<PAGE>
As filed with the Securities and Exchange Commission on July 2, 1999
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CREATIVE COMPUTERS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-451870
(State of Other Jurisdiction (I.R.S. Employer
of Incorporation of Organization) Identification No.)
2555 West 190th Street
Torrance, California 90504
(Address of Principal Executive Offices)
Nonqualified Stock Option Agreements each dated June 10, 1999 between Creative
Computers, Inc. and each of Michael Assadi, John D. Beach, S. Keating Rhoads,
Arthur W. Salyer and Peter L. Zuiker
(Full Title of Plans)
______________________________________________
Frank Khulusi
Chairman of the Board,
President and Chief
Executive Officer
Creative Computers, Inc.
2555 West 190th Street
Torrance, California 90504
(Name and Address of Agent for Service)
(310) 354-5600
(Telephone Number, Including Area Code, of Agent For Service)
Copy to:
Robert M. Mattson, Jr., Esq.
Morrison & Foerster LLP
19900 MacArthur Boulevard
Irvine, California 92612
(949) 251-7500
__________________________________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Price Aggregate offering Registration
to be Registered Registered Per Share(1) Price(1) Fee
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001
par value per share 235,000 shares $7.28125 $1,711,094 $475.68
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(h) under the Securities Act, the proposed maximum
offering price per share and the proposed maximum aggregate offering price
have been determined on the basis of the exercise price of options granted
pursuant to the Nonqualified Stock Option Agreements between the Registrant
and each of Michael Assadi, John D. Beach, S. Keating Rhoads, Arthur W.
Salyer and Peter L. Zuiker.
In addition, pursuant to Rule 416(c) under the Securities Act, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plans described herein.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of Form S-8
(plan information and registrant information and employee plan annual
information) will be sent or given to employees as specified by Securities and
Exchange Commission Rule 428 (b)(1). Such documents need not be filed with the
Securities and Exchange Commission either as part of this Registration Statement
or as prospectuses or prospectus supplements pursuant to Rule 424. These
documents and the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Form S-8 (Part II hereof), taken together,
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act of 1933, as amended (the "Securities Act").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") are incorporated by reference herein:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, which includes audited financial statements for the
Registrant's latest fiscal year.
(b) All other reports filed by the Registrant pursuant to Sections 13(a) or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") since the end
of the fiscal year covered by the audited financial statements described in (a)
above.
(c) The description of the Registrant's Common Stock which is contained in
its Registration Statement on Form 8-A dated March 31, 1996, filed under the
Exchange Act, including any amendment or report filed for the purpose of
updating such description.
All documents filed by the Registrant with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, and prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold shall be
deemed to be incorporated by reference into this Registration Statement and to
be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Registration Statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation, a
"derivative action") if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, if they had no reasonable
cause to believe their conduct was unlawful. A similar standard is applicable
in the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such actions, and the statute requires court approval before there
can be any indemnification where the person seeking indemnification has been
found liable to the corporation. The statute provides that it is not exclusive
of other indemnification that may be granted by a corporation's bylaws,
disinterested director vote, stockholder vote, agreement or otherwise.
The Registrant's Certificate of Incorporation and Bylaws provide that the
Registrant will indemnify its directors and officers, and may indemnify any of
its employees and agents, to the fullest extent permitted by Delaware law. The
Registrant is generally required to indemnify its directors and officers for all
judgments, fines, penalties, settlements, legal fees and other expenses incurred
in connection with pending, threatened or completed legal proceedings because of
the director's or officer's position with the Registrant or another entity that
the director or officer serves at the Registrant's request, subject to certain
conditions on advance funds to its directors and officers to enable them to
defend against such proceedings.
The DGCL permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability for (i) any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) payments of unlawful dividends or unlawful stock
repurchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.
The Certificate of Incorporation contains a provision that is designed to
limit the director's liability to the extent permitted by the DGCL and any
amendments thereto. Specifically, directors will not be personally liable to
the Registrant or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability as a result of: (i) any breach of the
duty of loyalty to the Registrant or its stockholders; (ii) actions or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) payment of an improper dividend or improper repurchase of the
Registrant's stock under Section 174 of the DGCL; or (iv) actions or omissions
pursuant to which the director derived an improper personal benefit. The
principal effect of the limitation of liability provision is that a stockholder
is unable to prosecute an action for monetary damages against a director of the
Registrant unless the stockholder can demonstrate one of the specified bases for
liability. The provision, however, does not eliminate or limit director
liability arising in connection with causes of action brought under the federal
securities laws. The Certificate of Incorporation does not eliminate a
director's duty of care.
The Separation and Distribution Agreement, dated as of December 7, 1998,
as amended, by and between the Registrant and uBid, Inc. provides for
indemnification by uBid of the Registrant and its directors, officers and
employees for certain liabilities, including liabilities under the Securities
Act.
Item 7. Exemption From Registration Claimed.
Not Applicable.
<PAGE>
Item 8. Exhibits.
4.1 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and Michael Assadi
4.2 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and John D. Beach
4.3 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and S. Keating Rhoads
4.4 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and Arthur W. Salyer
4.5 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and Peter L. Zuiker
5.1 Opinion of Morrison & Foerster LLP
23.1 Consent of Morrison & Foerster LLP (contained in Exhibit 5.1)
23.2 Consent of Independent Accountants
23.3 Consent of Ernst & Young LLP
24.1 Power of Attorney (See signature page)
Item 9. Undertakings.
(a) Rule 415 Offering.
------------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum offering price set forth in the "Calculation of Registration Fee" table
in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if this
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
---------------------------------------------------------------------
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Request for Acceleration of Effective Date or Filing of Registration
--------------------------------------------------------------------
Statement on Form S-8.
- ----------------------
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred by a
director, officer or controlling person of the Registrant in the successful
defense or any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Creative Computers,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Torrance, State of California, on June 28, 1999.
CREATIVE COMPUTERS, INC.
By: /s/ Frank F. Khulusi
--------------------
Frank F. Khulusi
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Frank F.
Khulusi and Sam U. Khulusi, and each of them, as attorneys-in-fact, each with
the power of substitution, for him or her in any and all capacities, to sign any
amendment to this Registration Statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Commission,
granting to said attorneys-in-fact, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in connection therewith, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Frank F. Khulusi Chairman of the Board of June 28, 1999
- -------------------- Directors, President, and
Frank F. Khulusi Chief Executive Officer
(Principal Executive Officer)
/s/ Sam U. Khulusi Director June 28, 1999
- --------------------
Sam U. Khulusi
<PAGE>
/s/ Ted Sanders Chief Financial Officer June 28, 1999
- -------------------- (Principal Financial and
Ted Sanders Accounting Officer)
/s/ Thomas O. Maloof Director June 28, 1999
- --------------------
Thomas O. Maloof
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
4.1 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and Michael Assadi
4.2 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and John D. Beach
4.3 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and S. Keating Rhoads
4.4 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and Arthur W. Salyer
4.5 Nonqualified Stock Option Agreement, dated June 10, 1999 between
the Registrant and Peter L. Zuiker
5.1 Opinion of Morrison & Foerster LLP
23.1 Consent of Morrison & Foerster LLP (contained in Exhibit 5.1)
23.2 Consent of Independent Accountants
23.3 Consent of Ernst & Young LLP
24.1 Power of Attorney (See signature page)
<PAGE>
EXHIBIT 4.1
CREATIVE COMPUTERS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made as of
June 10, 1999 (the "Grant Date"), between Creative Computers, Inc., a Delaware
corporation (the "Company"), and Michael Assadi ("Optionee").
RECITALS:
A. The Company recognizes the value of the services of Optionee to the
Company and desires to motivate Optionee in Optionee's work for the Company and
its affiliates, and the Company recognizes that the grant of the rights and
options provided for in this Agreement are an inducement essential to Optionee's
having entered into an employment relationship with the Company.
