SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 1995
HARVEY GROUP INC.
(Exact name of registrant as specified in charter)
New York 1-4626 13-1534671
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
600 Secaucus Road, Secaucus, New Jersey 07094
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 865-3418
N/A
(Former name or former address, if changed since last report)
Exhibit Index is located on Page
Item 5. Other Events.
On March 10, 1995, The Harvey Group Inc. (the
"Company") retained a placement agent pursuant to which such
agent will seek to raise, on a best efforts basis, up to
$4,200,000 of new equity to obtain additional working capital for
the Company in light of continuing losses. The proposed
placement will be for up to 12,000,000 shares at an anticipated
price between $0.35 and $0.38 per share. Fees relating to the
completion of this transaction include the issuance of 7,750,000
seven-year warrants (which includes 2,750,000 warrants to
purchase shares of common stock at an exercise price of $0.42 to
be issued to such agent and the 5,000,000 warrants to be issued
to Capital Vision Group as discussed below). The proposed
transaction is subject to certain conditions, including, among
others, shareholder approval of the transaction and restructuring
of certain existing indebtedness into equity of the Company.
There can be no assurance that this proposed transaction will be
completed.
The Company also entered into a letter agreement with
Capital Vision Group ("CVG") pursuant to which the Company has
agreed, among other things, to retain CVG as its financial and
business advisor upon completion of the above referenced private
placement. As compensation for CVG's services, the Company
agreed to pay CVG a cash fee equal to $6,000 per month and to
grant CVG warrants to purchase 5,000,000 shares of common stock
at an exercise price of $0.50 per share.
Copies of the agreement with the placement agent and
the letter agreement with CVG are incorporated herein by
reference and are filed herewith as Exhibits 99.1 and 99.2,
respectively. A copy of a press release issued by the Company
announcing the proposed placement is filed herewith as Exhibit
99.3 and is incorporated herein by reference.
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
THE HARVEY GROUP INC.
By: /s/ Joseph J. Calabrese, Jr.
Name: Joseph J. Calabrese, Jr.
Title: Vice President and
Chief Financial Officer
Dated: March 21, 1995
EXHIBIT INDEX
Exhibit No. Description Page No.
99.1 Letter Agreement, dated March 10, 1995, by
and between The Harvey Group Inc. and
Janssen-Meyers Associates, L.P.
99.2 Letter Agreement, dated March 9, 1995,
by and between The Harvey Group Inc. and
Capital Vision Group.
99.3 Press Release, dated March 13, 1995, issued
by The Harvey Group Inc.
JANSSEN/MEYERS
Janssen/Meyers Associates, L.P.
Investment Bankers
17 State Street
New York, NY 10004
800 606 4400 WATS
212 742 4200 TEL
212 742 4222 FAX
March 10, 1995
Mr. Art Shulman, President
The Harvey Group, Inc.
600 Secaucus Road
Secaucus, NJ 07094
Dear Sir and Madam:
You have advised us that The Harvey Group, Inc.
(the "Company") proposes to issue and sell privately up
to 12,000,000 shares of the Company's Common Stock (the
"Shares"), in reliance upon an exemption from
registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "Act"). The offering will
be on a "best efforts all or none basis" as to 7,500,000
Shares and on a "best efforts basis" as to an additional
4,500,000 Shares. The terms are subject to further
review and negotiation but it is anticipated that the
offering price per Share (the "Offering") will be between
$.35 and $.38. The final terms are subject to the mutual
agreement of the parties. The Company will have no more
than 3,200,000 shares of Common Stock outstanding
immediately prior to the Offering. In addition, the
Company shall have entered into an agreement with Capital
Vision Group ("CVG") prior to the commencement of the
Offering with respect to certain business consulting
services to be provided by CVG. CVG and the Company
shall agree as to the amount of subordinated debt which
will be either exchanged for Common Stock at the Offering
Price, or extended as to maturity date, upon the
consummation of the Offering.
The purpose of this letter is to set forth the
terms pursuant to which Janssen-Meyers Associates, L.P.
("JMA") shall serve as the exclusive placement agent
through which the Company shall offer and sell the
Shares.
