-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KiTlXeC0t7dLmcrJZ+xfvATO9xSGBx/qrxZ6J9T/6L62YL/R672Dca71At1Cw4QC ZZO8eKA0tTwWGid0i8mTTw== 0000052971-98-000013.txt : 19980413 0000052971-98-000013.hdr.sgml : 19980413 ACCESSION NUMBER: 0000052971-98-000013 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980410 EFFECTIVENESS DATE: 19980410 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACO ELECTRONICS INC CENTRAL INDEX KEY: 0000052971 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 111978958 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-49877 FILM NUMBER: 98591526 BUSINESS ADDRESS: STREET 1: 145 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5162735500 MAIL ADDRESS: STREET 1: 145 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 S-8 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on April 10, 1998 Registration No. 333-____ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8/S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 JACO ELECTRONICS, INC. (Exact name of registrant as specified in its charter) New York (State or other jurisdiction of incorporation or organization) 11-1978958 (I.R.S. Employer Identification No.) 145 Oser Avenue, Hauppauge, New York 11788 (Address of Principal Executive Offices, including zip code) Jaco Electronics, Inc. Restricted Stock Plan Stock Options Agreement of Joseph F. Hickey, Jr. (Full Title of the Plan) Joel H. Girsky Copy to: President Michael R. Reiner, Esq. Jaco Electronics, Inc. Morrison Cohen Singer & Weinstein, LLP 145 Oser Avenue 750 Lexington Avenue Hauppauge, NY 11788 New York, NY 10022 (516) 273-5500 (212) 735-8600 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plan(s) described herein. CALCULATION OF REGISTRATION FEE
Title of Each Class of Amount to be Proposed Maximum Offering Proposed Maximum Amount of Securities to be Registered Registered (1) Price per Share Aggregate Offering Price Registration Fee ================================== ================ ============================== ========================= ================== Common Stock, $.10 par value 300,000 $6.888 (2) $2,006,400 $591.89 ------------------ Common Stock, $.10 par value 10,000 $7.00 $ 70,000 $ 20.65 Total ........................................................................ $612.54
(1) This Registration Statement also includes an indeterminable number of shares of Common Stock which may be issued under the antidilution provisions of the plans. (2) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended, and constitutes the average of the bid and asked price of the Common Stock as reported on the Nasdaq National Market on April 10,1998. EXPLANATORY NOTE This Registration Statement on Form S-8/S-3 contains two parts. The first part contains a prospectus pursuant to Form S-3 (in accordance with Section C of the General Instructions to Form S-8) which covers reoffers and resales of control securities and restricted securities of the Registrant which have been issued or which shall be issued pursuant to the Jaco Electronics, Inc. Restricted Stock Plan and the Stock Option Agreement of Joseph F. Hickey, Jr. The second part contains Information Required in the Registration Statement pursuant to Part II of Form S-8 and certain items from Information Not Required in the Prospectus pursuant to Part II of Form S-3. Pursuant to the Note to Part I of Form S-8, the Plan Information specified by Part I is not being filed with the Securities and Exchange Commission. ii PROSPECTUS JACO ELECTRONICS, INC. 75,000 Shares of Common Stock (Par Value $0.10 Per Share) This Prospectus relates to 75,000 shares (the "Shares") of common stock, par value $0.10 per share (the "Common Stock"), of Jaco Electronics, Inc., a New York corporation (the "Company" or "Jaco"), which may be sold from time to time by the selling shareholders named herein (the "Selling Shareholders"). Of the Shares, 10,000 are issuable to one Selling Shareholder pursuant to options (the "Options") granted under a certain stock option agreement between the Company and the Selling Shareholder, and 65,000 have been issued to the Selling Shareholders pursuant to the Jaco Electronics, Inc. Restricted Stock Plan (the "Restricted Stock Plan"). The Company will receive $7.00 for each Share issued upon the exercise of the Options and has received $1.00 for each of the 90,000 Shares issued to date under the Restricted Stock Plan (including the 65,000 Shares issued to the Selling Shareholders). The purchase price of the remaining Shares under the Restricted Stock Plan shall be determined by the Board of Directors. The Company will not receive any of the proceeds from the sale of the Shares by the Selling Shareholders. All expenses of registration incurred in connection with this offering are being borne by the Company; all selling and other expenses incurred by the Selling Shareholders in connection with the sale of the Shares will be borne by the Selling Shareholders. The Company is not aware of any underwriting arrangements with respect to the sale of any of the Shares by the Selling Shareholders. The Shares may be offered by or for the account of the Selling Shareholders, from time to time, on the NASDAQ National Market or on any stock exchange on which the Shares may be listed at the time of sale, in negotiated transactions, or through a combination of such methods of sale, at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Shares to or through broker-dealers who may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of the Shares (which compensation as to a particular broker-dealer might be in excess of customary commissions). Any broker-dealer acquiring Shares from a Selling Shareholder may sell such Shares in its normal market making activities, through other brokers on a principal or agency basis, in negotiated transactions, or through a combination of such methods. See "Selling Shareholders" and "Plan of Distribution." The Common Stock is traded in the NASDAQ National Market under the symbol "JACO". On April 6, 1998 the closing price of the Common Stock was $6.75 per share. ------------------------ The Common Stock offered hereby involves a high degree of risk. See "Risk Factors" commencing on page 5 hereof. ------------------------ 1 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. No person has been authorized to give any information or to make any representation other than as contained or incorporated by reference in this Prospectus, and any information or representation not contained or incorporated by reference herein should not be relied upon as having been authorized by the Company. This Prospectus does not constitute an offer of any securities other than those described on the cover page or an offer to sell or a solicitation of an offer to buy the Shares in any State or other jurisdiction where, or to any person to whom, it is unlawful to make such offer. Neither the delivery of this Prospectus nor any sales made hereunder, under any circumstances, shall create any implication that there has been no change in the affairs of the Company between the date hereof and the date of any such sale. The date of this Prospectus is April 10, 1998. 2 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information may be inspected and copies may be obtained at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices of the Commission at Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such information may also be obtained by mail from the Public Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The Commission's web site can be accessed at http://www.sec.gov. Any such reports, proxy statements and other information filed or to be filed by the Company may also be inspected at the offices of the National Association of Securities Dealers, Inc., Market Listing Section, 1735 K Street, N.W., Washington, D.C. 20006. The Common Stock is traded on NASDAQ/NMS, and the Company's reports (and proxy and information statements when filed) may be inspected at the offices of The Nasdaq Stock Market, Inc., located at 1735 K Street, N.W., Washington, D.C. 20006. A Registration Statement on Form S-8/S-3, together with all amendments, exhibits and documents incorporated therein by reference (the "Registration Statement") has been filed with the Commission under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Shares offered by this Prospectus. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Statements made in this Prospectus as to the contents of any contract, agreement, exhibit or other document referred to herein are not necessarily complete, and each statement is qualified in all respects by reference to the copies of documents filed or incorporated by reference as an exhibit to the Registration Statement or otherwise filed with the Commission. See also "Incorporation of Certain Documents by Reference." The Company intends to furnish to holders of Common Stock for each fiscal year an annual report which contains consolidated financial statements prepared in accordance with United States generally accepted accounting principles and audited and reported on, with an opinion expressed by, an independent public accounting firm, and such other reports as may be required by law. 3 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents (or parts thereof) filed by the Company with the Commission are incorporated by reference in this Prospectus: 1. The Annual Report on Form 10-K for the fiscal year ended June 30, 1997; 2. The Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 1997 and December 31, 1997; 3. Definitive Proxy Statement, dated November 3, 1997 for the Annual Meeting of Shareholders held on December 9, 1997; 4. All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report referred to in (1) above; and 5. The description of the Common Stock contained in the Company's registration statement filed under the Exchange Act registering such Common Stock under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this Prospectus and prior to the filing of a post-effective amendment indicating that all of the Shares have been sold, or deregistering all of the Shares that, at the time of such post-effective amendment, remain unsold, shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in any document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document, which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company shall furnish without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the documents which are incorporated by reference herein (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents). Written or telephone requests for such documents should be directed to Mr. Jeffrey Gash, Vice President-Finance, Jaco Electronics, Inc., 145 Oser Avenue, Hauppauge, New York 11788. The Company's telephone number is (516) 273-5500. 