SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 5, 1999
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Room Plus
(Exact Name of Registrant as Specified in Charter)
New York 1-14478 11-2622051
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
91 Michigan Avenue, Paterson, New Jersey 07503
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (973) 523-4600
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Pursuant to authorization of the Company's Board of Directors,
the Company (i)(a) issued a Stock Subscription Warrant dated February 5, 1999
(the "New Warrant") to David Belford ("Belford"), the Company's Chairman of the
Board, pursuant to which Belford is granted the right to purchase up to
2,000,000 shares of the Company's Common Stock at an exercise price of $0.75 per
share (subject to adjustment) at any time prior to 5:00 P.M. (New York time) on
July 31, 2003, and (b) cancelled a Stock Subscription Warrant dated July 31,
1998 previously issued to Belford pursuant to which he had the right to purchase
up to 2,000,000 shares of the Company's Common Stock at an exercise price of
$2.00 per share (subject to adjustment); and (ii)(a) entered into new Stock
Option Agreements (the "New Option Agreements") with each of Ronald A. Kaplan,
the Company's President and Chief Executive Officer, and Stephen Giordano, the
Company's Executive Vice President, pursuant to which Messrs. Kaplan and
Giordano are granted the option to purchase up to 300,000 and 100,000 shares,
respectively, of the Company's Common Stock at an exercise price of $0.75 per
share (subject to adjustment) in accordance with vesting schedules set forth in
such New Option Agreements, and (b) cancelled previous Stock Option Agreements
with such individuals that covered the same numbers of shares at an exercise
price of $2.00 per share (subject to adjustment). Copies of the New Warrant and
each of the New Option Agreements are filed as Exhibits 4.14, 4.15 and 4.16 to
this Report on Form 8-K and are incorporated herein by reference. Reference is
made to such Exhibits for a complete statement of the terms and conditions of
such New Warrant and New Option Agreements.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits. The following Exhibits are filed herewith.
Number Description
4.14 Stock Subscription Warrant issued by the
Company to David Belford, dated February 5, 1999
4.15 Stock Option Agreement by and between the
Company and Ronald A. Kaplan
4.16 Stock Option Agreement by and between the
Company and Stephen Giordano
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ROOM PLUS, INC.
By: /s/ Jay H. Goldberg
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Name: Jay H. Goldberg
Title: Chief Financial Officer
Dated: February 18, 1999
EXHIBIT 4.14
Stock Subscription Warrant issued by the Company to David A. Belford, dated
February 5, 1999
THE WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR
SOLD UNLESS (i) A REGISTRATION STATEMENT UNDER SUCH ACT IS THEN IN EFFECT WITH
RESPECT THERETO, (ii) A WRITTEN OPINION FROM COUNSEL FOR THE ISSUER OR MESSRS.
STROOCK & STROOCK & LAVAN LLP OR OTHER COUNSEL FOR THE HOLDER REASONABLY
ACCEPTABLE TO THE ISSUER HAS BEEN OBTAINED TO THE EFFECT THAT NO SUCH
REGISTRATION IS REQUIRED OR (iii) A "NO ACTION" LETTER OR ITS THEN EQUIVALENT
HAS BEEN ISSUED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH TRANSFER OR SALE.
No. W - 1 A Warrant to Subscribe for
2,000,000 Shares
STOCK SUBSCRIPTION WARRANT
To Subscribe for and Purchase Common Stock of
ROOM PLUS, INC.
THIS CERTIFIES that, for value received,
David A. Belford
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or registered assigns is entitled to subscribe for and purchase from Room Plus,
Inc. (herein called the "Company"), a corporation organized and existing under
the laws of the State of New York, at the price of $0.75 per share (subject to
adjustment as noted below) (the "Exercise Price") at any time and from time to
time after the date hereof and before 5:00 P.M., New York City time, on July 31,
2003 (the "Exercise Period"),
Two Million
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fully paid and nonassessable shares of the Company's Common Stock (subject to
adjustment as noted below).
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise of This Warrant. The rights represented by this Warrant may
be exercised by the holder hereof, in whole or in part (but not as to a
fractional share of Common Stock), by the surrender of this Warrant (properly
endorsed if required) at the office of the Company, 91 Michigan Avenue,
Paterson, New Jersey 07053, or such other office or agency of the Company as the
Company may designate by notice in writing to the holder hereof at the
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address of such holder appearing on the books of the Company, at any time during
the Exercise Period upon payment to it of the Exercise Price for such shares.
The Exercise Price for shares of Common Stock issuable upon exercise of this
Warrant shall be payable as follows: (a) by payment to the Company of the
Exercise Price in cash, by check or by wire transfer of funds; (b) by surrender
to the Company for cancellation of securities of the Company having a Market
Price (as defined in Section 3C(8) hereof) on the date of exercise equal to the
Exercise Price for such shares; (c) by surrender to the Company for cancellation
of notes or debt securities of the Company having a principal balance plus
accrued interest on the date of exercise equal to the Exercise Price for such
shares or (d) by a combination of the methods described in clauses (a), (b) and
(c) above. In lieu of exercising the Warrant, the holder may elect to receive a
payment equal to the difference between (i) the Market Price of the number of
shares of Common Stock for which the payment is elected and (ii) the Exercise
Price with respect to such shares, payable only in shares of Common Stock valued
at Market Price on the date of exercise. The Company agrees that the shares so
purchased shall be deemed to be issued to the holder hereof as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment made for such shares as aforesaid.
Certificates for the shares of stock so purchased shall be delivered to the
holder hereof within a reasonable time, not exceeding five (5) days, after the
rights represented by this Warrant shall have been so exercised, and, unless
this Warrant has expired, a new Warrant representing the number of shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be delivered to the holder hereof within such time.
2. Reservation, Issuance and Listing of Stock.
2A. The Company will at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, solely for
the purpose of issue upon exercise of the Warrant, such number of shares of
Common Stock as shall then be issuable upon exercise of the Warrant. The Company
will, at its expense, use its best efforts to cause such shares to be listed
(subject to issuance or notice of issuance) on all stock exchanges, if any, on
which the Company's Common Stock may become listed during the Exercise Period.
2B. The Company covenants that all shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized and issued, fully paid and nonassessable and free from all taxes,
liens, charges and security interests with respect to the issue thereof.
