As filed with the Securities and Exchange Commission on July 30, 1999
Registration No. 333-_____
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------
FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
HARVEY ELECTRONICS, INC.
(exact name of Issuer as specified in its charter)
New York 13-1534671
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
205 Chubb Avenue, Lyndhurst, New Jersey 07071
(Address of principal executive offices)
Harvey Electronics, Inc. Stock Option Plan
(Full title of the plan)
Franklin C. Karp
President
Harvey Electronics, Inc.
205 Chubb Avenue
Lyndhurst, New Jersey 07071
(Name and address of agent for service)
(201) 842-0078
(Telephone number, including area code, of agent for service)
Copy to:
Paul Rubell, Esq.
Seth I. Rubin, Esq.
Ruskin, Moscou, Evans & Faltischek, P.C.
170 Old Country Road
Mineola, New York 11501
(516) 663-6600
(516) 663-6643 (facsimile)
CALCULATION OF REGISTRATION FEE
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<TABLE>
Number of shares Proposed maximum Proposed maximum
Title of securities to be to be Offering price aggregate offering Amount of
registered registered per share (1) price (1) Registration fee (1)
- ---------------------------- ------------------------- ------------------------ ------------------------- ------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par 1,000,000 $2.08 $2,081,320 $578.61
value (2)
- ---------------------------- ------------------------- ------------------------ ------------------------- ------------------------
Notes:
(1) Estimated solely for the purposes of calculating the registration fee and based (a) as to the 185,400 shares purchasable upon
exercise of outstanding options, upon the average price at which such options may be exercised and (b) as to the remaining 814,600
shares issuable upon exercise of options reserved for issuance, on the average of the high and low prices for the Registrant's
Common Stock as quoted on the Nasdaq SmallCap Market on July 26, 1999.
(2) Pursuant to Rule 416, there are also being registered additional shares of Common Stock as may become issuable pursuant to th
anti-dilution provisions of the plan being registered.
</TABLE>
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION
In accordance with Rule 428 under the Securities Act of 1933, as amended
(the "Act"), and the Note to Part I of Form S-8, the information required by
this item has been omitted from this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
In accordance with Rule 428 under the Act and the Note to Part I of Form
S-8, the information required by this item has been omitted from this
Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed by the Registrant with the
Securities and Exchange Commission (the "Commission") are hereby incorporated by
reference in this Registration Statement:
(a) The Registrant's Registration Statement on Form SB-2 (No. 333-42121)
filed with the Commission on April 1, 1998;
(b) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended
January 31, 1998;
(c) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended
April 30, 1998;
(d) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended
July 31, 1998;
(e) The Registrant's Annual Report on Form 10-KSB for the year ended
October 28, 1998; and
(f) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended
January 30, 1999; and
(g) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended
May 1, 1999; and
(h) The description of the Registrant's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission on March 26, 1998.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") after the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which removes from registration 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 or deemed to be 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 such 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
The validity of the Common Stock offered hereby will be passed upon for the
Registrant by the law firm of Ruskin, Moscou, Evans & Faltischek, P.C., which
owns a warrant to purchase 15,000 shares of Common Stock of the Registrant.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Business Corporation Law of the State of New York ("BCL") provides that
if a derivative action is brought against a director or officer, the Registrant
may indemnify him against amounts paid in settlement and reasonable expenses,
including attorneys' fees incurred by him in connection with the defense or
settlement of such action, if such director or officer acted in good faith for a
purpose which he reasonably believed to be in the best interests of the
Registrant, except that no indemnification shall be made without court approval
in respect of a threatened action, or a pending action settled or otherwise
disposed of, or in respect of any matter as to which such director or officer
has been found liable to the Registrant. In a nonderivative action or threatened
action, the BCL provides that the Registrant may indemnify a director or officer
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees incurred by him in defending such action if such
director or officer acted in good faith for a purpose which he reasonably
believed to be in the best interests of the Registrant.
Under the BCL, a director or officer who is successful, either in a
derivative or nonderivative action, is entitled to indemnification as outlined
above. Under any other circumstances, such director or officer may be
indemnified only if certain conditions specified in the BCL are met. The
indemnification provisions of the BCL are not exclusive of any other rights to
which a director or officer seeking indemnification may be entitled pursuant to
the provisions of the certificate of incorporation or the by-laws of a
corporation or, when authorized by such certificate of incorporation or by-laws,
pursuant to a shareholders' resolution, a directors' resolution or an agreement
providing for such indemnification.
The above is a general summary of certain provisions of the BCL and is
subject, in all cases, to the specific and detailed provisions of Sections
721-725 of the BCL.
The By-Laws of the Registrant provide:
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
(a) Indemnification of Directors and Officers. The Corporation shall, to
the fullest extent permitted by applicable law, as amended from time to time,
indemnify any person who is or was made, or threatened to be made, a party to
any action or proceeding, whether civil or criminal, whether involving any
actual or alleged breach of duty, neglect or error, any accountability, or any
actual or alleged misstatement, misleading statement or other act or omission
and whether brought or threatened in any court or administrative or legislative
body or agency, including any action by or in the right of the Corporation to
procure a judgment in its favor and an action by or in the right of any other
corporation of any type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, which any director or
officer of the Corporation is serving or served in any capacity at the request
of the Corporation, by reason of the fact that he, his testator or intestate, is
or was a director or officer of the Corporation, or is serving or served such
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity, against judgments, fines, amounts paid in
settlement, and expenses (including attorneys' fees, cost and charges) incurred
as a result of such action or proceed-mg, or appeal therein; provided, however,
that no indemnification shall be provided to any such person who is a director
or officer of the Corporation if a judgment or other final adjudication adverse
to such director or officer establishes that (i) his acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in either
case, were material to the cause of action so adjudicated, or (ii) he personally
gained in fact a financial profit or other advantage to which he was not legally
entitled.