4 RISK FACTORS Investors should be aware that ownership of the Common Stock of the Company involves certain risks, including those described below, which could adversely affect the value of their holdings of Common Stock. The Company does not make, nor has it authorized any other person to make, any representation about the future market value of the Company's Common Stock. Portions of this Prospectus contain certain "forward looking" statements which involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward looking statements. Although the Company believes that the assumptions underlying the forward looking statements contained herein are reasonable, any of the assumptions could prove inaccurate, and therefore, there can be no assurance that the forward looking statements included herein will prove to be accurate. In addition to the other information contained in this Prospectus, the following factors should be considered carefully in evaluating an investment in the Shares offered hereby. Dependence on Suppliers. Substantially all of the Company's inventory has and will be purchased from suppliers with which the Company has entered into non-exclusive distributor agreements. Such agreements are typically cancelable on short notice. These agreements are generally designed to protect the Company against product obsolescence and price. Currently, the Company has non-exclusive distribution agreements with many manufacturers. However, there can be no assurance that these distribution agreements will not be canceled. In the fiscal year ended June 30, 1997, of the Company's top ten suppliers, only Kemet Electronics Corporation accounted for more than 10% of net sales and the remaining nine each accounted for between 9.5% and 2.0% of net sales. No other supplier accounted for more than 1% of net sales. While the Company does not believe that the loss of any one supplier would have a material adverse impact upon the Company, the Company's future success will depend in large part on maintaining relationships with existing suppliers and developing relationships with new ones. The loss of, or significant disruptions in, relationships with major suppliers could have a material adverse effect on the Company's business, since there can be no assurance that the Company will be able to replace lost suppliers. As is common in the electronics distribution industry, from time to time the Company has experienced terminations of relationships with suppliers which affected its results of operations in post-termination fiscal periods. At various times, there have been shortages of components in the electronics industry and certain components, including certain semiconductor devices and capacitors, have been subject to limited allocation by some of the Company's suppliers. Although such shortages and allocations have not had a material adverse effect on the Company's results of operations or finances, there can be no assurance that future shortages or allocations would not have such an effect on the Company. Competition. The electronics distribution industry is highly competitive, primarily with respect to price and product availability. The Company competes with large national distributors as well as regional and specialty distributors, many of whom distribute the same or competitive 5 products. Some of the Company's competitors have significantly greater name recognition and greater financial and other resources than those of the Company. There can be no assurance that the Company will continue to compete successfully with existing or new competitors and failure to do so would have a material adverse effect on the Company's operating results. In addition, the printed circuit boards ("PCB") contract manufacturing industry is highly fragmented and is characterized by relatively high levels of volatility, competition and pricing and margin pressure. As a turnkey contract manufacturer of PCBs, the Company procures the required raw materials and components, manages the assembly and test operations, and supplies the PCBs in accordance with the customer's delivery schedule and quality requirements for the finished product. The Company believes that contract manufacturers which are affiliated or integrated with electronics distributors have competitive advantages over comparably-sized, stand-alone contract manufacturers. However, there can be no assurance that the Company will be able to maintain its current customers or obtain new customers in such a volatile industry or that the Company will be able to obtain sufficient raw materials to meet its customers' needs. Dependence on Key Personnel. The Company is highly dependent upon the services of its executive officers, including Joel H. Girsky, its Chairman, President and Treasurer, and Charles B. Girsky, its Executive Vice President and Director. The loss of the services of either Joel or Charles Girsky, or one or more of the Company's other key executives, could have a material adverse effect upon the business of the Company. While the Company believes that it would be able to locate suitable replacements for its executives if their services were lost, there can be no assurance that it would be able to do so. The Company's future success will also depend in part upon its continuing ability to attract and retain highly qualified personnel. Uncertainty of Future Acquisitions. The Company's continued growth depends, in part, upon its ability to identify and acquire compatible electronics distributors and/or contract manufacturers and to integrate the acquired operations. Although the Company has been successful in the past with its acquisitions, there can be no assurance that the Company will be able to locate additional appropriate acquisition candidates or, if identified, any of such candidates will be acquired or that the operations of acquired candidates will be effectively integrated or prove profitable. The completion of future acquisitions will require the expenditure of significant amounts of capital and management effort. Moreover, unexpected problems encountered in connection with the Company's acquisitions could have a material adverse effect on the Company. Foreign Manufacturing and Trade Regulation. A significant number of the components sold by the Company are manufactured by foreign manufacturers. As a result, the Company, and its ability to sell certain products at competitive prices, could be adversely affected by increases in tariffs or duties, changes in trade treaties, strikes or delays in air or sea transportation, and possible future United States legislation with respect to pricing and/or import quotas on products from foreign countries. The supply of components to the Company from its Asian manufacturers could also be affected by the recent volatility of the Asian financial markets. The Company's ability to be competitive with respect to sales of imported components could be affected by other governmental 6 actions and policy changes relating to, among other things, anti-dumping and other international antitrust legislation and adverse currency fluctuations which could have the effect of making components manufactured abroad more expensive. Because the Company purchases products from United States subsidiaries or affiliates of foreign manufacturers, the Company's purchases are paid for in U.S. dollars, which usually reduces or eliminates the potential adverse effects of currency fluctuations. While the Company does not believe that the factors involving foreign components supply have not adversely impacted its business in the past, there can be no assurance that such factors will not materially adversely affect its business in the future. Industry Cyclicality and Potential Quarterly Fluctuations. The electronics distribution industry has historically been affected historically by general economic downturns, which have had an adverse economic effect upon manufacturers, end-users of electronic components and electronic component distributors such as the Company. In addition, the life-cycle of existing electronic products and the timing of new product development and introduction can affect demand for electronic components. The Company's results of operations for any particular period may be adversely affected by numerous factors, such as the loss of key suppliers or customers, price competition, problems incurred in managing inventories or receivables, the timing or cancellation of orders from major customers, the timing or cancellation or purchase orders with suppliers and the timing of expenditures in anticipation of increased sales and customer product delivery requirements. Price competition in the industries in which the Company competes is intense and could result in gross margin declines, which could have an adverse impact on the Company's profitability. In various periods in the past, the Company's operating results have been affected by all of these factors. Continued Control By Present Shareholders and Management. Prior to the offering, upon exercise of all stock options held by Messrs. Joel H. Girsky and Charles B. Girsky, whether or not such options are currently exercisable, they will own an aggregate of 872,513 shares of Common Stock. Together, they will own and control approximately 21.8% of the outstanding capital stock of the Company. Upon completion of the offering, assuming that Messrs. Joel H. Girsky and Charles B. Girsky sell their Shares, they would own approximately 21.3% of the outstanding capital stock of the Company. As a result of such stock ownership and their positions as executive officers and directors, the Girskys may be in a position to influence both the election of the Board of Directors and the day-to-day affairs of the Company. Shares Eligible for Future Sale. As of the date of this Prospectus, a total of approximately 1,007,265 shares of Common Stock are held by executive officers and/or directors of the Company, including shares issuable upon exercise of options and warrants, whether or not such options and warrants are currently exercisable. As of the date of this Prospectus, a total of approximately 694,735 shares are currently saleable pursuant to Rule 144 promulgated under the Securities Act. In general, Rule 144 provides that any person holding restricted securities for a minimum of one year, which securities were acquired from the issuer or from an affiliate of the issuer, may sell every three months an amount of securities equal to the greater of 1% of the Company's outstanding shares of Common Stock or the average weekly reported volume of trading in such shares on all national 7 securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the filing of the notice of proposed sale. Non-affiliates holding such restricted shares may sell such shares after two years without regard to this volume limitation. The possibility of such sales under Rule 144 could have an adverse effect upon the market price of the Common Stock. In addition, the Company has registered the sale of an aggregate of 746,667 shares of Common Stock issuable upon exercise of options authorized under its 1993 Non-Qualified Stock Option Plan (the "1993 Non-Qualified Plan") and its 1993 Stock Option Plan for Outside Directors on a registration statement on Form S-8. The sale of such shares could also have an adverse effect upon the market price of the Common Stock. Dividends. On March 10, 1995, the Company paid a 10% stock dividend in shares of Common Stock to holders of record as of February 16, 1995. The Company has not paid any cash dividends on its Common Stock and does not anticipate paying dividends on its shares in the foreseeable future, inasmuch as it expects to employ all available cash in the continued growth of its business. Further, the Company's agreement with its lenders prohibits payment of cash dividends. Possible Volatility of Stock Price. The market price of the Common Stock could be subject to significant fluctuations in response to such factors as, among others, variations in the anticipated or actual results of operations of the Company or of other distributors in the electronics industry and changes in conditions affecting the economy generally, the financial markets or the electronics distribution industry. Furthermore, the relatively light trading volume in the Common Stock may exacerbate such volatility. USE OF PROCEEDS The Company will not realize any proceeds from the sale of the Shares which may be sold pursuant to this Prospectus for the respective accounts of each of the Selling Shareholders. The Company, however, will derive proceeds of approximately $70,000 if all of the Options are exercised and has received $1.00 for each of the 90,000 Shares issued to date under the Plan (including the 75,000 Shares issued to the Selling Stockholders). Such proceeds will be available to the Company for working capital and general corporate purposes. No assurance can be given, however, as to when or if any or all of the Options will be exercised. See "Selling Shareholders" and "Plan of Distribution." 