2C. Before or concurrently with the taking of any action which could
cause an adjustment pursuant to Section 3 reducing the Exercise Price below the
then par value (if any) of the Company's Common Stock, the Company will take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at such
Exercise Price as so adjusted.
3. Exercise Price. The above provisions are, however, subject to the
following:
3A. Initial Exercise Price; Adjustment of Number of Shares. The initial
Exercise Price of $0.75 per share shall be subject to adjustment from time to
time as hereinafter provided.
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Upon each adjustment of the Exercise Price, the holder of this Warrant shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of shares obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
3B. Adjustment of Exercise Price. Except as provided in paragraph 3F, if
and whenever subsequent to the issuance of this Warrant the Company shall issue
or sell any shares of its Common Stock (including shares now or hereafter held
in the treasury of the Company but not including shares issued upon the exercise
of this Warrant) for a consideration per share less than the Exercise Price in
effect on the date of such issue or sale, and/or the Company shall issue or sell
any shares of Common Stock for a consideration per share less than the Market
Price on the date of such issue or sale, then, forthwith upon such issue or
sale, the Exercise Price shall be reduced to the lower of the prices (calculated
to the nearest cent) determined as follows:
(i) by dividing (1) an amount equal to the sum of (aa) the number
of shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Exercise Price, and (bb) the consideration, if
any, received by the Company upon such issue or sale, by (2) the total number of
shares of Common Stock outstanding immediately after such issue or sale; and
(ii) by multiplying the Exercise Price in effect immediately
prior to the time of such issue or sale 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 issue or sale multiplied by the Market Price
immediately prior to such issue or sale plus (2) the consideration received by
the Company upon such issue or sale, and the denominator of which shall be the
product of (3) the total number of shares of Common Stock outstanding
immediately after such issue or sale, multiplied by (4) the Market Price
immediately prior to such issue or sale.
No adjustment of the Exercise Price however shall be made in an amount
less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment, if any, which together with any adjustments so carried forward shall
amount to $.01 per share or more, provided that upon any adjustment of the
Exercise Price as a result of any dividend or distribution payable in Common
Stock or Convertible Securities or the reclassification, subdivision or
combination of Common Stock into a greater or smaller number of shares, the
foregoing figure of $.01 per share (or such figure as last adjusted) shall be
adjusted (to the nearest one-half cent) in proportion to the adjustment in the
Exercise Price.
3C. Provisions Relating to Adjustment of Exercise Price. For the purpose
of subsection 3B, the following paragraphs 3C(1) to 3C(9), inclusive, shall also
be applicable:
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3(C)1 Issuance of Rights, Options or Warrants -- In case
at any time the Company shall grant (whether directly or by
assumption in a merger or otherwise) any rights (other than the
Warrant) to subscribe for or to purchase, or any options or
warrants for the purchase of Common Stock or any stock or
securities convertible into or exchangeable for Common Stock
(such convertible or exchangeable stock or securities being
herein called "Convertible Securities") whether or not such
rights or options or warrants or the right to convert or exchange
any such Convertible Securities are immediately exercisable, and
the price per share for which Common Stock is issuable upon the
exercise of such rights or options or warrants or upon conversion
or exchange of such Convertible Securities (determined by
dividing (a) the total amount, if any, received or receivable by
the Company as consideration for the granting of such rights or
options or warrants, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise
of such rights or options or warrants, plus, in the case of such
rights or options or warrants which relate to Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange
thereof, by (b) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or
warrants or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights
or options or warrants) shall be less than the Exercise Price in
effect immediately prior to the time of the granting of such
rights or options or warrants (or less than the Market Price
determined as of the date of the granting of such rights or
options or warrants, as the case may be), then the total maximum
number of shares of Common Stock issuable upon the exercise of
rights or options or warrants or upon conversion or exchange of
the total maximum amount of such Convertible Securities issuable
upon the exercise of such rights or options or warrants shall (as
of the date of granting of such rights or options or warrants) be
deemed to have been issued for such price per share. Except as
otherwise provided in paragraph 3C(3), no adjustments of the
Exercise Price shall be made upon the actual issue of such Common
Stock or of such Convertible Securities upon exercise of such
rights or options or warrants or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible
Securities.
3C(2) Issuance of Convertible Securities - In case the
Company shall issue (whether directly or by assumption in a
merger or otherwise) or sell any Convertible Securities, whether
or not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which Common
Stock is issuable upon such conversion or exchange (determined by
dividing (a) the total amount received or receivable by the
Company as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (b) the total maximum number
of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than
the Exercise Price in effect
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immediately prior to the time of such issue or sale (or less than
the Market Price, determined as of the date of such issue or sale
of such Convertible Securities, as the case may be), then the
total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall
(as of the date of the issue or sale of such Convertible
Securities) be deemed to be outstanding and to have been issued
for such price per share. If any such issue or sale of such
Convertible Securities is made upon exercise of any rights to
subscribe for or to purchase or any option or warrant to purchase
any such Convertible Securities for which adjustments of the
Exercise Price have been or are to be made pursuant to other
provisions of this paragraph 3C, no further adjustment of the
Exercise Price shall be made by reason of such issue or sale.
Except as otherwise provided in paragraph 3C(3), no adjustments
of the Exercise Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible
Securities.
3C(3) Change in Purchase Price or Conversion Rate -- Upon
the happening of any of the following events, namely, if the
purchase price provided for in any right, option or warrant
referred to in the first sentence of paragraph 3C(1), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Security referred to in the first
sentence of paragraph 3C(1) or 3C(2), or the rate at which any
Convertible Securities referred to in the first sentence of
paragraph 3C(1) or 3C(2) are convertible into or exchangeable for
Common Stock, shall change at any time (other than under or by
reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such event shall
forthwith be readjusted to the Exercise Price which would have
been in effect at such time had such rights, options, warrants or
Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued
or sold; and on the expiration of any such right, option or
warrant or the termination of any such right to convert or
exchange such Convertible Securities, the Exercise Price then in
effect hereunder shall forthwith be increased to the Exercise
Price which would have been in effect at the time of such
expiration or termination had such right, option, warrant or
Convertible Security, to the extent outstanding immediately prior
to such expiration or termination, never been issued, and the
Common Stock issuable thereunder shall no longer be deemed to be
outstanding. If the purchase price provided for in any such
right, option or warrant referred to in the first sentence of
paragraph 3C(1) shall decrease or the rate at which any
Convertible Securities referred to in the first sentence of
paragraph 3C(1) or 3C(2) are convertible into or exchangeable for
Common Stock shall increase at any time under or by reason of
provisions with respect thereto designed to protect against
dilution, then in case of the delivery of Common Stock upon the
exercise of any such right, option or warrant or upon conversion
or exchange of any such Convertible Security, the Exercise Price
then in effect hereunder shall forthwith be adjusted to such
respective amount as would have obtained had such right, option,
warrant or Convertible Security never been issued as to such
Common Stock and had adjustments been made upon the issuance of
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the shares of Common Stock delivered as aforesaid, but only if as
a result of such adjustment the Exercise Price then in effect
hereunder is thereby decreased.
