<PAGE> 1
As filed with the Securities and Exchange Commission on July 1, 1997.
Registration No.____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE HARVEY ENTERTAINMENT COMPANY
(Exact Name of Registrant as Specified in Its Charter)
CALIFORNIA 95-4217605
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
The Harvey Entertainment Company
1999 Avenue of the Stars
Suite 2050
Los Angeles, CA 90067
(Address of Principal Executive Offices with Zip Code)
THE HARVEY ENTERTAINMENT COMPANY 1997 STOCK OPTION PLAN
(Full Title of the Plan)
---------------
JEFFREY A. MONTGOMERY
Chairman, President and Chief Executive Officer
The Harvey Entertainment Company
1999 Avenue of the Stars
Suite 2050
Los Angeles, CA 90067
(310) 789-1990
(Name, Address and Telephone Number,
including Area Code, of Agent For Service)
Copies to:
GARY J. COHEN, Esq.
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
(213) 896-6000
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================
Title of Proposed maximum Proposed maximum
securities to be Amount to be offering price aggregate Amount of
registered registered per share offering price registration fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 250,000 shares(1) (2) $3,406,250(2) $1032.09(2)
(no par value)
====================================================================================================================
</TABLE>
(1) Issuable upon exercise of options granted pursuant to the Harvey
Entertainment Company 1997 Stock Option Plan (the "Plan"). The number of
shares issuable upon exercise of the options being registered hereby is
subject to adjustment pursuant to the terms of the Plan.
(2) Estimated pursuant to Rules 457(h) under the Securities Act of 1933, as
amended, solely for purposes of calculating the registration fee, the
proposed aggregate maximum offering price is based upon an exercise price
of $13.625, the average of the high and low prices for the common stock of
The Harvey Entertainment Company on the NASDAQ National Market System on
June 24, 1997 as reported by the National Association of Securities Dealers
Automated Quotation System.
================================================================================
<PAGE> 2
PART I
Item 1. PLAN INFORMATION.*
Item 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* Information required by Part I to be contained in the Section 10(a)
Prospectus is omitted from the Registration Statement in accordance with Rule
428 under the Securities Act of 1933, as amended (the "Securities Act"), and the
Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by The Harvey Entertainment Company, a California
corporation (the "Company" or the "Registrant"), pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the Securities Act,
are incorporated by reference in this Registration Statement:
(a) The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996;
(b) The Company's Quarterly Reports on Form 10-QSB for the quarter
ended March 31, 1997;
(c) The Company's 1997 definitive Proxy Statement; and
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form SB-2, declared effective on June 13,
1993, by which the Company's shares of Common Stock were registered under
Section 12 of the Exchange Act, and any other amendments or reports filed for
the purpose of updating such description.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment to this Registration Statement which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and made a part hereof from their respective dates of
filing (such documents, and the document enumerated above, being hereinafter
referred to as "Incorporated Documents"); provided, however, that the documents
enumerated above or subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act in each year during which the
offering made by this Registration Statement is in effect prior to the filing
with the Commission of the Company's Annual Report on Form 10-KSB covering such
year shall not be Incorporated Documents or be incorporated by reference in this
Registration Statement or be a part hereof from and after the filing of such
Annual Report on Form 10-KSB.
Any statement contained in an Incorporated Document 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
Incorporation Document 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.
<PAGE> 3
Item 4. DESCRIPTION OF SECURITIES.
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
Item 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The following statutes, charter provisions, bylaws, contracts and other
arrangements insuring or indemnifying a controlling person, director or officer
of the Company affect his or her liability in that capacity:
1. Section 317 of the California Corporations Code.
2. Article THREE of the Second Amended and Restated Articles of
Incorporation of the Company.
3. Article VI of the Second Amended and Restated Bylaws of the
Company.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
Item 8. EXHIBITS.
