<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1996
REGISTRATION NO. 333-03189
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-2534306
(STATE OF INCORPORATION) (I.R.S. EMPLOYER ID. NO.)
1101 PENNSYLVANIA AVENUE, N.W. BERNARD A. GIROD
SUITE 1010 HARMAN INTERNATIONAL INDUSTRIES,
WASHINGTON, D.C. 20004 INCORPORATED
(202) 393-1101 1101 PENNSYLVANIA AVENUE, N.W., SUITE 1010
(ADDRESS AND TELEPHONE NUMBER OF WASHINGTON, D.C. 20004
REGISTRANT'S PRINCIPAL EXECUTIVE (202) 393-1101
OFFICES) (NAME, ADDRESS AND TELEPHONE NUMBER
OF AGENT FOR SERVICE)
----------------
COPIES TO:
ROBERT A. PROFUSEK, ESQ. LAURA PALMA, ESQ.
JONES, DAY, REAVIS & POGUE SIMPSON THACHER & BARTLETT
599 LEXINGTON AVENUE 425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10017
(212) 326-3939 (212) 455-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===========================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A+
+ REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE+
+ SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY+
+ OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT+
+ BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR+
+ THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE+
+ SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE+
+ UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES+
+ LAWS OF ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 13, 1996
4,000,000 SHARES
[LOGO OF
HARMAN INTERNATIONAL HARMAN INTERNATIONAL
APPEARS HERE] INDUSTRIES, INCORPORATED
COMMON STOCK
Of the 4,000,000 shares of Common Stock offered hereby, 2,000,000 shares are
being sold by the Company and 2,000,000 shares are being sold by the Selling
Stockholders (the "Offering"). See "Selling Stockholders." The Company will not
receive any of the proceeds from the sale of shares of Common Stock by the
Selling Stockholders. The Common Stock of the Company is traded on the New York
Stock Exchange (the "NYSE") under the symbol "HAR." On May 10, 1996, the last
reported sale price of the Common Stock on the NYSE was $48.375 per share. See
"Price Range for Common Stock."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
============================================================================
Underwriting
Price Discounts and Proceeds to Proceeds to
to Public Commissions (1) Company(2) Selling Stockholders
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........... $ $ $ $
Total(3)............ $ $ $ $
============================================================================
</TABLE>
(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses of the Offering, which will be paid by the
Company, estimated at $675,000.
(3) The Company and certain Selling Stockholders have granted to the
Underwriters 30-day options to purchase up to 600,000 additional shares
of Common Stock, pro rata, solely to cover over-allotments, if any. If the
Underwriters exercise these options in full, Price to Public will total
$ , Underwriting Discounts and Commissions will total $ , Proceeds to
Company will total $ and Proceeds to Selling Stockholders will total
$ .
The shares of Common Stock are offered by the several Underwriters named
herein, as and if delivered to and accepted by the Underwriters and subject to
their right to reject any orders in whole or in part. It is expected that
delivery of the certificates representing such shares will be made against
payment therefor at the office of Montgomery Securities on or about May , 1996.
-----------
MONTGOMERY SECURITIES
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
J.P. MORGAN & CO.
May , 1996
<PAGE>
The Infinity Compositions
Prelude loudspeaker system
[ART APPEARS HERE] provides home theatre and
musical playback through 4-way,
full range front speakers and
quadrapole surrounds.
JBL's EON is a series of compact, portable professional sound reinforcement
systems.
The Soundcraft Broadway digitally controlled audio console provides powerful
theatre audio production capabilities in a flexible automated desk.
The Mark Levinson Reference No. 33 Amplifier features
a vertical design to optimize power distribution and
operating temperature.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW
YORK STOCK EXCHANGE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere and incorporated by reference in this
Prospectus. See "Available Information" and "Incorporation of Certain
Information by Reference." References to fiscal years shall mean the fiscal
year ended on June 30 of such year. Unless otherwise indicated, the information
in this Prospectus assumes no exercise of the Underwriters' over-allotment
options and that the Common Stock is offered to the public at $50.00 per share,
the closing sale price for the Common Stock on the NYSE on May 3, 1996, the
last full day of trading prior to the date of this Prospectus.
Except for historical information contained in this Prospectus and in the
documents incorporated in this Prospectus by reference, the matters discussed
herein and therein contain forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
suggested in the forward-looking statements, including without limitation, the
effect of economic conditions, product demand, competitive products and other
risks detailed herein and in the Company's other filings with the Securities
and Exchange Commission (the "Commission"). See "Risk Factors."