1. (a) The Company hereby appoints JMA as the
Company's exclusive placement agent for the purpose of
finding purchasers for the Shares for the account and
risk of the Company through the private placement herein
contemplated (the "Offering"). Subject to the terms and
conditions contained in this Agreement, JMA hereby
accepts such appointment and agrees to use its reasonable
best efforts to find prospective purchasers for the
Shares. The exclusive agency granted JMA hereunder shall
extend to any other equity or debt financing which the
Company may consider during term hereof and the Company
agrees to refer all proposals for any such financing to
JMA; provided, however, that in lieu thereof, the Company
may terminate this agreement during its term and pay JMA
the Termination Fee, as defined below. The Company
expressly acknowledges and agrees that JMA's obligations
hereunder are on a reasonable best efforts basis only and
that the execution of this Agreement does not constitute
a commitment by JMA to purchase the Shares and does not
ensure the successful placement of the Shares or any
portion thereof.
(b) The Company agrees that during the
term of JMA's agency hereunder, neither the Company nor
any person authorized to act on the Company's behalf will
offer the Shares, for sale to, or solicit any offers to
purchase the Shares from, or except as JMA may
specifically request, otherwise approach or negotiate in
respect thereof with, any other person or persons.
Neither the Company nor any person authorized to act on
the Company's behalf will, directly or indirectly, take
any action that would prevent the offering and sale of
the Shares from complying with the requirements or all
applicable securities laws or render unavailable any
exemption from the registration provisions of the Act
relied upon in making any offer or sale of the Shares, or
the state securities or "blue sky" laws of jurisdictions
in which the Shares will be offered.
(c) JMA agrees that it will not make any
offer of the Shares in any jurisdiction in which such
offer will be unlawful and will not take any action that
would prevent the offering and sale of the Shares from
complying with the requirements of all applicable
securities laws or render unavailable any exemption
thereunder.
2. In connection with JMA's activities
pursuant to this Agreement, the Company will furnish JMA
with all information (the "Information") concerning the
Company and its subsidiaries which JMA may request and
will provide JMA access to the Company's officers,
directors, accountants and counsel. The Company
acknowledges that in rendering its services hereunder,
JMA will be using and relying on the Information. The
Company represents and warrants that the Information and
the information contained in the Confidential Offering
Memorandum referred to below will not contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading except in
reliance upon and in conformity with written information
furnished to the Company by JMA concerning JMA expressly
for inclusion in the Confidential Offering Memorandum, or
any amendment or supplement thereto.
3. (a) The Company shall prepare or cause to
be prepared a Confidential Offering Memorandum, in form
and substance satisfactory to JMA, containing information
concerning, among other things, the terms of the Offering
and the Shares, the intended uses of the proceeds
thereof, the risks attendant to an investment in the
Shares, information concerning the business and finances
of the Company and its subsidiaries and other relevant
matters. JMA and its counsel shall have the opportunity
to make such review and investigation at the information
contained in the Confidential Offering Memorandum as it
deems appropriate. The Company authorizes and directs
JMA to furnish to prospective purchasers of the Shares,
the Confidential Offering Memorandum, as same may be
amended or supplemented, and agrees to provide JMA with
such number of copies thereof as JMA may reasonably
request. If any event relating to or affecting the
Company shall occur as a result of which it is necessary
or advisable to amend or supplement the Confidential
Offering Memorandum in order to make the statements
contained therein not misleading in light of the
circumstances existing at the time it is delivered to
prospective purchasers or in order to comply with any
applicable federal or state securities or "blue sky"
laws, the Company shall forthwith prepare and furnish to
JMA a reasonable number of copies of an amendment or
amendments of or a supplement or supplements to the
Confidential Offering Memorandum (in form and substance
satisfactory to JMA) which will amend or supplement the
Confidential Offering Memorandum so that as amended or
supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary
in order to make the statements contained therein, in the
light of the circumstances existing at the time the
Confidential Offering Memorandum is delivered to
prospective purchasers, not misleading and it will comply
with any applicable federal or state securities or "blue
sky" laws. The Company shall advise JMA of the happening
of any such event known to it, shall advise JMA promptly
after it receives knowledge or notice thereof of any
communication with the Securities and Exchange Commission
or any state securities commissioner concerning the
initiation of any proceeding concerning the Offering, and
shall advise JMA promptly after it receives knowledge or
notice thereof of the commencement of any lawsuit or
proceeding relating to the Offering.
