<PAGE>
As Filed with the Securities and Exchange Commission on June 30, 1995
Registration No. 33
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------
STERLING ELECTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 74-1261194
(State or other jurisdiction of (I.R.S. Employer Identification
organization) Number)
4201 SOUTHWEST FREEWAY
HOUSTON, TEXAS 77027
(Address of principal executive offices, including zip code)
STERLING ELECTRONICS CORPORATION 1994 STOCK OPTION PLAN
(Full title of plan)
RONALD S. SPOLANE
4201 SOUTHWEST FREEWAY
HOUSTON, TEXAS 77027
(Name and address of agent for service)
(713) 627-9800
(Telephone number, including area code, of agent for service)
---------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================
Title of securities to be Amount to be Proposed maximum Proposed Amount of
registered registered offering price per maximum registration
unit* aggregate fee
offering price*
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.50 500,000 Shares $13.964 $6,982,000 $2,408
par value per share
============================================================================================
<FN>
*Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) and 457(h) under the Securities Act of 1933, as
amended, based on the option exercise price of options granted to purchase
192,000 shares of Common Stock, and the average of the high and low prices of
the Common Stock on June 26, 1995, as to 308,000 shares of Common Stock.
</TABLE>
<PAGE>
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following, which have been filed with the Securities and Exchange
Commission (the "Commission") by Sterling Electronics Corporation, a Nevada
corporation ("Sterling" or the "Company"), are incorporated herein by
reference and made a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
April 1, 1995.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since the
fiscal year ended April 1, 1995.
(c) The description of the Company's common stock, par value $0.50 per
share (the "Common Stock"), which is contained in a Registration Statement on
Form S-1 (File No. 33-28665) as amended, filed with the Commission on May 11,
1989, and a Registration Statement on Form 8-A (File No. 1-1522), as amended,
filed with the Commission June 27, 1994 under the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
All documents filed subsequent to the effective date of this
Registration Statement by the Company 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 hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and
to be a part hereof from the date of filing such documents. Any statement
contained herein or in any 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 to
constitute a part of this Registration Statement, except as so modified or
superseded.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As provided for in Section 78.037 of the Nevada Revised Statutes
("NRS"), Article XII of the Company's Articles of incorporation, as amended
(the "Articles") ("Article XII"), eliminates or limits the personal liability
of directors for damages for breach of fiduciary duty as a director, except
for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of the law, or the unlawful payment of a dividend.
Article XII further provides that any person who is or was made a party
or is threatened to be made a party to an action by reason of the fact that
he is a director or officer of the Company shall be indemnified and held
harmless by the Company to the full extent authorized by Nevada law against
all expense liability and loss incurred in connection therewith.
<PAGE>
With respect to the extent a corporation is permitted to indemnify its
directors and officers, NRS Section 78.751 provides as follows:
1) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding, by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, or itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, and that, with
respect to any criminal action or proceeding, he had reasonable cause to
believe that his conduct was unlawful.
2) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction determines upon application that in
view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expense as the court deems proper.
3) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to the subsections 1 and 2, or in defense
of any claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4) Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
<PAGE>
5) The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in
advance of the final deposition of the action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the corporation.
The provisions of this subsection do not affect any rights to advancement of
expenses to which corporate personnel other than directors or officers may be
entitled under any contract or otherwise by law.
6) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omission involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
Article V of the Company's bylaws provides that each director and
officer of the Company shall be indemnified by the Company against
liabilities and expenses incurred by him in connection with any claim made
against him by reason of having been such a director or officer except:
(i) when he is adjudged to be liable for negligence or misconduct in the
performance of a duty; (ii) with respect to matters settled, independent
counsel shall have deemed the settlement payment not to be reasonable; or
(iii) where such indemnification would be against public policy.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
Unless otherwise indicated below as being incorporated by reference to
another filing of the Company with the Commission, each of the following
exhibits is filed herewith:
4.1 - Sterling Electronics Corporation 1994 Stock Option Plan
4.2 - Form of Stock Option Agreement of Sterling Electronics Corporation 1994
Stock Option Plan
4.3 - Specimen stock certificates evidencing Common Stock of Sterling
Electronics Corporation (Incorporated by reference to Exhibit 4.3 to the
Registration Statement on Form S-1 of the Company (File No. 33-28665)
filed with the Securities and Exchange Commission on May 11, 1989)
<PAGE>
4.4 - Articles of Incorporation, as amended, of the Company (Incorporated by
reference to Exhibit 3.1 to the Registration Statement on Form S-1 of
the Company (File No. 33-28665) filed with the Securities and Exchange
Commission on May 11, 1989)
4.5 - Bylaws, as amended, of the Company (Incorporated by reference to
Exhibit 3.2 to the Registration Statement on Form S-1 of the Company
(File No. 33-28665) filed with the Securities and Exchange Commission on
May 11, 1989)
5.1 - Opinion of Schlanger, Mills, Mayer & Grossberg, L.L.P.
23.1 - Consent of Ernst & Young LLP
24.1 - Powers of Attorney
ITEM 9. UNDERTAKING
The undersigned 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 of 1933;
(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 of any
material change to such information in the 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 the 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.
2) That, for the purpose of determining any liability under the Securities
Act of 1933, 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.
4) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the Company's annual report pursuant
to Section 13 (a) or Section 15 (d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15 (d) of the Securities Exchange Act of 1934)
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.
5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise,
<PAGE>
the Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or
controlling persons of the Company 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 Company 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 SECURITIES ACT OF 1933, 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 HOUSTON, STATE OF TEXAS, ON THE
27TH DAY OF JUNE, 1995.
STERLING ELECTRONICS CORPORATION
By: /s/ Mac McConnell
----------------------------------
Mac McConnell, Vice President-Finance
and Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
Signature Title Date
- --------- ----- ----
RONALD S. SPOLANE* Chairman of the Board, June 27, 1995
- ---------------------- President, Chief
Ronald S. Spolane Executive Officer and
Director (Principal
Executive Officer)
DAVID A. SPOLANE* Executive Vice President June 27, 1995
- ---------------------- and Director
David A. Spolane
Mac McCONNELL Vice President-Finance June 27, 1995
- ---------------------- Chief Financial Officer
Mac McConnell Principal Financial
and Accounting Officer)
LEON WEBB, JR.* Vice President, June 27, 1995
- ---------------------- Secretary and
Leon Webb, Jr. Treasurer
JAY H. GOLDING* Director June 27, 1995
- ----------------------
Jay H. Golding
S. M. LAMBERT* Director June 27, 1995
- ----------------------
S. M. Lambert, Ph. D.
HERSCHEL G. MALTZ* Director June 27, 1995
- ----------------------
Herschel G. Maltz
DAVID R. TOOMIM* Director June 27, 1995
- ----------------------
David R. Toomim
*By: Mac McConnell
-----------------
Mac McConnell, Attorney-In-Fact June 27, 1995
<PAGE>
EXHIBIT 4.1
STERLING ELECTRONICS CORPORATION
1994 STOCK OPTION PLAN
SCOPE AND PURPOSE OF PLAN
This Sterling Electronic Corporation 1994 Stock Option Plan (the "Plan")
provides for the granting of:
(a) Incentive Options (hereinafter defined) to certain key employees
of Sterling Electronics Corporation, a Nevada corporation (the
"Corporation"), or of its Affiliates (hereinafter defined); and
(b) Non statutory Options (hereinafter defined) to certain key
employees of the Corporation or of its Affiliates.
The purpose of the Plan is to provide an incentive for key employees of
the Corporation or its Affiliates to provide a means by which selected key
persons may be given an opportunity to purchase Stock of the Corporation, to
help secure and retain the services of key persons, and to provide incentives
for such persons to exert maximum efforts for the success of the Corporation.