<TABLE>
<CAPTION>
Number Description of Exhibit
- ------ ----------------------
<S> <C>
4.1 The Harvey Entertainment Company 1997 Stock Option Plan
5 Opinion of Sidley & Austin regarding the validity of the securities being registered.
23.1 Consent of Sidley & Austin, incorporated by reference to Exhibit 5 hereof.
23.2 Consent of Deloitte & Touche.
</TABLE>
Item 9. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) 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;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
<PAGE> 4
(2) That, for the purpose of determining any liability under the
Securities Act each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered hereby which remain unsold at the
termination of the offering.
(4) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by 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 Securities Act and will be governed by the final
adjudication of such issue.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Santa Monica, State of California on the 30th
day of June, 1997.
THE HARVEY ENTERTAINMENT COMPANY
By: /s/ Jeffrey A. Montgomery
----------------------------------------------
Jeffrey A. Montgomery, Chairman, President and
Chief Executive Officer
Pursuant to the requirement of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Jeffrey A. Montgomery Chairman of the Board, June 30, 1997
- ----------------------------- President and Chief Executive
Jeffrey A. Montgomery Officer (Principal Executive
Officer)
/s/ Gary M. Gray
- ----------------------------- Director June 30, 1997
Gary M. Gray
/s/ Allan R. Raphael
- ----------------------------- Director June 30, 1997
Allan R. Raphael
/s/ Gregory M. Yulish Executive Vice President and June 30, 1997
- ----------------------------- Chief Financial Officer
Gregory M. Yulish (Principal Financial Officer)
</TABLE>
<PAGE> 6
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Number Description of Exhibit
- ------ ----------------------
<S> <C>
4.1 The Harvey Entertainment Company 1997 Stock Option
Plan.
5 Opinion of Sidley & Austin regarding the validity of
certain of the securities to be registered.
23.1 Consent of Sidley & Austin, incorporated by reference
to Exhibit 5 to this registration statement.
23.2 Consent of Deloitte & Touche LLP.
</TABLE>
<PAGE> 1
Exhibit 4.1
The Harvey Entertainment Company 1997 Stock Option Plan.
THE HARVEY ENTERTAINMENT COMPANY 1997 STOCK OPTION PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1997 Stock Option Plan (the "Plan") of The
Harvey Entertainment Company (the "Company") are (i) to align the interests of
the Company's shareholders and the recipients of options under this Plan by
increasing the proprietary interest of such recipients in the Company's growth
and success, (ii) to advance the interests of the Company by attracting and
retaining officers and other key employees, consultants, independent
contractors, agent and well-qualified persons who are not officers or employees
of the Company ("Non- Employee Directors") for service as directors of the
Company and (iii) to motivate such persons to act in the long-term best
interests of the Company's shareholders.
1.2 ADMINISTRATION. This Plan shall be administered by a committee (the
"Committee") designated by the Board of Directors of the Company (the "Board")
consisting of two or more members of the Board. Each member of the Committee
shall be a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, if such
persons are available, an "outside director" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Committee shall, subject to the terms of this Plan, select eligible
persons for participation in this Plan (which persons may include members of the
Committee) and shall determine the number of shares of Common Stock subject to
each option granted hereunder, the exercise price of such option, the time and
conditions of exercise of such option and all other terms and conditions of such
option, including, without limitation, the form of the option agreement. The
Committee shall, subject to the terms of this Plan, interpret this Plan and the
application thereof, establish rules and regulations it deems necessary or
desirable for the administration of this Plan and may impose, incidental to the
grant of an option, conditions with respect to the grant, such as limiting
competitive employment or other activities. All such interpretations, rules,
regulations and conditions shall be final, binding and conclusive. The Committee
may, in its sole discretion and for any reason at any time, subject to the
requirements imposed under Section 162(m) of the Code and regulations
promulgated thereunder in the case of an option intended to be qualified
performance-based compensation, take action such that any or all outstanding
options shall become exercisable in part or in full. Each option shall be
evidenced by a written agreement (an "Agreement") between the Company and the
optionee setting forth the terms and conditions of such option.