(b) The Company shall also prepare or
cause to be prepared such subscription agreements,
other documentation (including, without limitation,
subscription agreements, escrow agreements and
certificates), all of which shall be in form and
substance satisfactory to JMA, as JMA may request in
connection with the Offering. As a condition to the
Closing of the Offering, the Company shall also deliver
to JMA and the purchasers of the Shares such instruments,
documents, certificates and opinions as JMA may request
in order to evidence the truth, accuracy and completeness
of the Information and the information contained in the
Confidential Offering Memorandum, the Company's authority
to make the Offering, the validity, legality and
enforceability of the Shares and the various instruments,
documents and agreements executed in connection with the
Offering and such other matters as JMA may reasonably
request; provided, however, that JMA shall not request an
opinion of the Company's counsel relating to the
accuracy, completeness or fairness of the statements
contained in the Confidential Offering Memorandum.
4. The Company will endeavor in good faith, in
cooperation with JMA, to qualify, to the extent required
by applicable law, the sale of the Shares for offering
and sale under the applicable securities or "blue sky"
laws of such jurisdictions as JMA may designate, and the
Company will use its best efforts to maintain such
qualifications in effect for as long as may be required
for the distribution of the Shares. In each
jurisdiction where the Shares shall have been qualified
as above provided, the Company will make and file such
statements and reports in each year as are or may be
required by the laws of such jurisdiction; provided,
however, that the Company shall not be required to
qualify as a foreign corporation or file a general
consent to service of process.
5. For acting as exclusive placement agent in
connection with the Offering, JMA shall be entitled to
receive and the Company hereby agrees to pay to JMA upon
consummation of the Offering, a fee equal to 10% of the
gross proceeds of the Offering. JMA shall also be
entitled to a non-accountable expense allowance equal to
3% of the gross proceeds of the Offering. The foregoing
compensation shall apply to any other financing referred
to JMA pursuant to paragraph 1 which is consummated by
the Company, unless the Company elects to terminate this
agreement and pay the Termination Fee, as defined below.
Upon execution of this letter, the Company shall deliver
to JMA a check in the amount of $25,000, which amount
shall be non-refundable and shall be applied against the
nonaccountable expense allowance.
6. The Company shall pay all fees, charges,
expenses and disbursements relating to the Offering,
including, without limitation, all fees, charges,
expenses and disbursements in connection with (a) the
preparation, printing, filing, distribution and mailing
of the Confidential Offering Memorandum and any
supplement and amendment thereto and all other documents
relating to the Offering and the purchase, sale and
delivery of the Shares, including the cost of all copies
thereof; (b) the issuance, sale, transfer and delivery of
the Shares, including any transfer or other taxes payable
thereon and the fees of any transfer agent or registrar;
and (c) the registration or qualification of the Shares
for offer and sale under the securities laws of such
states and other jurisdictions as JMA may designate
(including, without limitation, all filing and
registration fees and the reasonable "blue sky" fees and
disbursements of JMA's counsel all of which in the
aggregate shall not exceed $20,000). Upon JMA's request,
the Company shall provide funds to pay all such fees,
charges, expenses and disbursements as incurred.
7. Concurrent with, and as a condition
precedent to, the closing of the Offering, the Company
shall sell to JMA (or its designated affiliates) stock
purchase warrants covering 2,750,000 of shares of Common
Stock of the Company. The exercise price of the Warrants
will be 120% of the Offering Price and will expire seven
years after the Offering is consummated. The warrants
may be exercised as to all or a lesser number of shares
and will contain provisions for registration of the
resale of the underlying shares at the Company's expense
and for adjustment in the number of such shares and the
exercise price to prevent dilution; provided, however,
the holders will not be permitted to demand registration
of the underlying shares for a period of one year from
issuance.
8. A. The Company agrees that if Shares are
sold in the offering, JMA shall have an irrevocable
preferential right for a period of three years from the
date the Offering is completed to purchase for its
account or to sell for the account of the Company, or any
subsidiary of or successor to the Company, any securities
of the Company or any such subsidiary or successor which
the Company, any such subsidiary or successor may seek to
sell through an underwriter, placement agent or broker-
dealer whether pursuant to registration under the Act or
otherwise. The Company, any such subsidiary or successor
will consult JMA with regard to any such offering and
will offer JMA the opportunity to purchase or sell any
such securities on terms not more favorable to the
Company, any such subsidiary or successor than it or they
can secure elsewhere. If JMA fails to accept such offer
within 20 business days after the mailing of a notice
containing such offer by registered mail addressed to
JMA, then JMA shall have no further claim or right with
respect to the financing proposal contained in such
notice. If, however, the terms of such proposal are
subsequently modified in any material respect, the
preferential right referred to herein shall apply to such
modified proposal as if the original proposal had not
been made. JMA's failure to exercise its preferential
right with respect to any particular proposal shall not
affect its preferential rights relative to future
proposals.