B. The Company has determined that it would be to the advantage and in
the interest of the Company and its shareholders to grant the rights and options
provided for in this Agreement to Optionee as a reward and an incentive for
increased efforts on behalf of the Company and its affiliates.
AGREEMENT
Based on the foregoing and the agreements set forth herein, the parties
agree as follows:
1. Option Grant. The Company hereby grants to Optionee the right and
------------
option (the "Option") to purchase from the Company on the terms and conditions
set forth herein all or any part of an aggregate of fifteen-thousand (15,000)
shares of the Common Stock of the Company (the "Stock"). The purchase price of
the Stock subject to the Option shall be $7.28125 per share.
2. Option Period. The Option shall be exercisable only during the
-------------
Option Period. During such Option Period, the exercisability of the Option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and except as
provided in paragraph 3, shall end on the Terminal Date which shall be one
hundred twenty (120) months from the Grant Date.
3. Limits on Option Period. The Option Period may end before the
-----------------------
Terminal Date, as follows:
<PAGE>
(a) If Optionee ceases to be a bona fide employee of the Company or
of an affiliate thereof for any reason other than cause, disability (within the
meaning of subparagraph 3(c)) or death during the Option Period, the Option
Period shall terminate three (3) months after the date of cessation of
employment or on the Terminal Date, whichever is first, and the Option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(b) If Optionee should die while in the employ of the Company or its
affiliates, the Option Period shall end one (1) year after the date of death or
on the Terminal Date, whichever occurs first, and Optionee's executor or
administrator, or the person or persons to whom Optionee's rights under the
Option shall pass by will or by the applicable laws of descent and distribution
may exercise the entire unexercised portion of the Option to the extent
exercisable under paragraph 4 on the date of Optionee's death.
(c) If Optionee's employment is terminated by reason of disability,
as defined below, the Option Period shall end one (1) year after the date of
Optionee's cessation of employment or on the Terminal Date, whichever occurs
first, and the Option shall be exercisable only to the extent exercisable under
paragraph 4 on the date of Optionee's cessation of employment. For purposes of
this subparagraph (c), an individual is disabled if he is unable to engage in
any substantial gainful activity for the Company and/or its affiliates by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. An individual shall not
be considered to be disabled unless he furnishes proof of the existence thereof,
in such form and manner, and at such times, as the Board of Directors or the
Compensation Committee thereof (the "Committee") may require.
(d) If Optionee is on a leave of absence from the Company and any
affiliates thereof because of disability, or for any other reason as may be
approved by the Committee, Optionee shall not be deemed during the period of
such absence, by virtue of such absence alone, to have terminated employment
with the Company or an affiliate except as the Committee may otherwise expressly
provide.
(e) If Optionee's employment with the Company and any affiliates
thereof terminates for cause during the Option Period, the Option Period shall
terminate thirty (30) days from the date of Optionee's termination of employment
and the Option shall not thereafter be exercisable to any extent.
4. Vesting of Right to Exercise Options. The shares covered by the
------------------------------------
Option shall vest in equal annual installments over a 5-year period from the
hire date, with the Option 100% vested on the May 10, 2004 anniversary of your
hire date.
Any portion of the Option not exercised when vested shall accumulate and
be exercisable at any time during the Option Period (subject to early
termination pursuant to paragraph 3) prior to the Terminal Date. No partial
exercise of the Option may be for less than five percent (5%) of the total
number of shares then available under the Option. In no event shall the Company
be required to issue fractional shares. No portion of the Option that is not
vested
<PAGE>
on the date of termination of employment, for any reason, including death or
disability, shall vest after the date of such termination.
5. Method of Exercise. Subject to the limitations of paragraphs 3 and
------------------
4, Optionee may exercise the Option with respect to all or any part of the
shares of Stock then subject to such exercise as follows:
By giving the Company written notice of such exercise (the "Notice"),
specifying the number of shares as to which the Option is exercised. Such
Notice shall be accompanied by an amount equal to the option price of such
shares, in the form of any one or combination of the following: (1) cash, a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of the United States; (2) by delivery on a form
prescribed by the Committee of an irrevocable direction to a securities broker
approved by the Committee to sell shares of Stock and deliver all or a portion
of the proceeds to the Company in payment for the Stock; or (3) with shares of
Stock owned by Optionee or with shares of Stock withheld from the shares
otherwise deliverable to the Optionee upon exercise of this Option. Any shares
of Stock used to exercise this Option (including shares withheld upon exercise)
shall be valued at the Stock's per share Fair Market Value on the date of
exercise. In addition, if Optionee is an executive officer, director or greater
than 10% stockholder of the Company at the time of exercise, any use of shares
of Stock to pay the Option Price must also satisfy the applicable requirements
under Rule 16b-3 for exempt treatment thereunder.
As soon as practicable after receipt of the Notice required in the
foregoing paragraph, the Company shall, without transfer or issue tax and
without other incidental expense to Optionee, deliver to Optionee at the office
of the Company, at 2555 West 190th Street, Torrance, California 90504, or such
other place as may be mutually acceptable to the Company and Optionee, a
certificate or certificates of such shares of Stock; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it, with reasonable diligence, to comply with applicable
registration requirements under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any applicable listing requirements
of any national securities exchange, and requirements under any other law or
regulation applicable to the issuance or transfer of such shares.
6. Corporate Transactions. If there should be any change in the Stock
----------------------
subject to the Option, through merger, consolidation, reorganization,
reincorporation or other similar change in the corporate structure of the
Company, the Company may make appropriate adjustments in order to preserve, but
not to increase, the benefits to Optionee, including adjustments in the number
of shares subject to the Option and in the price per share. If there shall be
any change in the Stock subject to the Option herein granted, through
recapitalization, stock split, stock dividend (in excess of two percent) or
other similar change in the corporate structure of the Company, adjustments
shall automatically occur to preserve but not increase the benefits to Optionee,
including adjustments in the number of shares subject to the Option and in the
price per share. Any adjustment made pursuant to this paragraph 6 as a
consequence of a change in the corporate structure of the Company shall not
entitle Optionee to acquire a number of shares of Stock of the Company or shares
of stock of any successor company greater than the
<PAGE>
number of shares Optionee would receive if, prior to such change, Optionee had
actually held a number of shares of Stock equal to the number of shares then
subject to the Option.
7. Acceleration.
------------
(a) Upon the occurrence of a Change in Control as defined in Section
7(b) below, the Option shall become fully vested and exercisable effective as of
the date of such Change in Control. Upon the occurrence of a Change in Control
described in Section 7(b)(i), (ii) or (v) below, the Option period shall
continue for the remaining term of the Option. Upon the occurrence of a Change
in Control described in Section 7(b)(iii) or (iv) below, the Option shall
terminate as of the effective date of the merger, disposition of assets,
liquidation or dissolution described therein. In no event may the Option be
exercised after the Terminal Date.
(b) For purposes of this Section 7, a "Change in Control" shall be
deemed to occur upon:
(i) the direct or indirect acquisition by any person or related
group of persons (other than an acquisition from or by the Company or by a
employee benefit plan sponsored by the Company or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding stock;
(ii) a change in the composition of the board of directors of
the Company over a period of thirty-six (36) months or less such that a majority
of the board members cease, by reason of one or more contested elections for
board membership or by one or more actions by written consent of shareholders,
to be comprised of individuals who either (a) have been board members
continuously since the beginning of such period or (b) have been elected or
nominated for election as board members during such period by at least a
majority of the board members described in clause (a) who were still in office
at the time such election or nomination was approved by the board of directors
of the Company;
(iii) approval by the Company's shareholders of a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(iv) approval by the Company's shareholders of (x) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company's subsidiary corporations)
or (y) the complete liquidation or dissolution of the Company; or
(v) approval by the Company's shareholders of any reverse
merger in which the Company survives as an entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are
<PAGE>
transferred to a person or persons different from those who held such securities
immediately prior to such merger.