(b) Indemnification of Others. The Corporation may indemnify any other
person to whom the Corporation is permitted to provide indemnification or the
advancement of expenses to the fullest extent permitted by applicable law,
whether pursuant to rights granted pursuant to, or provided by, the New York
Business Corporation Law or other rights created by (i) a resolution of
shareholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that this Article VII
authorize the creation of other rights in any such manner.
(c) Reimbursement and Advances. The Corporation shall, from time to time,
reimburse or advance to any person referred to in paragraph (a) of this Article
VII the funds necessary for payment of expenses (including attorney's fees,
costs and charges) incurred in connection with any action or proceeding referred
to in paragraph (a) of this Article VII, upon receipt of a written undertaking
by or on behalf of such person to repay such amount(s) if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled. Nothing contained in this
paragraph (c) shall limit the right of the Corporation, from time to time, to
reimburse or advance funds to any person referred to in paragraph (b) of this
Article VII.
(d) Serving at the Request of the Corporation. Without limitation of any
indemnification provided by paragraph (a) of this Article VII, any director or
officer of the Corporation serving (i) another corporation, partnership, joint
venture or trust of which the majority of the voting power or residual economic
interest is held, directly or indirectly, by the Corporation, or (ii) any
employee benefit plan of the Corporation or any entity referred to in clause
(i), in any capacity, shall be deemed to be doing so at the request of the
Corporation.
(e) Determination of Entitlement. Any person entitled to be indemnified or
to the reimbursement or advancement of expenses as a matter of right pursuant to
this Article VII may elect to have the right to indemnification (or advancement
of expenses) interpreted on the basis of the applicable law in effect at the
time of the occurrence of the event or events giving rise to the action or
proceeding, to the extent permitted by law, or on the basis of the applicable
law in effect at the time indemnification is sought.
(f) Contractual Right. The right to be indemnified or to the reimbursement
or advancement of expenses pursuant to this Article VII or a resolution
authorized pursuant to paragraph (b) of this Article VII (i) is a contract right
pursuant to which the person entitled thereto may bring suit as if the
provisions hereof (or of any such resolution) where set forth in a separate
written contract between the Corporation and such person, (ii) is intended to be
retroactive and shall, to the extent permitted by law, be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto. The Corporation shall not be obligated under
this Article VII (including any resolution or agreement authorized by paragraph
(b) of this Article VII) to make any payment hereunder (or under any such
resolution or agreement) to the extent the person seeking indemnification
hereunder (or under any such resolution or agreement) has actually received
payment (under any insurance policy, resolution, agreement or otherwise) of the
amounts otherwise indemnifiable hereunder (or under any such resolution or
agreement).
(g) Judicial Claims. If a request to be indemnified or for the
reimbursement or advancement of expenses pursuant to paragraph (a) or (c) of
this Article VII is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled also to be paid the expenses of prosecuting such claim. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel or shareholders) to have made a determination prior to the commencement
of such action that indemnification of or reimbursement or advancement of
expenses to the claimant is proper in the circumstances, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel or shareholders) that the claimant is not entitled to
indemnification or reimbursement or advancement of expenses, shall be a defense
to the action or create a presumption that the claimant is not so entitled.
(h) Successor Corporation. For purposes of this Article VII, the term "the
Corporation" shall include any legal successor to the Corporation, including any
corporation which acquires all or substantially all of the assets of the
Corporation in one or more transactions.
(i) Nonexclusivity. The rights granted pursuant to or provided by the
foregoing provisions of this Article VII shall be in addition to and shall not
be exclusive of any other rights to indemnification and expenses to which such
person may otherwise be entitled by law, contract or otherwise.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
4.1 Harvey Electronics, Inc. Stock Option Plan
5.1 Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Ruskin, Moscou, Evans & Faltischek, P.C.
(contained in Exhibit 5.1 hereof)
24.1 Power of Attorney (contained in signature page hereof)
ITEM 9. UNDERTAKINGS
(a) 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 to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment 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.
(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) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 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 the 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) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the 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 Act and is, therefore, unenforceable. In the
event that a claim for indemnification is against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of 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 Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Registrant 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
Lyndhurst, state of New Jersey on the 30th day of July, 1999.
HARVEY ELECTRONICS, INC.
By: /s/ Franklin C. Karp
-----------------------
Franklin C. Karp, President
In accordance with the requirements of the Act, this Registration Statement
was signed by the following persons in the capacities and on the dates
indicated. Each person whose signature appears below hereby authorized each of
Franklin C. Karp with full power of substitution to execute in the name of such
person and to file any amendment or post-effective amendment to this
Registration Statement making such changes in this Registration Statement as the
Registrant deems appropriate and appoints Franklin C. Karp with full power of
substitution, attorney-in-fact to sign and to file any amendment and
post-effective amendment to this Registration Statement.
Signature Title Date
/s/ Michael E. Recca Chairman and Director July 30, 1999
- --------------------
Michael E. Recca
/s/ Franklin C. Karp President and Director July 30, 1999
- --------------------
Franklin C. Karp
/s/ Joseph J. Calabrese Executive Vice President, July 30, 1999
- ----------------------- Chief Financial Officer,
Joseph J. Calabrese Treasurer and Director
- -------------------- Director July 30, 1999
Stewart L. Cohen
/s/ William F. Kenny, III Director July 30, 1999
- -------------------------
William F. Kenny, III
/s/ Frederic J. Gruder Director July 30, 1999
- ----------------------
Frederic J. Gruder
<PAGE>
Index to Exhibits
Exhibit Number Description
4.1 Harvey Electronics, Inc. Stock Option Plan
5.1 Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Ruskin, Moscou, Evans & Faltischek, P.C.