3C(4) Stock Dividends -- In case the Company shall declare
a dividend or make any other distribution upon any stock of the
Company payable in Common Stock or Convertible Securities, any
Common Stock or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
3C(5) Consideration for Stock -- In case any shares of
Common Stock or Convertible Securities or any rights or options
or warrants to purchase any such Common Stock or Convertible
Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by
the Company therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or
options or warrants to purchase any such Common Stock or
Convertible Securities shall be issued or sold in whole or in
part for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be
deemed to be the fair value of such consideration as determined
by the Board of Directors of the Company, without deduction of
any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible
Securities or any rights or options or warrants to purchase such
Common Stock or Convertible Securities shall be issued in
connection with any merger or consolidation in which the Company
is the surviving corporation, the amount of consideration
therefor shall be deemed to be the fair value as determined by
the Board of Directors of the Company of such portion of the
assets and business of the non-surviving corporation or
corporations as such Board shall determine to be attributable to
such Common Stock, Convertible Securities, rights, options or
warrants, as the case may be. In the event of any consolidation
or merger of the Company in which the Company is not the
surviving corporation or in the event of any sale of all or
substantially all of the assets of the Company for stock or other
securities of any corporation, the Company shall be deemed to
have issued a number of shares of its Common Stock for stock or
securities of the other corporation computed on the basis of the
actual exchange ratio on which the transaction was predicated and
for a consideration equal to the fair market value on the date of
such transaction of such stock or securities of the other
corporation, and if any such calculation results in adjustment of
the Exercise Price, the determination of the number of shares of
Common Stock issuable upon exercise of the Warrant immediately
prior to such merger, conversion or sale, for purposes of
subsection 3G shall be made after giving effect to such
adjustment of the Exercise Price.
3C(6) Record Date -- In case the Company shall take a
record of the holders of its Common Stock for the purpose of
entitling them (a) to receive a
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dividend or other distribution payable in Common Stock or in
Convertible Securities, or (b) to subscribe for or purchase
Common Stock or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares
of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
3C(7) Treasury Shares -- The number of shares of Common
Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of this subsection 3C.
3C(8) Definition of Market Price -- The Market Price of a
share of Common Stock or other securities on any day shall mean
the average closing price of a share of Common Stock or other
security for the 5 consecutive trading days preceding such day on
the principal national securities exchange or Nasdaq system on
which the shares of Common Stock or securities are listed or
admitted to trading or, if not listed or admitted to trading on
any national securities exchange or Nasdaq system, the average of
the reported bid and asked prices during such 5 trading day
period in the over-the-counter market as furnished by the
National Quotation Bureau, Inc., or, if such firm is not then
engaged in the business of reporting such prices, as furnished by
any similar firm then engaged in such business selected by the
Company, or, if there is no such firm, as furnished by any member
of the National Association of Securities Dealers, Inc. selected
by the Company or, if the shares of Common Stock or securities
are not publicly traded, the Market Price for such day shall be
the fair market value thereof determined jointly by the Company
and the holder of this Warrant; provided, however, that if such
parties are unable to reach agreement within a reasonable period
of time, the Market Price shall be determined in good faith by
the Board of Directors of the Company.
3C(9) Determination of Consideration in Connection with
Certain Acquisitions -- Anything in paragraph 3C(5) to the
contrary notwithstanding, in the case of an acquisition where all
or part of the purchase price is payable in Common Stock or
Convertible Securities but is stated as a dollar amount, where
the Company upon making the acquisition pays only part of a
maximum dollar purchase price which is payable in Common Stock or
Convertible Securities and where the balance of such purchase
price is deferred or is contingently payable under a formula
related to earnings over a period of time, (i) the consideration
received for any Common Stock or Convertible Securities delivered
at the time of the acquisition shall be deemed to be such part of
the total consideration as the portion of the dollar purchase
price then paid in Common Stock or Convertible Securities bears
to the total maximum dollar purchase price payable in Common
Stock or Convertible Securities, and (ii) in connection with each
issuance of additional Common Stock or Convertible Securities
pursuant to the terms of the
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agreement relating to such acquisition, the consideration
received shall be deemed to be that portion of the dollar
purchase price then and theretofore paid in Common Stock or
Convertible Securities, multiplied by a fraction, the numerator
of which shall be the number of shares (or in the case of
Convertible Securities other than stock, the aggregate principal
amount) then issued and the denominator of which shall be the
total number of shares (or in the case of Convertible Securities
other than stock, the aggregate principal amount) then and
theretofore issued under such acquisition agreement. In the event
that only a part of the purchase price for an acquisition is paid
in Common Stock or Convertible Securities in the manner referred
to in this paragraph 3C(9), the term "total consideration" as
used in this paragraph 3C(9) shall mean that part of the
aggregate consideration as is fairly allocable to the purchase
price paid in Common Stock or Convertible Securities in the
manner referred to in this paragraph 3C(9), as determined by the
Board of Directors of the Company.
