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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
COMPUTER MARKETPLACE(R), INC.
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(Name of Issuer)
Common Stock, $.0001 par value
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(Title of Class of Securities)
205216
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(CUSIP Number)
Elliot Loewenstern, President
Victoria Holdings, Inc.
6700 North Andrews Avenue
Suite 500
Ft. Lauderdale, FL 33309
(954) 351-4200
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 31, 1996
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(Date of Event which Requires filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Statement because of Rule
13d-1(b)(3) or (4), check the following box:[ ]
Check the following box if a fee is being paid with the
Statement:[ ]
Note: Six copies of this Statement, including all exhibits, should
be filed with the Commission. SEE Rule 13d-1(a) for other parties
to whom copies are to be sent.
The information required on the remainder of this cover page shall not be deemed
"filed" for the purpose of Section 18 of the Securities Exchange Act of 1934
("Act") or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act.
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CUSIP NO. 205216 13D
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(1) NAME OF REPORTING PERSON
Victoria Holdings, Inc.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(A) [ ]
(B) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS
OO (Other) See Answer to Item 3
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
X
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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: (7) SOLE VOTING POWER
: (a) 6,000,000
:-----------------------------------
: (8) SHARED VOTING POWER
NUMBER OF SHARES :
BENEFICIALLY :___________________________________
OWNED BY EACH REPORTING : (9) SOLE DISPOSITIVE POWER
PERSON WITH : (a) 6,000,000
:-----------------------------------
: (10) SHARED DISPOSITIVE POWER
:
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
(a) 6,000,000
- --------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
(a) 42.5%
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(14) TYPE OF REPORTING PERSON
CO
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ITEM 1. SECURITY AND ISSUER
The class of equity securities to which this statement on Schedule 13D
relates is as follows:
Common stock, par value $.0001, (the "Company Common Stock")
of Computer Marketplace, Inc., a Delaware Corporation (the
"Company" or the "Issuer")
The principal executive officers of the Company are located at 1490
Railroad Street, Corona, California 91720
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is filed by Victoria Holdings, Inc., a corporation
organized under the laws of the State of Delaware ("Victoria Holdings").
Victoria Holding's principal business is providing corporate finance assistance
and consulting services to businesses. Its principal office is at 6700 North
Andrews Avenue, Suite 500, Ft. Lauderdale, FL 33309.
(a) The executive officers and directors of Victoria Holdings
are Elliot A. Loewenstern, who is the President and director, and
Richard Bronson, who is the Secretary/Treasurer and director. The
controlling shareholders are Elliot A. Loewenstern and Shelley
Loewenstern, as Tenants by the Entireties and the Richard Bronson
Trust, of which Mr. Richard Bronson is the Trustee.
(b) The business address for both Mr. Loewenstern and Mr.
Bronson is 6700 North Andrews Avenue, Suite 500, Ft. Lauderdale, FL
33309.
(c) Both Mr. Loewenstern and Mr. Bronson are in the
investment banking business.
(d) None.
(e) In 1993, the Securities and Exchange Commission filed a complaint
against both Elliot Loewenstern and Richard Bronson as principals of Biltmore
Securities, Inc., alleging violations of Section 17(a) of the Securities Act of
1933, Section 10(b) and 15(c) of the Securities Exchange Act of 1934, and Rules
10b-5, 10b-
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6 and 15cl-2 promulgated thereunder. On July 22, 1995, the complaint was
dismissed, with prejudice, as to both Mr. Loewenstern and Mr. Bronson. Mr.
Bronson agreed to a suspension from associating in any supervisory capacity with
any broker, dealer, municipal securities dealer, investment advisor or
investment company for a period of twelve (12) months from the beginning of said
suspension. Mr. Loewenstern also agreed to a suspension from associating in any
supervisory capacity with any broker, dealer, municipal securities dealer,
investment advisor or investment company for a period of twelve (12) months
commencing upon the expiration of Mr. Bronson's suspension.
(f) Citizenship: Messrs. Loewenstern and Bronson and Mrs. Loewenstern
are U.S. citizens
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On December 9, 1996, Victoria Holdings entered into a Consulting
Agreement wherein it provided consulting services to the Company and received
options to purchase shares of Company Common Stock as consideration for such
services. Victoria Holdings did not use any funds to purchase the options.
ITEM 4. PURPOSE OF THE TRANSACTION
The acquisition of the securities of the Issuer were as consideration
for the consulting services rendered to the Company by Victoria Holdings.
Subject to many factors, including the Issuer's financial condition, its
prospects, the market in general, other investment opportunities and
developments concerning Victoria Holdings' business, additional securities of
the Issuer may be purchased or sold.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Based upon current information available, there were 8,114,542 shares
of Company Common Stock issued and outstanding on the reporting date of this
Statement.