(contained in Exhibit 5.1 hereof)
24.1 Power of Attorney (contained in signature page hereof)
Exhibit 4.1
HARVEY ELECTRONICS, INC.
STOCK OPTION PLAN
1. Purpose.
This Stock Option Plan (the "Plan") is intended to encourage stock
ownership by employees of Harvey Electronics, Inc. ("Corporation"), its
divisions and Subsidiary Corporations, so that they may acquire or increase
their proprietary interest in the Corporation, and to encourage such employees
and directors to remain in the employ of the Corporation and to put forth
maximum efforts for the success of the business. It is further intended that
options granted by the Administrators pursuant to Section 6 of this Plan shall
constitute "incentive stock options" ("Incentive Stock Options") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder ("Code"), and options granted by the Administrators
pursuant to Section 7 of this Plan shall constitute "non-qualified stock
options" ("Non-qualified Stock Options"). Options granted under the Plan
("Options") may be accompanied by either stock appreciation rights ("Rights") or
limited stock appreciation rights ("Limited Rights"), or both, as hereinafter
set forth.
2. Definitions.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "DISABILITY" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or that has lasted or
can be expected to last for a continuous period of not less than twelve (12)
months.
(b) "FAIR MARKET VALUE" per share as of a particular date shall mean (i)
the closing sales price per share of Common Stock on a national securities
exchange for the last preceding date on which there was a sale of such Common
Stock on such exchange, or (ii) if the shares of Common Stock are then traded on
an over-the-counter market, the average of the closing bid and asked prices for
the shares of Common Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Common Stock in such market, or
(iii) if the shares of Common Stock are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the
Administrators in their discretion may determine.
(c) "PARENT CORPORATION" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the employer
corporation if, at the time of granting an Option, each of the corporations
other than the employer corporation owns stock possessing fifty (50%) percent or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
(d) "SUBSIDIARY CORPORATION" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the employer
corporation if, at the time of granting an Option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(e) "TEN PERCENT STOCKHOLDER" shall mean an Optionee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Corporation or of its Parent or Subsidiary Corporations.
3. Administration.
The Plan shall be administered by the Board of Directors of the Corporation
(the "Board") or the Stock Option and Compensation Committee of the Board of
Directors, or such other Committee of directors as the Board may establish or
designate (each, the "Committee"). The Committee is to be composed of not less
than two members, all of whom must be "non-employee directors" within the
meaning of Rule 16b-3 ("Rule 16b-3") promulgated under Section 16 of the
Securities Exchange Act of 1934 as amended (the "Act"). Except as may otherwise
be provided in the By-Laws or resolutions of the Board, a majority of the
members of the Committee shall constitute a quorum and the acts of a majority of
the members at any meeting at which a quorum is present, and any acts approved
in writing by all members of the Committee without a meeting, shall be the acts
of the Committee. Those administering the Plan from time to time are referred to
herein as the "Administrators."
The Administrators shall have the authority in their discretion, subject to
and not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically granted
to them under the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Options; to
determine which Options shall constitute Incentive Stock Options and which
Options shall constitute Non-qualified Stock Options; to determine which Options
(if any) shall be accompanied by Rights or Limited Rights; to determine the
purchase price of the shares of Common Stock covered by each Option (the "Option
Price"); to determine the persons to whom, and the time or times at which,
Options shall be granted; to determine the number of shares to be covered by
each Option; to interpret the Plan; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of the
Option Agreements (which need not be identical) entered into in connection with
Options granted under the Plan; and to make all other determinations deemed
necessary or advisable for the administration of the Plan. The Administrators
may delegate or to one or more agents such administrative duties as they may
deem advisable, and the Administrators or any person to whom they have delegated
duties as aforesaid may employ one or more persons to render advice with respect
to any responsibility the Administrators or such person may have under the Plan.
The Board may from time to time appoint additional Administrators and
substitute others. An Administrator shall be selected by the Board as chairman.
The Administrators shall hold their meetings at such times and places as they
shall deem advisable. All determinations of the Administrators shall be made by
a majority of the Administrators either present in person or participating by
conference telephone at any meeting or by written consent. The Administrators
may appoint a secretary and make such rule and regulations for the conduct of
their business as they shall deem advisable, and shall keep minutes of their
meetings.
No Administrator shall be liable for any action taken or determination made
in good faith with respect to the Plan or any Option, Right or Limited Right
granted hereunder.
4. Eligibility; Maximum Number
Options may be granted to employees (including, without limitation,
officers and directors who are employees) of the Corporation or its present or
future divisions and Subsidiary Corporations. In determining the persons to whom
Options shall be granted and the number of shares to be covered by each Option
and any accompanying Rights or Limited Rights, the Administrators shall take
into account the duties of the respective persons, their present and potential
contributions to the success of the Corporation and such other factors as the
Administrators shall deem relevant in connection with accomplishing the purpose
of the Plan. A person to whom an Option has been granted hereunder is sometimes
referred to herein as an "Optionee."
An Optionee shall be eligible to receive more than one grant of an Option
during the term of the Plan, but only on the terms and subject to the
restrictions hereinafter set forth.