THE COMPANY
Harman International Industries, Incorporated (together with its
subsidiaries, "Harman" or the "Company") is a worldwide leader in the design,
manufacture and marketing of high-quality, high-fidelity audio products
targeted primarily at the consumer, professional and original equipment
manufacturer ("OEM") markets. For almost 50 years, the Company and its
predecessors have been leaders and innovators in creating loudspeaker and
electronic products that deliver superior sound. The Company believes that its
JBL, Infinity and Harman Kardon brand names are well-known worldwide for
premium quality and performance. In order to expand and capitalize upon this
reputation, Harman has invested significant management and capital resources
over the years in developing an international design, engineering,
manufacturing and marketing capability that enables it to respond effectively
to customer needs, assure product quality and increase manufacturing
efficiency.
In the last three years, the Company's operations have been repositioned to
provide better customer focus and improved efficiency. The Company's operations
are now centered around three primary Groups: the Consumer Group, the
Professional Group and the OEM Group. During this same three-year period, the
Company completed a number of strategic acquisitions to improve its competitive
position in terms of market, product and technology. These acquisitions include
AKG Akustische u. Kino-Gerate Gesellschaft m.b.H. ("AKG"), a leading
manufacturer of microphones based in Austria; Studer Revox AG ("Studer"), a
leading manufacturer of broadcast and recording systems based in Switzerland;
Becker GmbH ("Becker"), a high technology manufacturer of automotive head units
(radio/cassette deck/CD player units) based in Germany; and Madrigal Audio
Laboratories, Inc. ("Madrigal"), the manufacturer of one of the most
prestigious brands of consumer electronic products, Mark Levinson, based in
Connecticut. Through these acquisitions, the Company believes it has positioned
each Group to offer a more complete line of products, thereby enabling the
Company to compete more effectively in its markets.
STRATEGY AND OPPORTUNITIES
The Company's strategy emphasizes utilization of its strengths to establish a
strong worldwide market position in the consumer, professional and OEM high-
fidelity audio markets. Management believes that significant opportunities
exist in market segments where an in-depth knowledge of sound reproduction
coupled with strong digital signal processing and manufacturing capabilities
give Harman a competitive advantage.
3
<PAGE>
CONSUMER GROUP
The Company designs, manufactures and markets loudspeakers under the JBL and
Infinity brand names for the consumer market. The Company also designs,
manufactures and markets a broad range of consumer electronic products. During
fiscal 1995, the Company's principal consumer electronics division, Harman
Kardon, Incorporated ("Harman Kardon"), achieved record sales, and in the first
three quarters of fiscal 1996, sales increased substantially over sales in the
same period of fiscal 1995. The Company's principal loudspeaker divisions, JBL
Incorporated ("JBL") and Infinity Systems, Inc. ("Infinity"), also achieved
record sales in the nine months ended March 31, 1996. The Company continues to
capitalize on these strong brand names by targeting growing markets, such as
home theater, and by developing new and innovative products. The Company
continually seeks to improve its market position in its core loudspeaker
business by introducing new products that offer greater efficiency and reduced
size.
PROFESSIONAL GROUP
The Company is a leading manufacturer and marketer of professional audio
electronics equipment, including loudspeakers, amplifiers, mixing consoles,
signal processing equipment, microphones and effects devices. Such products are
marketed on a worldwide basis under various trade names, including JBL,
Soundcraft, Allen & Heath, DOD, Lexicon, AKG, dbx, BSS, Turbosound, Orban,
Spirit and Studer.
The acquisitions of AKG in September 1993 and Studer in March 1994 enable the
Professional Group to supply a complete range of professional audio products
and turnkey systems to the principal segments of the industry, including
broadcast and recording, sound reinforcement and musical instrument support.
The Professional Group is developing digital systems that are integrated by
means of a proprietary digital architecture that permits all of the components
to communicate and allows for a single point of control. The ability to
integrate all of the audio components in the system also provides the
opportunity for better performance and lower costs.
OEM GROUP
Automotive Audio Systems. Harman is one of the world's largest manufacturers
of premium branded automotive OEM audio systems. During the past few years, the
Company has invested heavily to streamline its manufacturing operations and
establish relationships with new customers. During fiscal 1995 and the first
three quarters of fiscal 1996, the Company's OEM Group recorded significant
sales increases due to an increase in the number of automobile models offering
the Company's audio systems and higher penetration levels within existing
models. The Company's largest automotive OEM customer, Chrysler, offers
Infinity branded audio systems as options in thirteen different models. During
fiscal 1995, the Company began selling Harman Kardon premium branded systems to
Saab, Jaguar and Range Rover. Through the acquisition of Becker in 1995,
Mercedes, BMW and Porsche were added as customers. During the first nine months
of fiscal 1996, the Company began to sell premium branded Harman Kardon systems
to BMW for the 3-Series and Infinity branded systems to Chrysler for the Jeep
Grand Cherokee and Minivan in Europe. Other customers include Ford, Mitsubishi
and Toyota.