(a) On December 31, 1996, Victoria Holdings, pursuant to an Option
Agreement, was issued options to purchase 6,000,000 shares of Company Common
Stock, which are exercisable at $.166667 beginning on December 31, 1996 for a
term of five (5) years; this constitutes 42.5% of the outstanding shares of
Company Common Stock.
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(b) Victoria Holdings, through Elliot A. Loewenstern and Shelley
Loewenstern, as Tenants by the Entireties, and/or The Richard Bronson Trust, has
sole power to vote or direct the vote and sole power to dispose or direct the
disposition of the Company Common Stock owned by Victoria Holdings upon
exercise of the Options.
(c) There were no other transactions effected by Victoria Holdings
during the 60 day period prior to December 31, 1996 involving Company Common
Stock.
(d) N/A
(e) N/A
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
Other than the consulting agreement entered into by Victoria Holdings
with the Issuer on December 9, 1996, there are no other arrangements,
understandings or relationships with respect to securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A copy of the Consulting Agreement dated December 9, 1996
between Victoria Holdings, Inc. and Computer Marketplace, Inc. is
attached hereto.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement on Schedule 13D is
true, complete and correct as of the date hereof.
Dated: 5/27/97
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VICTORIA HOLDINGS, INC.
By: Elliot Loewenstern
-----------------------------
Name: Elliot Loewenstern
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Title: President
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CONSULTING AGREEMENT
--------------------
Agreement made and entered into as of the 9th day of December, 1996, by
and between Computer Marketplace, Inc., a Delaware corporation having offices at
1490 Railroad Street, Corona, CA 91720 (the "Company"), and Victoria Holdings,
Inc., a Delaware corporation and an affiliate of Biltmore Securities, Inc., a
Florida corporation having offices at 6700 North Andrews Avenue, Fort
Lauderdale, Florida 33309 (the "Consultant").
W I T N E S S E T H:
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WHEREAS, the Company desires to secure the services of the Consultant
to provide assistance with respect to corporate finance and evaluations of
possible business partners, and the Consultant desires to provide such services
to the Company, subject to and in accordance with the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is hereby agreed as follows:
1. RETENTION.
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The Company hereby retains the Consultant and the Consultant hereby
accepts such retention by Company, for the period and upon the terms and
conditions set forth in this Agreement.
2. DUTIES.
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(a) The Consultant shall serve the Company generally as a consultant
to assist the Company with regard to corporate finance, evaluations of possible
business partners and such other matters relating to the Company as may be
requested by the Company from time to time.
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The Consultant will seek to find business partners suitable for the Company and
assist in the structuring, negotiating and financing of such transactions.
(b) Throughout the Term (as hereinafter defined in Paragraph 3), the
Consultant shall devote its best efforts to the performance of its duties
hereunder in a manner which will faithfully and diligently further the business
interests of the Company. It is anticipated that over the Term the Consultant
will devote such time to the performance of its duties hereunder as is
reasonably requested by the Company from time to time.
3. TERM.
----
This Agreement shall be in effect for a term (the "Term") of three (3)
years commencing as of the date hereof and terminating on the third anniversary
of such date. Thereafter, this Agreement may be extended by mutual agreement of
the parties.
4. COMPENSATION.
------------
(a) FUTURE SERVICES. As compensation for services to be rendered by
the Consultant during the Term, the Company is issuing simultaneously with the
execution and delivery of this Agreement options (the "Options") to purchase
6,000,000 shares (or 1,000,000 shares of Common Stock following the 1-for-6
reverse stock split proposed by the Company) (the "Option Shares") of the
Company's common stock, par value $.0001 per share (the "Common Stock"), for an
exercise price of $.167 per share (or $1.00 per share after giving effect to
the proposed 1-for-6 reverse stock split). The Options will be exercisable for
a period commencing upon the consummation by the Company and/or its affiliates
of a financing providing gross proceeds to the Company of approximately
$1,000,000 (the "Financing") and terminating on the fifth anniversary of the
date hereof: PROVIDED, that if the Financing has not
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occurred by January 27, 1997, the Options shall terminate. The Options will be
issued pursuant to an option agreement substantially in the form annexed hereto
as Exhibit A.