The maximum aggregate number of shares of Common Stock as to which Options,
Rights and Limited Rights may be granted under the Plan to any Optionee during
any fiscal year of the Corporation is 50,000.
5. Stock
The stock subject to Options, Rights and Limited Rights hereunder shall be
shares of the Corporation's Common Stock, par value of $.01 per share ("Common
Stock"). Such shares may, in whole or in part, be authorized but unissued shares
or shares that shall have been or that may be reacquired by the Corporation. The
aggregate number of shares of Common Stock as to which Options, Rights and
Limited Rights may be granted from time to time under the Plan shall not exceed
1,000,000. The limitation established by the preceding sentence shall be subject
to adjustment as provided in Section 8(i) hereof.
In the event that any outstanding Option under the Plan for any reason
expires or is terminated without having been exercised in full or surrendered in
full in connection with the exercise of a Right or Limited Right, the shares of
Common Stock allocable to the unexercised portion of such Option shall (unless
the Plan shall have been terminated) become available for subsequent grants of
Options, Rights and Limited Rights under the Plan.
6. Incentive Stock Options.
Options granted pursuant to this Section 6 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
8 hereof.
(a) VALUE OF SHARES. In the event that the aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is granted) of the shares
of Common Stock with respect to which Options granted under this Plan and all
other option plans of the Corporation and any Subsidiary Corporation become
exercisable for the first time by an Optionee during any calendar year exceeds
$100,000, Options granted in excess of such limit shall constitute Non-qualified
Stock Options for all purposes.
(b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the Option Price shall not be less
than one hundred ten percent (110%) of the Fair Market Value of the shares of
Common Stock of the Corporation on the date of grant of such Incentive Stock
Option, and (ii) the exercise period shall not exceed five (5) years from the
date of grant of such Incentive Stock Option.
7. Non-qualified Stock Options.
Options granted pursuant to this Section 7 are intended to constitute
Non-qualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 8 hereof.
8. Terms and Conditions of Options.
Each Option granted pursuant to the Plan shall be evidenced by a written
Option Agreement between the Corporation and the Optionee, which agreement shall
comply with and be subject to the following terms and conditions:
(a) NUMBER OF SHARES. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates.
(b) TYPE OF OPTION. Each Option Agreement shall specifically identify the
portion, if any, of the Option which constitutes an Incentive Stock Option and
the portion, if any, which constitutes a Non-qualified Stock Option.
(c) OPTION PRICE. Each Option Agreement shall state the Option Price,
which, in the case of Incentive Stock Options, shall not be less than one
hundred percent (100%) of the Fair Market Value of the shares of Common Stock of
the Corporation on the date of grant of the Option. The Option Price shall be
subject to adjustment as provided in Section 8(i) hereof. The date on which the
Administrators adopt a resolution expressly granting an Option shall be
considered the day on which such Option is granted.
(d) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in full, at
the time of exercise, in cash or in shares of Common Stock having a Fair Market
Value equal to such Option Price or in a combination of cash and such shares,
and may be effected in whole or in part (i) with monies received from the
Corporation at the time of exercise as a compensatory cash payment, or (ii) with
monies borrowed from the Corporation pursuant to repayment terms and conditions
as shall be determined from time to time by the Administrators, in their
discretion, separately with respect to each exercise of Options and each
Optionee; provided, however, that each such method and time for payment and each
such borrowing and terms and conditions of repayment shall be permitted by and
be in compliance with applicable law, and provided, further, in the event the
Option Price is paid with monies borrowed from the Corporation, such fact shall
be noted conspicuously on the certificate for such shares in accordance with
applicable law.
(e) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over the
exercise period as and at the times and upon the conditions that the
Administrators may determine, as reflected in the Option Agreement; provided,
however, that the Administrators shall have the authority to accelerate the
exercisability of any outstanding Option at such time and under such
circumstances as they, in their sole discretion, deem appropriate. The exercise
period shall be determined by the Administrators; provided, however that in the
case of an Incentive Stock Option such exercise period shall not exceed ten (10)
years from the date of grant of such Option. The exercise period shall be
subject to earlier termination as provided in Sections 8(f) and 8(g) hereof. An
Option may be exercised, as to any or all full shares of Common Stock as to
which the Option has become exercisable, by giving written notice of such
exercise to the Administrators; provided, however, that an Option may not be
exercised at any one time as to fewer than 100 shares (or such number of shares
as to which the Option is then exercisable if such number of shares is less than
100).
(f) TERMINATION. Except as provided in this Section 8(f) and in Section
8(g) hereof, an Option may not be exercised unless the Optionee is then in the
employ of the Corporation or a division or subsidiary Corporation thereof (or a
corporation or a Parent or subsidiary Corporation of such corporation issuing or
assuming the Option in a transaction to which Section 425 (a) of the Code
applies), and unless the Optionee has remained continuously so employed since
the date of grant of the Option. In the event that the employment of an Optionee
shall terminate (other than by reason of death, disability or retirement), all
Options of such Optionee that are exercisable at the time of such termination
may, unless earlier terminated in accordance with their terms, be exercised
within three (3) months after such termination; provided, however, that if the
employment of an Optionee shall terminate for cause, all Options theretofore
granted to such Optionee shall, to the extent not theretofore exercised,
terminate forthwith. Nothing in the Plan or in any Option granted pursuant
hereto shall confer upon an individual any right to continue in the employ of
the Corporation or any of its divisions or Subsidiary Corporations or interfere
in any way with the right of the Corporation or any such division or Subsidiary
Corporation to terminate such employment.