8. Limitations on Transfer. The Option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him, and neither the Option nor any right
hereunder shall be transferable by Optionee, except by operation of law or by
will or the laws of descent and distribution; provided that any such successor
or transferee shall not be entitled to further transfer the Option and any
shares acquired upon execution of the Option shall be subject to the
restrictions set forth herein and in the Plan. In the event of any attempt by
Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose of the
Option, or of any right hereunder, except as provided for in this Agreement, or
in the event of the levy of any attachment, execution, or similar process upon
the rights or interest hereby conferred, the Company, at its election may
terminate the Option by notice to Optionee and the Option shall thereupon become
null and void.
9. No Shareholder Rights. Neither Optionee, nor any person entitled to
---------------------
exercise Optionee's rights in the event of his death, shall have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option except to the extent the certificates for such shares shall have been
issued upon the exercise of the Option.
10. No Effect on Terms of Employment. Notwithstanding any prior express
--------------------------------
or implied agreement to the contrary, except for a written employment agreement,
the Company shall have the right to terminate or change the terms of employment
of Optionee at any time and for any reason, with or without cause.
11. Notice. Any notice required to be given under the terms of this
------
Agreement shall be in writing and addressed to the Company in care of its
Corporate Secretary at the office of the Company at 2555 West 190th Street,
Torrance, California 90504 and any notice to be given to Optionee shall be in
writing and addressed to him at the address given by him beneath his signature
to this Agreement, or such other address as either party to this Agreement may
hereafter designate in writing to the other. Any such notice shall be deemed to
have been duly given (i) when enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified and deposited (postage or registration or
certification fee prepaid) in a post office, (ii) on the date of personal
service, or (iii) on the day after sending notice by an overnight delivery
service.
12. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
13. Withholding. Optionee agrees to make appropriate arrangements with
-----------
the Company for satisfaction of any applicable federal, state or local income
and employment tax withholding requirements or social security requirements, if
any. Optionee may satisfy withholding tax obligations by delivering cash; or,
if permitted by the Committee, shares of Stock (including electing to have the
Company withhold from the Stock to be issued to the
<PAGE>
Optionee shares of Stock) having a fair market value equal to the amount of the
withholding tax required to be withheld.
14. Governing Law. The interpretation, performance, and enforcement of
-------------
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and Optionee has signed this
Agreement as of the day and year first above written.
CREATIVE COMPUTERS, INC.
By: __________________________________________
Frank F. Khulusi
President and Chief Executive Officer
Signed: ______________________________________
Optionee
Name: Michael Assadi
<PAGE>
EXHIBIT 4.2
CREATIVE COMPUTERS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made as of
June 10, 1999 (the "Grant Date"), between Creative Computers, Inc., a Delaware
corporation (the "Company"), and John D. Beach ("Optionee").
RECITALS:
A. The Company recognizes the value of the services of Optionee to the
Company and desires to motivate Optionee in Optionee's work for the Company and
its affiliates, and the Company recognizes that the grant of the rights and
options provided for in this Agreement are an inducement essential to Optionee's
having entered into an employment relationship with the Company.
B. The Company has determined that it would be to the advantage and in
the interest of the Company and its shareholders to grant the rights and options
provided for in this Agreement to Optionee as a reward and an incentive for
increased efforts on behalf of the Company and its affiliates.
AGREEMENT
Based on the foregoing and the agreements set forth herein, the parties
agree as follows:
1. Option Grant. The Company hereby grants to Optionee the right and
------------
option (the "Option") to purchase from the Company on the terms and conditions
set forth herein all or any part of an aggregate of ten-thousand (10,000) shares
of the Common Stock of the Company (the "Stock"). The purchase price of the
Stock subject to the Option shall be $7.28125 per share.
2. Option Period. The Option shall be exercisable only during the
-------------
Option Period. During such Option Period, the exercisability of the Option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and except as
provided in paragraph 3, shall end on the Terminal Date which shall be one
hundred twenty (120) months from the Grant Date.
3. Limits on Option Period. The Option Period may end before the
-----------------------
Terminal Date, as follows:
<PAGE>
(a) If Optionee ceases to be a bona fide employee of the Company or
of an affiliate thereof for any reason other than cause, disability (within the
meaning of subparagraph 3(c)) or death during the Option Period, the Option
Period shall terminate three (3) months after the date of cessation of
employment or on the Terminal Date, whichever is first, and the Option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(b) If Optionee should die while in the employ of the Company or its
affiliates, the Option Period shall end one (1) year after the date of death or
on the Terminal Date, whichever occurs first, and Optionee's executor or
administrator, or the person or persons to whom Optionee's rights under the
Option shall pass by will or by the applicable laws of descent and distribution
may exercise the entire unexercised portion of the Option to the extent
exercisable under paragraph 4 on the date of Optionee's death.
(c) If Optionee's employment is terminated by reason of disability,
as defined below, the Option Period shall end one (1) year after the date of
Optionee's cessation of employment or on the Terminal Date, whichever occurs
first, and the Option shall be exercisable only to the extent exercisable under
paragraph 4 on the date of Optionee's cessation of employment. For purposes of
this subparagraph (c), an individual is disabled if he is unable to engage in
any substantial gainful activity for the Company and/or its affiliates by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. An individual shall not
be considered to be disabled unless he furnishes proof of the existence thereof,
in such form and manner, and at such times, as the Board of Directors or the
Compensation Committee thereof (the "Committee") may require.
(d) If Optionee is on a leave of absence from the Company and any
affiliates thereof because of disability, or for any other reason as may be
approved by the Committee, Optionee shall not be deemed during the period of
such absence, by virtue of such absence alone, to have terminated employment
with the Company or an affiliate except as the Committee may otherwise expressly
provide.
(e) If Optionee's employment with the Company and any affiliates
thereof terminates for cause during the Option Period, the Option Period shall
terminate thirty (30) days from the date of Optionee's termination of employment
and the Option shall not thereafter be exercisable to any extent.
4. Vesting of Right to Exercise Options. The shares covered by the
------------------------------------
Option shall vest in equal annual installments over a 4-year period from the
hire date, with the Option 100% vested on the June 10, 2003 anniversary of the
hire date.
Any portion of the Option not exercised when vested shall accumulate and
be exercisable at any time during the Option Period (subject to early
termination pursuant to paragraph 3) prior to the Terminal Date. No partial
exercise of the Option may be for less than five percent (5%) of the total
number of shares then available under the Option. In no event shall the Company
be required to issue fractional shares. No portion of the Option that is not
vested
<PAGE>
on the date of termination of employment, for any reason, including death or
disability, shall vest after the date of such termination.
5. Method of Exercise. Subject to the limitations of paragraphs 3 and
------------------
4, Optionee may exercise the Option with respect to all or any part of the
shares of Stock then subject to such exercise as follows:
By giving the Company written notice of such exercise (the "Notice"),
specifying the number of shares as to which the Option is exercised. Such
Notice shall be accompanied by an amount equal to the option price of such
shares, in the form of any one or combination of the following: (1) cash, a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of the United States; (2) by delivery on a form
prescribed by the Committee of an irrevocable direction to a securities broker
approved by the Committee to sell shares of Stock and deliver all or a portion
of the proceeds to the Company in payment for the Stock; or (3) with shares of
Stock owned by Optionee or with shares of Stock withheld from the shares
otherwise deliverable to the Optionee upon exercise of this Option. Any shares
of Stock used to exercise this Option (including shares withheld upon exercise)
shall be valued at the Stock's per share Fair Market Value on the date of
exercise. In addition, if Optionee is an executive officer, director or greater
than 10% stockholder of the Company at the time of exercise, any use of shares
of Stock to pay the Option Price must also satisfy the applicable requirements
under Rule 16b-3 for exempt treatment thereunder.
As soon as practicable after receipt of the Notice required in the
foregoing paragraph, the Company shall, without transfer or issue tax and
without other incidental expense to Optionee, deliver to Optionee at the office
of the Company, at 2555 West 190th Street, Torrance, California 90504, or such
other place as may be mutually acceptable to the Company and Optionee, a
certificate or certificates of such shares of Stock; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it, with reasonable diligence, to comply with applicable
registration requirements under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any applicable listing requirements
of any national securities exchange, and requirements under any other law or
regulation applicable to the issuance or transfer of such shares.