The Company believes significant growth opportunities continue to exist in
the automotive OEM market through higher penetration levels within existing
models, increases in the number of models offering the Company's audio systems
and the addition of new automotive OEM customers. Furthermore, the acquisition
of Becker permits the OEM Group to offer completely integrated audio systems
that include the head unit, amplifiers, loudspeakers and associated electronics
for the first time. The Company believes this integrated audio system provides
a platform for further expansion into associated automotive electronic products
such as communication, security and navigation.
Audio for Computers. During the first nine months of fiscal 1996, the Company
began to design and manufacture branded audio systems and loudspeakers for
manufacturers of personal computers. The Company intends to develop such
computer OEM systems in parallel with its automotive OEM business.
4
<PAGE>
Through an alliance with Compaq Computer Corporation, the Company has designed
a series of audio systems that will be incorporated as standard equipment in
Compaq's new Presario line of personal computers. Engineering and design have
been in process for more than a year as Harman and Compaq sought to create
high-performance audio for computers. The Harman designed and manufactured
systems will be badged "JBL-Pro." First production began in a dedicated new
facility in Northridge, California in early May 1996.
Initial shipments of a complete Harman Kardon surround sound system were made
to Gateway 2000 during April 1996. The surround sound system is offered by
Gateway as an option on its new product, named Destination. The Destination
product is a new generation of "TV computers" that combines familiar personal
computer functions with traditional home high fidelity and television reception
functions. The software incorporated in Destination, which facilitates
reception of detailed television program information, has been developed by the
Company's Harman Interactive Group and is branded Harman Smart TV. The Company
is in discussions with a number of additional computer makers to whom it hopes
to market Harman Smart TV and OEM audio and loudspeaker systems.
The Company was incorporated in Delaware in 1980. The Company's principal
executive offices are located at 1101 Pennsylvania Avenue, NW, Suite 1010,
Washington, DC 20004. The Company's telephone number is (202) 393-1101.
RECENT DEVELOPMENTS
For the nine months ended March 31, 1996, the Company's sales and operating
income increased 19% and 20%, respectively, from the same period in the prior
year. The Company reported earnings per share of $2.17 for the nine months
ended March 31, 1996, compared to $1.74 for the nine months ended March 31,
1995. These significantly improved earnings were the result of strong sales by
all Groups, increased operating leverage and new products. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company................. 2,000,000 shares
Common Stock offered by the Selling Stockholders.... 2,000,000 shares
Common Stock to be outstanding after the Offering... 18,270,953 shares(1)
Use of Proceeds by the Company...................... To repay outstanding indebtedness
NYSE Symbol......................................... HAR
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ENDED JUNE 30, MARCH 31,
------------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(2):
Net sales.............................. $586,941 $604,454 $664,913 $862,147 $1,170,224 $827,818 $988,482
Gross profit........................... 136,613 164,622 190,563 269,162 364,081 260,598 300,831
Operating income.................. 3,385 27,547 41,255 66,332 87,449 62,031 74,417
Income (loss) before taxes, minority
interest and extraordinary items....(20,646) 5,893 18,570 42,686 61,157 41,339 51,612
Net income (loss)...................... (19,764) 3,487 11,246 25,664 41,161 27,466 35,253
Net income (loss) per common share...$(2.15) $.37 $ .99 $ 1.83 $ 2.58 $ 1.74 $ 2.17
Weighted average number of common
shares outstanding.................... 9,195 9,371 11,367 14,042 15,980 15,858 16,177
<CAPTION>
MARCH 31, 1996
-----------------------
ACTUAL AS ADJUSTED(3)
-------- --------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital..................................................................... $344,363 $344,363
Total assets........................................................................ 985,507 985,507
Short-term debt..................................................................... 34,763 34,763
Long-term debt...................................................................... 354,074 261,869
Shareholders' equity................................................................ 311,715 403,920
</TABLE>
- --------
(1) Excludes 1,172,538 shares of Common Stock issuable upon the exercise of
outstanding options as of April 30, 1996 with a weighted average exercise
price of $25.77 per share granted under the Company's various executive
incentive plans.
(2) All periods reflect the 5% stock dividend declared in August 1995.
(3) Adjusted to reflect the application of the estimated net proceeds from the
sale of 2,000,000 shares of Common Stock offered by the Company hereby and
the application of the net proceeds therefrom to repay outstanding
indebtedness. See "Use of Proceeds" and "Capitalization."
6
<PAGE>
RISK FACTORS
Prospective purchasers should carefully consider the following risk factors
and other information contained in this Prospectus in evaluating an investment
in the Common Stock offered hereby.