(g) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall die
while employed by the Corporation or a Subsidiary Corporation, or within three
(3) months after the termination of such Optionee's employment, other than for
cause, or if the Optionee's 5 employment shall terminate by reason of Disability
or retirement, all Options theretofore granted to such Optionee (to the extent
otherwise exercisable) may, unless earlier terminated in accordance with their
terms, be exercised by the Optionee or by the Optionee's 5 estate or by a person
who acquired the right to exercise such Option by bequest or inheritance or
otherwise by reason of the death or Disability of the Optionee, at any time
within one year after the date of death, Disability or retirement of the
Optionee.
(h) NON-TRANSFERABILITY OF OPTIONS. Option granted under the Plan shall not
be transferable otherwise than by will or by the laws of descent and
distribution, and Options may be exercised, during the lifetime of the Optionee,
only by the Optionee or by his guardian or legal representative.
(i) EFFECT OF CERTAIN CHANGES.
(1) If there is any change in the number of shares of Common Stock through
the declaration of stock dividends, or through recapitalization resulting in
stock splits or reverse stock splits, or combinations or exchanges of such
shares, the number of shares of Common Stock available for Options, Rights and
Limited Rights, the number of such shares covered by outstanding Options, Rights
and Limited Rights, and the price per share of such Options or the applicable
market value of Rights or Limited Rights, shall be proportionately adjusted by
the Administrators to reflect any increase or decrease in the number of issued
shares of Common Stock; provided, however, that any fractional shares resulting
from such adjustment shall be eliminated.
(2) In the event of the proposed dissolution or liquidation of the
Corporation, in the event of any corporate separation or division, including,
but not limited to, split-up, split-off or spin-off, or in the event of a merger
or consolidation of the Corporation with another corporation, the Administrators
may provide that the holder of each Option then exercisable shall have the right
to exercise such Option (at its then Option Price) solely for the kind and
amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such dissolution, liquidation, or corporate
separation or division, or merger or consolidation by a holder of the number of
shares of Common Stock for which such Option might have been exercised
immediately prior to such dissolution, liquidation, or corporate separation or
division, or merger of consolidation; or the Administrators may provide, in the
alternative, that each Option granted under the Plan shall terminate as of a
date to be fixed by the Administrators; provided, however, that not less than
thirty (30) days' written notice of the date so fixed shall be given to each
Optionee, who shall have the right, during the period of thirty (30) days
preceding such termination, to exercise the Options as to all or any part of the
shares of Common Stock covered thereby, including shares as to which such
Options would not otherwise be exercisable; provided, further, that failure to
provide such notice shall not invalidate or affect the action with respect to
which such notice was required.
(3) If while unexercised Options remain outstanding under the Plan --
(A) any corporation, person or other entity (other than the Corporation)
makes a tender or exchange offer for shares of the Corporation Common Stock
pursuant to which purchases are made ("Offer"), or
(B) the stockholders of the Corporation approve a definitive agreement to
merge or consolidate the Corporation with or into another corporation or to sell
or otherwise dispose of all or substantially all of its assets, or adopt a plan
of liquidation, or
(C) the "beneficial ownership" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of securities
representing more than 30% of the combined voting power of the Corporation is
acquired by any "person" as defined in sections 13(d) and 14(d) of the Exchange
Act, or
(D) during any period of two consecutive years, individuals who at the
beginning of such period were members of the Board cease for any reason to
constitute at least a majority thereof (unless the election, or the nomination
for election by the Corporation's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period),
then from and after the date of the first purchase of Common Stock pursuant
to such Offer, or the date of any such stockholder approval or adoption, or the
date on which public announcement of the acquisition of such percentage shall
have been made, or the date on which the change in the composition of the Board
set forth above shall have occurred, whichever is applicable (the applicable
date being referred to herein as the "Acceleration Date"), all Options shall be
exercisable in full, whether or not otherwise exercisable. Following the
Acceleration Date, (a) the Administrators shall, in the case of a merger,
consolidation or sale or disposition of assets, promptly make an appropriate
adjustment to the number and class of shares of Common Stock available for
Options, and to the amount and kind of shares or other securities or property
receivable upon exercise of any outstanding Options after the effective date of
such transaction, and the price thereof, and (b) the Administrators shall cancel
all outstanding Options in exchange for a cash payment in an amount per share
subject to any such Option equal to the amount that would be payable pursuant to
Section 10(b) hereof upon exercise of a Limited Right under those circumstances,
subject to such terms and conditions as the Administrators may determine.
(4) Paragraphs (2) and (3) of this Section 8(i) shall not apply to a merger
or consolidation in which the Corporation is the surviving corporation and
shares of Common Stock are not converted into or exchanged for stock, securities
of any other corporation, cash or any other thing of value. Notwithstanding the
preceding sentence, in case of any consolidation or merger of another
corporation into the Corporation in which the Corporation is the surviving
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from par value to no par value, or
as a result of a subdivision or combination, but including any change in such
shares into two or more classes or series of shares), the Administrators may
provide that the holder of each Option then exercisable shall have the right to
exercise such Option solely for the kind and amount of shares of stock and other
securities (including those of any new direct or indirect parent of the
Corporation), property, cash or any combination thereof receivable upon such
reclassification, change, consolidation or merger by the holder of the number of
shares of Common Stock for which such Option might have been exercised.
(5) In the event of a change in the Common Stock of the Corporation as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
(6) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Administrators, whose determination in that respect shall be final, binding and
conclusive, provided that each Incentive Stock Option granted pursuant to this
Plan shall not be adjusted in a manner that causes such option to fail to
continue to qualify as an Incentive Stock Option within the meaning of Section
422 of the Code.