6. Corporate Transactions. If there should be any change in the Stock
----------------------
subject to the Option, through merger, consolidation, reorganization,
reincorporation or other similar change in the corporate structure of the
Company, the Company may make appropriate adjustments in order to preserve, but
not to increase, the benefits to Optionee, including adjustments in the number
of shares subject to the Option and in the price per share. If there shall be
any change in the Stock subject to the Option herein granted, through
recapitalization, stock split, stock dividend (in excess of two percent) or
other similar change in the corporate structure of the Company, adjustments
shall automatically occur to preserve but not increase the benefits to Optionee,
including adjustments in the number of shares subject to the Option and in the
price per share. Any adjustment made pursuant to this paragraph 6 as a
consequence of a change in the corporate structure of the Company shall not
entitle Optionee to acquire a number of shares of Stock of the Company or shares
of stock of any successor company greater than the
<PAGE>
number of shares Optionee would receive if, prior to such change, Optionee had
actually held a number of shares of Stock equal to the number of shares then
subject to the Option.
7. Acceleration.
------------
(a) Upon the occurrence of a Change in Control as defined in Section
7(b) below, the Option shall become fully vested and exercisable effective as of
the date of such Change in Control. Upon the occurrence of a Change in Control
described in Section 7(b)(i), (ii) or (v) below, the Option period shall
continue for the remaining term of the Option. Upon the occurrence of a Change
in Control described in Section 7(b)(iii) or (iv) below, the Option shall
terminate as of the effective date of the merger, disposition of assets,
liquidation or dissolution described therein. In no event may the Option be
exercised after the Terminal Date.
(b) For purposes of this Section 7, a "Change in Control" shall be
deemed to occur upon:
(i) the direct or indirect acquisition by any person or related
group of persons (other than an acquisition from or by the Company or by a
employee benefit plan sponsored by the Company or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding stock;
(ii) a change in the composition of the board of directors of
the Company over a period of thirty-six (36) months or less such that a majority
of the board members cease, by reason of one or more contested elections for
board membership or by one or more actions by written consent of shareholders,
to be comprised of individuals who either (a) have been board members
continuously since the beginning of such period or (b) have been elected or
nominated for election as board members during such period by at least a
majority of the board members described in clause (a) who were still in office
at the time such election or nomination was approved by the board of directors
of the Company;
(iii) approval by the Company's shareholders of a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(iv) approval by the Company's shareholders of (x) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company's subsidiary corporations)
or (y) the complete liquidation or dissolution of the Company; or
(v) approval by the Company's shareholders of any reverse
merger in which the Company survives as an entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are
<PAGE>
transferred to a person or persons different from those who held such securities
immediately prior to such merger.
8. Limitations on Transfer. The Option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him, and neither the Option nor any right
hereunder shall be transferable by Optionee, except by operation of law or by
will or the laws of descent and distribution; provided that any such successor
or transferee shall not be entitled to further transfer the Option and any
shares acquired upon execution of the Option shall be subject to the
restrictions set forth herein and in the Plan. In the event of any attempt by
Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose of the
Option, or of any right hereunder, except as provided for in this Agreement, or
in the event of the levy of any attachment, execution, or similar process upon
the rights or interest hereby conferred, the Company, at its election may
terminate the Option by notice to Optionee and the Option shall thereupon become
null and void.
9. No Shareholder Rights. Neither Optionee, nor any person entitled to
---------------------
exercise Optionee's rights in the event of his death, shall have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option except to the extent the certificates for such shares shall have been
issued upon the exercise of the Option.
10. No Effect on Terms of Employment. Notwithstanding any prior express
--------------------------------
or implied agreement to the contrary, except for a written employment agreement,
the Company shall have the right to terminate or change the terms of employment
of Optionee at any time and for any reason, with or without cause.
11. Notice. Any notice required to be given under the terms of this
------
Agreement shall be in writing and addressed to the Company in care of its
Corporate Secretary at the office of the Company at 2555 West 190th Street,
Torrance, California 90504 and any notice to be given to Optionee shall be in
writing and addressed to him at the address given by him beneath his signature
to this Agreement, or such other address as either party to this Agreement may
hereafter designate in writing to the other. Any such notice shall be deemed to
have been duly given (i) when enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified and deposited (postage or registration or
certification fee prepaid) in a post office, (ii) on the date of personal
service, or (iii) on the day after sending notice by an overnight delivery
service.
12. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
13. Withholding. Optionee agrees to make appropriate arrangements with
-----------
the Company for satisfaction of any applicable federal, state or local income
and employment tax withholding requirements or social security requirements, if
any. Optionee may satisfy withholding tax obligations by delivering cash; or,
if permitted by the Committee, shares of Stock (including electing to have the
Company withhold from the Stock to be issued to the
<PAGE>
Optionee shares of Stock) having a fair market value equal to the amount of the
withholding tax required to be withheld.
14. Governing Law. The interpretation, performance, and enforcement of
-------------
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and Optionee has signed this
Agreement as of the day and year first above written.
CREATIVE COMPUTERS, INC.
By: __________________________________________
Frank F. Khulusi
President and Chief Executive Officer
Signed: ______________________________________
Optionee
Name: John Beach
<PAGE>
EXHIBIT 4.3
CREATIVE COMPUTERS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made as of
June 10, 1999 (the "Grant Date"), between Creative Computers, Inc., a Delaware
corporation (the "Company"), and S. Keating Rhoads ("Optionee").
RECITALS:
A. The Company recognizes the value of the services of Optionee to the
Company and desires to motivate Optionee in Optionee's work for the Company and
its affiliates, and the Company recognizes that the grant of the rights and
options provided for in this Agreement are an inducement essential to Optionee's
having entered into an employment relationship with the Company.
B. The Company has determined that it would be to the advantage and in
the interest of the Company and its shareholders to grant the rights and options
provided for in this Agreement to Optionee as a reward and an incentive for
increased efforts on behalf of the Company and its affiliates.
AGREEMENT
Based on the foregoing and the agreements set forth herein, the parties
agree as follows:
1. Option Grant. The Company hereby grants to Optionee the right and
------------
option (the "Option") to purchase from the Company on the terms and conditions
set forth herein all or any part of an aggregate of one-hundred-fifty-thousand
(150,000) shares of the Common Stock of the Company (the "Stock"). The purchase
price of the Stock subject to the Option shall be $7.28125 per share.
2. Option Period. The Option shall be exercisable only during the
-------------
Option Period. During such Option Period, the exercisability of the Option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and except as
provided in paragraph 3, shall end on the Terminal Date which shall be one
hundred twenty (120) months from the Grant Date.
3. Limits on Option Period. The Option Period may end before the
-----------------------
Terminal Date, as follows:
<PAGE>
(a) If Optionee ceases to be a bona fide employee of the Company or of
an affiliate thereof for any reason other than cause, disability (within the
meaning of subparagraph 3(c)) or death during the Option Period, the Option
Period shall terminate three (3) months after the date of cessation of
employment or on the Terminal Date, whichever is first, and the Option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(b) If Optionee should die while in the employ of the Company or its
affiliates, the Option Period shall end one (1) year after the date of death or
on the Terminal Date, whichever occurs first, and Optionee's executor or
administrator, or the person or persons to whom Optionee's rights under the
Option shall pass by will or by the applicable laws of descent and distribution
may exercise the entire unexercised portion of the Option to the extent
exercisable under paragraph 4 on the date of Optionee's death.
(c) If Optionee's employment is terminated by reason of disability, as
defined below, the Option Period shall end one (1) year after the date of
Optionee's cessation of employment or on the Terminal Date, whichever occurs
first, and the Option shall be exercisable only to the extent exercisable under
paragraph 4 on the date of Optionee's cessation of employment. For purposes of
this subparagraph (c), an individual is disabled if he is unable to engage in
any substantial gainful activity for the Company and/or its affiliates by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. An individual shall not
be considered to be disabled unless he furnishes proof of the existence thereof,
in such form and manner, and at such times, as the Board of Directors or the
Compensation Committee thereof (the "Committee") may require.