DEPENDENCE ON KEY CUSTOMERS
Sales to Chrysler accounted for 10.2% of the Company's consolidated net sales
for the nine months ended March 31, 1996. The Company's next largest customers,
Mercedes Benz, Circuit City and Ford, accounted for an aggregate of
approximately 20% of its consolidated net sales for the nine months ended March
31, 1996. The loss of any one of these significant customers could have a
material adverse effect on the Company.
DEPENDENCE ON CONSUMER SPENDING
The Company's sales are dependent to a substantial extent on discretionary
spending by consumers, which may be adversely impacted by economic conditions
affecting disposable consumer income and retail sales. In addition, sales of
the Company's audio products to the automotive OEM market are dependent on the
overall success of the automobile industry, as well as the willingness, in many
instances, of automobile purchasers to pay for the option of a premium branded
automotive audio system.
ACQUISITION STRATEGY
A significant element of the Company's growth strategy has been the
acquisition of complementary businesses. The Company anticipates that it may
continue to make such acquisitions from time to time to the extent they are
compatible with the Company's long-term strategy. The integration of newly
acquired businesses into the Company presents certain risks in addition to
those presented by growth through internal development, including additional
demands on management time and attention. In addition, certain of the Company's
acquisitions have been of businesses that had suffered losses prior to
acquisition by the Company, including AKG in September 1993, Studer in March
1994 and Becker in February 1995.
DEPENDENCE ON SUPPLIERS
The Company is dependent upon certain unaffiliated domestic and foreign
suppliers for various components, parts, raw materials and certain finished
products. Some of the Company's suppliers produce products that compete with
the Company's products. Although the Company believes that the loss of any one
or more of its suppliers would not have a long-term material adverse effect on
the Company because other suppliers would be able to fulfill the Company's
requirements, the loss of certain of such suppliers could, in the short term,
adversely affect the Company's business until alternative suppliers could be
activated. The Company has begun using multiple vendors and has thus limited
its reliance on any single supplier. Arrangements with foreign suppliers are
also subject to the risks of doing business abroad, such as import duties,
trade restrictions, work stoppages, foreign currency fluctuations, political
instability and other factors which could have an adverse effect on the
Company.
COMPETITION
The high fidelity audio products business is fragmented and highly
competitive. Many manufacturers, large and small, domestic and foreign, offer
audio systems that vary widely in price and quality and are marketed through a
variety of channels, including audio specialty stores, discount stores,
department stores and mail order firms. Certain competitors of the Company have
financial and other resources greater than those of the Company. There can be
no assurance that the Company will continue to compete effectively against
existing or new competitors that may enter its markets.
7
<PAGE>
CURRENCY EXCHANGE RATES
The Company's operations are subject to fluctuations in foreign currency
exchange rates. Significant assets and operations of the Company are located in
Europe and Asia. In addition, the Company purchases certain foreign-made
products. The Company hedges a portion of its foreign currency exposure and,
due to the multiple currencies involved in the Company's business, foreign
currency positions are partially offsetting and are netted against one another
to reduce exposure.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Restated Certificate of Incorporation, as
amended (the "Certificate"), and its By-Laws, as amended (the "By-Laws"), may
make it more difficult for a third party to make, or may discourage a third
party from making, an acquisition proposal for the Company or initiating a
proxy contest and may thereby inhibit a change in control of the Company or the
removal of incumbent management or directors. See "Certain Provisions of the
Certificate, the By-Laws and Delaware Law."
8
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of 2,000,000 shares of Common Stock offered by
the Company, after deducting estimated underwriting discounts and offering
expenses, are estimated to be approximately $92,205,000 ($106,137,000 if the
Underwriters' over-allotment options are exercised in full) based on the
closing price of the Common Stock set forth on the cover page of this
Prospectus. The Company will not receive any of the proceeds from the sale of
shares of Common Stock by the Selling Stockholders.
The Company intends to use its net proceeds to repay a portion of the
outstanding indebtedness under its unsecured revolving credit facility due
September 2000 ($212.6 million outstanding as of March 31, 1996). As of March
31, 1996, the effective interest rate on the aggregate indebtedness to be
repaid with the net proceeds from the Offering was approximately 5.80%. After
the repayment of indebtedness described above, the Company will, on a pro forma
basis as of March 31, 1996, have an aggregate of $144.6 million of borrowing
capacity under its unsecured revolving credit facility and approximately $120.4
million of total borrowings outstanding. In September 1995, the Company
incurred $9.8 million of this indebtedness in the acquisition of Madrigal and
in March 1996 the Company incurred $7.6 million of this indebtedness as a
result of making the final payment for the acquisition of Becker.
PRICE RANGE FOR COMMON STOCK
The Company's Common Stock is traded on the NYSE under the symbol "HAR." The
following table sets forth, for the periods indicated, the high and low sale
prices of shares of the Common Stock as reported on the NYSE.