8 SELLING SHAREHOLDERS Identity of Selling Shareholders; Number of Shares Offered The following table sets forth (i) the name of each Selling Shareholder, (ii) the nature of any position, office, or other material relationship which each such Selling Shareholder has had with the Company or any of its affiliates within the last three years, (iii) the number of shares of Common Stock owned by each such Selling Shareholder prior to the offering, (iv) the number of shares of Common Stock offered for each such Selling Shareholder's account, and (v) the number of shares of Common Stock and the percentage owned by each such Selling Shareholder after completion of the offering, assuming all Shares offered pursuant to this Prospectus are sold.
Number of Shares Number of Shares Percentage Owned Prior to Offered for Account Owned After Selling Shareholder Relationship to Company Offering (1) of Selling Shareholder Offering (2) - ------------------- ----------------------- -------------- ---------------------- ------------- Joel H. Girsky President, Treasurer and Director 561,739 (3) 25,000 13.8% Charles B. Girsky Executive Vice President and Director 310,774 (4) 25,000 7.3% Joseph F. Hickey, Jr. Director 31,433 (5) 10,000 * Jeffrey D. Gash Vice President, Finance 29,565 (6) 10,000 * Herbert Entenberg Vice President of Management and Information Systems, and Secretary 16,167 (7) 5,000 * ------- 75,000
* Less than 1% (1) Includes all shares of Common Stock which may be acquired by such Selling Shareholder upon the exercise of stock options whether or not presently exercisable. (2) Based upon (i) 3,866,221 shares of Common Stock outstanding as of the date of this Prospectus and (ii) as to each Selling Shareholder, the number of shares of Common Stock that may be acquired by such Selling Shareholder upon the exercise of options whether or not presently exercisable. Excludes 199,500 shares of treasury stock. (3) Includes (i) 96,799 shares of Common Stock which may be acquired upon the exercise of options granted under the Company's 1993 NonQualified Plan and (ii) 25,000 shares of Common Stock issued or issuable to Mr. Girsky pursuant to the Jaco Electronics, Inc. Restricted Stock Plan (the "Restricted Stock Plan"). (4) Includes (i) 242,077 shares of Common Stock owned by the Girsky Family Trust (ii) 40,000 shares of Common Stock which may be acquired upon the exercise of options granted under the Company's 1993 Non-Qualified Plan and (iii) 25,000 shares of Common Stock issued or issuable to Mr. Girsky pursuant to the Restricted Stock Plan. (5) Includes (i) 1,000 shares of Common Stock, (ii) 17,500 shares of Common Stock which may be acquired by Cleary Gull Reiland and McDevitt, Inc., the underwriters for the Company's 1995 public offering, upon the exercise of warrants granted to it by the Company, (iii) 10,000 shares of Common Stock which may be acquired upon the exercise of non-qualified stock options granted to Mr. Hickey by the Company and (iv) 2,933 shares of Common Stock which may be acquired upon the exercise of options granted under the Company's 1993 Stock Option Plan for Outside Directors. The reporting person disclaims beneficial ownership of the shares of Common Stock which may be acquired upon the exercise of the warrants, except to the extent of his pecuniary interest therein. 9 (6) Includes (i) 19,033 shares of Common Stock which may be acquired upon the exercise of options granted under the Company's 1993 NonQualified Plan and (ii) 10,000 shares of Common Stock issued or issuable to Mr. Gash pursuant to the Restricted Stock Plan. (7) Includes (i) 11,167 shares of Common Stock which may be acquired upon the exercise of options granted under the Company's 1993 NonQualified Plan and (ii) 5,000 shares of Common Stock issued or issuable to Mr. Entenberg pursuant to the Restricted Stock Plan. Joel H. Girsky has been a Director and executive officer of the Company since it was founded in 1961. He also is a director of Nastech Pharmaceutical Company, Inc. of Hauppauge, New York, and Frequency Electronics, Inc. of Uniondale, New York. Messrs. Joel H. Girsky and Charles B. Girsky are brothers. Charles B. Girsky became an executive officer of the Company on August 2, 1985 and has been its Executive Vice President since January 1988. Since April 9, 1984, he has been President of Distel, Inc., a wholly-owned subsidiary of the Company since August, 1985. He was a founder, Director, and the President of the Company from 1961 through January, 1983, and was elected a Director of the Company again in 1986. Messrs. Charles B. Girsky and Joel H. Girsky are brothers. Stephen A. Cohen has been a Director of the Company since 1970. Since August, 1989, he has practiced law as a member of Morrison Cohen Singer & Weinstein, LLP, general counsel to the Company. Edward M. Frankel became a Director of the Company in May, 1984. For more than five years, he has been President of Vitaquest International, Inc., a distributor of vitamins and health and beauty products, and its predecessor entities. Joseph F. Hickey, Jr. became a Director of the Company on May 28, 1997. Since February 1, 1991, he has been employed by Cleary Gull Reiland and McDevitt Inc., an investment banking firm located in Milwaukee, Wisconsin. He is serving as a managing director of Cleary Gull Reiland and McDevitt Inc.'s syndication department. Jeffrey D. Gash became Vice President of Finance of the Company in January, 1989, and was Controller of the Company for more than five years prior thereto. He has also served in similar capacities with the Company's subsidiaries. Herbert Entenberg has served as Vice President of Management and Information Systems, and Secretary since 1988. Mr. Entenberg oversees management information systems and operations of the Company and is responsible for developing and implementing the Company's inventory control system. PLAN OF DISTRIBUTION The sales of the Shares by the Selling Shareholders may be effected, from time to time, on the NASDAQ National Market System or on any stock exchange on which the Shares may be listed 10 at the time of sale, in negotiated transactions, or through a combination of such methods of sale, at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, or at negotiated prices. The Selling Shareholders may effect such transactions by selling Shares to or through broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of Shares (which compensation as to a particular broker-dealer might be in excess of customary commissions). The Selling Shareholders and any broker-dealers that act in connection with the sale of the Shares hereunder might be deemed to be "Underwriters" within the meaning of Section 2(11) of the Securities Act; any commissions received by them and any profit on the resale of Shares as principal might be deemed to be underwriting compensation under the Securities Act. Any broker-dealer acquiring shares from a Selling Shareholder may sell the Shares either directly, in its normal market-making activities, through or to other brokers on a principal or agency basis, or to its customers. Any such sales may be at prices then prevailing on the NASDAQ National Market System, at prices related to such prevailing market prices, at negotiated prices, or a combination of such methods. The Company has advised the Selling Shareholders that anti-manipulative Regulation M under the Exchange Act may apply to their sales in the market, has furnished the Selling Shareholders with a copy of Regulation M and has informed the Selling Shareholders of the possible need for them to deliver copies of this Prospectus. The Selling Shareholders may indemnify any broker-dealer that participates in transactions involving the sale of the Shares against certain liabilities, including liabilities arising under the Securities Act. Any commissions paid or any discounts or concessions allowed to any such broker-dealers, and, if any such broker-dealers purchase Shares as principal, any profits received on the resale of such Shares, may be deemed to underwriting discounts and commissions under the Securities Act. Upon the Company's being notified by any Selling Shareholder that any material arrangement has been entered into with a broker-dealer for the sale of Shares through a cross or block trade, a supplemental prospectus will be filed pursuant to Rule 424(c) under the Securities Act, setting forth the name of the participating broker-dealer(s), the number of Shares involved, the price at which such Shares were sold by the Selling Shareholder, the commission paid or discounts or concessions allowed by the Selling Shareholder to such broker-dealer(s), and where applicable, that such broker-dealer(s) did not conduct any investigation to verify the information set forth in this Prospectus. Any Shares which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under that Rule rather than pursuant to this Prospectus. There can be no assurances that the Selling Shareholders will sell any or all of the Shares offered by them hereunder. 