B. The Company's executive officers and
directors shall agree that if Shares are sold in the
offering such individuals will not offer, issue, sell,
contract to sell, grant any option for the sale of or
otherwise dispose of any securities of the Company
without JMA's prior written consent for a period of one
year following the closing of the Offering.
9. At or prior to, and as a condition
precedent to, the closing of the Offering, the Company
will enter into a three year agreement with JMA pursuant
to which (i) the Company shall employ JMA as its
Investment Banker and Financial Consultant and pay JMA a
monthly retainer of $3,500 per month; (ii) JMA will be
paid a fee of five (5%) percent of the first $5,000,000
and two and one-half (2-1/2%) percent of the amount over
$5,0000,000 of the consideration paid or received by the
Company (or by any stockholder, subsidiary or affiliate
of the Company) in any transaction (including mergers,
acquisitions, joint ventures and other business
transactions) consummated by the Company or any
subsidiary or affiliate of the Company, introduced to the
Company by JMA; and (iii) the Company shall engage JMA in
any transaction (including mergers, acquisitions, joint
ventures and other business transactions) considered by
the Company, or any subsidiary or affiliate of the
Company, which was not introduced to the Company by
another investment banking firm on which the Company
desires to employ an investment banker, and shall pay to
JMA such compensation as shall be customarily paid to
investment bankers in the industry for similar services;
provided JMA is (i) legally qualified and (ii) able to
provide such services.
10. JMA shall have the right to designate a
senior advisor to the Board of Directors who shall be
entitled to receive notice of, and attend all, meetings
of the Board of Directors or any committee thereof.
11. The Company agrees that, for a period of
three years from the date hereof, it shall not solicit
any offer to buy from or offer to sell any person
introduced to the Company by JMA in connection with the
Offering, directly or indirectly, any securities of the
Company or of any other entity, or provide the name of
any such person to any other securities broker or dealer
or selling agent. In the event that the Company or any
of its affiliates, directly or indirectly, solicits,
offers to buy from or offers to sell to any such person
any such securities, or provides the name of any such
person to any other securities broker or dealer or
selling agent, and such person purchases such securities
or purchases securities from any other securities broker
or dealer or selling agent, the Company shall pay to JMA
an amount equal to 10% of the aggregate purchase price of
the securities so purchased by such person.
12. The Company agrees to indemnify JMA in
accordance with the indemnification provisions attached
hereto (the "Indemnification Provisions"), which
provisions are incorporated herein by reference and made
a part hereof.
13. The agency created hereby shall remain in
effect until (i) the execution and delivery by the
Company of an Agency Agreement relating to the Offering
incorporating the terms set forth herein in substantially
the form customarily used in the industry, or (ii) the
earlier termination as herein provided. If no Shares are
sold pursuant to the Offering within 75 days of the
receipt by JMA of the Confidential Offering Memorandum
and related documentation fully completed and ready for
distribution to offerees, the Company may terminate the
agency created hereby upon 10 days prior written notice
to JMA. JMA may terminate the agency created hereby for
any reason upon 10 days prior written notice to the
Company. In either case, neither party shall have any
liability or continuing obligation to the other except
that, regardless of which party elects to terminate, (i)
the Company agrees to reimburse JMA for, or otherwise pay
and bear, the expenses and fees to be paid and borne by
the Company as provided for in paragraph 6 above and to
reimburse JMA for the full amount of its actual out-of-
pocket expenses (which shall include, without limitation,
the fees and disbursements of JMA's counsel, travel and
lodging expenses, mailing, printing and reproduction
expenses, and any expenses incurred by JMA in conducting
its due diligence) up to a maximum of $50,000, less
amounts previously paid to JMA in reimbursement for such
expenses and the advance against the non-accountable
expense allowance delivered upon the execution of this
Agreement; provided if such termination is caused by the
affirmative fault of JMA, the amount of such
reimbursement shall not exceed the amounts previously
paid by the Company to JMA, and (ii) the provisions of
paragraph 11 and the Indemnification Provisions shall
remain in full force and effect; provided further, that
(i) in the event the Company terminates this agreement
and within six months from the date of such termination,
consummates any financing introduced to, or considered
by, the Company, during the term hereof, JMA shall be
entitled to receive the Termination Fee or 10% of the
aggregate amount of such financing; and (ii) in the event
the Company terminates this agreement within 75 days of
the receipt by JMA of the Confidential Offering
Memorandum and related documentation fully completed and
ready for distribution to offerees, the Company shall pay
to JMA the sum of $250,000 (the "Termination Fee").
