, and that Grantor has retained his own
counsel in connection with this transaction.
(f) The execution, delivery, and performance of
this Agreement by Grantor, 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")
applicable to Grantor, or (ii) any contract,
agreement or instrument to which Grantor is a
party.
(g) 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 to be obtained by Grantor
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.
(h) 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 information provided by or any
representation or warranty made by Grantor (other
than those made herein by Grantor).
(c) Grantee understands that the law firm of
Greenbaum, Rowe, Xxxxx, Xxxxx, Xxxxx & Xxxxxx LLP
is counsel to the Corporation, and not in any way
counsel to Grantee, for the purpose of this
Agreement and that Grantee has retained its own
counsel in connection with this transaction.
(d) 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,
reorganization and other laws affecting creditors'
rights generally, and to equitable principles.
(e) 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.
(f) 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.
(g) 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.
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.
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, which certificate(s) shall have affixed
thereto or typed thereon 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
(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. 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.
9. 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.
10. 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.
11. No party may assign its rights or obligations under this
Agreement without the prior written consent of other party hereto.
12. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
13. Each of the parties hereto irrevocably submits to the
non-exclusive jurisdiction of (a) the Supreme Court of the State of New York,
New York County, and (b) the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each of
the parties hereto further agrees that service of any process, summons, notice
or documents by United States registered mail, return receipt requested, to such
party's respective address set forth in the introduction of this Agreement,
shall be effective service of process for any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction in
this Paragraph 13. Each of the parties hereto irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in (x) the
Supreme Court of the State of New York, New York County, and (y) the United
States District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
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.
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.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
GRANTOR:
WITNESS: THE XXXXXXX FAMILY LIMITED
PARTNERSHIP
/s/ Gaia Xxxxxxxxx By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
GRANTEE:
ATTEST: BAY HARBOUR MANAGEMENT, L.C.,
for its managed accounts,
Signature illegible By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
Principal & Portfolio Manager