11 All expenses of the registration of the Shares will be paid for by the Company. LEGAL MATTERS The legality of the Shares offered by this Prospectus has been passed upon for the Company by Morrison Cohen Singer & Weinstein, LLP, 750 Lexington Avenue, New York, New York 10022. EXPERTS The consolidated financial statements and schedules of the Company as of June 30, 1997 and 1996, and for each of the years in the three-year period ended June 30, 1997, have been incorporated by reference herein and in the Registration Statement in reliance upon the report of Grant Thornton LLP, independent certified public accountants, and upon the authority of said firm as experts in accounting and auditing. INDEMNIFICATION Sections 721 to 725 of the New York Business Corporation Law ("NYBCL") permit indemnification of directors, officers, and employees of corporations under certain circumstances and subject to certain limitations. Section 726 of the NYBCL permits the purchase of insurance to indemnify the corporation and its officers and directors, subject to certain limitations. Section 402(b) of the NYBCL permits the inclusion of a provision in the certificate of incorporation of a corporation eliminating or limiting the personal liability of directors to the corporation or its shareholders for damages for any breach of duty in such capacity, subject to certain limitations. Article VI, Section 1 of the Company's By-laws, as amended through June 18, 1987, provides that the Company shall indemnify each director and officer of the Company elected, appointed, or continuing to serve after the adoption of Article VI of the By-laws, and may indemnify all other persons whom the Company is authorized to indemnify under the provisions of the NYBCL, to the fullest extent permitted by law, against all legal, accounting, and other expenses and liabilities incurred in connection with any pending or threatened action, suit, or proceeding, civil or criminal, or in connection with any appeal therein, or otherwise, and no provision of the By-laws is intended to be construed as limiting, prohibiting, denying, or abrogating any of the general or specific powers or rights conferred under the NYBCL upon the Company to furnish, or upon any court to award, such indemnification, or indemnification as otherwise authorized by the NYBCL or other law now or hereafter in effect. Article EIGHTH of the Company's Restated Certificate of Incorporation provides that the personal liability of the directors of the Company is eliminated to the fullest extent permitted by the 12 provisions of paragraph (b) of Section 402 of the NYBCL, as the same may be amended and supplemented. The Company maintains directors and officers insurance which, subject to certain exclusions, insures the directors and officers of the Company against certain losses which arise out of any neglect or breach of duty (including, but not limited to, any error, misstatement, act, or omission) by the directors or officers in the discharge of their duties, and insures the Company against amounts which it has paid or may become obligated to pay as indemnification to its directors and/or officers to cover such losses. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or controlling persons of the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 13 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 3 (Form S-8). Incorporation of Documents by Reference. Item 3 (Form S-8). Incorporation of Documents by Reference. The following documents (or parts thereof) filed or to be filed with the Securities and Exchange Commission (the "Commission") by the registrant are incorporated by reference in this registration statement: 1. The Annual Report on Form 10-K for the fiscal year ended June 30, 1997; 2. The Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 1997 and December 31, 1997; 3. Definitive Proxy Statement, dated November 3, 1997 for the Annual Meeting of Shareholders held on December 9, 1997; 4. All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report referred to in (1) above; and 5. The description of the Common Stock contained in the Company's registration statement filed under the Exchange Act registering such Common Stock under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this Prospectus and prior to the filing of a post-effective amendment indicating that all of the Shares have been sold, or deregistering all of the Shares that, at the time of such post-effective amendment, remain unsold, shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in any document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document, which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company shall furnish without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon the written or oral request of such person, a II - 1 copy of any or all of the documents which are incorporated by reference herein (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents). Written or telephone requests for such documents should be directed to Mr. Jeffrey Gash, Vice President-Finance, Jaco Electronics, Inc., 145 Oser Avenue, Hauppauge, New York 11788. The Company's telephone number is (516) 273-5500. Item 4 (Form S-8). Description of Securities Not applicable. Item 5 (Form S-8). Interests of Named Experts and Counsel Legal Matters The legality of the shares of Common Stock offered by this Registration Statement has been passed upon for the Company by Morrison Cohen Singer & Weinstein, LLP, 750 Lexington Avenue, New York, New York 10022. Experts The consolidated financial statements and schedules of the Company as of June 30, 1997 and 1996, and for each of the years in the three-year period ended June 30, 1997, have been incorporated by reference herein in reliance upon the report of Grant Thornton LLP, independent certified public accountants, and upon the authority of said firm as experts in accounting and auditing. Item 6 (Form S-8) and Item 15 (Form S-3). Indemnification of Directors and Officers Sections 721 to 725 of the New York Business Corporation Law ("NYBCL") permit indemnification of directors, officers, and employees of corporations under certain circumstances and subject to certain limitations. Section 726 of the NYBCL permits the purchase of insurance to indemnify the corporation and its officers and directors, subject to certain limitations. Section 402(b) of the NYBCL permits the inclusion of a provision in the certificate of incorporation of a corporation eliminating or limiting the personal liability of directors to the corporation or its shareholders for damages for any breach of duty in such capacity, subject to certain limitations. Article VI, Section 1 of the Company's By-laws, as amended through June 18, 1987, provides that the Company shall indemnify each director and officer of the Company elected, appointed, or continuing to serve after the adoption of Article VI of the By-laws, and may indemnify all other persons whom the Company is authorized to indemnify under the provisions of the NYBCL, to the fullest extent permitted by law, against all legal, accounting, and other expenses and liabilities incurred in connection with any pending or threatened action, suit, or proceeding, civil or criminal, or in connection with any appeal therein, or otherwise, and no provision of the By-laws is intended to be construed as limiting, prohibiting, denying, or abrogating any of the general or specific powers II - 2 or rights conferred under the NYBCL upon the Company to furnish, or upon any court to award, such indemnification, or indemnification as otherwise authorized by the NYBCL or other law now or hereafter in effect. Article EIGHTH of the Company's Restated Certificate of Incorporation provides that the personal liability of the directors of the Company is eliminated to the fullest extent permitted by the provisions of paragraph (b) of Section 402 of the NYBCL, as the same may be amended and supplemented. The Company maintains directors and officers insurance which, subject to certain exclusions, insures the directors and officers of the Company against certain losses which arise out of any neglect or breach of duty (including, but not limited to, any error, misstatement, act, or omission) by the directors or officers in the discharge of their duties, and insures the Company against amounts which it has paid or may become obligated to pay as indemnification to its directors and/or officers to cover such losses. Item 7 (Form S-8). Exemption from Registration Claimed Not Applicable. Item 8 (Form S-8) and Item 16 (Form S-3). Exhibits Exhibit No. Description 4.1 Jaco Electronics, Inc. Restricted Stock Plan (filed as Exhibit B to the Company's Definitive Proxy Statement, dated November 3, 1997 for the Annual Meeting of Shareholders held on December 9, 1997). 4.2 Form of Escrow Agreement under the Restricted Stock Plan. 4.3 Form of Stock Purchase Agreement under the Restricted Stock Plan. 4.4 Form of Stock Option Agreement. 4.5 Specimen of Common Stock certificate (filed as Exhibit 4.4 to the Company's Registration on Form S-8/S-3 (Registration Statement No. 33-89994), filed with the Commission and automatically effective on March 3, 1995). 5.1 Opinion of Morrison Cohen Singer & Weinstein, LLP, as to the legality of the securities being registered. 23.1 Consent of Grant Thornton LLP 23.2 Consent of Morrison Cohen Singer & Weinstein, LLP (contained in its Opinion filed as part of Exhibit 5.1) 24.1 Powers of Attorney (included on the signature page of the registration statement filed April 10, 1998). II - 3 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/S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hauppauge, State of New York, on this day of , 1998. JACO ELECTRONICS, INC. By:/s/ Joel H. Girsky Joel H. Girsky, Chairman of the Board, President and Treasurer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Joel H. Girsky and Jeffrey D. Gash, or either of them, each with the power of substitution, his or her attorney-in-fact, to sign any amendments to this Registration Statement and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorney-in-fact, or his or her substitute, may do or choose to be done by virtue hereof. Pursuant to the requirements 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: Signature Title Date /s/ Joel H. Girsky Joel H. Girsky Chairman of the Board, President and April 10, 1998 Treasurer (Principal Executive Officer) /s/ Charles Girsky Charles B. Girsky Executive Vice President and Director April 10, 1998 /s/ Stephen A. Cohen Stephen A. Cohen Director April 10, 1998 /s/ Edward M. Frankel Edward M. Frankel Director April 10, 1998 /s/ Joseph F. Hickey Jr. Joseph F. Hickey, Jr Director April 10, 1998 /s/ Jeffrey D. Gash Jeffrey D. Gash Vice President - Finance (Principal April 10, 1998 Financial and Accounting Officer) EXHIBIT INDEX No. Description 4.1 Jaco Electronics, Inc. 1981 Incentive Stock Option Plan, as amended (filed as Exhibit 4.1 to the Company's Registration on Form S-8/S-3 (Registration Statement No. 33-89994), filed with the Commission and automatically effective on March 3, 1995). 4.2 Jaco Electronics, Inc. 1993 Non-Qualified Stock Option Plan, as amended (filed as Exhibit A to the Company's Definitive Proxy Statement, dated November 3, 1997 for the Annual Meeting of Shareholders held on December 9, 1997). 4.3 Jaco Electronics, Inc. 1993 Stock Option Plan for Outside Directors (filed as Exhibit 4.3 to the Company's Registration on Form S-8/S-3 (Registration Statement No. 33-89994), filed with the Commission and automatically effective on March 3, 1995). 4.4 Specimen of Common Stock certificate (filed as Exhibit 4.4 to the Company's Registration on Form S-8/S-3 (Registration Statement No. 33-89994), filed with the Commission and automatically effective on March 3, 1995). 5.1 Opinion of Morrison Cohen Singer & Weinstein, LLP, as to the legality of the securities being registered. 23.1 Consent of Grant Thornton LLP. 23.2 Consent of Morrison Cohen Singer & Weinstein, LLP (contained in its opinion filed as Exhibit 5.1 hereto). 