(7) Except as hereinbefore expressly provided in this Section 8(i), the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger, or consolidation or spin-off of assets
or stock of another corporation; and any issue by the Corporation of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to the Option. The
grant of an Option pursuant to the Plan shall not affect in any way the right or
power of the Corporation to make adjustments, reclassifications, reorganizations
or changes of its capital or business structures or to merge or to consolidate
or to dissolve, liquidate or sell, or transfer all or part of its business or
assets.
(j) RIGHTS AS STOCKHOLDER. An Optionee or a transferee of an Option shall
have no rights as a stockholder with respect to any shares covered by the Option
until the date of the issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distribution of other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 8(i) hereof.
(k) OTHER PROVISIONS. The Option Agreements authorized under the Plan shall
contain such other provisions, including, without limitation, (i) the granting
of either Rights or Limited Rights, or both, (ii) the imposition of restrictions
upon the exercise of an Option, and (iii) in the case of an Incentive Stock
Option, the inclusion of any condition not inconsistent with such Option
qualifying as an Incentive Stock Option, as the Administrators shall deem
advisable.
9. Stock Appreciation Rights.
(a) The Administrators shall have authority to grant Rights to the holder
of any Option granted under the Plan (the "Related SAR Option") with respect to
all or some of the shares of Stock covered by such Related SAR Option. A Right
may be granted either at the time of the grant of the Related SAR Option or any
time thereafter during its term (except as otherwise provided in Section 12
hereof). Each Right shall be exercisable only if, and to the extent that, the
Related SAR Option is exercisable and, in the case of Rights granted in respect
of Incentive Stock Options, only when the Fair Market Value per share of Common
Stock exceeds the Option Price per share. Upon the exercise of a Right, the
Related SAR Option shall cease to be exercisable to the extent of the shares of
Common Stock with respect to which such Right is exercised, but shall be
considered to have been exercised to that extent for purposes of determining the
number of shares available for the grant of further Options, Rights and Limited
Rights pursuant to the Plan. Upon the exercise or termination of a Related SAR
Option, the Right with respect to such Related SAR Option shall terminate to the
extent of the shares of Common Stock with respect to which the Related SAR
Option was exercised or terminated.
(b) Upon the exercise of a Right, the holder thereof, subject to Paragraph
(e) of this Section 9, shall be entitled at the holder's election to receive
either --
(i) that number of shares of Common Stock equal to the quotient computed by
dividing the Spread (as defined in Paragraph (c) hereof) by the Fair Market
Value per share of Common stock on the date of exercise of the Right; provided,
however, that in lieu of fractional shares, the Corporation shall pay cash equal
to the same fraction of the Fair Market Value per share of Common Stock on the
date of exercise of the Right, or
(ii) an amount in cash equal to the Spread, or
(iii) a combination of cash and a number of shares calculated as provided
in clause (10 of this Paragraph (b) (after reducing the Spread by such cash
amount), plus cash in lieu of any fractional shares as above provided.
(c) The term "Spread" as used in this Section 9 shall mean an amount equal
to the product computed by multiplying (i) the excess of (A) the Fair Market
Value per share of Common Stock on the date the Right is exercised over (B) the
Option Price per share at which the Related SAR Option is exercisable, by (ii)
the number of shares with respect to which such Right is exercised.
(d) Notwithstanding the provisions of this Section 9, a Right granted to a
holder who is subject to the reporting requirements of Section 16(a) of the
Exchange Act may not be exercised until the expiration of six (6) months from
the date of grant of such Right unless, prior to the expiration of such six (6)
month period, the holder of such Right ceases to be an employee of the
Corporation or a division or subsidiary Corporation thereof by reason of such
holder's death or disability.]
(e) Notwithstanding the provisions in Paragraph (b) in this Section 9, the
Administrators shall have sole discretion to consent to or disapprove an
election to receive cash in whole or in part ("Cash Election") upon the exercise
of a Right. A Cash Election and related exercise may be made only during the
period beginning on the third business day following the date of release for
publication of the quarterly and annual summary statements of sales and earnings
of the Corporation and ending on the 12th business day following such date.
(f) A Right may be granted to an Optionee irrespective of whether such
Optionee is being granted or has been granted a Limited Right.
(g) A Right shall not be transferable except by will or by the laws of
descent and distribution. During the lifetime of an Optionee, the Right shall be
exercisable only by such Optionee or by the Optionee's guardian or legal
representative.
(h) Each Right shall be granted on such terms and conditions not
inconsistent with the Plan as the Administrators may determine.
(i) To exercise a Right, the Optionee shall (i) give written notice thereof
to the Administrators in form satisfactory to the Administrators specifying (A)
the number of shares of Common Stock with respect to which the Right is being
exercised and (B) the amount the Optionee elects to receive in cash and shares
of Common Stock with respect to the exercise of the Right, and (ii) if requested
by the Administrators, deliver the Option Agreement to the Administrators, who
shall endorse thereon a notation of such exercise and return the Option
Agreement to the Optionee. The date of exercise of a Right that is validly
exercised shall be deemed to be the date on which there shall have been
delivered the instruments referred to in the first sentence of this Paragraph
(i).
(j) The Corporation intends that this Section 9 shall comply with the
requirements of Rule 16b-3 and any future rules promulgated in substitution
therefor (the "Rule") under the Act during the term of the Plan. Should any
provision of this Section 9 not be necessary to comply with the requirements of
the Rule, the Board may amend the Plan to add to or modify the provisions of the
Plan accordingly.