The Committee may delegate some or all of its power and authority
hereunder to the Chief Executive Officer or other executive officer of the
Company as the Committee deems appropriate; provided, however, that the
Committee may not delegate its power and authority with regard to (i) the grant
of an option to any person who is a "covered employee" within the meaning of
Section 162(m) of the Code or who, in the Committee's judgment, is likely to be
a covered employee at any time during the period an option granted hereunder to
such employee would be outstanding or (ii) the selection for participation in
this Plan of an officer or other person subject to Section 16 of the Exchange
Act or decisions concerning the timing, pricing or amount of an option grant to
such an officer or other person.
No member of the Board of Directors or Committee, and neither the Chief
Executive Officer nor other executive officer to whom the Committee delegates
any of its power and authority hereunder, shall be liable for any act, omission,
interpretation, construction or determination made in connection with this Plan
in good faith, and the members of the Board of Directors and the Committee and
the Chief Executive Officer or other executive officer shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including attorneys' fees) arising therefrom to the full
extent permitted by law and under any directors' and officers' liability
insurance that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by all of the members of the Committee without a meeting.
<PAGE> 2
1.3 ELIGIBILITY. Participants in this Plan shall consist of such officers, other
key employees, consultants, independent contractors and agents of the Company,
its subsidiaries from time to time and any other entity designated by the Board
or the Committee (individually a "Subsidiary" and collectively the
"Subsidiaries") as the Committee in its sole discretion may select from time to
time. For purposes of this Plan, references to employment shall also mean an
agency or independent contractor relationship and references to employment by
the Company shall also mean employment by a Subsidiary. The Committee's
selection of a person to participate in this Plan at any time shall not require
the Committee to select such person to participate in this Plan at any other
time. Non-employee directors of the Company shall be eligible to participate in
this Plan in accordance with Section III.
1.4 SHARES AVAILABLE. Subject to adjustment as provided in Section 3.7, 250,000
shares of the common stock of the Company ("Common Stock"), shall be available
for grants of options under this Plan, reduced by the sum of the aggregate
number of shares of Common Stock which become subject to outstanding options
under the Plan. To the extent that shares of Common Stock subject to an
outstanding option are not issued or delivered by reason of the expiration,
termination, cancellation or forfeiture of such option or by reason of the
delivery or withholding of shares of Common Stock to pay all or a portion of the
exercise price of such option, or to satisfy all or a portion of the tax
withholding obligations relating to such option, then such shares of Common
Stock shall again be available under this Plan. Shares of Common Stock shall be
made available from authorized and unissued shares of Common Stock, or
authorized and issued shares of Common Stock reacquired and held as treasury
shares or otherwise or a combination thereof authorized and issued shares of
Common Stock reacquired and held as treasury shares or otherwise.
II. STOCK OPTIONS
2.1 GRANTS OF STOCK OPTIONS. The Committee may, in its discretion, grant options
to purchase shares of Common Stock to such eligible persons as may be selected
by the Committee. Each option, or portion thereof, that is not an incentive
stock option, shall be a non-qualified stock option. An incentive stock option
may not be granted to any person who is not an employee of the Company or any
subsidiary (as defined in Section 424 of the Code). An incentive stock option
shall mean an option to purchase shares of Common Stock that meets the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") or any successor provision, which is intended by the Committee to
constitute an incentive stock option. Each incentive stock option shall be
granted within ten years of the effective date of this Plan. To the extent that
the aggregate Fair Market Value (determined as of the date of grant) of shares
of Common Stock with respect to which options designated as incentive stock
options are exercisable for the first time by a participant during any calendar
year (under this Plan or any other plan of the Company, or any parent or
subsidiary as defined in Section 424 of the Code) exceeds the amount (currently
$100,000) established by the Code, such options shall constitute non-qualified
stock options. "Fair Market Value" shall mean the closing transaction price of a
share of Common Stock as reported in the NASDAQ National Market System on the
date as of which such value is being determined or, if there shall be no
reported transactions on such date, on the next preceding date for which a
transaction was reported; provided that if Fair Market Value for any date cannot
be determined as above provided, Fair Market Value shall be determined by the
Committee by whatever means or method as the Committee, in the good faith
exercise of its discretion, shall at such time deem appropriate.