14. All communications hereunder, except as
may be otherwise specifically provided herein, shall be
in writing and shall be mailed, hand delivered, or
telexed or telegraphed and confirmed by letter, to the
party to whom it is addressed at the address set forth
above. All notices hereunder shall be effective upon
receipt by the party to which it is addressed.
15. The benefits of this Agreement shall inure
to the respective successors and assigns of the parties
hereto and of the indemnified parties hereunder and their
successors and assigns and representatives, and the
obligations and liabilities assumed in this Agreement by
the parties hereto shall be binding upon their respective
successors and assigns; provided, that the rights and
obligations of either party under this Agreement may not
be assigned without the prior written consent of the
other party hereto and any other purported assignment
shall be null and void.
16. The validity and interpretation of this
Agreement shall be governed by the laws of the State of
New York applicable to agreements made and to be fully
performed therein.
If the foregoing correctly sets forth our
agreement, please sign two copies of this letter in the
space provided below and return same to us.
Very truly yours,
Janssen-Meyers Associates, L.P.
By: Meyers-Janssen Securities
Corp. (General Partner)
By: /s/ Bruce Meyers
Bruce Meyers
Vice-President
Confirmed and Agreed to
this 10th day of March, 1995.
/s/ Arthur Shulman
Name: Arthur Shulman
Title: President & CEO
The Harvey Group
INDEMNIFICATION PROVISIONS
The Harvey Group, Inc. (the "Company") agrees
to indemnify and hold harmless Janssen-Meyers Associates,
L.P. ("JMA"), its affiliated entities, officers,
directors, legal counsel, agents and controlling persons
(such persons or entities being referred to collectively
to as the "Company" for purposes of this indemnification
provision) against any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements (and any and all
actions, suits, proceedings and investigations in respect
thereof and any and all legal and other costs, expenses
and disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise),
including, without limitation, the costs, expenses and
disbursements, as and when incurred, of investigating,
preparing or defending any such action, suit, proceeding
or investigation (whether or not in connection with
litigation in which JMA is a party), directly or
indirectly, caused by, relating to, based upon, arising
out of, or in connection with (a) any untrue statement or
alleged untrue statement of a material fact contained in,
or omissions from, the Confidential Offering Memorandum
referred to in the Agreement, between the Company and JMA
to which these indemnification provisions are attached
and form a part (the "Agreement"), including any
amendment thereof or supplement thereto, or similar
statements or omissions in or from any other information
furnished by the Company to JMA or any prospective
purchaser of the Shares in the Offering (as such terms
are defined in the Agreement); (b) violations or breaches
of any representation, warranty, covenant or agreement
contained or incorporated in the Agreement or in any
instrument, document, agreement or certificate delivered
by the Company to JMA or to any prospective purchaser of
the Shares in the Offering; and (c) JMA's acting for the
Company, including, without limitation, any act or
omission by JMA in connection with its acceptance of or
the performance or non-performance of its obligations
under the Agreement; and (d) the Offering; provided,
however, that, with respect to clauses (a), (c) and (d)
of this sentence, such indemnity shall not apply to any
portion of any such loss, claim, damage, obligation,,
penalty, judgement, liability, cost or expense to the
extent it results from (x) a breach by JMA of the
provisions of paragraph 1(c) of the Agreement, (y) JMA's
gross negligence, bad faith or willful misconduct, or (z)
any untrue statement of a material fact or an omission to
state a material fact in the Offering memorandum made in
reliance upon information furnished to the Company in
writing by or on behalf of JMA. The Company also agrees
that JMA shall not have any liability (whether direct or
indirect, in contract or tort or otherwise) to the
Company for or in connection with the engagement of JMA,
except as provided below with respect to JMA's
obligations to indemnify to the Company.