(d) If Optionee is on a leave of absence from the Company and any
affiliates thereof because of disability, or for any other reason as may be
approved by the Committee, Optionee shall not be deemed during the period of
such absence, by virtue of such absence alone, to have terminated employment
with the Company or an affiliate except as the Committee may otherwise expressly
provide.
(e) If Optionee's employment with the Company and any affiliates
thereof terminates for cause during the Option Period, the Option Period shall
terminate thirty (30) days from the date of Optionee's termination of employment
and the Option shall not thereafter be exercisable to any extent.
4. Vesting of Right to Exercise Options. The shares covered by the
------------------------------------
Option shall vest in equal annual installments over a 4-year period from the
hire date, with the Option 100% vested on the January 21, 2003 anniversary of
the hire date.
Any portion of the Option not exercised when vested shall accumulate and
be exercisable at any time during the Option Period (subject to early
termination pursuant to paragraph 3) prior to the Terminal Date. No partial
exercise of the Option may be for less than five percent (5%) of the total
number of shares then available under the Option. In no event shall the Company
be required to issue fractional shares. No portion of the Option that is not
vested
<PAGE>
on the date of termination of employment, for any reason, including death or
disability, shall vest after the date of such termination.
5. Method of Exercise. Subject to the limitations of paragraphs 3 and
------------------
4, Optionee may exercise the Option with respect to all or any part of the
shares of Stock then subject to such exercise as follows:
By giving the Company written notice of such exercise (the
"Notice"), specifying the number of shares as to which the Option is exercised.
Such Notice shall be accompanied by an amount equal to the option price of such
shares, in the form of any one or combination of the following: (1) cash, a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of the United States; (2) by delivery on a form
prescribed by the Committee of an irrevocable direction to a securities broker
approved by the Committee to sell shares of Stock and deliver all or a portion
of the proceeds to the Company in payment for the Stock; or (3) with shares of
Stock owned by Optionee or with shares of Stock withheld from the shares
otherwise deliverable to the Optionee upon exercise of this Option. Any shares
of Stock used to exercise this Option (including shares withheld upon exercise)
shall be valued at the Stock's per share Fair Market Value on the date of
exercise. In addition, if Optionee is an executive officer, director or greater
than 10% stockholder of the Company at the time of exercise, any use of shares
of Stock to pay the Option Price must also satisfy the applicable requirements
under Rule 16b-3 for exempt treatment thereunder.
As soon as practicable after receipt of the Notice required in the
foregoing paragraph, the Company shall, without transfer or issue tax and
without other incidental expense to Optionee, deliver to Optionee at the office
of the Company, at 2555 West 190th Street, Torrance, California 90504, or such
other place as may be mutually acceptable to the Company and Optionee, a
certificate or certificates of such shares of Stock; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it, with reasonable diligence, to comply with applicable
registration requirements under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any applicable listing requirements
of any national securities exchange, and requirements under any other law or
regulation applicable to the issuance or transfer of such shares.
6. Corporate Transactions. If there should be any change in the Stock
----------------------
subject to the Option, through merger, consolidation, reorganization,
reincorporation or other similar change in the corporate structure of the
Company, the Company may make appropriate adjustments in order to preserve, but
not to increase, the benefits to Optionee, including adjustments in the number
of shares subject to the Option and in the price per share. If there shall be
any change in the Stock subject to the Option herein granted, through
recapitalization, stock split, stock dividend (in excess of two percent) or
other similar change in the corporate structure of the Company, adjustments
shall automatically occur to preserve but not increase the benefits to Optionee,
including adjustments in the number of shares subject to the Option and in the
price per share. Any adjustment made pursuant to this paragraph 6 as a
consequence of a change in the corporate structure of the Company shall not
entitle Optionee to acquire a number of shares of Stock of the Company or shares
of stock of any successor company greater than the
<PAGE>
number of shares Optionee would receive if, prior to such change, Optionee had
actually held a number of shares of Stock equal to the number of shares then
subject to the Option.
7. Acceleration.
------------
(a) Upon the occurrence of a Change in Control as defined in Section
7(b) below, the Option shall become fully vested and exercisable effective as of
the date of such Change in Control. Upon the occurrence of a Change in Control
described in Section 7(b)(i), (ii) or (v) below, the Option period shall
continue for the remaining term of the Option. Upon the occurrence of a Change
in Control described in Section 7(b)(iii) or (iv) below, the Option shall
terminate as of the effective date of the merger, disposition of assets,
liquidation or dissolution described therein. In no event may the Option be
exercised after the Terminal Date.
(b) For purposes of this Section 7, a "Change in Control" shall be
deemed to occur upon:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a employee benefit plan sponsored by the Company or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding stock;
(ii) a change in the composition of the board of directors of
the Company over a period of thirty-six (36) months or less such that a majority
of the board members cease, by reason of one or more contested elections for
board membership or by one or more actions by written consent of shareholders,
to be comprised of individuals who either (a) have been board members
continuously since the beginning of such period or (b) have been elected or
nominated for election as board members during such period by at least a
majority of the board members described in clause (a) who were still in office
at the time such election or nomination was approved by the board of directors
of the Company;
(iii) approval by the Company's shareholders of a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(iv) approval by the Company's shareholders of (x) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company's subsidiary corporations)
or (y) the complete liquidation or dissolution of the Company; or
(v) approval by the Company's shareholders of any reverse
merger in which the Company survives as an entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are
<PAGE>
transferred to a person or persons different from those who held such securities
immediately prior to such merger.
8. Limitations on Transfer. The Option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him, and neither the Option nor any right
hereunder shall be transferable by Optionee, except by operation of law or by
will or the laws of descent and distribution; provided that any such successor
or transferee shall not be entitled to further transfer the Option and any
shares acquired upon execution of the Option shall be subject to the
restrictions set forth herein and in the Plan. In the event of any attempt by
Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose of the
Option, or of any right hereunder, except as provided for in this Agreement, or
in the event of the levy of any attachment, execution, or similar process upon
the rights or interest hereby conferred, the Company, at its election may
terminate the Option by notice to Optionee and the Option shall thereupon become
null and void.
9. No Shareholder Rights. Neither Optionee, nor any person entitled to
---------------------
exercise Optionee's rights in the event of his death, shall have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option except to the extent the certificates for such shares shall have been
issued upon the exercise of the Option.
10. No Effect on Terms of Employment. Notwithstanding any prior express
--------------------------------
or implied agreement to the contrary, except for a written employment agreement,
the Company shall have the right to terminate or change the terms of employment
of Optionee at any time and for any reason, with or without cause.
11. Notice. Any notice required to be given under the terms of this
------
Agreement shall be in writing and addressed to the Company in care of its
Corporate Secretary at the office of the Company at 2555 West 190th Street,
Torrance, California 90504 and any notice to be given to Optionee shall be in
writing and addressed to him at the address given by him beneath his signature
to this Agreement, or such other address as either party to this Agreement may
hereafter designate in writing to the other. Any such notice shall be deemed to
have been duly given (i) when enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified and deposited (postage or registration or
certification fee prepaid) in a post office, (ii) on the date of personal
service, or (iii) on the day after sending notice by an overnight delivery
service.
12. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
13. Withholding. Optionee agrees to make appropriate arrangements with
-----------
the Company for satisfaction of any applicable federal, state or local income
and employment tax withholding requirements or social security requirements, if
any. Optionee may satisfy withholding tax obligations by delivering cash; or,
if permitted by the Committee, shares of Stock (including electing to have the
Company withhold from the Stock to be issued to the
<PAGE>
Optionee shares of Stock) having a fair market value equal to the amount of the
withholding tax required to be withheld.
14. Governing Law. The interpretation, performance, and enforcement of
-------------
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and Optionee has signed this
Agreement as of the day and year first above written.