SECTION 1. Definitions
1.1 "Affiliates" shall mean (a) any corporation, other than the
Corporation, in an unbroken chain of corporations ending with the Corporation
if each of the corporations, other than the Corporation, 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 and (b)
any corporation, other than the Corporation, in an unbroken chain of
corporations beginning with the Corporation if 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.
1.2 "Agreement" shall mean the written agreement between the Corporation
and a Holder evidencing the Option granted by the Corporation and the
understanding of the parties with respect thereto.
1.3 "Board of Directors" shall mean the board of directors of the
Corporation.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5 "Compensation Committee" shall mean the committee appointed pursuant
to Section 3 hereof by the Board of Directors to administer this Plan.
1.6 "Eligible Individuals" shall mean key employees, including officers
and directors who are also employees of the Corporation or of any of its
Affiliates.
1.7 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.8 "Fair Market Value" shall mean:
(a) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities exchange
at the date of determining the Fair Market Value, the last reported sale
price on such exchange on the last business day prior to the date in
question; or
1 of
<PAGE>
(b) If shares of Stock of the same class shall not be listed or admitted
to unlisted trading privileges as provided in Subparagraph 1.8(a) and sales
prices therefor in the over-the-counter market shall be reported by the
National Association of Securities Dealers, Inc. Automated Quotations, Inc.
("NASDAQ") National Market System at the date of determining the Fair Market
Value, the last reported sale price so reported on the last business day
prior to the date in question; or
(c) If shares of Stock of the same class shall not be listed or admitted
to unlisted trading privileges as provided in Subparagraph 1.8(a) and sales
prices therefor shall not be reported by the NASDAQ National Market System as
provided in Subparagraph 1.8(b), and bid and asked prices therefor in the
over-the-counter market shall be reported by NASDAQ (or, if not so reported,
by the National Quotation Bureau Incorporated) at the date of determining the
Fair Market Value, the average of the closing bid and asked prices on the
last business day prior to the date in question; and
(d) If shares of Stock of the same class shall not be listed or admitted
to unlisted trading privileges as provided in Subparagraph 1.8(a) and sales
prices or bid and asked prices therefor shall not be reported by NASDAQ (or
the National Quotation Bureau Incorporated) as provided in Subparagraph
1.8(b) or Subparagraph 1.8(c) at the date of determining the Fair Market
Value, the value determined in good faith by the Board of Directors.
For purposes of valuing Options, the Fair Market Value of Stock shall be
determined without regard to any restriction other than one which, by its
terms, will never lapse.
1.9 "Holder" shall mean an Eligible Individual to whom an Option has
been granted.
1.10 "Incentive Options" shall mean stock options that are intended to
satisfy the requirements of section 422 of the Code.
1.11 "Nonstatutory Options" shall mean stock options that are not
intended to satisfy the requirements of section 422 of the Code.
1.12 "Options" shall mean either Incentive Options or Nonstatutory
Options, or both.
1.13 "Securities Act" shall mean the Securities Act of 1933, as amended.
1.14 "Significant Affiliate" shall mean any Affiliate or Affiliates
which collectively account for 50% or greater of (i) the total assets of the
Corporation and all Affiliates or (ii) the total sales of the Corporation and
all Affiliates.
1.15 "Stock" shall mean the Corporation's authorized common stock, $0.50
par value per share, together with any other securities with respect to which
Options granted hereunder may become exercisable.
SECTION 2: Stock and Maximum Number of Shares Subject to the Plan.
2.1 DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The Stock which
may be issued upon the exercise of an Option may either be unissued or
reacquired shares of Stock, as the Board of Directors may, in its sole and
absolute discretion, from time to time determine.
Subject to the adjustments provided for in Paragraph 6.6, the aggregate
number of shares of Stock to be issued pursuant to the exercise of all
Options granted hereunder may equal but shall not exceed 500,000 shares of
Stock.
2.2 RESTORATION OF UNPURCHASED SHARES. If an Option granted hereunder
expires or terminates for any reason during the term of this Plan and prior
to the exercise of the Option in full, the shares
2 of
<PAGE>
of Stock subject to but not issued under such Option shall again be available
for Options granted hereunder subsequent thereto.
SECTION 3: Administration of the Plan.
3.1 COMPENSATION COMMITTEE. The Plan shall be administered by the
Compensation Committee. The Compensation Committee shall consist of not less
than two individuals. In the event that the Stock is registered under Section
12 of the Exchange Act, directors of the Corporation, and all members of the
Compensation Committee shall be:
(a) directors of the Corporation; and
(b) "disinterested persons," as defined in Rule 16b-3(c)(2)(i)
promulgated under the Exchange Act; and in such event members of the
Compensation Committee shall not be eligible to receive Options or any
equity securities under any plan of the Corporation or its affiliates
(except as specifically allowed by Rules 16(b)-3(c)(2)(i)(A)-(D)
promulgated under the Exchange Act) within one (1) year prior to their
appointment to the Compensation Committee or while they are serving as
members of the Compensation Committee; provided, however, that this
subparagraph incorporates and its restrictions shall be deemed to be
modified according to any changes to Rule 16b-3 promulgated under the
Exchange Act.
3.2 DURATION, REMOVAL, ETC. The members of the Compensation Committee
shall serve at the pleasure of the Board of Directors, which shall have the
power, at any time and from time to time, to remove members from the
Compensation Committee or to add members thereto. Vacancies on the
Compensation Committee, however caused, shall be filled by action of the
Board of Directors.
3.3 MEETINGS AND ACTIONS OF THE COMPENSATION COMMITTEE. The
Compensation Committee shall elect one of its members as its Chairman and
shall hold its meetings at such times and places as it may determine. All
decisions and determinations of the Compensation Committee shall be made by
the majority vote or decision of all of its members present at a meeting;
provided, however, that any decision or determination reduced to writing and
signed by all of the members of the Compensation Committee shall be as fully
effective as if it had been made at a meeting duly called and held. The
Compensation Committee may make any rules and regulations for the conduct of
its business that are not inconsistent with the provisions hereof and with
the bylaws of the Corporation as it may deem advisable.
3.4 COMPENSATION COMMITTEE'S POWERS. Subject to the express provisions
hereof, the Compensation Committee shall have the authority, in its sole and
absolute discretion, (a) to adopt, amend, and rescind administrative and
interpretive rules and regulations relating to the Plan; (b) to determine the
terms and provisions of the respective Agreements (which need not be
identical), including provisions defining or otherwise relating to (i)
subject to Section 6 of the Plan, the term and the period or periods and
extent of exercisability of the Options, (ii) the extent to which the
transferability of shares of Stock issued upon exercise of Options is
restricted, (iii) the effect of termination of employment upon the
exercisability of the Options, and (iv) the effect of approved leaves of
absence (consistent with any applicable regulations of the Internal Revenue
Service); (c) to accelerate the time of exercisability of any Option that has
been granted; (d) to construe the terms of any Agreement and the Plan; and
(e) to make all other determinations and perform all other acts necessary or
advisable for administering the Plan, including the delegation of such
ministerial acts and responsibilities as the Compensation Committee deems
appropriate. The Compensation Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Agreement in
the manner and to the extent it shall deem expedient to carry it into effect,
and it shall be the sole and final judge of such expediency. The Compensation
Committee shall have full discretion to make all determinations on the
matters referred to in this Paragraph 3.4; such determinations shall be
final, binding and conclusive.
3 of
<PAGE>
SECTION 4: Eligibility and Participation.
4.1 ELIGIBLE INDIVIDUALS. Options may be granted hereunder only to
persons who are Eligible Individuals at the time of the grant thereof.
Notwithstanding any provision contained herein to the contrary, a person
shall not be eligible to receive an Incentive Option hereunder unless he or
she is an employee of the Corporation or an Affiliate, nor shall a person be
eligible to receive an Incentive Option hereunder if he or she, at the time
such Incentive Option is granted, would own (within the meaning of Sections
422 and 424 of the Code) stock possessing more than ten percent (10%) of the
total combined voting power or value of all classes of stock of the
Corporation or of an Affiliate unless at the time such Incentive Option is
granted the exercise price per share of Stock is at least one hundred and ten
percent (110%) of the Fair Market Value of each share of Stock to which the
Incentive Option relates and the Incentive Option is not exercisable after
the expiration of five (5) years from the date it is granted.