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL QUARTER ENDED HIGH LOW
------------------- ----------------------------------- ------- -------
<S> <C> <C> <C>
1994 September 30, 1993................................ $20.953 $16.548
December 31, 1993................................. 27.858 17.977
March 31, 1994.................................... 32.024 25.953
June 30, 1994..................................... 29.763 23.334
1995 September 30, 1994................................ 33.334 24.048
December 31, 1994................................. 36.191 30.477
March 31, 1995.................................... 40.001 34.048
June 30, 1995..................................... 39.048 32.382
1996 September 30, 1995................................ 49.750 35.596
December 31, 1995................................. 48.875 39.750
March 31, 1996.................................... 41.250 32.000
June 30, 1996 (through May 10, 1996)............... 50.250 37.375
</TABLE>
DIVIDEND POLICY
No cash dividends were paid on the Company's Common Stock until a cash
dividend of $.04 per share was paid for the fourth quarter of fiscal 1994.
During fiscal 1995, the Company declared dividends of $.18 per share, with a
dividend of $.04 per share declared for each of the first two quarters and a
dividend of $.05 per share declared for the third and fourth quarters. During
the current fiscal year, dividends of $.05 per share have been declared for
each of the first three quarters. The third quarter dividend is to be paid on
May 29, 1996 to each stockholder of record as of the close of business on May
15, 1996. In addition, in August 1995 the Company declared a special 5% stock
dividend. In deciding whether to pay dividends in the future, the Company's
Board of Directors will consider factors it deems relevant, including the
Company's earnings and financial condition and its working capital and capital
expenditure requirements. Accordingly, past dividend payments are not
necessarily indicative of future dividends. In addition, the payment of
dividends is subject to certain restrictions contained in the Company's
revolving credit facility, indenture notes, senior notes and senior
subordinated notes. Management does not believe that such restrictions
materially limit the Company's ability to pay future dividends consistent with
its dividend history.
9
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of the
Company at March 31, 1996 and as adjusted to reflect the sale of 2,000,000
shares of Common Stock offered by the Company hereby at an assumed offering
price of $48.375 per share and the anticipated application of the estimated net
proceeds therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------
(UNAUDITED)
ACTUAL AS ADJUSTED
----------- -------------------
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
Short-term debt:
Notes payable................................................... $ 21,831 $ 21,831
Current portion of long-term debt...................... 12,932 12,932
---------- -----------------
Total short-term debt...................................... $ 34,763 $ 34,763
======= ==========
Long-term debt:
Senior notes...................................................... $ 17,500 $ 17,500
Other senior debt.............................................. 226,774 134,569
Senior subordinated notes................................ 109,800 109,800
--------- ---------------
Total long-term debt...................................... 354,074 261,869
Minority interest................................................ 3,896 3,896
Shareholders' equity:
Preferred Stock, $.01 par value; 5,000,000 shares au-
thorized; none issued and outstanding................ -- --
Common Stock, par value $0.01 per share; 50,000,000
shares authorized; 16,269,503 shares issued and
outstanding; 18,269,503 shares issued and outstanding,
as adjusted(1)................................................ 160 180
Additional paid-in capital................................ 182,950 275,135
Equity adjustment from foreign currency translation.... (2,621) (2,621)
Retained earnings............................................ 131,226 131,226
--------- ---------------
Shareholders' equity...................................... 311,715 403,920
--------- ---------------
Total capitalization.................................... $669,685 $669,685
======= ========
</TABLE>
- --------
(1) Excludes 1,169,988 shares of Common Stock issuable upon the exercise of
outstanding options as of March 31, 1996 with a weighted average exercise
price of $25.70 granted under the Company's various executive incentive
plans.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of and for each
of the fiscal years in the five-year period ended June 30, 1995 are derived
from the consolidated financial statements of the Company, which consolidated
financial statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants. The selected consolidated financial data
presented below for the nine-month periods ended March 31, 1996 and 1995 and as
of March 31, 1996 are derived from the unaudited condensed consolidated
financial statements of the Company. In the opinion of the Company's
management, such unaudited condensed consolidated financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the consolidated financial position of the Company and
results of operations for the periods presented. The results of operations for
the nine-month period ended March 31, 1996 are not necessarily indicative of