(b) CORPORATE FINANCE TRANSACTIONS. In the event that during the Term
the Company consummates (i) the acquisition of one or more businesses
introduced to the Company by the Consultant which in the aggregate have net
assets of not less than $2,500,000 or (ii) the divestiture of assets outside
the ordinary course of business, or the sale of a majority of the Company's
capital stock outside the ordinary course of business, by merger or otherwise,
to a purchaser introduced to the Company by the Consultant resulting in net
proceeds to the Company of not less than $2,000,000 in cash or stock
(COLLECTIVELY, AN "INTRODUCED ACQUISITION"), then the Consultant shall be
entitled to receive 1,000,000 shares of Common Stock simultaneously with the
closing of such transaction (the "Shares"), such number of shares shall be
subject to customary anti-dilution protection in the event of stock splits or
other reclassification or reorganization.
(c) REGISTRATION OF OPTIONS SHARES AND SHARES. The Company agrees to
grant registration rights to the Consultant with respect to the Options Shares
and Shares in accordance with the registration rights provisions attached as
Exhibit B to this Agreement which are incorporated herein and made a part
hereof.
5. REIMBURSEMENT FOR OUT-OF-POCKET EXPENSES. The Company shall
reimburse the Consultant for all reasonable expenses incurred during the Term
which are directly related to the performance of its services hereunder,
provided that such expenses have been previously authorized in writing by an
executive officer of the Company. The Consultant shall be reimbursed at such
times and with such frequency as is the custom of the company with regard
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to reimbursement of employees for expenses. For such purposes, the Consultant
shall submit to the Company periodic reports of such expenses, including a
statement of the related services performed by the Consultant to which such
expenses relate.
6. AUTHORITY TO BIND THE COMPANY. Nothing herein shall imply that the
Consultant is either an employee or agent of the Company, except to such an
extent as might be agreed upon in writing for a specified purpose. Except as
expressly agreed, the Consultant shall not have the authority to obligate or
commit the Company in any manner whatsoever.
7. COMPANY PROPERTY. All advertising, sales, marketing and other
materials or articles or information, including without limitation data
processing reports, sales analyses, invoices, price lists or information, or
any other materials or data of any kind furnished to the Consultant by the
Company or developed by the Consultant for the Company at the Company's
direction or for the Company's use or otherwise in connection with the
Consultant's services hereunder, are and shall remain the sole and confidential
property of the Company; if the Company requests the return of such materials
at any time during or after the Term, the Consultant shall immediately deliver
the same to Company.
8. NON-COMPETITION, TRADE SECRETS.
------------------------------
(a) During the Term and as long as this Agreement is in effect and for
a period of two (2) years thereafter, the Consultant shall not directly or
indirectly induce or attempt to influence any employee of the Company to
terminate his employment with the Company or solicit or divert any business or
customer or supplier from the Company.
(b) During the Term and at all times thereafter, the Consultant shall
not use for its benefit, or disclose, communicate or divulge to, or use for the
direct or indirect benefit of
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any person, firm, association or company other than the Company, any material
referred to in Paragraph 7 above or any information regarding the business
methods, business policies, procedures, techniques, trade secrets, or other
knowledge or processes of or developed by the Company or any names and addresses
of the Company's customers or clients or any data on or relating to past,
present or prospective customers or clients of the Company or any other
confidential information relating to or dealing with the business operations or
activities of the Company, made known to the Consultant or learned or acquired
by the Consultant while retained by the Company, provided that this provision
shall not be construed to restrict the use or disclosure of any information
which (i) is generally publicly known at the time of its disclosure to, or use
by, the Consultant or (ii) is lawfully received by the Consultant from a third
party not bound in a confidential relationship to the Company or any subsidiary
or affiliate thereof.
(c) Any and all writings, inventions, improvements, processes,
procedures and/or techniques which the Consultant may make, conceive, discover
or develop, either solely or jointly with any person or person, at any time
during the Term, whether during working hours or at any other time and whether
at the request or upon the suggestion of the Company or otherwise, which relate
to or are useful in connection with any business now or hereafter carried or
including developments or expansions of its present fields of operations, shall
be the sole and exclusive property of the Company. The Consultant shall promptly
make full disclosure to the Company of all such writings, inventions,
improvements, processes, procedures and techniques and otherwise aid and assist
the Company so that the Company can prepare and present applications for
copyright or letters of patents therefor, can secure such copyright or letters
of patent wherever possible, as well as reissues, renewals, and extension
thereof and can obtain the record title to such copyright or patents so that the
Company shall be the sole and absolute owner
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thereof in all countries in which it may desire to have copyright or patent
protection. The Consultant shall not be entitled to any additional or special
compensation or reimbursement regarding any and all such writings, inventions,
improvements, processes, procedures and techniques.