3D. Adjustment for Certain Special Dividends. In case the Company shall
declare a dividend upon the Common Stock payable otherwise than out of
consolidated earnings or consolidated earned surplus, determined in accordance
with generally accepted accounting principles, including the making of
appropriate deductions for minority interests, if any, in subsidiaries (except
in Common Stock or Convertible Securities or rights or options or warrants to
purchase Common Stock or Convertible Securities, but including other
securities), the Exercise Price in effect immediately prior to the declaration
of such dividend shall be reduced (to the extent payable otherwise than out of
consolidated earnings or consolidated earned surplus) by an amount equal, in the
case of a dividend in cash, to the amount thereof payable per share of the
Common Stock, or in the case of any other dividend, to the fair value thereof
per share of the Common Stock as determined by the Board of Directors of the
Company. For the purposes of the foregoing a dividend other than in cash shall
be considered payable out of earnings or surplus (other than revaluation or
paid-in-surplus) only to the extent that such earnings or surplus are charged an
amount equal to the fair value of such dividend as determined by the Board of
Directors of the Company. Such reductions shall take effect as of the date on
which a record is taken for the purpose of such dividend, or, if a record is not
taken, the date as of which the holders of Common Stock of record entitled to
such dividend are to be determined.
3E. Subdivision or Combination of Stock. In case the Company shall at
any time subdivide its outstanding shares of Common Stock into a greater number
of shares, the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the outstanding shares
of Common Stock of the Company shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased.
3F. Certain Issues of Common Stock Excepted. Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment of the Exercise Price in connection with the issuance of stock
options pursuant to any stock option plan adopted by the Board of Directors of
the Company or the issuance of stock on the exercise or conversion of securities
of the Company outstanding prior to the date hereof.
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3G. Reorganization, Reclassification, Consolidation, Merger or Sale. If
the Company shall effect a reorganization, shall merge with or consolidate into
another corporation, or shall sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business and, pursuant to the terms
of such reorganization, merger, consolidation or disposition of assets, property
or assets of the Company, successor or transferee or an affiliate thereof or
cash are to be received by or distributed to the holders of Common Stock, then
the holder of this Warrant shall have the right thereafter to receive, upon the
exercise of this Warrant, the number of shares of stock or other securities,
property or assets of the Company, successor, transferee or affiliate thereof or
cash receivable upon or as a result of such reorganization, merger,
consolidation or disposition of assets by a holder of the number of shares of
Common Stock equal to that to which the holder of this Warrant upon the exercise
thereof immediately prior to such event would be entitled. The provisions of
this subsection 3G shall similarly apply to successive reorganizations, mergers,
consolidations or dispositions of assets. Upon any reorganization,
consolidation, merger or transfer hereinabove referred to, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable to
the shares of stock and other securities, property, assets and cash receivable
upon the exercise of this Warrant after the consummation of such reorganization,
consolidation, merger or transfer, as the case may be. The Company shall not
effect any such reorganization, consolidation, merger or transfer, unless prior
to the consummation thereof the successor corporation (if other than the
Company) resulting therefrom or the corporation purchasing such assets shall, by
written instrument executed and mailed to the registered holder hereof at the
last address of such holder appearing on the books of the Company, (i) assume
the obligation to deliver to such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to purchase, and (ii) agree to be bound by all the terms of this
Warrant.
3H. Notice of Adjustment. Upon any adjustment of the Exercise Price or
in the occurrence of any event which should result in an adjustment to the
Exercise Price, the Company shall promptly obtain the opinion of a firm of
independent certified public accountants (which may be the regular auditors of
the Company) of recognized national standing selected by the Board of Directors
of the Company, which opinion shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such Price upon the exercise of the Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company will promptly deliver, by registered or
certified mail, postage prepaid, a copy of such accountants' opinion to the
registered holder of such Warrant at the address of such holder as shown on the
Company's books.
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3I. Other Notices. In case at any time:
(1) the Company shall pay any cash dividend on its
Common Stock;
(2) the Company shall declare any dividend payable in
stock upon its Common Stock or make any special dividend or other
distribution;
(3) the Company shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of
any class or other rights;
(4) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation; or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give written notice,
by registered or certified mail, postage prepaid, addressed to the holder of the
Warrant at the address of such holder as shown on the books of the Company, of
(1) the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or (2) the date
(or, if not then known, a reasonable approximation thereof by the Company) on
which such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as the case may be.
Such notice shall also specify (or, if not then known, reasonably approximate)
the date as of which the holders of Common Stock of record shall participate in
such dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such written notice shall be
given at least ten (10) days prior to the action in question and not less than
ten (10) days prior to the record date or the date on which the Company's
transfer books are closed in respect thereto.
3J. Certain Events. If any event occurs as to which in the opinion of
the Board of Directors the other provisions of this Section 3 are not strictly
applicable or if strictly applicable would not fairly protect the purchase
rights of the holder of the Warrant in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
equitable adjustment in the application of such provisions, in accordance with
such essential intent and principles, so as to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
increasing the Exercise Price as otherwise determined pursuant to this Section 3
except in the event of a combination of shares of the type contemplated in
subsection 3E and then in no event to an amount larger than the Exercise Price
as adjusted pursuant to subsection 3E.
3K. Loan Agreement Adjustment. In addition to the adjustments set forth
in this Section 3, the Exercise Price shall be adjusted as set forth in the Loan
Agreement dated the date hereof between the Company and the holder of this
Warrant.
10
<PAGE>
4. Definition of Common Stock. As used herein the term "Common Stock"
shall mean and include the Company's authorized Common Stock as constituted on
the date hereof and shall also include any capital stock of any class of the
Company hereafter authorized which shall not be limited to a fixed sum or sums
or percentage or percentages of par value in respect of the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Company; provided that the shares purchasable pursuant to this Warrant shall
include only shares designated as Common Stock of the Company on the date hereof
or, in case of any reclassification of the outstanding shares thereof, the
stock, securities or assets provided for in subsection 3F above.
5. No Voting Rights. This Warrant shall not entitle the holder hereof to
any voting rights or other rights as a stockholder of the Company.
6. Transfer and Registration of Warrants. This Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company referred to in Section 1 hereof by the holder hereof in person or his
duly authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that this Warrant, when endorsed in blank, shall be deemed negotiable,
and that the holder hereof, when this Warrant shall have been so endorsed may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner thereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant, or to the transfer hereof on the books
of the Company, any notice to the contrary notwithstanding; but until such
transfer on such books, the Company may treat the registered holder hereof as
the owner for all purposes.
7. Exchanges of Warrants. This Warrant is exchangeable, upon the
surrender hereof by the holder hereof at such office or agency of the Company,
for new Warrants of like tenor representing in the aggregate the right to
subscribe for and purchase the number of shares which may be subscribed for and
purchased hereunder, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by said
holder hereof at the time of such surrender.