4.2 NO RIGHT TO OPTION. The adoption of the Plan shall not be deemed to
give any person a right to be granted an Option.
SECTION 5: Grant of Options and Certain Terms of the Agreements.
Subject to the express provisions hereof, the Compensation Committee
shall determine which Eligible Individuals shall be granted Options hereunder
from time to time. In making grants, the Compensation Committee shall take
into consideration the contribution the potential Holder has made or may make
to the success of the Corporation or its Affiliates and such other
considerations as the Board of Directors may from time to time specify. The
Compensation Committee shall also determine the number of shares subject to
each of such Options, and shall authorize and cause the Corporation to grant
Options in accordance with such determinations.
The date on which the Compensation Committee completes all action
constituting an offer of an Option to an individual, including the
specification of the number of shares of Stock to be subject to the Option,
shall be the date on which the Option covered by an Agreement is granted,
even though certain terms of the Agreement may not be at such time determined
and even though the Agreement may not be executed until a later time. For
purposes of the preceding sentence, an offer shall be deemed made if the
Compensation Committee has completed all such action except communication of
the grant of the Option to the potential Holder. In no event, however, shall
a Holder gain any rights in addition to those specified by the Compensation
Committee in its grant, regardless of the time that may pass between the
grant of the Option and the actual execution of the Agreement by the
Corporation and the Holder.
Each Option granted hereunder shall be evidenced by an Agreement,
executed by the Corporation and the Eligible Individual to whom the Option is
granted, incorporating such terms as the Compensation Committee shall deem
necessary or desirable. More than one Option may be granted hereunder to the
same Eligible Individual and be outstanding concurrently hereunder. In the
event an Eligible Individual is granted one or more Incentive Options and one
or more Nonstatutory Options, such grants shall be evidenced by separate
Agreements, one for each of the Incentive Option grants and one for each of
the Nonstatutory Option grants.
Each Agreement may contain or otherwise provide for conditions giving
rise to the forfeiture of the Stock acquired pursuant to an Option granted
hereunder or otherwise and such restrictions on the transferability of shares
of the Stock acquired pursuant to an Option granted hereunder or otherwise as
the Compensation Committee in its sole and absolute discretion shall deem
proper or advisable. Such conditions giving rise to forfeiture may include,
but need not be limited to, the requirement that the Holder render
substantial services to the Corporation or its Affiliates for a specified
period of time. Such restrictions on transferability may include, but need
not be limited to, options and rights of first refusal in favor of the
Corporation and stockholders of the Corporation other than the Holder of such
shares of Stock who is a party to the particular Agreement or a subsequent
holder of the shares of Stock who is bound by such Agreement.
4 of
<PAGE>
SECTION 6: Terms and Conditions of Options.
All Options granted hereunder shall comply with, be deemed to
include, and shall be subject to the following terms and
conditions:
6.1 NUMBER OF SHARES. Each Agreement shall state the number of
shares of Stock to which it relates.
6.2 EXERCISE PRICE. Each Agreement shall state the exercise
price per share of Stock. The exercise price per share of Stock
subject to an Incentive Option shall not be less than the greater
of (a)the par value per share of the Stock or (b)100% of the Fair
Market Value per share of the Stock on the date of the grant of
the Incentive Option. The exercise price per share of Stock
subject to a Nonstatutory Option shall not be less than the
greater of (a) the par value per share of the Stock or (b) 100%
of the Fair Market Value per share of the Stock on the date of
the grant of the Nonstatutory Option. The exercise price per
share of Stock subject to either an Incentive Option or a
Nonstatutory Option shall be determined by the Compensation
Committee upon the granting of the Option, subject to the
restrictions set forth above.
6.3 MEDIUM AND TIME OF PAYMENT, METHOD OF EXERCISE, AND
WITHHOLDING TAXES. The exercise price of an Option shall be
payable upon the exercise of the Option in a manner that is
acceptable to the Compensation Committee in its sole discretion,
which form may include cash, shares of Stock or a share or shares
of Stock owned by the Holder and surrendered for actual or deemed
multiple exchanges of shares of Stock, or any combination
thereof. Exercise of an Option shall not be effective until the
Corporation has received written notice of exercise, specifying
the number of whole shares to be purchased and accompanied by
payment in full of the aggregate exercise price of the number of
shares purchased. The Corporation shall not in any case be
required to sell, issue, or deliver a fractional share of Stock
with respect to any Option.
The Compensation Committee may, in its discretion, require a
Holder to pay to the Corporation at the time of exercise of an
Option or portion thereof the amount that the Corporation deems
necessary to satisfy its obligation to withhold Federal, state or
local income or other taxes incurred by reason of the exercise.
Where the exercise of an Option does not give rise to an
obligation to withhold Federal income or other taxes on the date
of exercise, the Corporation may, in its discretion, require a
Holder to place shares of Stock purchased under the Option in
escrow for the benefit of the Corporation until such time as
Federal income or other tax withholding is no longer required
with respect to such shares or until such withholding is required
on amounts included in the gross income of the Holder as a result
of the exercise of an Option or the disposition of shares of
Stock acquired pursuant thereto. At such later time, the
Corporation, in its discretion, may require a Holder to pay to
the Corporation the amount that the Corporation deems necessary
to satisfy its obligation to withhold Federal, state or local
income or other taxes incurred by reason of the exercise of the
Option or the disposition of shares of Stock. Upon receipt of
such payment by the Corporation, such shares of Stock shall be
released from escrow to the Holder.
6.4 TERM, TIME OF EXERCISE, AND TRANSFERABILITY OF STOCK AND
OPTIONS. In addition to such other terms and conditions as may be
included in a particular Agreement granting an Option, an Option
shall be exercisable during a Holder's lifetime only by the
Holder or by the Holder's guardian or legal representative in
accordance with the next sentence. An Option shall not be
transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined in the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder. The provisions of
the remainder of this Paragraph 6.4 shall apply to the extent a
Holder's Agreement does not expressly provide otherwise.
If a Holder (a) voluntarily ceases to be an Eligible Individual
or (b) ceases to be an Eligible Individual by reason that his
status as such was terminated by the Corporation or one of its
Affiliates (with or without cause), the Option shall terminate
thirty days after such Holder ceases to be an Eligible
Individual.
5 of
<PAGE>
Notwithstanding the foregoing, if a Holder ceases to be an
Eligible Individual by reason of (a) disability (as defined in
repealed Section 105(d)(4) of the Code) or (b) death, then the
Holder shall have the right for twelve months after the date of
disability or death to exercise an Option to the extent such
Option is exercisable on the date of his disability.
For purposes of this Paragraph 6.4, the term "cause" means,
without regard to any determination of "cause" or "without cause"
under any other applicable agreement with the individual other
than an Agreement hereunder, a termination of employment, as
determined by the Board of Directors of the Corporation or the
board of directors of an Affiliate in the sole discretion
exercised in good faith of such board of directors, for (a) the
breach by the Holder of any employment, nondisclosure,
noncompetition, or other agreement to which the Holder and the
Corporation or any Affiliate are parties, (b) the commission by
the Holder of a felony or of a misdemeanor involving moral
turpitude, (c) the participation by the Holder in any fraud, (d)
dishonesty by the Holder that is detrimental to the best
interests of the Corporation or any Affiliate, or (e) willful
disloyalty by the Holder to the Corporation or any Affiliate.
That portion of the Option which is not exercisable on the date
the Holder ceases to be an Eligible Individual shall terminate
and be forfeited to the Corporation on the date of such
cessation.