24.1 Powers of Attorney (included on the signature page of this Registration Statement). EX-4.2 2 ESCROW AGREEMENT UNDER THE RESTRICTED STOCK PLAN ESCROW AGREEMENT UNDER JACO ELECTRONICS, INC. RESTRICTED STOCK PLAN ESCROW Agreement dated March 27th, 1998, by and between Jaco Electronics, Inc. having offices at 145 Oser Avenue, Hauppauge, New York 11789 (the "Company"), , (the "Participant") and Morrison Cohen Singer & Weinstein having offices at 750 Lexington Avenue, New York, NY 10022 as escrow agent (the "Escrow Agent"). RECITALS: WHEREAS, the Company has adopted the Jaco Electronics, Inc. Restricted Stock Plan ("Plan") under which eligible employees selected by the Board of Directors (the "Board") of the Company may purchase certain stock of the Company, subject to those restrictions as determined by the Board; and WHEREAS, the Participant is an employee of the Company and has been selected by the Board of Directors of the Company to purchase Restricted Stock in accordance with the Plan; and WHEREAS, the defined and capitalized terms of this agreement have the same meaning and definition as in the Plan, unless otherwise provided herein; and WHEREAS, the Board has required Participant to deposit the Restricted Stock purchased by Participant, in escrow, in order to insure compliance with the terms of the Plan and the Stock Purchase Agreement executed by the Participant contemporaneously herewith; and WHEREAS, the parties desire to specifically set forth the terms and conditions under which the Restricted Stock has been delivered by the Company to the Participant and thereupon delivered by the Participant to the Escrow Agent and under which such Restricted Stock will either be redelivered to the Participant or delivered to the Company. NOW, THEREFORE, the Company, the Participant and the Escrow Agent agree as follows: 1. Receipt by the Participant. The Participant acknowledges receipt from the Company of _______________ common shares ("Restricted Stock") registered in the name of the Participant and delivered by the Company to the Participant pursuant to the terms of the Plan and the Stock Purchase Agreement. 2. Receipt by the Escrow Agent. The Escrow Agent acknowledges receipt from the Participant of the Restricted Stock, registered in the name of the Participant, and acknowledges receipt of stock powers executed in blank by the Participant covering all of the Restricted Stock. 3. Delivery by the Escrow Agent. a. Upon receipt by the Escrow Agent of a written notice from the Company that the Participant has fully satisfied the terms and provisions of the Plan and/or the Stock Purchase Agreement including, without limitation, the restrictions and representations incorporated in the Stock Purchase Agreement, or that the Participant is otherwise entitled to receive some or all of the Restricted Stock, the Escrow Agent shall deliver some or all of the Restricted Stock, as so directed, to the Participant. The Company shall simultaneously provide a copy of such notice to the Participant. b. Upon receipt by the Escrow Agent of a written notice from the Company together with an affidavit of an officer of the Company stating that the Participant has not fully satisfied the terms and provisions of the Plan and/or the Stock Purchase Agreement including, without limitation, the restrictions and representations incorporated in the Stock Purchase Agreement, the Escrow Agent shall deliver the Restricted Stock to the Company. The Company shall simultaneously provide a copy of such notice to the Participant. Upon receipt of the Restricted Stock, the Company shall make any required payment to Participant in respect of the Repurchase Price. c. In acting pursuant to the provisions of either subparagraphs a. or b. above, the Escrow Agent shall be entitled to rely fully upon the notice and/or the notice and affidavit received by it and the Escrow Agent shall not be required under any circumstances to make any further or additional inquiries or investigations before acting in accordance with the provisions of this paragraph. d. Upon acting in accordance with the provisions of this paragraph, the Escrow Agent shall be automatically relieved and released of all liability hereunder, except for its fraud or willful misconduct. 4. Voting Rights; Dividends; Capital Changes. The Participant, in accordance with the Plan and the Stock Purchase Agreement, shall have the full power to vote all of the Restricted Stock held by the Escrow Agent from time to time and shall be entitled to receive all dividends declared upon any of the Restricted Stock held by the Escrow Agent from time to time. All new, additional or different stock or securities of the Company or some other corporation, which the Participant may receive or become entitled to receive with respect to such Restricted Stock by virtue of a stock split or stock dividend or any other change in the corporate or capital structure of the Company, shall be subject to all of the terms and conditions of this Escrow Agreement. 5. Indemnification. The Escrow Agent shall have no duties or responsibilities except those expressly set forth herein. The Escrow Agent shall have no liability for acting in accordance with the provisions of Paragraph 3 or otherwise in accordance with the other terms and provisions of this Agreement and, therefore, the Company and the Participant shall indemnify and hold harmless the Escrow Agent against any liability, loss, cost or expense (including reasonable counsel fees and disbursements) arising out of any act or omission to act in connection with this Agreement, unless arising out of the Escrow Agent's fraud or willful misconduct. The Escrow Agent shall have no responsibility as to the validity or value of the Restricted Stock held in escrow hereunder. Furthermore, the Escrow Agent shall have no duty as to the collection or protection of the Restricted Stock (or any additional securities issued by the Company which may be distributed on or with respect to the Restricted Stock) or income thereon, nor as to the preservation of any rights pertaining thereto, beyond the safe custody of any such Restricted Stock actually in its possession. The Escrow Agent may rely on any certificate, statement, request, consent, agreement, instrument or other document which it reasonably believes to be genuine and to have been signed or presented by a person or entity. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions from any party hereto with respect to the Restricted Stock held in pledge hereunder which, in its reasonable opinion, are in conflict with any of the provisions of this Agreement or any instructions received from the other party to this Agreement, the Escrow Agent shall be entitled: (i) to refrain from taking any action other than to keep the Restricted Stock until such time as there has been a final determination of the rights of the Company and the Participant with respect to the Restricted Stock as hereinafter provided or (ii) to deposit the Restricted Stock held hereunder into court pursuant to relevant statutes and commence an action in interpleader in order to obtain a judicial determination as to the party legally entitled to receive the Restricted Stock. In the event of such an interpleader action, or any action against or involving the Escrow Agent with respect to the escrow, the Escrow Agent's costs and expenses, including reasonable attorney's fees (either paid to retained attorneys or representing the fair value of legal services rendered by the Escrow Agent to itself) with regard thereto, shall be reimbursed to the Escrow Agent by the party determined by a court of competent jurisdiction not to be entitled to the Restricted Stock. The Escrow Agent shall have a lien on the escrowed property to the extent of such costs and expenses. 6. Binding Effect. This Escrow Agreement shall be binding upon and inure to the benefit of the Company, the Participant and the Escrow Agent and their respective heirs, legal representatives, successors and assigns. 7. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law. 8. Waiver. Any provision contained in this Agreement may be waived, either generally or in any particular instance, by the Board; provided that such waiver shall be effective only if in writing and confirmed by a writing executed and delivered with the same formality as this Agreement. 9. Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or three (3) business days following deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other parties at the addresses shown above, or at such other address or addresses as any party shall designate to the other in accordance with this Paragraph 9. 10. Pronouns. Wherever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine, or neuter forms. The singular form of nouns and pronouns shall include the plural, and the plural form of nouns and pronouns shall include the singular. 11. Entire Agreement. This Agreement constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings relating to the subject matter of this Agreement. 12. Amendment. This Agreement may be amended or modified only by a written instrument executed with the same formality as this Agreement. 13. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same instrument, and shall become effective when one or more counterparts have been signed by each or the parties and delivered to all the other parties. 14. Headings. The headings contained in this Agreement are for reference only and shall not under any circumstances be deemed to affect the meaning or interpretation of this Agreement. 15. Costs of Escrow Agent. The Company shall pay the Escrow Agent reasonable compensation for its services and it shall receive reimbursement for its out of pocket expenses, including reasonable counsel fees, that it may incur as a result of its acting as Escrow Agent hereunder or in connection with the performance of its duties hereunder. 16. Resignation or Removal of Escrow Agent. The Escrow Agent may at any time resign by giving ten (10) days' written notice to the Company and the Participant. The Board may at any time remove the Escrow Agent by giving ten (10) days' written notice to the Escrow Agent. Upon such resignation or removal, a successor Escrow Agent shall be appointed by the Board and thereupon the resignation or removal of the Escrow Agent shall become effective upon the Escrow Agent delivering the Restricted Stock in its possession to the successor Escrow Agent and thereupon the Escrow Agent hereunder shall be automatically relieved and released of all further liability hereunder. Simultaneously with delivery of the Restricted Stock to the successor Escrow Agent, such successor shall execute a counterpart of this Agreement and it shall thereupon be bound by all of the terms and provisions hereof. 17. Recitals. The recitals are deemed a part of this Agreement. 