CREATIVE COMPUTERS, INC.
By:_________________________________________
Frank F. Khulusi
President and Chief Executive Officer
Signed:_____________________________________
Optionee
Name: S. Keating Rhoads
<PAGE>
EXHIBIT 4.4
CREATIVE COMPUTERS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made as of
June 10, 1999 (the "Grant Date"), between Creative Computers, Inc., a Delaware
corporation (the "Company"), and Arthur W. Salyer ("Optionee").
RECITALS:
A. The Company recognizes the value of the services of Optionee to the
Company and desires to motivate Optionee in Optionee's work for the Company and
its affiliates, and the Company recognizes that the grant of the rights and
options provided for in this Agreement are an inducement essential to Optionee's
having entered into an employment relationship with the Company.
B. The Company has determined that it would be to the advantage and in
the interest of the Company and its shareholders to grant the rights and options
provided for in this Agreement to Optionee as a reward and an incentive for
increased efforts on behalf of the Company and its affiliates.
AGREEMENT
Based on the foregoing and the agreements set forth herein, the parties
agree as follows:
1. Option Grant. The Company hereby grants to Optionee the right and
------------
option (the "Option") to purchase from the Company on the terms and conditions
set forth herein all or any part of an aggregate of thirty-thousand (30,000)
shares of the Common Stock of the Company (the "Stock"). The purchase price of
the Stock subject to the Option shall be $7.28125 per share.
2. Option Period. The Option shall be exercisable only during the
-------------
Option Period. During such Option Period, the exercisability of the Option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and except as
provided in paragraph 3, shall end on the Terminal Date which shall be one
hundred twenty (120) months from the Grant Date.
3. Limits on Option Period. The Option Period may end before the
-----------------------
Terminal Date, as follows:
<PAGE>
(a) If Optionee ceases to be a bona fide employee of the Company or of
an affiliate thereof for any reason other than cause, disability (within the
meaning of subparagraph 3(c)) or death during the Option Period, the Option
Period shall terminate three (3) months after the date of cessation of
employment or on the Terminal Date, whichever is first, and the Option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(b) If Optionee should die while in the employ of the Company or its
affiliates, the Option Period shall end one (1) year after the date of death or
on the Terminal Date, whichever occurs first, and Optionee's executor or
administrator, or the person or persons to whom Optionee's rights under the
Option shall pass by will or by the applicable laws of descent and distribution
may exercise the entire unexercised portion of the Option to the extent
exercisable under paragraph 4 on the date of Optionee's death.
(c) If Optionee's employment is terminated by reason of disability, as
defined below, the Option Period shall end one (1) year after the date of
Optionee's cessation of employment or on the Terminal Date, whichever occurs
first, and the Option shall be exercisable only to the extent exercisable under
paragraph 4 on the date of Optionee's cessation of employment. For purposes of
this subparagraph (c), an individual is disabled if he is unable to engage in
any substantial gainful activity for the Company and/or its affiliates by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. An individual shall not
be considered to be disabled unless he furnishes proof of the existence thereof,
in such form and manner, and at such times, as the Board of Directors or the
Compensation Committee thereof (the "Committee") may require.
(d) If Optionee is on a leave of absence from the Company and any
affiliates thereof because of disability, or for any other reason as may be
approved by the Committee, Optionee shall not be deemed during the period of
such absence, by virtue of such absence alone, to have terminated employment
with the Company or an affiliate except as the Committee may otherwise expressly
provide.
(e) If Optionee's employment with the Company and any affiliates
thereof terminates for cause during the Option Period, the Option Period shall
terminate thirty (30) days from the date of Optionee's termination of employment
and the Option shall not thereafter be exercisable to any extent.
4. Vesting of Right to Exercise Options. The shares covered by the
------------------------------------
Option shall vest in equal annual installments over a 5-year period from the
hire date, with the Option 100% vested on the March 30, 2004 anniversary of the
hire date.
Any portion of the Option not exercised when vested shall accumulate and
be exercisable at any time during the Option Period (subject to early
termination pursuant to paragraph 3) prior to the Terminal Date. No partial
exercise of the Option may be for less than five percent (5%) of the total
number of shares then available under the Option. In no event shall the Company
be required to issue fractional shares. No portion of the Option that is not
vested
<PAGE>
on the date of termination of employment, for any reason, including death or
disability, shall vest after the date of such termination.
5. Method of Exercise. Subject to the limitations of paragraphs 3 and
------------------
4, Optionee may exercise the Option with respect to all or any part of the
shares of Stock then subject to such exercise as follows:
By giving the Company written notice of such exercise (the
"Notice"), specifying the number of shares as to which the Option is exercised.
Such Notice shall be accompanied by an amount equal to the option price of such
shares, in the form of any one or combination of the following: (1) cash, a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of the United States; (2) by delivery on a form
prescribed by the Committee of an irrevocable direction to a securities broker
approved by the Committee to sell shares of Stock and deliver all or a portion
of the proceeds to the Company in payment for the Stock; or (3) with shares of
Stock owned by Optionee or with shares of Stock withheld from the shares
otherwise deliverable to the Optionee upon exercise of this Option. Any shares
of Stock used to exercise this Option (including shares withheld upon exercise)
shall be valued at the Stock's per share Fair Market Value on the date of
exercise. In addition, if Optionee is an executive officer, director or greater
than 10% stockholder of the Company at the time of exercise, any use of shares
of Stock to pay the Option Price must also satisfy the applicable requirements
under Rule 16b-3 for exempt treatment thereunder.
As soon as practicable after receipt of the Notice required in the
foregoing paragraph, the Company shall, without transfer or issue tax and
without other incidental expense to Optionee, deliver to Optionee at the office
of the Company, at 2555 West 190th Street, Torrance, California 90504, or such
other place as may be mutually acceptable to the Company and Optionee, a
certificate or certificates of such shares of Stock; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it, with reasonable diligence, to comply with applicable
registration requirements under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any applicable listing requirements
of any national securities exchange, and requirements under any other law or
regulation applicable to the issuance or transfer of such shares.
6. Corporate Transactions. If there should be any change in the Stock
----------------------
subject to the Option, through merger, consolidation, reorganization,
reincorporation or other similar change in the corporate structure of the
Company, the Company may make appropriate adjustments in order to preserve, but
not to increase, the benefits to Optionee, including adjustments in the number
of shares subject to the Option and in the price per share. If there shall be
any change in the Stock subject to the Option herein granted, through
recapitalization, stock split, stock dividend (in excess of two percent) or
other similar change in the corporate structure of the Company, adjustments
shall automatically occur to preserve but not increase the benefits to Optionee,
including adjustments in the number of shares subject to the Option and in the
price per share. Any adjustment made pursuant to this paragraph 6 as a
consequence of a change in the corporate structure of the Company shall not
entitle Optionee to acquire a number of shares of Stock of the Company or shares
of stock of any successor company greater than the
<PAGE>
number of shares Optionee would receive if, prior to such change, Optionee had
actually held a number of shares of Stock equal to the number of shares then
subject to the Option.
7. Acceleration.
------------
(a) Upon the occurrence of a Change in Control as defined in Section
7(b) below, the Option shall become fully vested and exercisable effective as of
the date of such Change in Control. Upon the occurrence of a Change in Control
described in Section 7(b)(i), (ii) or (v) below, the Option period shall
continue for the remaining term of the Option. Upon the occurrence of a Change
in Control described in Section 7(b)(iii) or (iv) below, the Option shall
terminate as of the effective date of the merger, disposition of assets,
liquidation or dissolution described therein. In no event may the Option be
exercised after the Terminal Date.