Notwithstanding any other provision of this Plan, no Option shall
be exercisable after the expiration of ten (10) years from the
date it is granted, or the period specified in Paragraph 4.1, if
applicable. The Compensation Committee shall have authority to
prescribe in any Agreement that the Option evidenced thereby may
be exercised in full or in part as to any number of shares
subject thereto at any time or from time to time during the term
of the Option, or in such installments at such times during said
term as the Compensation Committee may prescribe. Except as
provided above and unless otherwise provided in any Agreement, an
Option may be exercised at any time or from time to time during
the term of the Option. Such exercise may be as to any or all
whole (but no fractional) shares which have become purchasable
under the Option.
Within a reasonable time or such time as may be permitted by law
after the Corporation receives written notice that the Holder has
elected to exercise all or a portion of an Option, accompanied by
payment in full of the aggregate Option exercise price of the
number of shares of Stock purchased, the Corporation shall issue
and deliver a certificate representing the shares acquired in
consequence of the exercise and any other amounts payable in
consequence of such exercise. In the event that a Holder
exercises both an Incentive Option, or portion thereof, and a
Nonstatutory Stock Option, or a portion thereof, separate Stock
certificates shall be issued, one for the Stock subject to the
Incentive Option and one for the Stock subject to the
Nonstatutory Stock Option. The number of the shares of Stock
transferable due to an exercise of an Option under this Plan
shall not be increased due to the passage of time, except as may
be provided in an Agreement. However, this number of such shares
of Stock which are transferable may increase due to the
occurrence of certain events which are fully described in
Paragraph 6.6.
Nothing herein or in any Option granted hereunder shall require
the Corporation to issue any shares upon exercise of any Option
if such issuance would, in the opinion of counsel for the
Corporation, constitute a violation of the Securities Act or any
similar or superseding statute or statutes, or any other
applicable statute or regulation, as then in effect. At the time
of any exercise of an Option, the Corporation may, as a condition
precedent to the exercise of such Option, require from the Holder
of the Option (or in the event of his or her death, his or her
legal representatives, heirs, legatees, or distributees) such
written representations, if any, concerning his or her intentions
with regard to the retention or disposition of the shares being
acquired by exercise of such Option and such written covenants
and agreements, if any, as to the manner of disposal of such
shares as, in the opinion of counsel to the Corporation, may be
necessary to ensure that any disposition by such Holder (or in
the event of his or her death, his or her legal representatives,
heirs, legatees, or distributees), will not involve a violation
of the Securities Act or any similar or superseding statute or
statutes, or any other applicable state or federal statute or
regulation, as then in effect. Shares of Stock issued upon
exercise of any Option shall not be transferable until after six
months from the date the Incentive Option is granted.
Certificates for shares of Stock, when is-
6 of
<PAGE>
sued, may have the following or similar legend, or statements
of other applicable restrictions, endorsed thereon, and, as described
in the preceding sentence, may not be immediately transferable:
The shares of Stock evidenced by this certificate have been
issued to the registered owner in reliance upon written
representations that these shares have been purchased for
investment. These shares have not been registered under the
Securities Act of 1933, as amended, or any applicable state
securities laws, in reliance upon an exception from registration.
Without such registration, these shares may not be sold,
transferred, assigned or otherwise disposed of unless, in the
opinion of the Corporation and its legal counsel, such sale,
transfer, assignment or disposition will not be in violation of
the Securities Act of 1933, as amended, applicable rules and
regulations of the Securities and Exchange Commission, and any
applicable state securities laws.
6.5 LIMITATION ON AGGREGATE VALUE OF SHARES THAT MAY BECOME
FIRST EXERCISABLE DURING ANY CALENDAR YEAR UNDER AN INCENTIVE
OPTION. Except as is otherwise provided in the second paragraph
of Paragraph 6.6, with respect to any Incentive Option granted
under this Plan, the sum of:
(a) the aggregate Fair Market Value of shares of
Stock subject to such Incentive Option that first become
purchasable in a calendar year under such Incentive Option, and
(b) the aggregate Fair Market Value of shares of
Stock or stock of any Affiliate (or a predecessor of the
Corporation or an Affiliate) subject to any other incentive stock
option (within the meaning of Section 422 of the Code) of the
Corporation or its Affiliates (or a predecessor corporation of
any such corporation), that first become purchasable in a
calendar year under such incentive stock option may not (with
respect to any Holder) exceed $100,000, with such Fair Market
Value to be determined as of the date the Incentive Option or
such other incentive stock option is granted.
For purposes of this Paragraph 6.5, "predecessor corporation"
means (i) a corporation that was a party to a transaction
described in Section 424(a) of the Code (or which would be so
described if a substitution or assumption under such section had
been effected) with the Corporation, (ii) a corporation which, at
the time the new incentive stock option (within the meaning of
section 422 of the Code) is granted, is an Affiliate of the
Corporation or (iii) a predecessor corporation of any such
corporations.
6.6 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER, ETC.
The existence of outstanding Options shall not affect in any way
the right or power of the Corporation or its shareholders to make
or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Corporation's capital
structure or its business, or any merger or consolidation of the
Corporation, or any issue of bonds, debentures, preferred to
prior preference stock ahead of or affecting the Stock or the
rights thereof, or the dissolution or liquidation of the
Corporation, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
If the Corporation shall effect a subdivision or
consolidation of shares or other capital adjustment of, or the payment
of a dividend in capital stock or other equity securities of the
Corporation on, its Stock, or other increase or reduction of the
number of shares of the Stock without receiving consideration
therefor in money, services, or property, or the reclassification
of its Stock, in whole or in part, into other equity securities
of the Corporation, then (a) the number, class and per share
price of shares of Stock subject to outstanding Options hereunder
shall be appropriately adjusted (or in the case of the issuance
of other equity securities as a dividend on, or in a
reclassification of, the Stock, the Options shall extend to such
other securities) in such a manner as to entitle a Holder to
receive, upon exercise of an Option, for the same aggregate cash
consideration, the same total number and class or classes of
shares (or in the case of a dividend of, or reclassification
into, other equity securities, such other securities) he would
have held after such adjustment if he or she had exercised his or her
Option in full immediately prior to the event requiring the adjustment,
or, if applicable, the record date for determining shareholders
7 of
<PAGE>
to be affected by such adjustment; and (b) the
number and class of shares then reserved for issuance under the
Plan (or in the case of a dividend of, or reclassification into,
other equity securities, such other securities) shall be adjusted
by substituting for the total number and class of shares of stock
then reserved, the number and class or classes of shares of stock
(or in the case of a dividend of, or reclassification into, other
equity securities, such other securities) that would have been
received by the owner of an equal number of outstanding shares of
Stock as a result of the event requiring the adjustment.
Comparable rights shall accrue to each Holder in the event of
successive subdivisions, consolidations, capital adjustments,
dividends or reclassification of the character described above.
The Agreements to be entered into under this Plan may provide
that if the Corporation (a) shall offer for sale to the
shareholders of its Stock shares of Stock or other classes of
stock or other securities of the Corporation, or (b) in
connection with any transaction shall acquire or shall cause to
be issued rights to acquire shares of stock or other securities
of another corporation for the benefit of or to the holders of
Stock of the Corporation, the Corporation will give written
notice to Holder of the rights which are thus to be acquired or
issued for the benefit of or the holders of Stock of the
Corporation in sufficient time to permit Holder to exercise the
Option granted hereunder if Holder should elect to do so and to
permit Holder to participate in such rights as a holder in such
Stock of the Corporation.