2.2 TERMS OF STOCK OPTIONS. Options shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares of Common
Stock subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of Common Stock purchasable
upon exercise of a non-qualified stock option shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the date of grant of such option
and the purchase price per share of Common Stock purchasable upon exercise of an
incentive stock option shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the date of grant of such option; provided further,
that if an incentive stock option shall be granted to any person who, at the
time such option is granted, owns capital stock possessing more than ten percent
of the total combined voting power of all classes of capital stock of the
Company (or of any parent or subsidiary as defined in
<PAGE> 3
Section 424 of the Code) (a "Ten Percent Holder"), the purchase price per share
of Common Stock shall be the price (currently 110% of Fair Market Value)
required by the Code in order to constitute an incentive stock option.
(b) Option Period and Exercisability. The period during which an option
may be exercised shall be determined by the Committee; provided, however, that
no incentive stock option shall be exercised later than ten years after its date
of grant; provided further, that if an incentive stock option shall be granted
to a Ten Percent Holder, such option shall not be exercised later than five
years after its date of grant. The Committee may, in its discretion, establish
performance measures or other criteria which shall be satisfied or met as a
condition to the grant of an option or to the exercisability of all or a portion
of an option. The Committee shall determine whether an option shall become
exercisable in cumulative or non-cumulative installments and in part or in full
at any time. An exercisable option, or portion thereof, may be exercised only
with respect to whole shares of Common Stock.
(c) Method of Exercise. An option may be exercised (i) by giving
written notice to the Company specifying the number of whole shares of Common
Stock to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's satisfaction) either (A) in
cash, (B) by delivery (either actual delivery or by attestation procedures
established by the Company) of previously owned whole shares of Common Stock
(which the optionee has held for at least six months prior to the delivery of
such shares or which the optionee purchased on the open market and in each case
for which the optionee has good title, free and clear of all liens and
encumbrances) having an aggregate Fair Market Value, determined as of the date
of exercise, equal to the aggregate purchase price payable by reason of such
exercise, (C) by authorizing the Company to withhold whole shares of Common
Stock which would otherwise be delivered upon exercise of the option having an
aggregate Fair Market Value, determined as of the date of exercise, equal to the
aggregate purchase price payable by reason of such exercise, if such exercise
does not result in the recognition of compensation expense to the Company, (D)
in cash by a broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise, or (E) a combination of (A), (B)
and (C), in each case to the extent set forth in the Agreement relating to the
option and (ii) by executing such documents as the Company may reasonably
request. The Company shall have sole discretion to disapprove of an election
pursuant to any of clauses (B)-(E). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the optionee. No certificate
representing Common Stock shall be delivered until the full purchase price
therefor has been paid (or arrangement made for such payment to the Company's
satisfaction).
(d) Additional Reload Options. The Committee shall have the authority
to include in any Agreement relating to an option a provision entitling the
optionee to an additional option in the event such optionee exercises the option
represented by such option agreement, in whole or in part, by delivering
previously owned whole shares of Common Stock in payment of the purchase price
in accordance with this Plan and such Agreement. Any such additional option
shall be for a number of shares of Common Stock equal to the number of delivered
shares, shall have a purchase price determined by the Committee in accordance
with this Plan, shall be exercisable on the terms and subject to the conditions
established by the Committee at the time of grant of such additional option, and
shall be subject to such other terms and conditions as the Committee shall
determine in accordance with this Plan.