18. Litigation. This Agreement shall be governed and interpreted in accordance with the laws of the State of New York and, regardless of the order in which the signatures of the parties are affixed, it shall be deemed executed at the Company's address, as above. The parties consent to the jurisdiction and venue of any state or federal court located within the State of New York, the County of New York or the Southern District of the U.S. District Court and agree that all actions or proceedings arising, directly or indirectly, from this Agreement shall be litigated only in courts having such situs and in any such action or proceeding, the parties waive trial by Jury and as between the Company and the Participant only, the successful party shall be entitled to recover reasonable counsel fees and the expenses of such litigation; and the Escrow Agent's rights as to counsel fees and expenses of the litigation shall be governed by Paragraph 5 above. In any such action or legal proceeding, the court shall apply such rule of law of the State of New York including any conflicts of law rule, which shall have the effect of sustaining the validity of all the terms and provisions of this Agreement. Company: JACO ELECTRONICS, INC. ATTEST: By: Participant: ATTEST: By: Escrow ATTEST: Agent: By: EX-4.3 3 STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT UNDER JACO ELECTRONICS, INC. RESTRICTED STOCK PLAN AGREEMENT, made this 27th day of March 1998, by and between Jaco Electronics, Inc., a New York corporation having offices at 145 Oser Avenue, Hauppauge, New York 11788 (the "Company"), and _____________________________________________, (the "Participant"). RECITALS: WHEREAS, the Company has adopted the Jaco Electronics, Inc. Restricted Stock Plan (the "Plan") under which eligible employees selected by the Board may purchase certain stock of the Company, subject to those restrictions as determined by the Board; and WHEREAS, the Participant is an employee of the Company and has been selected by the Board to purchase Restricted Stock in accordance with the Plan; and WHEREAS, the defined and capitalized terms of this agreement have the same meaning and definition as in the Plan, unless otherwise provided herein. NOW, THEREFORE, for valuable consideration, receipt of which is acknowledged, the parties agree as follows: 1. Purchase of Shares. The Participant subscribes for and, upon acceptance, shall purchase, subject to the terms and conditions set forth in this Agreement, common shares (the "Restricted Stock"), par value $.10 per share (the "Common Shares"), of the Company at a purchase price of $1.00 per share. The aggregate purchase price of the Restricted Stock shall be paid by the Participant by Check payable to the order of the Company. Upon the Company receiving payment for the Restricted Stock, it shall issue to the Participant one or more certificates in the name of the Participant for that number of shares of Restricted Stock purchased by Participant. The Participant agrees that the Restricted Stock shall be subject to the forfeiture restrictions set forth in Paragraphs 2 and 3 of this Agreement and the restrictions on transfer set forth in Paragraph 4 of this Agreement and that all of such shares are Restricted Stock. 2. Repurchase Provisions. Purchase by the Participant of all Restricted Stock hereunder is subject to the following restrictions: (a) If a Participant's employment with the Company shall be terminated by the Company based upon Discharge For Cause, or by the act of the Participant in voluntarily terminating his employment with the Company, within five (5) years from the date Restricted Stock shall have been purchased hereunder, the Company shall have the option for a period of sixty (60) days after such termination of employment, to buy any or all of the shares purchased by such terminated employee, which have not vested in accordance with the vesting schedule determined by the Board, for an amount equal to the product of (x) the consideration paid by the terminated employee to the Company to acquire such shares, multiplied by (y) the number of shares which the Company repurchases ("Repurchase Price"). The provisions of this paragraph shall automatically terminate and the restrictions shall be removed in accordance with the Section 6.9 of the Plan immediately following a "Change of Control of the Company." A "Change of Control of the Company" shall mean a dissolution or liquidation of the Company or a merger, consolidation, sale of all or substantially all of its assets, or other corporate reorganization in which the Company is not the surviving corporation. (b) If a Participant shall, within five (5) years from the date Restricted Stock shall have been purchased, directly or indirectly, own, manage, operate, control, be employed by, or participate in, as a partner, joint venture, employee, agent, salesman, officer, director, five (5%) percent shareholder, or be connected in any manner with the ownership, management, operation, control, employment or participation as a partner, joint venture, employee, agent, salesman, officer, director, or five (5%) percent shareholder, of any business similar to the type of business conducted by the Company at that time, as determined in the sole discretion of the Board, the Company shall have the option for a period of sixty (60) days after such determination to buy any or all of the shares purchased by Participant, which have not vested in accordance with the vesting schedule determined by the Board, for an amount equal to the Repurchase Price. The provisions of this paragraph shall automatically terminate and the restrictions shall be removed in accordance with Section 6.9 of the Plan immediately following a Change of Control of the Company or if the Participant is terminated by the Company under circumstances which do not constitute a Discharge for Cause. (c) If, within twelve (12) months of the date on which Restricted Stock is purchased hereunder, the Company shall not have filed a registration statement under the Securities Act for the public offer and sale of its Common Shares and any such registration statement shall not have been declared effective by the Securities and Exchange Commission, then the Company shall have the option for a period of sixty (60) days after the end of such twelve (12) month period to buy any or all of the shares purchased hereunder for an amount equal to the Repurchase Price. 3. Exercise of Repurchase Provision. (a) If at any time within five (5) years from the date hereof, the Company determines to exercise its option to purchase all of the Restricted Stock or such lesser percentage of the Restricted Stock as is, at such time, subject to restriction as provided in Paragraph 2(a), 2(b) and 2(c), the Company shall give notice of such exercise to the Participant within the applicable sixty (60) day period. (b) Within three (3) business days after the Company gives notice to the Participant of the exercise of its repurchase option pursuant to Paragraph 3(a), the Participant shall deliver to the Company at its address shown above the certificate or certificates representing the Restricted Stock that the Company has elected to purchase, duly endorsed in blank by the Participant or with duly endorsed stock powers attached, all in form suitable for the transfer of the Restricted Stock to the Company. Upon receipt of the Restricted Stock, the Company shall deliver or mail to the Participant payment for the aggregate Repurchase Price, or the Company may, at its option, set off the Repurchase Price from any obligation or liability to a Participant, whether as compensation or otherwise. (c) After the time when any Restricted Stock is required to be delivered to the Company for transfer pursuant to Paragraph 3(b), the Company shall not pay any dividend to the Participant on account of such Restricted Stock, or permit the Participant to exercise any of the privileges or rights of a shareholder with respect to such Restricted Stock, but shall, insofar as permitted by law, treat the Company as the owner of such Restricted Stock. (d) The Company shall not be required to purchase any fraction of a share of Restricted Stock upon exercise of the repurchase provision, and any such fraction resulting from a computation made pursuant to paragraph 9 of this Agreement may be rounded to the nearest whole share (with any one-half share being rounded upward). 4. Restrictions on Transfer. (a) Except as otherwise provided in Paragraph 4(b), the Participant shall not, during the term of the repurchase provisions specified in Paragraphs 2 and 3, sell, assign, transfer, pledge, hypothecate, or otherwise dispose of, by operation of law or otherwise (collectively "transfer"), any of the Restricted Stock, or any interest therein, unless the Restricted Stock is no longer subject to the repurchase provisions in Paragraphs 2 and 3. (b) Notwithstanding the foregoing, the Participant may transfer Restricted Stock by Last Will and Testament or the laws of Descent and Distribution, provided that such shares shall remain subject to this Agreement, including without limitation the restrictions on transfer set forth in this Paragraph 4 and the repurchase provisions set forth in Paragraphs 2 and 3, and the permitted transferee shall, as a condition to the transfer, deliver to the Company a written instrument confirming that the transferee shall be bound by all of the terms and conditions of this Agreement. (c) Except insofar as may otherwise be required by law or this Agreement, no Restricted Stock held at any time pursuant to an Escrow Agreement entered into between the Participant, the Company and an Escrow Agent, as referred to in the Plan, shall be subject in any manner to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge, or encumbrance of any kind nor in any manner be subject to the debts or liabilities of Participant and/or any person and any attempt to so alienate or subject any such amount, whether presently or thereafter payable, shall be void. If Participant and/or any person in violation of the provisions of this Agreement shall attempt to, or shall alienate, sell, transfer, assign, pledge, attach, charge, or otherwise encumber any Restricted Stock purchased under this Agreement, or any part thereof, or if by reason of Participant's bankruptcy or other event happening at any such time, such Restricted Stock would be made subject to Participant's debts or liabilities or would otherwise not be enjoyed by Participant, then the Board, if they so elect, may direct that such Restricted Stock be withheld and that the same or any part thereof be paid or applied to or for the benefit of such Participant, his or her spouse, children or other dependents, or any of them, in such manner and proportion as the Board may deem proper, in their sole discretion. 5. Effect of Prohibited Transfer. In the event of a transfer of Restricted Stock without compliance with the terms of this Agreement or the Plan, the Company shall not be required: (a) To transfer on its books any of the Restricted Stock that shall have been sold or transferred in violation of any of the provisions set forth in this Agreement or the Plan; or (b) To treat as owner of such Restricted Stock or to pay dividends to any transferee to whom any of such shares shall have been so sold or transferred. 6. Restrictive Legends. All certificates representing Restricted Stock shall have affixed thereto legends in substantially the following form, in addition to any other legends that may be required under federal or state securities laws: (i) "The shares of Jaco Electronics, Inc. $.10 par value common stock evidenced by this certificate are subject to repurchase by Jaco Electronics, Inc., and such shares may not be sold or otherwise transferred, pledged or hypothecated except pursuant to the provisions of the Escrow Agreement and/or Stock Purchase Agreement by and between the Escrow Agent, Jaco Electronics, Inc. and the registered owner of such shares." and (ii) "This stock certificate may not be sold, transferred, pledged or hypothecated unless it has first been registered under the Securities Act of 1933, as amended, or unless counsel for Jaco Electronics, Inc. has given an opinion that registration under said Act is not required, except that after a Change of Control of the Company, an opinion of counsel that registration under said Act is not required, may be provided by counsel independent of Jaco Electronics, Inc. These shares are subject to the terms of an Escrow Agreement and/or Stock Purchase Agreement with the Escrow Agent, Jaco Electronics, Inc. and the registered owner of such shares." 