The Agreements may also provide that in the event the Corporation
proposes to merge or consolidate with another corporation or to
sell or dispose of its properties, assets and business or to
dissolve, the Corporation will give written notice thereof to the
Holder in sufficient time to permit Holder to exercise the Option
granted hereunder, if Holder should elect to do so and
participate in such transaction as a stockholder of the
Corporation; provided, however, in connection with any merger or
consolidation or other transaction under which the Corporation or
its holders of shares of Stock will acquire stock or other
securities of the continuing, resulting or other corporation in
exchange for their shares of Stock of the Corporation, provision
shall be made for the reservation for and issuance upon exercise
by Holder of the Option granted of Holder's pro rata number of
shares or other securities (on the basis of the number of shares
of Stock of the Corporation as to which the Option granted
hereunder remains at the time unexercised), at the same aggregate
purchase price provided for in the Agreement, the price per unit
to be adjusted upward or downward, according to the increase or
decrease of the number of units involved.
The Agreements may also provide that in the event the Corporation
undergoes, or is threatened by, a transaction effecting a
significant change in the business, as determined by the Board of
Directors, the waiting period for exercising will be waived and
Holder will be permitted to immediately exercise the Option
granted pursuant to this Plan.
If a corporate transaction described in Section 424(a) of the
Code which involves the Corporation is to take place and there is
to be no surviving corporation while an Option remains in whole
or in part unexercised, it shall be canceled by the Board of
Directors as of the effective date of any such corporate
transaction but before the date each Holder shall be provided
with a notice of such cancellation and each Holder shall have the
right to exercise such Option in full to the extent it is then
still unexercised during a 30-day period preceding the effective
date of such corporate transaction.
Except as hereinbefore expressly provided, the issue by the
Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or
property, or for labor or services either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Corporation
convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Stock then subject
to outstanding Options.
In the event of a Change of Control Transaction (as hereinafter
defined), all outstanding Options granted under the Plan will
vest immediately upon any such Change of Control Transaction
involving the Corporation. A Change of Control Transaction is
(i) the dissolution of the Corporation or any Significant
Affiliate, (ii) a liquidation of more than 50 percent in value of
the Corporation or any Significant Affiliate, (iii) a sale of
assets involving 50 percent or more of the value of the assets of
the Corporation or
8 of
<PAGE>
any Significant Affiliate prior to such sale,
(iv) any merger or reorganization or consolidation of the
Corporation in which the Corporation is not the surviving entity,
(v) any merger or reorganization or consolidation of any
Significant Affiliate in which the Significant Affiliate is not
the surviving entity (other than a merger or reorganization or
consolidation with the Corporation or any entity controlled by
the Corporation), (vi) any sale or the disposition of more than
50 percent of the combined voting securities of any Significant
Affiliate, or (vii) any transaction pursuant to which the
stockholders, as a group, of all the securities of the
Corporation outstanding prior to the transaction hold, as a
group, less than 50 percent of the combined voting power of the
Corporation or any successor company outstanding after the
transaction.
6.7 RIGHTS AS A STOCKHOLDER. A Holder shall have no right as
a stockholder with respect to any shares covered by his or her
Option until a certificate representing such shares is issued to
him or her. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is prior
to the date such certificate is issued, except as provided in
Paragraph 6.6 hereof.
6.8 MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject
to the terms and conditions of and within the limitations of the
Plan, the Compensation Committee may modify, extend or renew
outstanding Options granted under the Plan, or accept the
surrender of Options outstanding hereunder (to the extent not
theretofore exercised) and authorize the granting of new Options
hereunder in substitution therefor (to the extent not theretofore
exercised). The Compensation Committee may not, however, modify
any outstanding Options so as to specify a lower exercise price
or base amount or accept the surrender of outstanding Options and
authorize the granting of new Options in substitution therefor
specifying a lower exercise price. In addition, the Compensation
Committee may not, without the consent of the Holder, modify any
outstanding Options so as to specify a higher exercise price or
base amount or accept the surrender of outstanding Options and
authorize the granting of new Options in substitution therefor
specifying a higher exercise price. In addition, no modification
of an Option granted hereunder shall, without the consent of the
Holder, alter or impair any rights or obligations under any
Incentive Option theretofore granted hereunder to such Holder
under the Plan, except as may be necessary, to satisfy the
requirements of Section 422 of the Code.
6.9 FURNISH INFORMATION. Each Holder shall furnish to the
Corporation all information requested by the Corporation to
enable it to comply with any reporting or other requirement
imposed upon the Corporation by or under any applicable statute
or regulation.
6.10 OBLIGATION TO EXERCISE; TERMINATION OF EMPLOYMENT. The
granting of an Option hereunder shall impose no obligation upon
the Holder to exercise the same or any part thereof. In the event
of a Holder's termination of employment with the Corporation or
an Affiliate, the unexercised portion of an Option granted
hereunder shall terminate in accordance with Paragraph 6.4
hereof.
6.11 AGREEMENT PROVISIONS. The Agreements authorized under the
Plan shall contain such provisions in addition to those required
by the Plan (including, without limitation, restrictions or the
removal of restrictions upon the exercise of the Option and the
retention or transfer of shares thereby acquired) as the
Compensation Committee shall deem advisable. Each Agreement shall
identify the Option evidenced thereby as an Incentive Option or a
Nonstatutory Option, as the case may be, and no Agreement shall
cover both an Incentive Option and a Nonstatutory Option. Each
Agreement relating to an Incentive Option granted hereunder shall
contain such limitations and restrictions upon the exercise of
the Incentive Option to which it relates as shall be necessary
for the Incentive Option to which such Agreement relates to
constitute an incentive stock option, as defined in Section 422
of the Code.
SECTION 7: Remedies and Legend.
7.1 REMEDIES. The Corporation shall be entitled to recover from
a Holder reasonable attorneys' fees incurred in connection with
the enforcement of the terms and provisions of the Plan and any
9 of
<PAGE>
Agreement whether by an action to enforce specific performance or
for damages for its breach or otherwise.
7.2 SPECIFIC PERFORMANCE. The Corporation shall be entitled to
enforce the terms and provisions of this Section 7, including the
remedy of specific performance.
7.3 LEGEND. Each certificate representing shares of Stock issued
to a Holder upon exercise of an Option granted under the Plan
shall, if such share is subject to any transfer restriction
(including a right of first refusal) under the Plan or any
Agreement, bear a legend that complies with applicable law with
respect to such restriction, such as:
The shares represented by this certificate are subject to
restrictions on transferability imposed by that certain
instrument entitled "Sterling Electronics Corporation 1994 Stock
Option Plan" dated _____________, 1994, and an agreement
thereunder between Sterling Electronics Corporation and [Holder]
dated ___________, 19__, which grants to the Corporation an
option to purchase such shares in certain instances. A copy of
such plan and agreement is on file at the principal office of the
Corporation and is subject to the same right of examination by a
stockholder of the Corporation (in person or by agent, attorney,
or accountant) as are the books and records of the Corporation.
SECTION 8: Duration of Plan.
No Options may be granted hereunder after the date that is 10
years from the earlier of (a) the date the Plan is adopted by the
Board of Directors or (b) the date the Plan is approved by the
stockholders of the Corporation. In addition, with respect to
shares of Stock not currently covered by an outstanding Option,
this Plan may be terminated at any time by the Board of
Directors.
SECTION 9: Amendment of Plan.
The Compensation Committee may at any time terminate or from
time to time amend or suspend the Plan; provided, however, that no
such amendment shall, without approval of the stockholders of the
Corporation, except as provided in Section 6, (a) increase the
aggregate number of shares of Stock as to which Options may be
granted under the Plan; (b) increase the maximum period during
which Options may be exercised; or (c) extend the effective
period of the Plan. No Option may be granted during any
suspension of the Plan or after the Plan has been terminated and
no amendment, suspension or termination shall, without a Holder's
consent, alter or impair any of the rights or obligations under
any Option theretofore granted to such Holder under the Plan.
SECTION 10. General.
10.1 APPLICATION OF FUNDS. The proceeds received by the
Corporation from the sale of shares pursuant to Options shall be
used for general corporate purposes.