8. No Fractional Shares. No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issued upon the exercise
of the Warrant, but, in lieu thereof, there shall be paid an amount in cash
equal to the same fraction of the Market Price of a whole share of Common Stock
on the business day preceding the day of exercise.
9. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of the
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
11
<PAGE>
10. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
11. Notices. Except as otherwise provided herein, any notices hereunder
shall be deemed to have been given five (5) days after having been mailed in the
United States by registered or certified mail, addressed if given to the Company
to the principal office of the Company, Attention: President, or if given to a
holder of this Warrant addressed to such holder at his address as the same shall
appear on the books of the Company.
12. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by both
the Company and the holder hereof. This Warrant is being delivered in the State
of New York and shall be construed and enforced in accordance with and governed
by the laws of such State. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
13. Expiration of Warrants. At 5:00 P.M. New York time on the last day
of its Exercise Period, the Warrant, if not exercised prior thereto, shall be
and become wholly void and of no value.
IN WITNESS WHEREOF, Room Plus, Inc. has caused this Warrant to be
signed by one of its duly authorized officers.
Dated: February 5, 1999
ROOM PLUS, INC.
By: /s/ Marc Zucker
-----------------------------
12
<PAGE>
SUBSCRIPTION AGREEMENT
(To be signed only upon exercise of Warrant)
To ROOM PLUS, INC.:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, shares of Common Stock of ROOM PLUS, INC. and
herewith (a)makes payment of $ therefor, (b) surrender securities
having a Market Price of $ or (c) elects to receive the difference
between Market Price and the Exercise Price, payable in shares. The undersigned
requests that the certificates for such shares be issued in the name of,
and delivered
to, , whose address is .
Dated:
----------------- ---------------------------
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant)
---------------------------
(Address)
13
<PAGE>
ASSIGNMENT
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
all of the rights of the undersigned under the within Warrant, with respect to
the number of shares of Common Stock of ROOM PLUS, INC. covered thereby set
forth hereinbelow unto:
Name of Assignee Address No. of Shares
---------------- ------- -------------
Dated: , 19
------------- -- ---------------------------
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant)
---------------------------
(Address)
Signed in the presence of:
- -------------------------
14
EXHIBIT 4.15
Stock Option Agreement by and between the Company and Ronald A. Kaplan
STOCK OPTION AGREEMENT
WHEREAS, Room Plus, Inc. (the "Company") and Ronald A. Kaplan
("Grantee") are parties to an Amended and Restated Stock Option Agreement dated
November 1, 1998 (the "Prior Option"); and
WHEREAS, the Company and the Grantee have agreed to cancel the Prior
Option and to enter into this Stock Option Agreement ("Option") pursuant to
which Grantee shall have an option to purchase up to 300,000 shares of the
Company's Common Stock, par value $.00133 per share, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the Company and the Grantee agree that the Prior
Option is hereby cancelled and that, pursuant to this Option, the Grantee shall
have the option to purchase the number of shares of the Company's Common Stock
specified below, during the term ending at midnight (prevailing local time at
the Company's principal offices) on the expiration date of this Option specified
below, at the option exercise price specified below, subject to and upon the
following terms and conditions:
1. Identifying Provisions: As used in this Option, the
following terms shall have the following respective meanings:
(a) Grantee: Ronald A. Kaplan
(b) Date of grant: February 5, 1999
(c) Number of shares optioned: 300,000
(d) Option exercise price per share: $0.75
(e) Expiration date: September 30, 2003
This Option is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal Revenue Code.
2. Exercise Schedule: Subject to Section 3 hereof, this Option
shall vest and become exercisable as follows: This Option shall become
exercisable in respect of 33,600 shares on the date hereof, in respect of an
additional 8400 shares on the 1st day of each month thereafter to and including
September 1, 2001 and in respect of 6000 shares on October 1, 2001 (each such
date a "Vesting Date") and shall be exercisable in whole or in part, from time
to time, on or prior to the expiration date.
1
<PAGE>
3. Additional Exercise Provisions: Notwithstanding the
provisions of Section 2, the exercise of this Option shall be subject to the
following additional provisions:
(a) If the Grantee's employment shall be terminated for Cause
pursuant to Section 6.1 of the Employment Agreement by
reason of a criminal conviction covered by Section
6.3(c) thereof, this Option, including all rights of
exercise, shall expire and terminate forthwith upon the
effective date of such termination for Cause; in
addition, if the Company gives notice to the Grantee
pursuant to Section 6.3 of the Employment Agreement of
its intention to terminate Grantee's employment for
Cause based on subsection (c) thereof, Grantee's right
to exercise this Option shall be suspended during such
period of notice;
(b) If the Grantee's employment is terminated by the Company
pursuant to (i) Section 2.2 of the Employment Agreement
effective at the end of the Initial Term (as therein
defined) or (ii) Section 6.1(a) (death) or Section 6.1(b)
(disability) of the Employment Agreement , this Option
shall thereupon become exercisable in respect of such
additional number of shares in respect of which it would
have become exercisable in the 12-month period immediately
following such termination of employment;
(c) If the Grantee's employment by the Company is terminated
by the Grantee pursuant to Section 6.1(d) ("Good
Reason") or Section 6.1(e) ("Change of Control") of the
Employment Agreement or by the Company under any of the
circumstances covered by Section 6.6(E) ("Termination by
the Employer Without Cause") thereof, this Option shall
thereupon become exercisable in respect of all shares
for which the Vesting Date had not occurred prior to
such termination of employment ; provided, however,
-------- that, in the event of a termination of
Grantee's employment by the Company under circumstances
covered by Section 6.6(E) prior to the end of the
Initial Term, this Option shall become exercisable only
in respect of the number of shares for which the Vesting
Date would have occurred on or prior to the second
anniversary of the Effective Date (as therein defined);
and
(d) Except as set forth in (b) and (c) of this Section 3, if
Grantee ceases to be employed by the Company for any
reason, this Option shall not at any time become
exercisable in respect of any shares for which the Vesting
Date had not occurred prior to such termination of
employment.
4. Non-Transferable: The Grantee may not transfer this Option
except by will or the laws of descent and distribution. This Option shall not be
otherwise transferred, assigned, pledged, hypothecated or disposed of in any
way, whether by operation of law or otherwise, and shall be exercisable during
the Grantee's lifetime only by the Grantee or his guardian or legal
representative.