10. Limited Stock Appreciation Rights.
(a) The Administrators shall have authority to grant a Limited Right to the
holder of any Option granted under the Plan (referred to herein as the "Related
LSAR Option") with respect to all or some of the shares of Common Stock covered
by such Related LSAR Option. A Limited Right may be granted either at the time
of grant of the Related LSAR Option or any time thereafter during its term
(except as otherwise provided in Section 12 hereof). A Limited right may be
exercised only during the sixty-day period beginning on an "Acceleration Date"
(as defined in Section 8(i) (3) hereof). Each Limited Right shall be exercisable
only if, and to the extent that, the Related LSAR Option is exercisable and, in
the case of a Limited Right granted in respect of an Incentive Stock Option,
only when the Fair Market Value per share of Common Stock exceeds the Option
Price per share. [Notwithstanding the provisions of the two immediately
preceding sentences, no Limited Right may be exercised until the expiration of
six (6) months from the date of grant of the Limited Right unless, prior to the
expiration of such six (6) month period, the holder of such Limited Right ceases
to be an employee of the Corporation or a division or Subsidiary Corporation
thereof by reason of such holder's death or disability.] Upon the exercise of a
Limited Right, the Related LSAR Option shall cease to be exercisable to the
extent of the shares of Common stock with respect to which such Limited Right is
exercised, but shall be considered to have been exercised to that extent for
purposes of determining the number of shares of Common Stock available for the
grant of further Options, Rights and Limited Rights pursuant to this Plan. Upon
the exercise or termination of a Related LSAR Option, the Limited Right with
respect to such Related LSAR Option shall. terminate to the extent of the shares
of Common Stock with respect to which the Related LSAR Option was exercised or
terminated.
(b) Upon the exercise of a Limited Right, the holder thereof shall receive
in cash whichever or the following amounts is applicable:
(i) in the case of an exercise of Limited Rights by reason of the
occurrence of an Offer (as defined in Section 8(i) (3) (i) hereof), an amount
equal to the Offer Spread (as defined in Section 10(d) hereof);
(ii) in the case of an exercise of Limited Rights by reason of stockholder
approval for an agreement described in Section 8(i) (3) (ii), an amount equal to
the Merger Spread (as defined in Section 10 (f) hereof)
(iii) in the case of an exercise of Limited Rights by reason of an
acquisition of Common Stock described in Section 8(i) (3) (iii), an amount equal
to the Acquisition Spread (as defined in Section 10(h) hereof); or
(iv) in the case of an exercise of Limited Rights by reason of the change
in composition of the Board of Directors described in Section 8(i) (3) (iv), an
amount equal to the Spread (as defined in Section 10(i) hereof).
Notwithstanding the foregoing provisions of this Section 10 (b), in the
case of a Limited Right granted in respect of an Incentive Stock Option, the
holder may not receive an amount in excess of the maximum amount that will
enable such option to continue to qualify as an Incentive Stock Option.
(c) The term "Offer Price per Share" as used in this Section 10 shall mean,
with respect to the exercise of any Limited Right by reason of the occurrence of
an Offer, the greater of (i) the highest price per share of Common Stock paid in
any Offer, which offer is in effect at any time during the sixty-day period
ending on the date on which such Limited Right is exercised, or (ii) the highest
Fair Market Value per share of the Common Stock during such sixty-day period.
Any securities or property that are part or all of the consideration paid for
shares of Common Stock in the Offer shall be valued in determining the Offer
Price per Share at the higher of (a) the valuation placed on such securities or
property by the corporation, person or other entity making such Offer or (b) the
valuation placed on such securities or property by the Administrators.
(d) The term "Offer Spread" as used in this Section 10 shall mean an amount
equal to the product computed by multiplying (i) the excess of (A) the Offer
Price per Share over (B) the Option Price per share of Common Stock at which the
Related LSAR Option is exercisable, by (ii) the number of shares of Common Stock
with respect to which such Limited Right is being exercised.
(e) The term "Merger Price per Share" as used in this Section 10 shall
mean, with respect to the exercise of any Limited Right by reason of stockholder
approval of an agreement described in Section 8(i) (3) (ii), the greater of (i)
the fixed or formula price for the acquisition of shares of Common Stock
specified in such agreement, if such fixed or formula price is determinable on
the date on which such Limited Right is exercised, and (ii) the highest Fair
Market Value per share of Common Stock during the sixty-day period ending on the
date on which such Limited Right is exercised.
(f) The term "Merger Spread" as used in this Section 10 shall mean an
amount equal to the product computed by multiplying (i) the excess of (A) the
Merger Price per Share over (B) the Option Price per share of Common Stock at
which the Related LSAR Option is exercisable, by (ii) the number of shares of
Common Stock with respect to which such Limited Right is being exercised.
(g) The term "Acquisition Price per Share" as used in this Section 10 shall
mean, with respect to the exercise of any Limited Right by reason of an
acquisition of Common Stock described in Section 8(i) (3) (iii), the greater of
(i) the highest price per share shown on the Statement of Schedule 13D or
amendment thereto filed by the holder of 30% or more of the Corporation's Common
Stock which gives rise to the exercise of such Limited Right, and (ii) the
highest Fair Market Value per share of Common Stock during the sixty-day period
ending on the date the Limited Right is exercised.
(h) The term "Acquisition Spread" as used in this Section 10 shall mean an
amount equal to the product computed by multiplying (i) the excess of (A) the
Acquisition Price per Share over (B) the Option Price per share of Common Stock
at which the Related LSAR Option is exercisable, by (ii) the number of shares of
Common Stock with respect to which such Limited Right is being exercised.