10.2 RIGHT OF THE CORPORATION AND AFFILIATES TO TERMINATE
EMPLOYMENT. Nothing contained in the Plan, or in any Agreement,
shall confer upon any Holder the right to continue in the employ
of the Corporation or any Affiliate, or interfere in any way with
the rights of the Corporation or any Affiliate to terminate his
or her employment any time.
10.3 AUTHORITY OF COMPENSATION COMMITTEE. In addition to its
authority expressed herein, the Compensation Committee shall have
full and absolute discretion to make determinations under the
Plan and any Agreement and to interpret the provisions of the
Plan and any Agreement.
10.4 NO LIABILITY FOR GOOD FAITH DETERMINATIONS. Neither the
members of the Board of Directors nor any member of the
Compensation Committee shall be liable for any act, omission, or
determination taken or made in good faith with respect to the
Plan or any Option granted under it, and members of the Board of
Directors and the Compensation Committee shall be entitled to
indemnification and reim-
10 of
<PAGE>
bursement by the Corporation in respect of any claim,
loss, damage, or expense (including attorneys' fees, the
costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the
Corporation, and amounts paid in satisfaction of a judgment,
except a judgment based on a finding of bad faith) arising
therefrom to the full extent permitted by law and under any
directors and officers liability or similar insurance coverage
that may from time to time be in effect.
10.5 INFORMATION CONFIDENTIAL. As partial consideration for
the granting of each Option hereunder, the Agreement may, in the
Compensation Committee's sole and absolute discretion, provide
that the Holder shall agree with the Corporation that he or she
will keep confidential all information and knowledge that he or
she has relating to the manner and amount of his or her
participation in the Plan; provided, however, that such
information may be disclosed as required by law and may be given
in confidence to the Holder's spouse, tax and financial advisors,
or to a financial institution to the extent that such information
is necessary to secure a loan. In the event any breach of this
promise comes to the attention of the Compensation Committee, it
shall take into consideration such breach, in determining whether
to recommend the grant of any future Option to such Holder, as a
factor mitigating against the advisability of granting any such
future Option to such individual.
10.6 OTHER BENEFITS. Participation in the Plan shall not
preclude the Holder from eligibility in any other stock option
plan of the Corporation or any Affiliate or any old age benefit,
insurance, pension, profit sharing, retirement, bonus, or other
extra compensation plans which the Corporation or any Affiliate
has adopted, or may, at any time, adopt for the benefit of its
employees.
10.7 EXECUTION OF RECEIPTS AND RELEASES. Any payment of cash
or any issuance or transfer of shares of Stock to the Holder, or to
his or her legal representative, heir, legatee, or distributee,
in accordance with the provisions hereof, shall, to the extent
thereof, be in full satisfaction of all claims of such persons
hereunder. The Compensation Committee may require any Holder,
legal representative, heir, legatee, or distributee, as a
condition precedent to such payment, to execute a release and
receipt therefor in such form as it shall determine.
10.8 NO GUARANTEE OF INTERESTS. Neither the Compensation
Committee nor the Corporation guarantees the Stock of the
Corporation from loss or depreciation.
10.9 PAYMENT OF EXPENSES. All expenses incident to the
administration, termination, or protection of the Plan,
including, but not limited to, legal and accounting fees, shall
be paid by the Corporation or its Affiliates; provided, however,
the Corporation or an Affiliate may recover any and all damages,
fees, expenses, and/or costs arising out of any actions taken by
the Corporation to enforce its rights hereunder.
10.10 CORPORATION RECORDS. Records of the Corporation or
its Affiliates regarding the Holder's period of employment,
termination of employment and the reason therefor, leaves of
absence, re-employment, and other matters shall be conclusive for
all purposes hereunder, unless determined by the Compensation
Committee to be incorrect.
10.11 INFORMATION. The Corporation and its Affiliates shall, upon
request or as may be specifically required hereunder, furnish or
cause to be furnished, all of the information or documentation
which is necessary or required by the Committee to perform its
duties and functions under the Plan.
10.12 NO LIABILITY OF CORPORATION. The Corporation assumes no
obligation or responsibility to the Holder or his or her legal
representatives, heirs, legatees, or distributees for any act of,
or failure to act on the part of, the Compensation Committee.
10.13 CORPORATION ACTION. Any action required of the Corporation
shall be by resolution of its Board of Directors, by a person
authorized to act by resolution of the Board of Directors, or by
a person authorized to act by the bylaws of the Corporation.
11 of
<PAGE>
10.14 SEVERABILITY. If any provision of this Plan is held to be
illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions hereof, but such
provision shall be fully severable and the Plan shall be
construed and enforced as if the illegal or invalid provision had
never been included herein.
10.15 NOTICES. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally
delivered or sent by mail or by a nationally recognized courier
service. Any notice required or permitted to be delivered
hereunder shall be deemed to be delivered on the date on which it
is personally delivered, or, if mailed, whether actually received
or not, on the third business day after it is deposited in the
United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address which
such person has previously specified by written notice delivered
in accordance herewith or, if by courier, 24 hours after it is
sent, addressed as described in this Section, or, if by facsimile
machine, the time mechanically recorded on the document by the
facsimile process. The Corporation or a Holder may change, at any
time and from time to time, by written notice to the other, the
address which it, he or she had previously specified for
receiving notices. Until changed in accordance herewith, the
Corporation and each Holder shall specify as its and his or her
address for receiving notices the address set forth in the
Agreement pertaining to the shares to which such notice relates.
10.16 WAIVER OF NOTICE. Any person entitled to notice hereunder
may waive such notice.
10.17 SUCCESSORS. The Plan shall be binding upon the Holder, his
or her legal representatives, heirs, legatees, and distributees,
upon the Corporation, its successors, and assigns, and upon the
Compensation Committee and its successors.
10.18 HEADINGS. The titles and headings of Sections and
Paragraphs are included for convenience of reference only and are
not to be considered in construction of the provisions hereof.
10.19 GOVERNING LAW. All questions arising with respect to the
provisions of the Plan shall be determined by application of the
laws of the State of Nevada except to the extent Nevada law is
preempted by federal law. Questions arising with respect to the
provisions of an Agreement that are matters of contract law shall
be governed by the laws of the state specified in the Agreement,
except to the extent preempted by federal law and except to the
extent that Nevada corporate law conflicts with the contract law
of such state, in which event Nevada corporate law shall govern.
The obligation of the Corporation to sell and deliver Stock
hereunder is subject to applicable laws and to the approval of
any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Stock.
10.20 WORD USAGE. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of this Plan
dictates, the plural shall be read as the singular and the
singular as the plural.
SECTION 11: Effective Date of Plan.
The Plan shall become effective and shall be deemed to have been
adopted on August 23, 1994. No Option shall be ghranted pursuant
to the Plan after August 23, 2004.
12 of
<PAGE>
Exhibit 4.2
INCENTIVE STOCK OPTION AGREEMENT
STERLING ELECTRONICS CORPORATION
THIS AGREEMENT is made and entered into as of this xxxx day of
xxxxx, xxxx, between STERLING ELECTRONICS CORPORATION, a Nevada
corporation (the "Company"), and xxxxxx xxx(the "Holder") in connection
with the grant of an Incentive Option (hereinafter defined), which
occurred on the xxxx day of xxxxx, xxxx, under the Sterling Electronics
Corporation 1994 Stock Option Plan (the "Plan").
W I T N E S S E T H :
WHEREAS, the Holder is employed by the Company or one of its
Affiliates (hereinafter defined) in a key position and the Company
desires to encourage him to own Stock (hereinafter defined) and to give
him added incentive to advance the interests of the Company through the
Plan and desires to grant the Holder an Incentive Option to purchase
shares of Stock of the Company under terms and conditions established by
the Board of Directors (hereinafter defined).