2.3 TERMINATION OF EMPLOYMENT.
(a) Disability. Subject to paragraph (f) below and unless otherwise
specified in the Agreement relating to an option, if an optionee's employment
with the Company terminates by reason of Disability, each option held by such
optionee shall be exercisable only to the extent that such option is exercisable
on the effective date of such optionee's termination of employment and may
thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is 12 months (or such other period as set forth in the
Agreement relating to such option) after the effective date of such optionee's
termination of employment and (ii) the expiration date of the term of such
option. For purposes of this Plan, "Disability" shall mean the inability of an
optionee substantially to perform such optionee's duties and responsibilities
for a continuous period of at least six months.
<PAGE> 4
(b) Retirement. Subject to paragraph (f) below and unless otherwise
specified in the Agreement relating to an option, if an optionee's employment
with the Company terminates by reason of retirement on or after age 65 after a
minimum of ten (10) years of employment with the Company each option held by
such optionee shall be exercisable only to the extent that such option is
exercisable on the effective date of such optionee's termination of employment
and may thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is twelve (12) months (or such other period as set forth in
the Agreement relating to such option) after the effective date of such
optionee's termination of employment and (ii) the expiration date of the term of
such option.
(c) Death. Subject to paragraph (f) below and unless otherwise
specified in the Agreement relating to an option, if an optionee's employment
with the Company terminates by reason of death, each option held by such
optionee shall be exercisable only to the extent that such option is exercisable
on the date of such optionee's death and may thereafter be exercised by such
optionee's executor, administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (i) the date which is twelve
(12) months (or such other period as set forth in the Agreement relating to such
option) after the date of death and (ii) the expiration date of the term of such
option.
(d) Other Termination. Subject to paragraph (f) below and unless
otherwise specified in the Agreement relating to an option if the employment
with the Company of the holder of an option is terminated by the Company for
Cause, each option held by such holder shall terminate automatically on the
effective date of such holder's termination of employment.
Subject to paragraph (f) below and unless otherwise specified in
the Agreement relating to an option, if an optionee's employment with the
Company terminates for any reason other than Disability, retirement on or after
age 65 after a minimum of ten (10) years of employment with the Company or death
or Cause, each option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the effective date of such optionee's
termination of employment and may thereafter be exercised by such optionee (or
such optionee's legal representative or similar person) until and including the
earliest to occur of (i) the date which is three months (or such other period as
set forth in the Agreement relating to such option) after the effective date of
such optionee's termination of employment and (ii) the expiration date of the
term of such option; provided that if such optionee's employment is terminated
for Cause, all options held by such optionee shall terminate automatically on
the effective date of such optionee's termination of employment. For purposes of
this Plan, "Cause" shall mean the willful and continued failure to substantially
perform the duties assigned by the Company (other than a failure resulting from
the optionee's Disability), the willful engaging in conduct which is
demonstrably injurious to the Company or any Subsidiary, monetarily or
otherwise, including conduct that, in the reasonable judgment of the Company, no
longer conforms to the standard of the Company's executives, any act of
dishonesty, commission of a felony, or a significant violation of any statutory
or common law duty of loyalty to the Company.
(e) Death Following Termination of Employment. Subject to paragraph (f)
below and unless otherwise specified in the Agreement relating to an option, if
an optionee dies during the period set forth in Section 2.3(a) following
termination of employment by reason of Disability, or if an optionee dies during
the period set forth in Section 2.3(b) following termination of employment by
reason of retirement on or after age 65 after a minimum of ten (10) years of
employment with the Company, or if an optionee dies during the period set forth
in Section 2.3(d) following termination of employment for any other reason other
than Disability or retirement on or after age 65 after a minimum of ten (10)
years of employment with the Company (or, in each case, such other period as set
forth in the Agreement relating to an option), each option held by such optionee
shall be exercisable only to the extent that such option is exercisable on the
date of such optionee's death and may thereafter be exercised by such optionee's
executor, administrator, legal representative, beneficiary or similar person
until and including the earliest to occur of (i) the date which is twelve (12)
months (or such other period as set forth in the Agreement relating to such
option) after the date of death and (ii) the expiration date of the term of such
option.