(d) The Consultant acknowledges that the restrictions contained in the
foregoing subparagraphs (a), (b) and (c), in view of the nature of the business
in which the Company is engaged, are reasonable and necessary in order to
protect the legitimate interests of the Company and that any violation thereof
would result in irreparable injuries to the Company, and the Consultant
therefore acknowledges that, in the event of its violation of any of these
restrictions, the Company shall be entitled to obtain from any court of
competent jurisdiction preliminary and permanent injunctive relief as well as
damages and an equitable accounting of all earnings, profits and other benefits
arising from such violation, which rights shall be cumulative and in addition to
any other rights or remedies to which the Company may be entitled.
(e) If the period of time or the area specified in subparagraph (a)
above should be adjudged unreasonable in any proceeding, then the period of time
shall be reduced by such number of months or the area shall be reduced by the
elimination of such portion thereof or both so that such restrictions may be
enforced in such areas and for such time as adjudged to be reasonable. If the
Consultant violates any of the restrictions contained in the foregoing
subparagraph (a), the restrictive period shall not run in favor of the
Consultant from the time of the commencement of any such violation until such
time as such violation shall be cured by the Consultant to the satisfaction of
the Company.
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9. INDULGENCES. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege with
respect to any occurrence. No waiver shall be effective unless it is in writing
and is signed by the party asserted to have granted such waiver.
10. ASSIGNMENT. Neither party may assign its right or obligations
under the Agreement without the written consent of the other party.
11. TERMINATION. Either party may, upon 30 days prior written notice
to the other, terminate this Agreement; provided however, that in the event
that the Company consummates an Introduced Acquisition within eighteen (18)
months following termination, then the Consultant shall be entitled to receive
the Shares.
12. NOTICE. All notices, requests, demands and other communications
required or permitted under this Agreement will be in writing and will be
deemed to have been duly given, made and received when personally delivered,
three (3) days after deposited in the United States mails, certified mail return
receipt requested, or one (1) day after sent by a reputable overnight courier
service, addressed as set forth below:
(i) If to the Company:
Computer Marketplace, Inc.
1490 Railroad Street
Corona, California 91720
Attn: Wayne Kiley, President
(ii) If to the Consultant:
Victoria Holdings, Inc.
c/o Biltmore Securities, Inc.
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6700 North Andrews Avenue
Suite 5500
Fort Lauderdale, FL 33309
Attn: Elliot Loewenstern, President
13. CONTROLLING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, notwithstanding any
conflict-of-law doctrine of such state or jurisdiction to the contrary.
14. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties, may not be altered or modified, except in a writing signed
by the party to be charged thereby, and supersedes any and all previous
agreements between the parties.
15. EXECUTIVE AND COUNTERPARTS. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
will be deemed to be an original and all of which taken together will be
considered one and the same Agreement.
16. ARBITRATION. Any dispute, controversy or claim arising out of or
in connection with this Settlement Agreement shall be determined and settled by
arbitration in the County of Broward, State of Florida conducted by the
American Arbitration Association in accordance with its then existing rules,
regulations, practices and procedures. The arbitration proceedings shall be
conducted before a single neutral arbitrator selected by the Association in
accordance with its then existing rules, regulations, practices and procedures.
Any decision rendered by the arbitrator shall be final, conclusive and binding
upon the parties to the arbitration any may be enforced by the judgement and
order of the court of proper jurisdiction in the State of Florida for Broward
County and the parties hereto hereby waive any objection to such jurisdiction or
venue in any such proceeding commenced in such court. In any proceeding between
the parties hereto
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arising out of or in connection with this Agreement, the prevailing party shall
be entitled to recover its reasonable legal fees and expenses from the losing
party.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
COMPUTER MARKETPLACE, INC.
By: /s/ L. Wayne Kiley
--------------------------------
Name: L. Wayne Kiley
Title: President and
Chief Executive Officer
VICTORIA HOLDINGS, INC.
By: /s/ Elliot Loewenstern
-------------------------------
Name: Elliot Loewenstern
Title: President
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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.
EXHIBIT "A"
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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
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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,
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<PAGE> 19
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 adjusted 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 or 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
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<PAGE> 20
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.
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<PAGE> 21
(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 Underwriter's 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
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<PAGE> 22
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 indemnify 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 indemnify 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's 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
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<PAGE> 23
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 1490 Railroad Street, Corona, CA 91720, or such
other address as the Company has designated in writing to the Holder, or
(b) the Holder at 6700 North Andrews Avenue, Fort Lauderdale,
Florida 33309, 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.
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<PAGE> 24
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/ L. Wayne Kiley
--------------------------------
Name: L. Wayne Kiley
Title: Chairman of the Board and
Chief Executive Officer
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<PAGE> 25
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 __________________________
Address __________________________
__________________________
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 __________________________
Address __________________________
__________________________
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 __________________________
Address __________________________
__________________________