NOW, THEREFORE, in consideration of these premises, the parties
agree that the following shall constitute the Agreement between the
Company and the Holder:
DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings specified below:
"Affiliates" shall mean (a) any corporation, other than the
Company, in an unbroken chain of corporations ending with the Company if
each of the corporations, other than the Company, 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 and
(b) any corporation, other than the Company, in an unbroken chain of
corporations beginning with the Company if 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.
"Agreement" shall mean the written agreement between the
Company and a Holder evidencing the Option granted by the Corporation
and the understanding of the parties with respect thereto.
"Board of Directors" shall mean the board of directors of
the Company.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
<PAGE>
1.5 "Committee" shall mean the committee appointed by the Board
of Directors to administer this Plan.
1.6 "Eligible Individuals" shall mean key employees, including
officers and directors who are also employees of the Company or of any
of its Affiliates.
1.7 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.8 "Fair Market Value" shall mean the last reported sale price
on the New York Stock Exchange on the last business day prior to the
date in question.
For purposes of valuing Options, the Fair Market Value of Stock
shall be determined without regard to any restriction other than one
which, by its terms, will never lapse.
1.9 "Holder" shall mean an Eligible Individual to whom an Option
has been granted.
1.10 "Incentive Options" shall mean stock options that are
intended to satisfy the requirements of section 422 of the Code.
1.11 "Nonstatutory Options" shall mean stock options that are not
intended to satisfy the requirements of section 422 of the code.
1.12 "Options" shall mean either Incentive Options or
Nonstatutory Options, or both.
1.13 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.14 "Significant Affiliate" shall mean any Affiliate or
Affiliates which collectively account for 50% or greater of (i) the
total assets of the Company and all Affiliates or (ii) the total sales
of the Company and all Affiliates.
1.15 "Stock" shall mean the Company's authorized common stock,
$.50 par value, together with any other securities with respect to which
this Incentive Option may be exercisable.
<PAGE>
2. GRANT OF INCENTIVE OPTION. Subject to the terms and
conditions set forth herein, the Company grants to the Holder an
Incentive Option to purchase from the Company during the period ending
five (5) years from the date of said grant xxxxxx shares of Stock at a
price of $xxxxx per share, subject to adjustment as provided in Section
6.6 of the Plan. This Incentive Option is exercisable with respect to
the shares of Stock indicated as follows:
<TABLE>
<CAPTION>
<S> <C>
On and After Number of Shares
------------ ----------------
1 year after the xxxxx shares of Stock
grant date
2 years after the xxxxx additional shares of Stock
grant date
</TABLE>
3. NOTICE OF EXERCISE. This Incentive Option may be exercised
in whole or in part, from time to time, in accordance with Paragraph 2
by written notice to the Company, which notice shall:
(a) specify the number of shares of Stock to be purchased
and the exercise price to be paid therefor;
(b) if the person exercising this Incentive Option is not
the Holder himself, contain or be accompanied by evidence
satisfactory to the Committee of such person's right to exercise
this Incentive Option; and
(c) be accompanied by payment in full of the purchase
price in any form acceptable to the Committee in its sole
discretion, which form may include cash, shares of Stock or a
share or shares of Stock owned by the Holder and surrendered for
actual or deemed multiple exchanges of shares of Stock, or any
combination thereof.
<PAGE>
4. INVESTMENT LETTER. If required by the Committee, the Holder
agrees that the shares of Stock acquired on exercise of this Incentive
Option shall be acquired for his own account for investment only and not
with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act or
other applicable securities laws. If the Board of Directors or the
Committee so determines, any Stock certificates issued upon exercise of
this Incentive Option shall bear a legend to the effect that the shares
have been so acquired. The Company may, but in no event shall be
required to, bear any expenses of complying with the Securities Act,
other applicable securities laws or the rules and regulations of any
national securities exchange or other regulatory authority in connection
with the registration, qualification, or transfer, as the case may be,
of this Incentive Option or any shares of Stock acquired upon the
exercise thereof. The foregoing restrictions on the transfer of the
shares of Stock shall be inoperative if (a) the Company previously shall
have been furnished with an opinion of counsel, satisfactory to it, to
the effect that such transfer will not involve any violation of the
Securities Act or other applicable securities laws or (b) the shares of
Stock shall have been duly registered in compliance with the Securities
Act and other applicable securities laws. If this Incentive Option, or
the shares of Stock subject to this Incentive Option, are so registered
under the Securities Act, the Holder agrees that he will not make a
public offering of the said shares except on a national securities
exchange on which the Stock of the Company is then listed.
5. TRANSFER AND EXERCISE OF INCENTIVE OPTION. This Incentive
Option shall not be transferable except by will or by the laws of
descent and distribution. During the Holder's lifetime this Incentive
Option may be exercised only by him. No assignment or transfer of this
Incentive Option, whether voluntary or involuntary, by operation of law
or otherwise, except a transfer by will or by the laws of descent or
distribution, shall vest in the assignee or transferee any interest or
right whatsoever in this Incentive Option.
6. STATUS OF HOLDER. The Holder shall not be deemed a
shareholder of the Company with respect to any of the shares of Stock
subject to this Incentive Option, except to the extent that such shares
shall have been purchased and transferred to him. The Company shall not
be required to issue or transfer any certificates for shares of Stock
purchased upon exercise of this Incentive Option until all applicable
requirements of law have been complied with and, in the event that the
Stock is publicly traded, such shares shall have been duly listed on any
securities exchange on which the Stock may then be listed.
<PAGE>
7. NO EFFECT ON CAPITAL STRUCTURE. This Incentive Option shall
not affect the right of the Company or any Affiliate thereof to
reclassify, recapitalize or otherwise change its capital or debt
structure or to merge, consolidate, convey any or all of its assets,
dissolve, liquidate, windup, or otherwise reorganize.
8. PREMATURE EXPIRATION OF INCENTIVE OPTION. If the Holder
ceases to be an employee of the Company or one of its Affiliates prior
to its expiration, then this Incentive Option shall terminate as
provided in the Plan.
9. COMMITTEE AUTHORITY. Any question concerning the
interpretation of this Agreement, any adjustments required to be made
under Paragraph 6.6 of the Plan, and any controversy which may arise
under this Agreement shall be determined by the Committee in its sole
discretion.
10. NOTICE OF DISQUALIFYING DISPOSITION. In order to enable the
Company to avail itself of any income tax deduction to which it may be
entitled, the Holder shall notify the Company of his intent to dispose
of any of the shares of Stock purchased pursuant to this Incentive
Option within two (2) years from the date of the grant of the Incentive
Option and one (1) year from the date of transfer of any such shares of
Stock to the Holder, and promptly after such disposition the Holder
shall notify the Company of the number of shares of Stock disposed of,
the dates of acquisition and disposition of such shares, and the
consideration, if any, received on such disposition. Nothing in this
Paragraph 10, however, shall give the Holder any right to dispose of
shares that is inconsistent with any provision of the Plan or this
Agreement or any stock transfer restriction agreement entered into by
the Holder. If in connection with any such disposition the Company
becomes liable for withholding taxes and has no amounts owing the Holder
with which to discharge its withholding obligation, the Holder shall
provide the Company with the amount needed to discharge the Company's
withholding obligation and shall indemnify the Company against any
penalties it may incur through its inability to apply amounts owing the
Holder in discharge of its withholding obligation.
11. INCENTIVE OPTION QUALIFICATION. This Incentive Option is
intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Code, and shall be so construed; provided, however,
that nothing in this Agreement shall be interpreted as a representation,
guarantee or other undertaking on the part of the Company that this
Incentive Option is or will be determined to be an "incentive stock
option" within such Section or any other Section of the Code.
12. PLAN CONTROLS. The terms of this Agreement are governed by
the terms of the Plan, which is made a part hereof as if fully set forth
herein, and in the case of any inconsistency between the terms of this
Agreement and the terms of the Plan, the terms of the Plan shall
control.