(f) Termination of Employment - Incentive Stock Options. Unless
otherwise specified in the Agreement relating to the option, if the employment
with the Company of a holder of an incentive stock option
<PAGE> 5
terminates by reason of Permanent and Total Disability (as defined in Section
22(e)(3) of the Code), each incentive stock option held by such optionee shall
be exercisable only to the extent that such option is exercisable on the
effective date of such optionee's termination of employment by reason of
Permanent and Total Disability, and may thereafter be exercised by such optionee
(or such optionee's legal representative or similar person) until and including
the earliest to occur of (i) the date which is one (1) year (or such shorter
period as set forth in the Agreement relating to such option) after the
effective date of such optionee's termination of employment by reason of
Permanent and Total Disability and (ii) the expiration date of the term of such
option.
Unless otherwise specified in the Agreement relating to the
option, if the employment with the Company of a holder of an incentive stock
option terminates by reason of death, each incentive stock option held by such
optionee shall be exercisable only to the extent that such option is exercisable
on the date of such optionee's death and may thereafter be exercised by such
optionee's executor, administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (i) the date which is one
(1) year (or such shorter period as set forth in the Agreement relating to such
option) after the date of death and (ii) the expiration date of the term of such
option.
If the employment with the Company of a holder of an incentive
stock option terminates for any reason other than Permanent and Total Disability
or death, each incentive stock option held by such optionee shall be exercisable
only to the extent such option is exercisable on the effective date of such
optionee's termination of employment, and may thereafter be exercised by such
holder (or such holder's legal representative or similar person) until and
including the earliest to occur of (i) the date which is three months after the
effective date of such optionee's termination of employment and (ii) the
expiration date of the term of such option.
If the holder of an incentive stock option dies during the
period set forth in the first paragraph of this Section 2.3(f) following
termination of employment by reason of Permanent and Total Disability (or such
shorter period as set forth in the Agreement relating to such option), or if the
holder of an incentive stock option dies during the period set forth in the
third paragraph of this Section 2.3(f) following termination of employment for
any reason other than Permanent and Total Disability or death, each incentive
stock option held by such optionee shall be exercisable only to the extent such
option is exercisable on the date of the optionee's death and may thereafter be
exercised by the optionee's executor, administrator, legal representative,
beneficiary or similar person until and including the earliest to occur of (i)
the date which is one year (or such shorter period as set forth in the Agreement
relating to such option) after the date of death and (ii) the expiration date of
the term of such option.
III. GENERAL
3.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
shareholders of the Company for approval and, if approved by the affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy at the 1997 annual meeting of shareholders, shall become
effective as of December 26, 1996. No option may be exercised prior to the date
of such stockholder approval. This Plan may be submitted to the shareholders of
the Company for approval in accordance with Section 162(m). This Plan shall
terminate ten years after its effective date, unless terminated earlier by the
Board. Termination of this Plan shall not affect the terms or conditions of any
option granted prior to termination.
In the event that this Plan is not approved by the shareholders of the
Company on or before December 31, 1997, this Plan and any options granted
hereunder shall be null and void.
3.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation, including Section 162(m) of the Code; provided, however,
that no amendment shall be made without stockholder approval if such amendment
would (a) increase the maximum number of shares of Common Stock available under
this Plan (subject to Section 3.7), (b) effect any change inconsistent with
Section 422 of the Code or (c) extend the term of this Plan; provided, further,
that this Plan shall not be amended in a manner which fails to comply with Rule
16b-3(c)(2)(ii)(B) under Section 16 of the Exchange Act. No amendment may impair
the rights of a holder of an outstanding option without the consent of such
holder.
<PAGE> 6
3.3 AGREEMENT. No option shall be valid until an Agreement is executed by the
Company and the optionee and, upon execution by the Company and the optionee and
delivery of the Agreement to the Company, such option shall be effective as of
the effective date set forth in the Agreement.
