-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DtPXfEdOLVAvOi3yBXpVLJBMEUhNTHC3kgs4dVi+tolm26BhN47Ou9Kb6y6RqxFs ZIoxAWgD6SU+bKA3wc8kSg== 0001017062-99-001247.txt : 19990705 0001017062-99-001247.hdr.sgml : 19990705 ACCESSION NUMBER: 0001017062-99-001247 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19990702 EFFECTIVENESS DATE: 19990702 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREATIVE COMPUTERS INC CENTRAL INDEX KEY: 0000937941 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 954518700 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-82257 FILM NUMBER: 99659062 BUSINESS ADDRESS: STREET 1: 2555 WEST 190TH STREET CITY: TORRENCE STATE: CA ZIP: 90504 BUSINESS PHONE: 3103545600 MAIL ADDRESS: STREET 1: 2555 WEST 190TH STREET CITY: TORRENCE STATE: CA ZIP: 90504 S-8 1 FORM S-8 - REGISTRATION STATEMENT 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
- -------------------------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------------------------- Common Stock, $.001 par value per share 235,000 shares $7.28125 $1,711,094 $475.68 - --------------------------------------------------------------------------------------------------
(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. ================================================================================ 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. 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. 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 /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 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) EX-4.1 2 NONQUALIFIED STOCK OPTION AGREE. W/ MICHAEL ASSADI 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: (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 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 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 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 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 EX-4.2 3 NONQUALIFIED STOCK OPTION W/ JOHN BEACH 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: (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 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 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 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 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 EX-4.3 4 NONQUALIFIED STOCK OPTION W/ S. KEATING RHOADS 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: (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 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 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 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 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 EX-4.4 5 NONQUALIFIED STOCK OPTION W/ ARTHUR SALYER 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: (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 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 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 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 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 EX-4.5 6 NONQUALIFIED STOCK OPTION W/ PETER ZUIKER 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: (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 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 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 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 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 EX-5.1 7 OPINION OF MORRISON & FOERSTER LLP 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 EX-23.2 8 CONSENT OF PRICEWATERHOUSECOOPERS LLP 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 EX-23.3 9 CONSENT OF ERNST & YOUNG LLP 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 -----END PRIVACY-ENHANCED MESSAGE-----