(b) For purposes of this Section 7, a "Change in Control" shall be
deemed to occur upon:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a employee benefit plan sponsored by the Company or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding stock;
(ii) a change in the composition of the board of directors of
the Company over a period of thirty-six (36) months or less such that a majority
of the board members cease, by reason of one or more contested elections for
board membership or by one or more actions by written consent of shareholders,
to be comprised of individuals who either (a) have been board members
continuously since the beginning of such period or (b) have been elected or
nominated for election as board members during such period by at least a
majority of the board members described in clause (a) who were still in office
at the time such election or nomination was approved by the board of directors
of the Company;
(iii) approval by the Company's shareholders of a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(iv) approval by the Company's shareholders of (x) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company's subsidiary corporations)
or (y) the complete liquidation or dissolution of the Company; or
(v) approval by the Company's shareholders of any reverse
merger in which the Company survives as an entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are
<PAGE>
transferred to a person or persons different from those who held such securities
immediately prior to such merger.
8. Limitations on Transfer. The Option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him, and neither the Option nor any right
hereunder shall be transferable by Optionee, except by operation of law or by
will or the laws of descent and distribution; provided that any such successor
or transferee shall not be entitled to further transfer the Option and any
shares acquired upon execution of the Option shall be subject to the
restrictions set forth herein and in the Plan. In the event of any attempt by
Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose of the
Option, or of any right hereunder, except as provided for in this Agreement, or
in the event of the levy of any attachment, execution, or similar process upon
the rights or interest hereby conferred, the Company, at its election may
terminate the Option by notice to Optionee and the Option shall thereupon become
null and void.
9. No Shareholder Rights. Neither Optionee, nor any person entitled to
---------------------
exercise Optionee's rights in the event of his death, shall have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option except to the extent the certificates for such shares shall have been
issued upon the exercise of the Option.
10. No Effect on Terms of Employment. Notwithstanding any prior express
--------------------------------
or implied agreement to the contrary, except for a written employment agreement,
the Company shall have the right to terminate or change the terms of employment
of Optionee at any time and for any reason, with or without cause.
11. Notice. Any notice required to be given under the terms of this
------
Agreement shall be in writing and addressed to the Company in care of its
Corporate Secretary at the office of the Company at 2555 West 190th Street,
Torrance, California 90504 and any notice to be given to Optionee shall be in
writing and addressed to him at the address given by him beneath his signature
to this Agreement, or such other address as either party to this Agreement may
hereafter designate in writing to the other. Any such notice shall be deemed to
have been duly given (i) when enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified and deposited (postage or registration or
certification fee prepaid) in a post office, (ii) on the date of personal
service, or (iii) on the day after sending notice by an overnight delivery
service.
12. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
13. Withholding. Optionee agrees to make appropriate arrangements with
-----------
the Company for satisfaction of any applicable federal, state or local income
and employment tax withholding requirements or social security requirements, if
any. Optionee may satisfy withholding tax obligations by delivering cash; or,
if permitted by the Committee, shares of Stock (including electing to have the
Company withhold from the Stock to be issued to the
<PAGE>
Optionee shares of Stock) having a fair market value equal to the amount of the
withholding tax required to be withheld.
14. Governing Law. The interpretation, performance, and enforcement of
-------------
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and Optionee has signed this
Agreement as of the day and year first above written.
CREATIVE COMPUTERS, INC.
By:_________________________________________
Frank F. Khulusi
President and Chief Executive Officer
Signed:_____________________________________
Optionee
Name: Arthur W. Salyer
<PAGE>
EXHIBIT 4.5
CREATIVE COMPUTERS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made as of
June 10, 1999 (the "Grant Date"), between Creative Computers, Inc., a Delaware
corporation (the "Company"), and Peter L. Zuiker ("Optionee").
RECITALS:
A. The Company recognizes the value of the services of Optionee to the
Company and desires to motivate Optionee in Optionee's work for the Company and
its affiliates, and the Company recognizes that the grant of the rights and
options provided for in this Agreement are an inducement essential to Optionee's
having entered into an employment relationship with the Company.
B. The Company has determined that it would be to the advantage and in
the interest of the Company and its shareholders to grant the rights and options
provided for in this Agreement to Optionee as a reward and an incentive for
increased efforts on behalf of the Company and its affiliates.
AGREEMENT
Based on the foregoing and the agreements set forth herein, the parties
agree as follows:
1. Option Grant. The Company hereby grants to Optionee the right and
------------
option (the "Option") to purchase from the Company on the terms and conditions
set forth herein all or any part of an aggregate of thirty-thousand (30,000)
shares of the Common Stock of the Company (the "Stock"). The purchase price of
the Stock subject to the Option shall be $7.28125 per share.
2. Option Period. The Option shall be exercisable only during the
-------------
Option Period. During such Option Period, the exercisability of the Option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and except as
provided in paragraph 3, shall end on the Terminal Date which shall be one
hundred twenty (120) months from the Grant Date.
3. Limits on Option Period. The Option Period may end before the
-----------------------
Terminal Date, as follows:
<PAGE>
(a) If Optionee ceases to be a bona fide employee of the Company or of
an affiliate thereof for any reason other than cause, disability (within the
meaning of subparagraph 3(c)) or death during the Option Period, the Option
Period shall terminate three (3) months after the date of cessation of
employment or on the Terminal Date, whichever is first, and the Option shall be
exercisable only to the extent exercisable under paragraph 4 on the date of
Optionee's cessation of employment.
(b) If Optionee should die while in the employ of the Company or its
affiliates, the Option Period shall end one (1) year after the date of death or
on the Terminal Date, whichever occurs first, and Optionee's executor or
administrator, or the person or persons to whom Optionee's rights under the
Option shall pass by will or by the applicable laws of descent and distribution
may exercise the entire unexercised portion of the Option to the extent
exercisable under paragraph 4 on the date of Optionee's death.
(c) If Optionee's employment is terminated by reason of disability, as
defined below, the Option Period shall end one (1) year after the date of
Optionee's cessation of employment or on the Terminal Date, whichever occurs
first, and the Option shall be exercisable only to the extent exercisable under
paragraph 4 on the date of Optionee's cessation of employment. For purposes of
this subparagraph (c), an individual is disabled if he is unable to engage in
any substantial gainful activity for the Company and/or its affiliates by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. An individual shall not
be considered to be disabled unless he furnishes proof of the existence thereof,
in such form and manner, and at such times, as the Board of Directors or the
Compensation Committee thereof (the "Committee") may require.
(d) If Optionee is on a leave of absence from the Company and any
affiliates thereof because of disability, or for any other reason as may be
approved by the Committee, Optionee shall not be deemed during the period of
such absence, by virtue of such absence alone, to have terminated employment
with the Company or an affiliate except as the Committee may otherwise expressly
provide.
(e) If Optionee's employment with the Company and any affiliates
thereof terminates for cause during the Option Period, the Option Period shall
terminate thirty (30) days from the date of Optionee's termination of employment
and the Option shall not thereafter be exercisable to any extent.
4. Vesting of Right to Exercise Options. The shares covered by the
------------------------------------
Option shall vest in equal quarterly installments over a 3-year period from the
hire date, with the Option 100% vested on the April 12, 2002 anniversary of the
hire date.
Any portion of the Option not exercised when vested shall accumulate and
be exercisable at any time during the Option Period (subject to early
termination pursuant to paragraph 3) prior to the Terminal Date. No partial
exercise of the Option may be for less than five percent (5%) of the total
number of shares then available under the Option. In no event shall the Company
be required to issue fractional shares. No portion of the Option that is not
vested
<PAGE>
on the date of termination of employment, for any reason, including death or
disability, shall vest after the date of such termination.
5. Method of Exercise. Subject to the limitations of paragraphs 3 and
------------------
4, Optionee may exercise the Option with respect to all or any part of the
shares of Stock then subject to such exercise as follows:
By giving the Company written notice of such exercise (the "Notice"),
specifying the number of shares as to which the Option is exercised. Such
Notice shall be accompanied by an amount equal to the option price of such
shares, in the form of any one or combination of the following: (1) cash, a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of the United States; (2) by delivery on a form
prescribed by the Committee of an irrevocable direction to a securities broker
approved by the Committee to sell shares of Stock and deliver all or a portion
of the proceeds to the Company in payment for the Stock; or (3) with shares of
Stock owned by Optionee or with shares of Stock withheld from the shares
otherwise deliverable to the Optionee upon exercise of this Option. Any shares
of Stock used to exercise this Option (including shares withheld upon exercise)
shall be valued at the Stock's per share Fair Market Value on the date of
exercise. In addition, if Optionee is an executive officer, director or greater
than 10% stockholder of the Company at the time of exercise, any use of shares
of Stock to pay the Option Price must also satisfy the applicable requirements
under Rule 16b-3 for exempt treatment thereunder.