results to be expected for the fiscal year ending June 30, 1996. The selected
consolidated financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus and the consolidated financial statements
of the Company and its subsidiaries incorporated herein by reference. See
"Incorporation of Certain Information by Reference."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ENDED JUNE 30, MARCH 31,
-------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- --------- ---------- -------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA(1):
Net sales.............. $586,941 $604,454 $664,913 $ 862,147 $1,170,224 $827,818 $988,482
Cost of sales.......... 450,328 439,832 474,350 592,985 806,143 567,220 687,651
-------- -------- -------- --------- ---------- -------- --------
Gross profit.......... 136,613 164,622 190,563 269,162 364,081 260,598 300,831
Selling, general and
administrative
expenses.............. 133,228 137,075 149,308 202,830 276,632 198,567 226,414
-------- -------- -------- --------- ---------- -------- --------
Operating income....... 3,385 27,547 41,255 66,332 87,449 62,031 74,417
Interest expense....... 23,917 21,075 23,566 22,110 25,284 19,064 21,682
Other expenses (in-
come)................. 114 579 (881) 1,536 1,008 1,628 1,123
-------- -------- -------- --------- ---------- -------- --------
Income (loss) before
taxes, minority inter-
est and extraordinary
item ................. (20,646) 5,893 18,570 42,686 61,157 41,339 51,612
Income tax expense
(benefit)............. (882) 2,406 7,324 16,248 19,642 13,466 16,332
Minority interest...... -- -- -- 26 80 133 27
-------- -------- -------- --------- ---------- -------- --------
Income (loss) before
extraordinary item.... (19,764) 3,487 11,246 26,412 41,435 27,740 35,253
Extraordinary item, net
of income taxes....... -- -- -- (748) (274) (274) --
-------- -------- -------- --------- ---------- -------- --------
Net income (loss)...... $(19,764) $ 3,487 $ 11,246 $ 25,664 $ 41,161 $ 27,466 $ 35,253
======== ======== ======== ========= ========== ======== ========
Income (loss) per
common share before
extraordinary item.... $ (2.15) $ .37 $ .99 $ 1.88 $ 2.60 $ 1.76 $ 2.17
======== ======== ======== ========= ========== ======== ========
Net income (loss) per
common share.......... $ (2.15) $ .37 $ .99 $ 1.83 $ 2.58 $ 1.74 $ 2.17
======== ======== ======== ========= ========== ======== ========
Weighted average number
of common shares
outstanding........... 9,195 9,371 11,367 14,042 15,980 15,858 16,177
<CAPTION>
JUNE 30,
-------------------------------------------------- MARCH 31,
1991 1992 1993 1994 1995 1996
-------- -------- -------- --------- ---------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........ $ 80,649 $102,374 $147,492 $ 215,878 $ 257,564 $344,363
Total assets........... 359,402 415,909 431,726 680,691 886,872 985,507
Short-term debt........ 60,070 69,697 37,762 69,254 40,214 34,763
Long-term debt......... 132,809 132,675 175,583 156,577 266,021 354,074
Shareholders' equity... 80,781 111,241 111,149 232,021 289,490 311,715
</TABLE>
- --------
(1) All periods reflect the 5% stock dividend declared in August 1995.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Except for historical information contained in this Prospectus and in the
documents incorporated in this Prospectus by reference, the matters discussed
herein and therein contain forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
suggested in the forward-looking statements, including without limitation, the
effect of economic conditions, product demand, competitive products and other
risks detailed herein and in the Company's other filings with the Commission.
See "Risk Factors."
RESULTS OF OPERATIONS
Comparison of the Three-Month and Nine-Month Periods Ended March 31, 1996 and
1995
Net sales for the quarter ended March 31, 1996, totaled $339.3 million, a 9%
increase over the comparable period in the prior year. Excluding Becker, sales
increased 17%. Becker sales in the quarter were lower than the comparable
period in the prior year due to the phase-out of a group of activities that
were irrelevant to the Company's business, such as sewing machine circuit
boards and air bag sensors.
For the first nine months of the year, sales of $988.5 million were 19% above
the prior year and 12% higher excluding the sales contribution of Becker from
both years (Becker sales were reported for the first time in the third quarter
last year).
The Consumer Group reported higher sales for the third quarter and the nine
months. Harman Kardon sales almost doubled for the quarter as the division
gained market share in North America and Europe. Infinity reported vigorous
sales growth, especially in Germany. The addition of the Mark Levinson and
Proceed lines through the September 1995 acquisition of Madrigal contributed to
the sales growth.
The Professional Group contributed higher sales for the third quarter and the
nine months, with virtually all operations reporting increased sales. JBL
Professional sales were enhanced by the international success of its EON line
of compact, portable sound reinforcement systems. Studer sales were lower due
to several large contracts completed in the prior year.
The OEM Group produced higher sales for the third quarter and the nine
months. Shipments of high fidelity systems for the Chrysler Minivan, Ford
Explorer, Jeep Grand Cherokee and Dodge Ram pickup trucks were excellent.
Becker reported lower sales in the quarter due to the phase-out of the non-core
businesses referred to above.