(i) The term "Spread" as used in this Section 10 shall mean, with respect
to the exercise of any Limited Right by reason of a change in the composition of
the Board described in Section 8(i) (3) (iv), an amount equal to the product
computed by multiplying (i) the excess of (A) the highest Fair Market Value per
share of Common Stock during the sixty-day period ending on the date the Limited
Right is exercised over (B) the Option Price per share of Common Stock with
respect to which the Limited Right is being exercised.
(j) A Limited Right shall not be transferable except by will or by laws of
descent and distribution. During the lifetime of an Optionee, the Limited Right
shall be exercisable only by such Optionee or by the Optionee's guardian or
legal representative.
(k) Each Limited Right shall be granted on such terms and conditions not
inconsistent with the Plan as the Administrators may determine.
(l) To exercise a Limited Right, the Optionee shall (i) give written notice
thereof to the Administrators in form satisfactory to the Administrators
specifying the number of shares of Common Stock with respect to which the
Limited Right is being exercised, and (ii) if requested by the Administrators,
deliver the Option Agreement to the Administrators who shall endorse thereon a
notation of such exercise and return the Option Agreement to the Optionee. The
date of exercise of a Limited Right that is validly exercised shall be deemed to
be the date on which there shall have been delivered the instruments referred to
in the first sentence of this Paragraph (1).
(m) The Corporation intends that this Section 10 shall comply with the
requirements of the Rule during the term of the Plan. Should any provision of
this Section 10 not be necessary to comply with the requirements of the Rule or
should any additional provisions be necessary for this Section 10 to comply with
the requirements of the Rule, the Board may amend the Plan to add to or modify
the provisions of the Plan accordingly.
11. Agreement by Optionee Regarding withholding Taxes.
If the Administrators shall so require, as a condition of exercise, each
Optionee shall agree that - -
(a) no later than the date of exercise of any Option, Right or Limited
Right granted hereunder, the Optionee will pay to the Corporation or make
arrangements satisfactory to the Administrators regarding payment of any
federal, state or local taxes of any kind required by law to be withheld upon
the exercise of such Option, Right or Limited Right, and
(b) the Corporation shall, to the extent permitted or required by law, have
the right to deduct federal, state and local taxes of any kind required by law
to be withheld upon the exercise of such Option, Right or Limited Right from any
payment of any kind otherwise due to the Optionee.
12. Term of Plan.
Options, Rights and Limited Rights may be granted pursuant to the Plan from
time to time within a period of ten (10) years from the date the Plan is adopted
by the Board, or the date the Plan is approved by the stockholders of the
Corporation, whichever is earlier.
13. Amendment and Termination of the Plan.
The Board at any time and from time to time may suspend, terminate, modify
or amend the Plan; provided, however, that to the extent required by Rule 16b-3
or Section 162 (m), such suspension, termination, modification and amendment
shall be subject to the approval of the holders of a majority of the Common
Stock issued and outstanding. Except as provided in Section 8 hereof, no
suspension, termination, modification or amendment of the Plan may adversely
affect any Option, Right or Limited Right previously granted, unless the written
consent of the Optionee is obtained.
14. Interpretation.
The Plan is designed and intended to comply with Rule 16b-3 and, to the
extent practicable, with Section 162(m) of the Code, and all provisions of the
Plan shall be construed in accordance with such design and intent.
15. Approval of Stockholders.
The Plan shall take effect upon its adoption by the Board of Directors but
shall be subject to the approval of the holders of a majority of the issued and
outstanding shares of Common Stock of the Corporation, which approval must occur
within twelve months after the date the Plan is adopted by the Board.
16. Effect of Headings.
The section and subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
Exhibit 5.1
OPINION OF COUNSEL REGARDING LEGALITY AND CONSENT OF COUNSEL
[LETTERHEAD OF RMEF, P.C.]
July 30, 1999
Harvey Electronics, Inc.
205 Chubb Avenue
Lyndhurst, NJ 07071
Re: Harvey Electronics, Inc. 1998 Stock Option Plan
Ladies and Gentlemen:
We have acted as counsel to Harvey Electronics, Inc. (the
"Company") in connection with the registration with the Securities and Exchange
Commission on Form S-8 of shares of the Company's common stock, par value $.01
(the "Shares"), which will be awarded to certain Company employees under the
above-referenced plan (the "Plan"). In connection with that registration, we
have reviewed the proceedings of the Board of Directors of the Company relating
to the registration and proposed issuance of the common stock, the Articles of
Incorporation of the Company and all amendments thereto, the Bylaws of the
Company and all amendments thereto, and such other documents and matters as we
have deemed necessary to the rendering of the following opinion.
Based upon that review, it is our opinion that the Shares,
when issued in conformance with the terms and conditions of the Plan, will be
legally issued, fully paid, and nonassessable under the Business Corporation Law
of the State of New York.
We do not find it necessary for the purposes of this opinion
to cover, and accordingly we express no opinion as to, the application of the
securities or blue sky laws of the various states as to the issuance and sale of
the Shares.
We consent to the use of this opinion in the registration
statement filed with the Securities and Exchange Commission in connection with
the registration of the Shares and to the reference to our firm under the
heading "Interests of Named Experts and Counsel" in the registration statement.
Very truly yours,
RUSKIN, MOSCOU, EVANS
& FALTISCHEK, P.C.
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-____) pertaining to the Harvey Electronics, Inc.
Stock Option Plan of our report dated January 7, 1999, with respect to the
financial statements of Harvey Electronics, Inc. included in its Annual Report
(Form 10-KSB) for the year ended October 31, 1998, filed with the Securities and
Exchange Commission.
Melville, New York
July 30, 1999