7. Removal of Restrictions. (a) If (i) a Participant shall die, retire, or become permanently and totally disabled, as determined in accordance with applicable Company personnel policies, or (ii) there is a Change of Control of the Company at any time after the date Restricted Stock shall have been purchased hereunder, or (iii) with respect to Restricted Stock released from restriction upon the passage of time as provided in Paragraph 2(a) and 2(b), the events of forfeiture specified in Paragraphs 2(a) and (b) (but not 2(c)) shall automatically terminate as to all of the Restricted Stock in the case of an event described in clause 7(a)(i) or 7(a)(ii), or as to the applicable number of shares in the case of an event described in clause 7(a)(iii), and upon surrender and presentation to the Company of the legended certificates evidencing such shares, replacement certificates shall be issued and delivered to the Participant, free from the legend provided for in Paragraph 6(i) hereof or any other restrictions on the sale or other transfer of such shares, pursuant to the Plan, and free from the legend provided for in Paragraph 6(ii) hereof pursuant to the rules and regulations of the Securities Act, and such shares shall, nonetheless, remain subject to the Securities Act and the Exchange Act, unless an opinion of counsel is provided in accordance with Section 6.7(d) of the Plan. (b) If the Company chooses not to exercise its sixty (60) day option with respect to any Restricted Stock or such sixty (60) day option period has expired pursuant to the applicable provisions of Paragraph 2, the events of forfeiture specified in Paragraph 2 shall terminate, and upon surrender and presentation to the Company of the legended certificates evidencing such Restricted Stock, replacement certificates shall be issued and delivered to the Participant, free from the legend provided for in Paragraph 6(i) hereof or any other restrictions on the sale or transfer of such Restricted Stock pursuant to the Plan or this Agreement, and free from the legend provided for in Paragraph 6(ii) hereof pursuant to the rules and regulations of the Securities Act, and such shares shall, nonetheless, remain subject to the Securities Act and the Exchange Act, unless an opinion of counsel is provided in accordance with Section 6.7(d) of the Plan. 8. Investment Representations. The Participant represents, warrants, and covenants as follows: (a) The Participant is purchasing the Shares for his or her own account for investment only, and not with a view to distribution or resale. (b) The Participant understands that the offering and sale of the Restricted Stock is intended to be exempt under the Securities Act and any applicable "Blue Sky" laws. (c) The Participant understands that the Shares are deemed to be "Restricted Securities" as defined in Rule 144 under the Securities Act and that such Shares may not be offered for sale, sold, delivered after sale, pledged, hypothecated, transferred, assigned, or otherwise disposed of except pursuant to registration under the Securities Act or pursuant to an opinion of counsel satisfactory in form and substance to the Company, that the sale, transfer or other disposition may be made without registration. 9. Adjustments. In the event the Common Shares hereafter is changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of merger, consolidation, or other reorganization, recapitalization, reclassification, combination of shares, stock split-up, or stock dividend, then: (a) The number of shares of Restricted Stock purchased by Participant pursuant to this Agreement shall be adjusted appropriately, both as to the number of shares and the price; (b) Such new or additional or different shares or securities which are distributed to the Participant, in his or her capacity as the owner of Restricted Stock purchased hereunder, shall be subject to all of the conditions and restrictions applicable to Restricted Stock issued as provided herein. Any adjustments required hereunder and the manner of application of the foregoing provisions shall be determined solely by the Board, and any such adjustment may provide for the elimination of fractional share interests. 10. Withholding Taxes. (a) A Participant who files an election with the Internal Revenue Service to include the fair market value of any Restricted Stock in gross income while such shares are still subject to restrictions shall promptly furnish the Company with a copy of such election together with information as to the amount of any federal, state, local or other taxes required to be withheld to enable the Company to claim an income tax deduction with respect to such election. (b) All Restricted Stock purchased pursuant hereto and dividends on such shares shall be subject to withholding as required by applicable federal, state and local laws, and the Board may make such arrangements for the payment of any withholding taxes on Restricted Stock purchased pursuant hereto as they deem satisfactory, including but not limited to (i) reducing the number of shares of Restricted Stock otherwise deliverable, based upon their fair market value, to permit deduction of the amount of any such withholding taxes from the amount which may otherwise be purchased under the Plan, (ii) deducting the amount required to be withheld from salary or any other amount then or thereafter payable to the Participant, and (iii) requiring the Participant to pay to the Company the amount required to be withheld as a condition of releasing the Shares and any other distributions related thereto. 11. Rights as Shareholder. Subject to the provisions of Paragraph 12 hereof, a certificate or certificates for all Restricted Stock registered in the name of the Participant shall be delivered to him or her as soon as reasonably practicable and he or she shall thereupon be a shareholder and have all the rights of a shareholder with respect to such shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such shares; provided, that such shares, and any new, additional or different securities the Participant may become entitled to receive with respect to such shares by virtue of a stock split or stock dividend or any other change in the corporate or capital structure of the Company, shall be subject to the restrictions described in Paragraphs 2, 3 and 4 hereof. 12. Escrow. In order to enforce the restrictions imposed upon the Restricted Stock issued under the Plan, the Board may require the Participant to deposit with the Escrow Agent all certificates for Restricted Stock together with stock powers, appropriately endorsed in blank, and to enter into an Escrow Agreement providing that the certificates representing Restricted Stock issued pursuant to the Plan shall remain in the physical custody of the Escrow Agent until any or all of the restrictions imposed pursuant hereto have terminated. If required by the Board, the Escrow Agreement shall be executed at the time the Participant is entitled to receive the Restricted Stock. 13. Stock Certificates. The Company may, but shall not be required to, issue or deliver any certificate for Restricted Stock purchased hereunder or any portion thereof, prior to fulfillment of all of the following conditions: (a) The admission of such Restricted Stock to listing on all stock exchanges on which the Common Shares is then listed; (b) The completion of any registration or other qualification of such Restricted Stock under any federal or state law or under the rules or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Board shall in their sole discretion deem necessary or advisable; (c) The obtaining of any approval or other clearance from any federal or state governmental agency which the Board shall in their sole discretion determine to be necessary or advisable; (d) Compliance with all terms and provisions of the Plan, this Agreement and the Escrow Agreement; (e) The lapse of such reasonable period of time following the purchase of the Restricted Stock as the Board from time to time, in their sole discretion, may establish for reasons of administrative convenience; and (f) The approval of the Plan by the holders of a majority of the shares of Common Shares of the Company represented at an annual or special meeting of the shareholders of the Company. Nothing herein contained shall be construed as imposing any obligation on the Board or the Company to undertake or complete any act with respect to subparagraphs (a), (b), (c) or (f) of this Paragraph 13. 14. Severability. The invalidity or enforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law. 15. Waiver. Any provision contained in this Agreement may be waived, either generally or in any particular instance, by the Board provided that such waiver shall be effective only if in writing and confirmed by a writing executed and delivered with the same formality as this Agreement. 16. Binding Effect. This Agreement shall be binding upon, and inure to the benefit of, the Company and the Participant and their respective heirs, executors, administrators, legal representatives, successors, and assigns, as provided in this Agreement. 17. No Rights to Employment. Nothing contained in this Agreement shall be construed as giving the Participant any right to be retained, in any position, as an employee of the Company. 18. Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or three (3) business days following deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown above, or at such other address or addresses as either party shall designate to the other in accordance with this Paragraph 18. 19. Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine, or neuter forms. The singular form of nouns and pronouns shall include the plural, and the plural form of nouns and pronouns shall include the singular. 20. Entire Agreement. This Agreement constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings relating to the subject matter of this Agreement. 21. Amendment. This Agreement may be amended or modified only by a written instrument executed with the same formality as this Agreement. 22. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to all the other parties. 23. Headings. The headings contained in this Agreement are for reference only and shall not under any circumstances be deemed to affect the meaning or interpretation of this Agreement. 24. Recitals. The recitals are deemed a part of this Agreement. 