These indemnification provisions shall be in
addition to any liability which either party may have to
the other. The persons indemnified below in this
sentence and shall extend to the following: JMA, its
affiliated entities, partners, employees, legal counsel,
agents and controlling persons (within the meaning of the
federal securities laws), and the officers, directors,
employees, legal counsel, agents and controlling persons
of any of them. All references to JMA in these
indemnification provisions shall be understood to include
any and all of the foregoing.
If any action, suit, proceeding or
investigation is commenced, as to which JMA proposes to
demand indemnification, it shall notify the Company with
reasonable promptness (provided, however, that any
failure by JMA to notify the Company shall not relieve
the Company from its obligations hereunder except to the
extent the Company in actually and materially prejudiced
by such failure), and the Company shall have the right to
assume the defense of such action. JMA shall have the
right to retain counsel of its own choice to represent
it, but the fees and expenses of such counsel shall be at
its expense unless the employment of such counsel shall
have been authorized in writing by the Company in
connection with the defense of such action or the Company
shall not have promptly employed counsel reasonably
satisfactory to JMA to have charge of the defense of such
action or JMA shall have reasonably concluded that there
may be one or more legal defenses available to it which
are different from or additional to those available to
the Company, in any of which events such fees and
expenses shall be borne by the Company. Any such counsel
of JMA shall, to the extent consistent with its
professional responsibilities, cooperate with the Company
and any counsel designated by the Company. The Company
shall be liable for any settlement of any claim against
JMA made with the Company's written consent, which
consent shall not be unreasonably withheld. The Company
shall not, without the prior written consent of JMA,
settle or compromise any claim, or permit a default or
consent to the entry of any judgment in respect thereof,
unless such settlement, compromise or consent includes,
as an unconditional term thereof, the giving by the
claimant to JMA of an unconditional release from all
liability in respect of such claim.
JMA agrees to indemnify and hold harmless the
Company, its affiliated entities, officers, directors,
legal counsel, agents and controlling persons (such
persons or entities being referred to collectively as the
"Company" for purposes of this indemnification provision)
to the same extent as the foregoing indemnity from the
Company to JMA, but only with respect to statements, if
any, made in the Confidential Offering Memorandum, or any
amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the
Company by JMA concerning JMA expressly for inclusion in
the Confidential Offering Memorandum, or any amendment or
supplement thereto, provided, however, that JMA's
obligations to provide indemnification hereunder shall be
limited to the fees actually received by JMA pursuant to
this Agreement. If any action shall be brought against
the Company in respect of which indemnification may be
sought against JMA pursuant hereto, JMA shall have the
rights and duties given to the Company above, and the
Company shall have the rights and duties so given to JMA.
In order to provide for just and equitable
contribution, if a claim for indemnification pursuant to
these indemnification provisions is made but it is found
in a final judgment by a court of competent jurisdiction
(not subject to further appeal) that such indemnification
may not be enforced in such case, even though the express
provisions hereof provide for indemnification in such
case, then the Company, on the one hand, and JMA, on the
other hand, shall contribute to the losses, claims,
damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements to which
the indemnified persons any be subject in accordance with
the relative benefits received by the Company, on the one
hand, JMA, on the other hand, and also the relative fault
of the Company, on the one hand, and JMA, on the other
hand, in connection with the statements, acts or
omissions which resulted in such losses, claims, damages,
obligations, penalties, judgments, awards, liabilities,
costs, expenses or disbursements and the relevant
equitable considerations shall also be considered. No
person found liable for a fraudulent misrepresentation
shall be entitled to contribution from any person who is
not also found liable for such fraudulent
misrepresentation. Notwithstanding the foregoing, JMA
shall not be obligated to contribute any amount hereunder
that exceeds the amount of fees previously received by
JMA pursuant to the Agreement.
Neither termination nor completion of the
engagement of JMA referred to above shall affect these
indemnification provisions which shall remain operative
and in full force and effect.
CAPITAL VISION GROUP, INC.
150 Vanderbilt Motor Parkway - Suite 311
Hauppauge, New York 11788
(516) 273-0045 * Fax (516) 273-0047
March 9, 1995
The Harvey Group Inc.