2
<PAGE>
5. Adjustments and Corporate Reorganizations: If the outstanding
shares of the class then subject to this Option are increased or decreased, or
are changed into or exchanged for a different number or kind of shares or
securities, as a result of one or more reorganizations, recapitalizations, stock
splits, reverse stock splits, stock dividends or the like, appropriate
adjustments shall be made in the number and/or kind of shares or securities for
which the unexercised portions of this Option may thereafter be exercised, all
without any change in the aggregate exercise price applicable to the unexercised
portions of this Option, but with a corresponding adjustment in the exercise
price per share or other unit. No fractional share of stock shall be issued
under this Option or in connection with any such adjustment. Such adjustments
shall be made by or under authority of the Company's board of directors whose
determinations as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merger with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all of its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Grantee shall have the right thereafter to receive, upon
exercise of this Option, the number of shares of common stock of the successor
or acquiring corporation or of the company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Option is exercisable
immediately prior to such event (including after giving effect to the
accelerated vesting referred to in Section 3). In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor and acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Option to be performed and observed by
the Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares
of the Common Stock for which this Option is exercisable which shall be as
nearly equivalent as practicable to the adjustments provided for in this Section
5. For purposes of this Section 5, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscriber for or purchase any such stock. The
foregoing provisions of this Section 5 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
6. Exercise, Payment For and Delivery of Stock: This Option may
be exercised by the Grantee or other person then entitled to exercise it by
giving five (5) business days' written
3
<PAGE>
notice of exercise to the Company specifying the number of shares to be
purchased and the total purchase price, accompanied by a check to the order of
the Company in payment of such price. If the Company is required to withhold an
account of any present or future tax imposed as a result of such exercise, the
notice of exercise shall be accompanied by a check to the order of the Company
in payment of the amount of such withholding.
7. Alternative Payment with Stock: Notwithstanding the foregoing
provisions requiring payment by check, payment of such purchase price or any
portion thereof may be made with shares of stock of the same class as the shares
then subject to this Option, if shares of that class are then publicly traded
(as defined below), such shares to be credited toward such purchase price at the
Market Price thereof as defined in Section 8, in which event the stock
certificates evidencing the shares so to be used shall accompany the notice of
exercise and shall be duly endorsed or accompanied by duly executed stock powers
to transfer the same to the Company; provided, however, that such payment in
stock instead of cash shall not be effective and shall be rejected by the
Company if (i) the Company is then prohibited from purchasing or acquiring
shares of the class of its stock thus tendered to it, or (ii) the right or power
of the person exercising the Option to deliver such shares in payment of said
purchase price is subject to the prior interests of any other person (excepting
the Company), as indicated by legends upon the certificate(s) or as known to the
Company. For purposes of this Section, "publicly traded" shares are those which
are listed or admitted to unlisted trading privileges on a national securities
exchange or as to which sales or bid and offer quotations are reported in the
automated quotation system ("NASDAQ") operated by the National Association of
Securities Dealers, Inc. ("NASD"). If the Company rejects the payment in stock,
the tendered notice of exercise shall not be effective hereunder unless promptly
after being notified of such rejection the person exercising the Option pays the
purchase price in acceptable form. If and while payment of the purchase price
with stock is permitted in accordance with the foregoing provisions, the person
then entitled to exercise this Option may, in lieu of using previously
outstanding shares therefor, use some of the shares as to which this Option is
then being exercised, in which case the notice of exercise need not be
accompanied by any stock certificates but shall include a statement directing
the Company to withhold so many of the shares that would otherwise have been
delivered upon that exercise of this Option as equals the number of shares that
would have been transferred to the Company if the purchase price had been with
previously issued stock.
8. Definition of Market Price: The Market Price of a share of
stock or other securities on any day shall mean the average closing price of a
share of Common Stock or other security for the 5 consecutive trading days
preceding such day on the principal national securities exchange or NASDAQ
system on which the shares of Common Stock or securities are listed or admitted
to trading or, if not listed or admitted to trading on any national securities
exchange or NASDAQ system, the average of the reported bid and asked prices
during such 5 trading day period in the over-the-counter market as furnished by
the National Quotation Bureau, Inc., or, if such firm is not then engaged in
such business selected by the Company, or, if there is no such firm, as
furnished by any member of the National Association of Securities Dealers, Inc.
selected by the Company, or if the shares of Common Stock or securities are not
publicly traded, the Market Price for such day shall be the fair market value
thereof as determined in good faith by the Board of Directors of the Company.
4
<PAGE>
9. Rights in Shares Before Issuance and Delivery: No person shall
be entitled to the privileges of stock ownership in respect of any shares
issuable upon exercise of this Option, unless and until such shares have been
issued to such person as fully paid shares.
10. Requirements of Law of Stock Exchanges: By accepting this
Option, the Grantee represents and agrees for himself and his transferees by
will or the laws of descent and distribution that, unless a registration
statement under the Securities Act of 1933 is in effect as to shares purchased
upon any exercise of this Option, (i) any and all shares so purchased shall be
acquired for his personal account and not with a view to or for sale in
connection with any distribution, and (ii) each notice of the exercise of any
portion of this Option shall be accompanied by a representation and warranty in
writing, signed by the person entitled to exercise the same, that the shares are
being so acquired in good faith for his personal account and not with view to or
for sale in connection with any distribution.
No certificate or certificates for shares of stock purchased upon
exercise of this Option shall be issued and delivered prior to the admission of
such shares to listing on notice of issuance on any stock exchange on which
shares of that class are then listed, nor unless and until, in the opinion of
counsel for the Company, such securities may be issued and delivered without
causing the Company to be in violation of or incur any liability under any
federal, state or other securities law, any requirement of any securities
exchange listing agreement to which the Company may be a party, or any other
requirement of law or of any regulatory body having jurisdiction over the
Company.
Notwithstanding the foregoing , the company agrees to use its
best efforts to cause a registration statement on Form S-8 (or comparable form)
to be filed with the Securities and Exchange Commission in respect of the shares
underlying this Option and to become effective and to take all steps as may be
necessary to cause such shares to be eligible for trading on any stock exchange
on which the Company's Common Stock is traded.