25. Litigation. This Agreement shall be governed and interpreted in accordance with the laws of the State of New York and, regardless of the order in which the signatures of the parties are affixed, it shall be deemed executed at the Company's address, as above. The parties consent to the jurisdiction and venue of any state or federal court located within the State of New York, the County of New York or the Southern District of the U.S. District Court and agree that all actions or proceedings arising, directly or indirectly, from this Agreement shall be litigated only in courts having such situs and in any such action or proceeding, the parties waive trial by jury and the successful party shall be entitled to recover reasonable counsel fees and the expenses of such litigation. In any such action or legal proceeding, the court shall apply such rule of law of the State of New York including any conflicts of law rule, which shall have the affect of sustaining the validity of all the terms and provisions of this Agreement. 26. Receipt of Plan. The Participant hereby acknowledges that prior to execution of this Agreement, Participant has received, read and fully understands all of the terms and provisions of the Plan. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. JACO ELECTRONICS, INC. By: ATTEST: PARTICIPANT: Name: ATTEST: EX-4.4 4 FORM OF STOCK OPTION AGREEMENT THE OPTION GRANTED PURSUANT TO THIS NON-QUALIFIED STOCK OPTION AGREEMENT (THE "OPTION") AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THE OPTION OR THE SHARES UNDER THE SECURITIES ACT, OR AN OPINION OF COUNSEL, WHICH IS SATISFACTORY TO JACO ELECTRONICS, INC. AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. JACO ELECTRONICS, INC. NON-QUALIFIED STOCK OPTION AGREEMENT This Non-Qualified Stock Option Agreement (this "Agreement") is effective as of June 9, 1997, between Jaco Electronics, Inc., a New York corporation (the "Company"), and Joseph Hickey (the "Optionee"). W I T N E S S E T H: WHEREAS, the Company desires to provide outside directors of the Company with an incentive to achieve the long-term objectives of the Company and to provide such outside directors with an opportunity to acquire an equity interest in the Company; and WHEREAS, the Optionee is an outside director of the Company; and WHEREAS, the Board of Directors of the Company (the "Committee") has granted this Option to the Optionee; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: 1. Grant of Option. On the terms and conditions set forth in this Agreement, the Company hereby grants to the Optionee this Option to purchase an aggregate of 10,000 shares (the "Shares") of the Company's common stock, $.10 par value per share (the "Common Stock"), subject to adjustment as provided in Paragraph 8 below, at a price of $7.00 per Share, which is equal to the Fair Market Value (as defined below) of the Common Stock at June 9, 1997. As used herein, Fair Market Value shall mean the closing price of the Common Stock as reported by the National Association of Securities Dealers (as published in the Wall Street Journal, if published). This Option is not intended to qualify as an "incentive stock option" under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and shall be construed accordingly. 3 2. Right to Exercise. Subject to the terms and conditions of this Agreement, this Option shall become exercisable, in whole or in part, commencing on June 9, 1998. 3. Transferability. This Option is not transferable by Optionee and may be exercised only by the Optionee to whom it is granted or in the event of the Optionee's death, his or her personal representative(s), designee(s), heir(s) or devisee(s) pursuant to the terms of Paragraph 5 herein. 4. Manner of Exercise. (a) Notice. The Option may be exercised from time to time, in whole or in part, by delivering written notice of exercise to the Chief Executive Officer or the Chief Financial Officer of the Company substantially in the form annexed hereto as Exhibit A. Such notice is irrevocable and must be accompanied by full payment of the purchase price in cash or shares of previously acquired Common Stock of the Company. If previously acquired shares of Common Stock are tendered in payment of all or part of the exercise price, the value of such shares shall be the Fair Market Value of such shares determined as of the date of such exercise. (b) Issuance of Shares. After receiving a proper notice of exercise, the Company shall cause to be issued a certificate or certificates for the Shares as to which this Option has been exercised, registered in the name of the person exercising this Option. The Company shall cause such certificate or certificates to be delivered to or upon the order of the person exercising this Option. (c) Withholding Taxes. In the event that the Company determines that it is required to withhold foreign, federal, state or local tax as a result of the exercise of this Option, the Optionee, as a condition to the exercise of this Option, shall make arrangements satisfactory to the Company to enable it to satisfy all withholding requirements. The Optionee shall also make the arrangements satisfactory to the Company to enable it to satisfy any withholding requirements that may arise in connection with the disposition of Shares purchased by exercising this Option. 5. Term and Expiration. This Option shall expire upon the earlier of (i) June 8, 2002, or (ii) one (1) year following the date on which the Optionee ceases to serve in his capacity as an outside director of the Company for any reason other than removal for cause. If the Optionee dies before fully exercising any portion of the Option then exercisable, the Option may be exercised by the Optionee's personal representative(s), designee(s), heir(s) or devisee(s) at any time within the one (1) year period following his or her death; provided, however, that in no event shall the Option be exercisable at any time after June 8, 2002. If the Optionee is removed as an outside director of the Company for cause, the Option shall expire upon such removal. 4 6. No Registration Rights. The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with any law. 7. Securities Law Restrictions. (a) Restrictions. Regardless of whether the offering and sale of Shares have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company at its direction may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on stock certificates) if, in the judgment of the Company and its counsel, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any state or any other law or with restrictions imposed by the Company's underwriters. (b) Investment Intent at Grant. The Optionee represents and agrees that the Shares to be acquired upon exercising this Option will be acquired for investment, and not with a view to the sale or distribution thereof. (c) Investment Intent at Exercise. In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available which requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel. (d) Legend. All certificates evidencing Shares acquired under this Agreement in an unregistered transaction shall bear the following restrictive legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law): "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY, IN THE OPINION OF COUNSEL, OF AN EXEMPTION FROM REGISTRATION THEREUNDER." 5 (e) Administration. Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 7 shall be conclusive and binding on the Optionee and all other persons. 8. Shares and Adjustments. In the event of any change or changes in the outstanding Common Stock of the Company by reason of any stock dividend or split, recapitalization, reorganization, merger, consolidation, split-off, combination or any similar corporate change, or other increase or decrease in such shares effected without receipt or payment of consideration by the Company, the number of shares of Common Stock issuable upon exercise of the Option and the exercise price of the Option shall be automatically adjusted to prevent dilution or enlargement of the rights granted to the Optionee hereunder. 9. Miscellaneous Provisions. (a) Entire Agreement; Amendments. This Agreement constitutes the entire agreement between the parties hereto with regard to the subject matter hereof. This Agreement may not be amended except by a written instrument signed by both parties hereto. (b) Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and the Optionee has personally executed this Agreement. JACO ELECTRONICS, INC. /s/ Joseph Hickey /s/ Joel H. Girsky ______________________ By:_______________________________ Joseph Hickey Joel H. Girsky President EX-5.1 5 OPINION OF MORRISON COHEN SINGER & WEINSTEIN Jaco Electronics, Inc. April 10, 1998 Page 1 [Morrison Cohen Singer & Weinstein, LLP Letterhead] (212) 735-8600 April 10, 1998 Jaco Electronics, Inc. 145 Oser Avenue Hauppauge, NY 11788 Re: Jaco Electronics, Inc. Registration Statement on Form S-8/S-3 Gentlemen: As counsel to Jaco Electronics, Inc., a New York corporation (the "Company"), we have been requested to render our opinion in connection with the issuance of up to 300,000 shares of the Company's common stock, $.10 par value (the "Shares") authorized under the Company's Restricted Stock Plan (the "Plan") and 10,000 shares issuable upon the exercise of a non-qualified stock option (the "Option Shares"), pursuant to a registration statement on Form S-8/S-3 (the "Registration Statement") being filed by the Company with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended. In connection with the foregoing, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the Certificate of Incorporation of the Company, as amended, the By-laws of the Company, as amended, the Plan, the forms of purchase agreements, escrow agreements and such other documents as we have deemed necessary or appropriate as a basis for the opinions set forth below. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to executed documents of all executed copies submitted to us as conformed or photostatic copies. As to any facts material to such opinions which we did not independently establish or verify, we have relied upon statements or representations of officers and other representatives of the Company, public officials or others. Jaco Electronics, Inc. April 10, 1998 Page 2 Based upon the foregoing, we are of the opinion that: The Shares and the Option Shares have been duly authorized by the Board of Directors of the Company and, when (a) the Shares are issued and paid for in accordance with the Plan, and (b) the Option Shares are issued and paid for in accordance with the terms of the option, the Shares and the Option Shares, respectively will be validly issued, fully paid and non-assessable, and no personal liability will attach to the ownership thereof. We hereby consent to the inclusion of this opinion as Exhibit 5.1 to the Registration Statement. Very truly yours, /s/ Morrison Cohen Singer & Weinstein, LLP Morrison Cohen Singer & Weinstein, LLP EX-23.1 6 CONSENT OF GRANT THORNTON LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our reports dated August 18, 1997, accompanying the consolidated financial statements of Jaco Electronics, Inc. and Subsidiaries appearing in the 1997 Annual Report of the Company to its shareholders and accompanying the schedule included in the Annual Report on Form 10-K for the year ended June 30, 1997 which are incorporated by reference in this Registration Statement. We consent to the incorporation by reference in the Registration Statement of the aforementioned reports and to the use of our name as it appears under the caption "Experts." GRANT THORNTON LLP Melville, New York April 6, 1998 -----END PRIVACY-ENHANCED MESSAGE-----