As soon as practicable after receipt of the Notice required in the
foregoing paragraph, the Company shall, without transfer or issue tax and
without other incidental expense to Optionee, deliver to Optionee at the office
of the Company, at 2555 West 190th Street, Torrance, California 90504, or such
other place as may be mutually acceptable to the Company and Optionee, a
certificate or certificates of such shares of Stock; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it, with reasonable diligence, to comply with applicable
registration requirements under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any applicable listing requirements
of any national securities exchange, and requirements under any other law or
regulation applicable to the issuance or transfer of such shares.
6. Corporate Transactions. If there should be any change in the Stock
----------------------
subject to the Option, through merger, consolidation, reorganization,
reincorporation or other similar change in the corporate structure of the
Company, the Company may make appropriate adjustments in order to preserve, but
not to increase, the benefits to Optionee, including adjustments in the number
of shares subject to the Option and in the price per share. If there shall be
any change in the Stock subject to the Option herein granted, through
recapitalization, stock split, stock dividend (in excess of two percent) or
other similar change in the corporate structure of the Company, adjustments
shall automatically occur to preserve but not increase the benefits to Optionee,
including adjustments in the number of shares subject to the Option and in the
price per share. Any adjustment made pursuant to this paragraph 6 as a
consequence of a change in the corporate structure of the Company shall not
entitle Optionee to acquire a number of shares of Stock of the Company or shares
of stock of any successor company greater than the
<PAGE>
number of shares Optionee would receive if, prior to such change, Optionee had
actually held a number of shares of Stock equal to the number of shares then
subject to the Option.
7. Acceleration.
------------
(a) Upon the occurrence of a Change in Control as defined in Section
7(b) below, the Option shall become fully vested and exercisable effective as of
the date of such Change in Control. Upon the occurrence of a Change in Control
described in Section 7(b)(i), (ii) or (v) below, the Option period shall
continue for the remaining term of the Option. Upon the occurrence of a Change
in Control described in Section 7(b)(iii) or (iv) below, the Option shall
terminate as of the effective date of the merger, disposition of assets,
liquidation or dissolution described therein. In no event may the Option be
exercised after the Terminal Date.
(b) For purposes of this Section 7, a "Change in Control" shall be
deemed to occur upon:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a employee benefit plan sponsored by the Company or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding stock;
(ii) a change in the composition of the board of directors of
the Company over a period of thirty-six (36) months or less such that a majority
of the board members cease, by reason of one or more contested elections for
board membership or by one or more actions by written consent of shareholders,
to be comprised of individuals who either (a) have been board members
continuously since the beginning of such period or (b) have been elected or
nominated for election as board members during such period by at least a
majority of the board members described in clause (a) who were still in office
at the time such election or nomination was approved by the board of directors
of the Company;
(iii) approval by the Company's shareholders of a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(iv) approval by the Company's shareholders of (x) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company's subsidiary corporations)
or (y) the complete liquidation or dissolution of the Company; or
(v) approval by the Company's shareholders of any reverse
merger in which the Company survives as an entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are
<PAGE>
transferred to a person or persons different from those who held such securities
immediately prior to such merger.
8. Limitations on Transfer. The Option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him, and neither the Option nor any right
hereunder shall be transferable by Optionee, except by operation of law or by
will or the laws of descent and distribution; provided that any such successor
or transferee shall not be entitled to further transfer the Option and any
shares acquired upon execution of the Option shall be subject to the
restrictions set forth herein and in the Plan. In the event of any attempt by
Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose of the
Option, or of any right hereunder, except as provided for in this Agreement, or
in the event of the levy of any attachment, execution, or similar process upon
the rights or interest hereby conferred, the Company, at its election may
terminate the Option by notice to Optionee and the Option shall thereupon become
null and void.
9. No Shareholder Rights. Neither Optionee, nor any person entitled to
---------------------
exercise Optionee's rights in the event of his death, shall have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option except to the extent the certificates for such shares shall have been
issued upon the exercise of the Option.
10. No Effect on Terms of Employment. Notwithstanding any prior express
--------------------------------
or implied agreement to the contrary, except for a written employment agreement,
the Company shall have the right to terminate or change the terms of employment
of Optionee at any time and for any reason, with or without cause.
11. Notice. Any notice required to be given under the terms of this
------
Agreement shall be in writing and addressed to the Company in care of its
Corporate Secretary at the office of the Company at 2555 West 190th Street,
Torrance, California 90504 and any notice to be given to Optionee shall be in
writing and addressed to him at the address given by him beneath his signature
to this Agreement, or such other address as either party to this Agreement may
hereafter designate in writing to the other. Any such notice shall be deemed to
have been duly given (i) when enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified and deposited (postage or registration or
certification fee prepaid) in a post office, (ii) on the date of personal
service, or (iii) on the day after sending notice by an overnight delivery
service.
12. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
13. Withholding. Optionee agrees to make appropriate arrangements with
-----------
the Company for satisfaction of any applicable federal, state or local income
and employment tax withholding requirements or social security requirements, if
any. Optionee may satisfy withholding tax obligations by delivering cash; or,
if permitted by the Committee, shares of Stock (including electing to have the
Company withhold from the Stock to be issued to the
<PAGE>
Optionee shares of Stock) having a fair market value equal to the amount of the
withholding tax required to be withheld.
14. Governing Law. The interpretation, performance, and enforcement of
-------------
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and Optionee has signed this
Agreement as of the day and year first above written.
CREATIVE COMPUTERS, INC.
By:_________________________________________
Frank F. Khulusi
President and Chief Executive Officer
Signed:_____________________________________
Optionee
Name: Peter L. Zuiker
<PAGE>
EXHIBIT 5.1
OPINION OF MORRISON & FOERSTER LLP
[Morrison & Foerster LLP Letterhead]
June 21, 1999
Creative Computers, Inc.
2555 West 190th Street
Torrance, California 90504
Gentlemen:
At your request, we have examined the Registration Statement on Form S-8 to
be filed with the Securities and Exchange Commission (the "SEC") in connection
with the registration under the Securities Act of 1933, as amended, of an
aggregate of 235,000 shares of your common stock, $.001 par value (the "Common
Shares") issuable upon exercise of options which have been granted pursuant to
those certain Nonqualified Stock Option Agreements, dated June 10, 1999 between
you and each of Michael Assadi, John Beach, S. Keating Rhoads, Arthur Salyer and
Peter Zuiker (the "Option Agreements").
As your counsel in connection with the Registration Statement, we have
examined the proceedings taken by you in connection with the adoption of the
Option Agreements and the authorization of the issuance of the Common Shares or
options to purchase Common Shares under the Option Agreements (the "Option
Agreement Shares") and such documents as we have deemed necessary to render this
opinion.
Based upon the foregoing, it is our opinion that the Option Agreement Shares,
when issued and outstanding pursuant to the terms of the Option Agreements, will
be validly issued, fully paid and nonassessable Common Shares.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Morrison & Foerster LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 3, 1999 relating to the
financial statements and financial statement schedules, which appears in
Creative Computers, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998.
/s/ PricewaterhouseCoopers LLP
Los Angeles, California
June 30, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to Creative Computers, Inc. of our report dated
January 22, 1999, with respect to the financial statements of uBid, Inc.,
incorporated by reference in the Annual Report (Form 10-K) of Creative
Computers, Inc. for the year ended December 31, 1998.
/s/ Ernst & Young LLP
Chicago, Illinois
June 28, 1999