3.4 NON-TRANSFERABILITY. No option hereunder shall be transferable other than
(i) by will or the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company or (ii) as otherwise permitted
under Rule 16b-3 under the Exchange Act as set forth in the Agreement relating
to such option. Except to the extent permitted by the foregoing sentence, each
option may be exercised during the optionee's lifetime only by the optionee or
the optionee's legal representative or similar person. Except as permitted by
the second preceding sentence, no option hereunder shall be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any option hereunder, such option and all
rights thereunder shall immediately become null and void.
3.5 TAX WITHHOLDING. The Company shall have the right to require, prior to the
issuance or delivery of any shares of Common Stock, payment by the optionee of
any Federal, state, local or other taxes which may be required to be withheld or
paid in connection with an option hereunder. An Agreement may provide that (i)
the Company shall withhold whole shares of Common Stock which would otherwise be
delivered upon exercise of the option having an aggregate Fair Market Value
determined as of the date the obligation to withhold or pay taxes arises in
connection with the option (the "Tax Date") in the amount necessary to satisfy
any such obligation or (ii) the optionee may satisfy any such obligation by any
of the following means: (A) a cash payment to the Company, (B) delivery (either
actual delivery or by attestation procedures established by the Company) to the
Company of previously owned whole shares of Common Stock (which the optionee has
held for at least six months prior to the delivery of such shares or which the
optionee purchased on the open market and in each case for which the optionee
has good title, free and clear of all liens and encumbrances) having an
aggregate Fair Market Value determined as of the Tax Date, equal to the amount
necessary to satisfy any such obligation, (C) authorizing the Company to
withhold whole shares of Common Stock which would otherwise be delivered upon
exercise of the option having an aggregate Fair Market Value determined as of
the Tax Date, equal to the amount necessary to satisfy any such obligation, (D)
a cash payment by a broker-dealer acceptable to the Company to whom the optionee
has submitted an irrevocable notice of exercise or (E) any combination of (A),
(B) and (C), in each case to the extent set forth in the Agreement relating to
the option; provided, however, that the Company shall have sole discretion to
disapprove of an election pursuant to any of clauses (B)-(E). An Agreement may
provide for shares of Common Stock to be delivered or withheld having a Fair
Market Value in excess of the minimum amount required to be withheld, but not in
excess of the amount determined by applying the optionee's maximum marginal tax
rate. Any fraction of a share of Common Stock which would be required to satisfy
such an obligation shall be disregarded and the remaining amount due shall be
paid in cash by the optionee.
3.6 RESTRICTIONS ON SHARES. Each option hereunder shall be subject to the
requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
option upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the exercise of such option
or the delivery of shares thereunder, such option shall not be exercised and
such shares shall not be delivered unless such listing, registration,
qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company. The Company may
require that certificates evidencing shares of Common Stock delivered pursuant
to any option hereunder bear a legend indicating that the sale, transfer or
other disposition thereof by the holder is prohibited except in compliance with
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
3.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option, the purchase
price per security, and the number and class of securities subject to each
option to be granted to non-employee directors pursuant to Article III shall be
appropriately adjusted by the Committee, such adjustments to be
<PAGE> 7
made in the case of outstanding options without an increase in the aggregate
purchase price. The decision of the Committee regarding any such adjustment
shall be final, binding and conclusive. If any adjustment would result in a
fractional security being (a) available under this Plan, such fractional
security shall be disregarded, or (b) subject to an option under this Plan, the
Company shall pay the optionee, in connection with the first exercise of the
option in whole or in part occurring after such adjustment, an amount in cash
determined by multiplying (A) the fraction of such security (rounded to the
nearest hundredth) by (B) the excess, if any, of (x) the Fair Market Value on
the exercise date over (y) the exercise price of the option.