The Company's gross profit margin for the quarter ended March 31, 1996, was
30.5% ($103.4 million) compared to 30.2% ($93.9 million) in the prior year. The
increase in the gross profit margin for the quarter reflects increased
operating leverage at the automotive OEM factories in North America and the
United Kingdom and improved performance by Harman Kardon. The gross profit
margin for the first nine months of fiscal 1996 was 30.4% ($300.8 million)
compared to 31.5% ($260.6 million) in the previous year. The decrease in the
gross margin percentage in the nine months primarily reflects the inclusion of
Becker, which was acquired in the third quarter last year.
Operating income as a percentage of sales was 8.2% ($27.7 million) for the
third quarter ended March 31, 1996, up from 7.4% ($23.1 million) for the same
period in the prior year. The increase results from improved gross margin as
discussed above and lower selling, general and administrative expenses as a
percentage of sales. For the first nine months, operating income as a
percentage of sales was 7.5%, equivalent to the prior year.
Interest expense for the three months ended March 31, 1996, of $7.2 million
was equal to the third quarter of the prior year. For the nine months ended
March 31, 1996, interest expense was $21.7 million, up
12
<PAGE>
from $19.1 million for the nine months ended March 31, 1995. Average borrowings
outstanding were $379.7 million for the third quarter of fiscal 1996 and $354.6
million for the nine months, up from $287.3 million and $266.2 million,
respectively, for the same periods in the prior year. Higher average borrowings
in fiscal 1996 result from the Becker and Madrigal acquisitions and the
financing of increased working capital requirements.
The impact of the increase in average borrowings on interest expense was
offset by a substantial reduction in the average interest rate on borrowings.
The average interest rate on borrowings was 7.6% for the third quarter and 8.2%
for the nine months ended March 31, 1996, down from 10.0% for the third quarter
and 9.6% for the nine months ended March 31, 1995. The decrease in average
interest rates results from generally lower market interest rates worldwide and
the refinancing of unsecured lines of credit with a committed revolving credit
facility agreement in September 1994. Interest expense as a percentage of sales
was 2.2% for the first nine months of fiscal 1996, down from 2.3% for the
comparable period in the previous year.
Income before income taxes, minority interest and extraordinary items for the
third quarter of fiscal 1996 was $20.3 million, up from $15.7 million in the
previous year. For the nine months ended March 31, 1996, income before income
taxes, minority interest and extraordinary items increased to $51.6 million,
compared with $41.3 million in the prior year period.
The effective tax rate for the third quarter of fiscal 1996 was 31.5%
compared with 27.4% in the same period a year ago. The effective tax rate for
the first nine months of fiscal 1996 was 31.6% compared with 32.6% in the prior
year. The effective tax rates are below United States statutory rates due to
the restructuring of certain foreign subsidiaries to take advantage of prior
years' tax losses. The Company calculates its effective tax rate based upon its
current estimate of annual results.
Net income for the three months ended March 31, 1996, was $13.9 million, or
$0.86 per share, compared with $11.4 million, or $0.72 per share, in the
previous year. Net income for the first nine months of fiscal 1996 was $35.3
million, or $2.17 per share, compared with $27.5 million, or $1.74 per share,
in the previous year. Prior year earnings per share data have been restated to
give effect to the special 5% stock dividend declared and issued in August
1995.
FINANCIAL CONDITION
Net working capital at March 31, 1996, was $344.4 million, compared with
$257.6 million at June 30, 1995. Working capital increased primarily due to the
increase in inventories from $236.5 million at June 30, 1995, to $302.6 million
at March 31, 1996. Higher inventory levels reflect the support of increased
sales volumes, requirements for new product launches in the fourth quarter and
the acquisition of Madrigal.
Borrowings under the revolving credit facility at March 31, 1996, were $212.6
million, comprised of swing line borrowings of $6.7 million, which are included
in notes payable, and competitive advance borrowings and revolving credit
borrowings of $205.9 million. Borrowings under the revolving credit facility at
June 30, 1995, were $115.9 million, comprised of swing line borrowings of $9.7
million and competitive advance borrowings and revolving credit borrowings of
$106.2 million. Increased borrowings reflect the financing of capital
expenditures, additional working capital requirements, the Madrigal acquisition
and final payments for the Becker acquisition. In the second quarter of fiscal
1996, the revolving credit facility was amended and increased from $220 million
to $275 million, and the maturity was extended one year to September 30, 2000.
Accrued liabilities decreased $13.1 million, from $164.1 million to $151.0
million, primarily due to the funding of previously announced restructuring
programs to enhance the productivity of recent acquisitions.
Excess of cost over fair value of assets acquired increased $14.4 million,
from $122.5 million to $136.9 million, reflecting final acquisition accounting
adjustments for Becker and the acquisition of Madrigal.