13. SALE OF ADDITIONAL SHARES OF COMMON STOCK. The Company agrees
that if and whenever during the term of this Agreement, and prior to the
exercise of this Incentive
<PAGE>
Option as to all shares subject hereto, the Company (a) shall offer for
sale to holders of its Common Stock shares of Common Stock or of other
classes of stock or other securities of the Company, or (b) in connection
with any transaction shall acquire or shall cause to be issued rights to
acquire shares of stock or other securities of another corporation for the
benefit of or to the holders of Common Stock of the Company, the Company will
give written notice to Holder of the rights which are thus to be acquired or
issued for the benefit of or to the holders of Common Stock of the Company in
sufficient time to permit Holder to exercise this Incentive Option if
Holder should elect to do so and to permit Holder to participate in such
rights as a holder in such Common Stock of the Company.
14. MERGERS. In the event the Company proposes to merge or
consolidate with another corporation or to sell or dispose of its
properties, assets and business or to dissolve, the Company will give
written notice thereof to Holder in sufficient time to permit Holder to
exercise this Incentive Option, if Holder should elect to do so and
participate in such transaction as a stockholder of the Company;
provided, however, in connection with any merger or consolidation or
other transaction under which the Company or its holders of shares of
Common Stock will acquire stock or other securities of the continuing,
resulting or another corporation in exchange for their shares of Common
Stock, provision shall be made for the reservation for and issuance upon
exercise by Holder of Holder's pro rata number of shares or other
securities (on the basis of the number of shares of Common Stock as to
which this Incentive Option remains at the time unexercised), at the
same aggregate purchase price provided for in this Agreement, the price
per unit to be adjusted upward or downward, according to the increase or
decrease of the number of units involved.
15. CHANGE OF CONTROL. In the event of a Change of Control
Transaction (as herein defined), all outstanding Options granted under
the Plan will vest immediately upon any such Change of Control
Transaction involving the Corporation. A Change of Control Transaction
is (i) the dissolution of the Corporation or any Significant Affiliate,
(ii) a liquidation of more than 50 percent in value of the Corporation
or any Significant Affiliate, (iii) a sale of assets involving 50
percent or more of the value of the assets of the Corporation or any
Significant Affiliate prior to such sale, (iv) any merger or
reorganization or consolidation of the Corporation in which the
Corporation is not the surviving entity, (v) any merger or
reorganization or consolidation of any Significant Affiliate in which
the Significant Affiliate is not the surviving entity (other than a
merger or reorganization or consolidation with the Corporation or any
entity controlled by the Corporation), (vi) any sale or the disposition
of more than 50 percent of the combined voting securities of the
Corporation outstanding prior to the transaction hold, as a group, less
than 50 percent of the combined voting power of the Corporation or any
successor company outstanding after the transaction.
16. GOVERNING LAW. Where applicable, the provisions of this
Agreement shall be governed by the contract law of the State of Texas.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Holder has hereunto set his hand on the day and year
first above written.
STERLING ELECTRONICS CORPORATION
By:_________________________________
Ronald S. Spolane
Chairman of the Board of Directors
HOLDER
_____________________________________
xxxxxx xxx
<PAGE>
SCHLANGER, MILLS, MAYER & GROSSBERG, L.L.P.
[LETTERHEAD]
June 28, 1995
3097-09175
Sterling Electronics Corp.
4201 Southwest Freeway
Houston, Texas 77027
Ladies and Gentlemen:
We have acted as counsel to Sterling Electronics Corp., a
Nevada corporation (the "Company"), with respect to the Company's
Registration Statement on Form S-8 (the "Registration Statement")
relating to the registration under the Securities Act of 1933, as
amended, of up to 500,000 shares of Common Stock, $0.50 par value
per share (the "Common Stock") of the Company pursuant to the
Company's 1994 Stock Option Plan (the "1994 Plan").
We have examined copies of the Amended and Restated Articles
of Incorporation and the Restated Bylaws of the Company as
amended and corrected and restated to date. We have examined the
1994 Plan, the Registration Statement and records of corporate
proceedings of the Company.
Based upon the foregoing and the matters hereinafter
referred to, and having due regard for the legal considerations
we deem relevant, we are of the opinion that, subject to the
limitations set forth below:
(a) The shares of Common Stock to be issued upon the
exercise of the options granted pursuant to either the 1994
Plan (the "Plan Shares") are duly and validly authorized;
and
(b) When the Plan Shares have been duly delivered
against payment therefor as contemplated by the applicable
Option Agreement issued pursuant to 1994 Plan, the Plan
Shares will be legally issued, fully paid and nonassessable.
The opinions expressed above are subject to the following
assumptions, qualifications and limitations:
(a) We assume (i) all signatures not witnessed by us
are genuine, (ii) the competency of all persons other than
the Company executing such documents, (iii) all documents
submitted to us as originals are authentic, and (iv) all
documents submitted to us as copies are accurate and
complete copies of the originals thereof.
<PAGE>
Sterling Electronics Corp.
June 28, 1995
Page 2
(b) This opinion is limited to the matters expressly
set forth herein, and no opinion is to be implied or may be
inferred beyond the matters expressly so stated.
(c) The opinions expressed herein are limited to the
laws of the State of Texas and applicable federal law. We
have assumed for the purposes of this opinion that the
corporate laws of the state of Nevada are the same as the
corporate laws of the State of Texas.
David Toomim, who is Of Counsel to this firm, is a
stockholder and director of the Company. We hereby consent to
the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
SCHLANGER, MILLS, MAYER & GROSSBERG, L.L.P.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the registration of 500,000 shares of common stock for
issuance under the Sterling Electronics Corporation 1994 Stock Option Plan of
our report dated May 8, 1995, with respect to the consolidated financial
statements of Sterling Electronics Corporation, and our report dated June 27,
1995 with respect to the financial statement schedule of Sterling Electronics
Corporation, included or incorporated by reference in its Annual Report (Form
10-K) for the fiscal year ended April 1, 1995 filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Houston, Texas
June 27, 1995
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
WHEREAS, Sterling Electronics Corporation, a Nevada corporation
(the "Company"), intends to file with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended (the "Act"), a
Registration Statement on Form S-8 (the "Registration Statement"), including
any amendments thereto as may be required by the SEC pursuant to the Act and
the rules and regulations of the SEC promulgated thereunder, along with any
and all exhibits and other documents having relation thereto, which filing
will be in connection with the registration of approximately 500,000 shares
of Common Stock, par value $0.50 per share, of the Company for issuance to
certain employees and directors of the Company pursuant to the Sterling
Electronics Corporation 1994 Stock Option Plan.
NOW THEREFORE, the undersigned, in their capacities as directors or
officers or both, as the case may be, of the Company, do hereby appoint
Messrs. Ronald S. Spolane and Mac McConnell, or either of them severally,
their true and lawful attorney or attorneys, with power to act with or
without the other and with full power of substitution and resubstitution, to
execute in the name, place, and stead in the capacity as a director, officer,
or both, as the case may be, of the Company, the Registration Statement and
any and all amendments to such Registration Statement, and all instruments
necessary of incidental in connection therewith and to file the same with the
SEC. Each of the attorneys shall have full power and authority to do and
perform in the name and on behalf of the undersigned in any and all
capacities every act whatsoever necessary or desirable to be done in the
premises as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned have executed this instrument
in multiple original counterparts as of the 27th day of June, 1995.
LEON WEBB, JR. HERSCHEL G. MALTZ
- --------------------- ----------------------
Leon Webb, Jr. Herschel G. Maltz
S.M. LAMBERT, PH.D. DAVID A. SPOLANE
- --------------------- ----------------------
S. M. Lambert, Ph. D. David A. Spolane
DAVID R. TOOMIM RONALD S. SPOLANE
- --------------------- ----------------------
David R. Toomim Ronald S. Spolane
MAC MCCONNELL JAY H. GOLDING
- --------------------- ----------------------
Mac McConnell Jay H. Golding