600 Secaucus Road
Secaucus, NJ 07094
Attn: Mr. Art Shulman
President
Dear Mr. Shulman:
Pursuant to our prior discussions, the purpose
of this letter is to set forth the agreement reached
between The Harvey Group Inc. ("Harvey" or the "Company")
and Capital Vision Group, Inc. ("CVG") whereby Harvey
will retain the services of CVG as its financial and
business advisor effective upon completion of a private
placement pursuant to the terms of the letter of intent
dated on or about March 8, 1995 with Janssen-Meyers
Associates, L.P. ("JMA"), an unaffiliated broker/dealer.
It is understood that as part of this agreement, Mr.
Lawrence Fleischman, the president of CVG, will be
elected to the board of directors of Harvey concurrently
with the closing of the anticipated private placement
referred to below and will assume the role of chairman of
a to be formed executive committee or other similar
position. Additionally, the board at such time shall
consist of not more than nine individuals, including
certain current members, all to be reasonably
satisfactory to CVG.
Following completion of the private placement
through JMA, CVG will assist the management in returning
Harvey to profitability through expense reductions and
new marketing ideas, as previously discussed, and through
the acquisition of other entities, all as may be
acceptable to the Board of Directors.
CVG shall be entitled to receive as
compensation for its services a cash fee equal to $6,000
per month. Additionally, CVG shall as of the date this
letter agreement is executed by Harvey, subject to and
conditioned upon ratification by the Harvey shareholders
and completion of the private placement, purchase for
$100.00 from Harvey warrants to purchase 5,000,000 shares
of common stock. Such warrants shall be exercisable at
$0.50 per share (subject to anti-dilution protection) at
any time, in whole or in part, until seven years from the
date of the ratification by shareholders of the warrant
issuance. As additional compensation to CVG, Harvey
shall pay to CVG a bonus equal to 10% of the pre-tax
earnings of the Company which shall exceed $500,000 in
any given fiscal year (if such fiscal year is for a
period less than twelve months, the $500,000 threshold
shall be adjusted accordingly). Any and all reasonable
and customary out of pocket expenses incurred by CVG
shall be reimbursed by the Company promptly upon request.
This agreement shall terminate on March 31,
1997 if not previously renewed by CVG and Harvey. Any
amounts owed to CVG as of such date shall promptly
thereafter be paid and the warrants purchased by CVG and
its designees shall be retained by the holders thereof.
If the foregoing accurately sets forth our
agreement and has been approved by the board of directors
of Harvey, please so indicate by signing one copy of this
letter where indicated below and returning it to the
undersigned by facsimile and mail. We look forward to
working with you on this most exciting endeavor.
Sincerely,
CAPITAL VISION GROUP, INC.
By: /s/ Lawrence K. Fleischman
Lawrence K. Fleischman
President
ACCEPTED AND AGREED TO:
THE HARVEY GROUP INC.
By: /s/ Art Shulman
Art Shulman
President
THE HARVEY GROUP INC.
CONTACT:
Joseph J. Calabrese
Vice President & CFO
The Harvey Group Inc.
Tel. (201) 865-3418
Fax (201) 865-0342
FOR IMMEDIATE RELEASE
March 13, 1995, Secaucus, New Jersey... The
Harvey Group Inc. (the "Company" / AMEX: HRA) announced
today that the Company has retained a placement agent
pursuant to which such agent will seek to raise, on a
best effort basis, up to $4,200,000 of new equity to
obtain additional working capital in light of continuing
losses. The proposed placement will be for up to
12,000,000 shares (an increase of 379%) at an anticipated
price between $0.35 and $0.38 per share. Fees relating
to the completion of this transaction include the
issuance of 7,750,000 seven-year warrants at an exercise
price of between $0.42 and $0.50 per common share. The
proposed transaction is subject to certain conditions,
including, among others, shareholder approval of the
transaction and restructuring of certain existing
indebtedness into equity of the Company. The Company
also intends to effect a reverse stock split in the near
future. There can be no assurance that this proposed
transaction will be completed.
The shares and warrants to be issued in the
private placement would not be registered under the
Securities Act of 1933 and may not be offered or sold in
the United States absent registration or an applicable
exemption from the registration requirements.
The Company is currently not in compliance with
the financial guidelines for continued listing on the
American Stock Exchange and there can be no assurance
that the listing will be continued.
Based in Secaucus, New Jersey, Harvey
Electronics, the operating entity of The Harvey Group, is
a specialty retailer of high quality audio/video consumer
electronics and home theater products with eight stores
in the Metropolitan New York area. As of March 13, 1995
the Company had 3,164,887 shares of common stock
outstanding.