11. Notices: Any notice to be given to the Company shall be
addressed to the Company in care of its Secretary as its principal office, and
any notice to be given to the Grantee shall be addressed to him at the address
given beneath his signature hereto or at such other address as the Grantee may
hereafter designate in writing to the Company. Any such notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified, and deposited, postage and registry or
certification fee prepaid, in a post office or branch post office regularly
maintained by the United States Postal Service.
12. Applicable Law: This Option shall be construed and enforced
in accordance with the laws of the State of New York applicable to contracts
made and to be performed therein.
5
<PAGE>
IN WITNESS WHEREOF, the parties executed this Stock Option
Agreement as of February 5, 1999.
ROOM PLUS, INC.
By: /s/ Marc Zucker
------------------------------
Title: President of Merchandising
---------------------------
ACCEPTED:
/s/ Ronald A. Kaplan
- ---------------------------------
Grantee
Ronald A. Kaplan
150 West 56th Street
Apt. 5804
New York, New York 10019
6
EXHIBIT 4.16
Stock Option Agreement by and Between the Company and Stephen Giordano
STOCK OPTION AGREEMENT
WHEREAS, Room Plus, Inc. (the "Company") and Stephen Giordano
("Grantee") are parties to a Stock Option Agreement dated September 21, 1998
(the "Prior Option"); and
WHEREAS, the Company and the Grantee have agreed to cancel the
Prior Option and to enter into this Stock Option Agreement ("Option") pursuant
to which Grantee shall have an option to purchase up to 100,000 shares of the
Company's Common Stock, par value $.00133 per share, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the Company and the Grantee agree that the Prior
Option is hereby cancelled and that, pursuant to this Option, the Grantee shall
have the option to purchase the number of shares of the Company's Common Stock
specified below, during the term ending at midnight (prevailing local time at
the Company's principal offices) on the expiration date of this Option specified
below, at the option exercise price specified below, subject to and upon the
following terms and conditions:
1. Identifying Provisions: As used in this Option, the
following termsshall have the following respective meanings:
(a) Grantee: Stephen Giordano
(b) Date of grant: February 5, 1999
(c) Number of shares optioned: 100,000
(d) Option exercise price per share: $0.75
(e) Expiration date: September 20, 2003
(f) Employment Agreement: the Employment Agreement
dated as of September 21, 1998 between the Company
and the Grantee, together with any amended or
successor employment agreement (References herein
to any "Section" of the Employment Agreement shall
refer to the corresponding sections of the
Employment Agreement dated September 21, 1998 and
any comparable provision of any amended or
successor employment agreement.)
This Option is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal Revenue Code.
2. Exercise Schedule: Subject to Section 3 hereof, this
Option shall vest and become exercisable as follows: This Option shall become
exercisable in respect of 11,200 shares on February 8, 1999, in respect of an
additional 2800 shares on the 21st day of each month thereafter to and including
August 21, 2001 and in respect of 2000 shares on September 21, 2001
1
<PAGE>
(each such date a "Vesting Date") and shall be exercisable in whole or in part,
from time to time, on or prior to the expiration date.
3. Additional Exercise Provisions: Notwithstanding the
provisions of Section 2, the exercise of this Option shall be subject to the
following additional provisions:
(a) If the Grantee's employment shall be terminated for Cause
pursuant to Section 6.1 of the Employment Agreement by
reason of a criminal conviction covered by Section 6.3(c)
thereof, this Option, including all rights of exercise,
shall expire and terminate forthwith upon the effective
date of such termination for Cause; in addition, if the
Company gives notice to the Grantee pursuant to Section
6.3 of the Employment Agreement of its intention to
terminate Grantee's employment for Cause based on
subsection (c) thereof, Grantee's right to exercise this
Option shall be suspended during such period of notice;
(b) If the Grantee's employment is terminated by the Company
pursuant to (i) Section 2.2 of the Employment Agreement
effective at the end of the Initial Term (as therein
defined) or (ii) Section 6.1(a) (death) or Section 6.1(b)
(disability) of the Employment Agreement , this Option
shall thereupon become exercisable in respect of such
additional number of shares in respect of which it would
have become exercisable in the 12-month period immediately
following such termination of employment;
(c) If the Grantee's employment by the Company is terminated
by the Grantee pursuant to Section 6.1(d) ("Good Reason")
or Section 6.1(e) ("Change of Control") of the Employment
Agreement or by the Company under any of the circumstances
covered by Section 6.6(E) ("Termination by the Employer
Without Cause") thereof, this Option shall thereupon
become exercisable in respect of all shares for which the
Vesting Date had not occurred prior to such termination of
employment ; provided, however, -------- that, in the
event of a termination of Grantee's employment by the
Company under circumstances covered by Section 6.6(E)
prior to the end of the Initial Term, this Option shall
become exercisable only in respect of the number of shares
for which the Vesting Date would have occurred on or prior
to the second anniversary of the Effective Date (as
therein defined); and
(d) Except as set forth in (b) and (c) of this Section 3, if
Grantee ceases to be employed by the Company for any
reason, this Option shall not at any time become
exercisable in respect of any shares for which the Vesting
Date had not occurred prior to such termination of
employment.
4. Non-Transferable: The Grantee may not transfer this Option
except by will or the laws of descent and distribution. This Option shall not be
otherwise transferred, assigned, pledged, hypothecated or disposed of in any
way, whether by operation of law or otherwise, and
2
<PAGE>
shall be exercisable during the Grantee's lifetime only by the Grantee or his
guardian or legal representative.