3.8 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any right to
participate in this Plan. Neither this Plan nor any option granted hereunder
shall confer upon any person any right to continued employment by the Company,
any Subsidiary or any affiliate of the Company or affect in any manner the right
of the Company, any Subsidiary or any affiliate of the Company to terminate the
employment of any person at any time without liability hereunder.
3.9 RIGHTS AS STOCKHOLDER. No person shall have any rights as a stockholder of
the Company with respect to any shares of Common Stock which are subject to an
option hereunder until such person becomes a stockholder of record with respect
to such shares of Common Stock.
3.10 DESIGNATION OF BENEFICIARY. If permitted by the Company, an optionee may
file with the Committee a written designation of one or more persons as such
optionee's beneficiary or beneficiaries (both primary and contingent) in the
event of the optionee's death. To the extent an outstanding option granted
hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to
exercise such option.
Each beneficiary designation shall become effective only when filed in writing
with the Committee during the optionee's lifetime on a form prescribed by the
Committee. The spouse of a married optionee domiciled in a community property
jurisdiction shall join in any designation of a beneficiary other than such
spouse. The filing with the Committee of a new beneficiary designation shall
cancel all previously filed beneficiary designations.
If an optionee fails to designate a beneficiary, or if all designated
beneficiaries of an optionee predecease the optionee, then each outstanding
option hereunder held by such optionee, to the extent exercisable, may be
exercised by such optionee's executor, administrator, legal representative or
similar person.
3.11 GOVERNING LAW. This Plan, each option hereunder and the related Agreement,
and all determinations made and actions taken pursuant thereto, to the extent
not otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of California and construed in accordance
therewith without giving effect to principles of conflicts of laws.
3.12 FOREIGN EMPLOYEES. Without amending this Plan, the Committee may grant
options to eligible persons who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment of
the Committee be necessary or desirable to foster and promote achievement of the
purposes of this Plan and, in furtherance of such purposes the Committee may
make such modifications, amendments, procedures, subplans and the like as may be
necessary or advisable to comply with provisions of laws in other countries or
jurisdictions in which the Company or its Subsidiaries operates or has
employees.
<PAGE> 1
Exhibit 5
Opinion of Sidley & Austin
June 30, 1997
The Harvey Entertainment Company
1999 Avenue of the Stars
Suite 2050
Los Angeles, California 90067
Ladies and Gentlemen:
We have acted as your counsel in connection with the issuance of an
aggregate of 250,000 additional shares of your Common Stock, no par value
("Additional Shares"), which have been reserved for issuance upon exercise of
options granted pursuant to the The Harvey Entertainment Company 1997 Stock
Option Plan (the "Plan") and which are referred to in and will be registered
pursuant to the Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"). In such connection, we have
examined the Registration Statement and we are familiar with the corporate
proceedings taken by your stockholders and your Board of Directors and officers
in connection with the authorization of the Additional Shares and related
matters, and we have reviewed such documents, records and matters of law as we
have considered necessary for rendering this opinion hereinafter set forth.
Based on the foregoing, we are of the opinion that:
1. The Harvey Entertainment Company is a corporation duly organized and
validly existing under the laws of the State of California.
2. The Additional Shares have been duly and validly authorized and,
when (i) the Registration Statement has become effective under the Act and (ii)
the Additional Shares are issued and sold in the manner and upon the terms set
forth in the Plan, such Additional Shares will be duly authorized, legally
issued, fully paid and nonassessable.
We consent to the use of this opinion as Exhibit 5 of the Registration
Statement.
Very truly yours,
/s/ Sidley & Austin
<PAGE> 1
Exhibit 23.2
Consent of Deloitte & Touche
We consent to the incorporation by reference in this reference
in this Registration Statement of The Harvey Entertainment Company on Form S-8
of our report dated February 14, 1997, appearing in the Annual Report on Form
10-KSB of The Harvey Entertainment Company for the year ended December 31, 1996.
/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
June 30, 1997