5. Adjustments and Corporate Reorganizations: If the outstanding
shares of the class then subject to this Option are increased or decreased, or
are changed into or exchanged for a different number or kind of shares or
securities, as a result of one or more reorganizations, recapitalizations, stock
splits, reverse stock splits, stock dividends or the like, appropriate
adjustments shall be made in the number and/or kind of shares or securities for
which the unexercised portions of this Option may thereafter be exercised, all
without any change in the aggregate exercise price applicable to the unexercised
portions of this Option, but with a corresponding adjustment in the exercise
price per share or other unit. No fractional share of stock shall be issued
under this Option or in connection with any such adjustment. Such adjustments
shall be made by or under authority of the Company's board of directors whose
determinations as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merger with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all of its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Grantee shall have the right thereafter to receive, upon
exercise of this Option, the number of shares of common stock of the successor
or acquiring corporation or of the company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Option is exercisable
immediately prior to such event (including after giving effect to the
accelerated vesting referred to in Section 3). In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor and acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Option to be performed and observed by
the Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares
of the Common Stock for which this Option is exercisable which shall be as
nearly equivalent as practicable to the adjustments provided for in this Section
5. For purposes of this Section 5, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscriber for or purchase any such stock. The
foregoing provisions of this Section 5 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
3
<PAGE>
6. Exercise, Payment For and Delivery of Stock: This Option may
be exercised by the Grantee or other person then entitled to exercise it by
giving five (5) business days' written notice of exercise to the Company
specifying the number of shares to be purchased and the total purchase price,
accompanied by a check to the order of the Company in payment of such price. If
the Company is required to withhold an account of any present or future tax
imposed as a result of such exercise, the notice of exercise shall be
accompanied by a check to the order of the Company in payment of the amount of
such withholding.
7. Alternative Payment with Stock: Notwithstanding the foregoing
provisions requiring payment by check, payment of such purchase price or any
portion thereof may be made with shares of stock of the same class as the shares
then subject to this Option, if shares of that class are then publicly traded
(as defined below), such shares to be credited toward such purchase price at the
Market Price thereof as defined in Section 8, in which event the stock
certificates evidencing the shares so to be used shall accompany the notice of
exercise and shall be duly endorsed or accompanied by duly executed stock powers
to transfer the same to the Company; provided, however, that such payment in
stock instead of cash shall not be effective and shall be rejected by the
Company if (i) the Company is then prohibited from purchasing or acquiring
shares of the class of its stock thus tendered to it, or (ii) the right or power
of the person exercising the Option to deliver such shares in payment of said
purchase price is subject to the prior interests of any other person (excepting
the Company), as indicated by legends upon the certificate(s) or as known to the
Company. For purposes of this Section, "publicly traded" shares are those which
are listed or admitted to unlisted trading privileges on a national securities
exchange or as to which sales or bid and offer quotations are reported in the
automated quotation system ("NASDAQ") operated by the National Association of
Securities Dealers, Inc. ("NASD"). If the Company rejects the payment in stock,
the tendered notice of exercise shall not be effective hereunder unless promptly
after being notified of such rejection the person exercising the Option pays the
purchase price in acceptable form. If and while payment of the purchase price
with stock is permitted in accordance with the foregoing provisions, the person
then entitled to exercise this Option may, in lieu of using previously
outstanding shares therefor, use some of the shares as to which this Option is
then being exercised, in which case the notice of exercise need not be
accompanied by any stock certificates but shall include a statement directing
the Company to withhold so many of the shares that would otherwise have been
delivered upon that exercise of this Option as equals the number of shares that
would have been transferred to the Company if the purchase price had been with
previously issued stock.
8. Definition of Market Price: The Market Price of a share of
stock or other securities on any day shall mean the average closing price of a
share of Common Stock or other security for the 5 consecutive trading days
preceding such day on the principal national securities exchange or NASDAQ
system on which the shares of Common Stock or securities are listed or admitted
to trading or, if not listed or admitted to trading on any national securities
exchange or NASDAQ system, the average of the reported bid and asked prices
during such 5 trading day period in the over-the-counter market as furnished by
the National Quotation Bureau, Inc., or, if such firm is not then engaged in
such business selected by the Company, or, if there is no such firm, as
furnished by any member of the National Association of Securities Dealers, Inc.
selected by the Company, or if the shares of Common Stock or securities are not
publicly traded, the Market Price
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for such day shall be the fair market value thereof as determined in good faith
by the Board of Directors of the Company.
9. Rights in Shares Before Issuance and Delivery: No person shall
be entitled to the privileges of stock ownership in respect of any shares
issuable upon exercise of this Option, unless and until such shares have been
issued to such person as fully paid shares.
10. Requirements of Law of Stock Exchanges: By accepting this
Option, the Grantee represents and agrees for himself and his transferees by
will or the laws of descent and distribution that, unless a registration
statement under the Securities Act of 1933 is in effect as to shares purchased
upon any exercise of this Option, (i) any and all shares so purchased shall be
acquired for his personal account and not with a view to or for sale in
connection with any distribution, and (ii) each notice of the exercise of any
portion of this Option shall be accompanied by a representation and warranty in
writing, signed by the person entitled to exercise the same, that the shares are
being so acquired in good faith for his personal account and not with view to or
for sale in connection with any distribution.
No certificate or certificates for shares of stock purchased upon
exercise of this Option shall be issued and delivered prior to the admission of
such shares to listing on notice of issuance on any stock exchange on which
shares of that class are then listed, nor unless and until, in the opinion of
counsel for the Company, such securities may be issued and delivered without
causing the Company to be in violation of or incur any liability under any
federal, state or other securities law, any requirement of any securities
exchange listing agreement to which the Company may be a party, or any other
requirement of law or of any regulatory body having jurisdiction over the
Company.
Notwithstanding the foregoing , the company agrees to use its
best efforts to cause a registration statement on Form S-8 (or comparable form)
to be filed with the Securities and Exchange Commission in respect of the shares
underlying this Option and to become effective and to take all steps as may be
necessary to cause such shares to be eligible for trading on any stock exchange
on which the Company's Common Stock is traded.
11. Notices: Any notice to be given to the Company shall be
addressed to the Company in care of its Secretary as its principal office, and
any notice to be given to the Grantee shall be addressed to him at the address
given beneath his signature hereto or at such other address as the Grantee may
hereafter designate in writing to the Company. Any such notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified, and deposited, postage and registry or
certification fee prepaid, in a post office or branch post office regularly
maintained by the United States Postal Service.
12. Applicable Law: This Option shall be construed and enforced
in accordance with the laws of the State of New York applicable to contracts
made and to be performed therein.
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IN WITNESS WHEREOF, the Company has granted this Option as of the
date of grant specified above.
ROOM PLUS, INC.
By: /s/ Marc Zucker
---------------------------------
Title: President of Merchandising
------------------------------
ACCEPTED:
/s/ Stephen Giordano
- ---------------------------------
Grantee
Stephen Giordano
427 Portside Drive
Edgewater, New Jersey 07024