13
<PAGE>
BUSINESS
HISTORY AND DEVELOPMENT
Since its formation in 1980, the Company has developed internally and through
acquisitions the capacity to design, manufacture and market its products to
compete worldwide in the most significant areas of the high-quality, high-
fidelity audio markets. While the Company has existed as a separate corporate
entity for only 16 years, its significant subsidiaries have been in business
for substantially longer periods, some previously as part of the same
enterprise and most under their current management.
In 1953, Dr. Sidney Harman, Chairman and Chief Executive Officer of the
Company, co-founded Harman Kardon to design, manufacture and market high-
fidelity consumer electronic audio components. Harman Kardon was the first
domestic manufacturer to produce and market a high-fidelity receiver (a
combination of tuner, preamplifier and power amplifier in one chassis). In
1962, Harman Kardon was acquired by a predecessor of the Company (the
"Predecessor"). The Predecessor expanded its participation in the high-fidelity
field in 1969 by acquiring JBL, a domestic manufacturer of high-quality
loudspeakers designed for professional and consumer markets, and by forming
international subsidiaries to market and distribute its audio products in
Europe and Japan. In August 1977, the Predecessor was acquired by Beatrice
Foods Co. (now Beatrice Companies, Inc. ("Beatrice")), when Dr. Harman became
the Under Secretary of Commerce of the United States.
In January 1980, after the conclusion of his service as Under Secretary of
Commerce, Dr. Harman organized the Company to acquire from Beatrice the JBL
loudspeaker business and the international distribution companies, which
together represented approximately 60% of the Predecessor's business. Since
1980, through both internal growth and a series of strategic acquisitions, the
Company has (i) expanded its loudspeaker business by adding new product lines
and entering new markets, (ii) broadened its consumer and professional customer
base through diversification into the consumer and professional audio
electronics components business and (iii) increased its manufacturing and
distribution capabilities domestically and internationally in conjunction with
its strategy to become a vertically-integrated designer, manufacturer and
worldwide marketer of high-quality, high-fidelity audio products designed for
consumer and professional use.
STRATEGY
Harman is a leading domestic and international manufacturer and marketer of
high-fidelity audio products. The Company's goal is to capitalize on its
technical expertise and reputation for creating superior sound and to translate
this expertise into increased market share in existing markets and into new
product areas wherever an in-depth understanding of sound gives Harman a
competitive edge. The key elements of its strategy are:
Provide Superior Sound. Harman strives to provide its customers with products
that deliver high-quality, high-fidelity sound. The Company and its
predecessors have been leaders and innovators in loudspeaker and electronic
production and technology for almost 50 years. Management believes the
Company's research, development and engineering capabilities are among the most
advanced in the audio field.
Capitalize on Brand Equity. The Company believes that its brand names are
well recognized worldwide for premium quality and performance. Harman believes
that this strong brand name recognition has enabled it to expand its product
offerings and market share in the consumer, professional and OEM audio markets,
and will continue to facilitate such growth in the future.
Pursue Market Segment Diversification. The Company has emphasized utilization
of its strengths in delivering superior sound beyond the consumer and
professional loudspeaker markets. Harman has expanded into the automotive OEM
and aftermarket loudspeaker business both domestically and internationally. The
Company has also expanded into developing areas in the consumer and
professional audio electronics markets where it believes that the integration
of electronics and loudspeakers will improve a product's performance
14
<PAGE>
or provide a systems solution, focusing most recently on home theater and
branded OEM audio systems for personal computers.
Integrate Design, Engineering, Manufacturing and Marketing. Harman has
invested significant resources in developing sophisticated manufacturing
processes and facilities in the United States and Europe. Management believes
that its ability to manufacture innovative, high-quality products is
attributable to the Company's integrated facilities, coupled with its policy of
emphasizing workers' education, training and participation in the decision-
making process. The Company seeks to integrate the disciplines of design,
engineering, manufacturing and marketing. As distinguished from the traditional
separation of these functions, management believes that communication and
cooperation among all functional areas significantly reduces development time,
generates products which can be more efficiently and competitively produced,
and improves the Company's ability to respond to customer needs.
Market on a Worldwide Basis. The Company and its Predecessor have been
actively marketing products worldwide for almost 50 years. Harman strives to
produce products that are responsive to the requirements of different
international markets for functionality, appearance and performance. As a
result, the Company believes that its major brands are well recognized for high
quality in most major markets worldwide.
OPPORTUNITIES
The Company believes that its well-recognized brand names, its reputation for
high quality products and superior sound, and its design and manufacturing
capabilities position it well to capitalize on current industry trends. To
exploit opportunities created by the industry-wide transition from analog to
digital processing, the Company continues to enhance existing product offerings
and to develop new proprietary products, including software-driven audio
systems with integrated digital architecture that permits communication among
all components. Within its Consumer, Professional and OEM Groups, the Company
foresees growth opportunities including the following:
Existing and Emerging Market Segments. The Company continues to leverage its
brand names to broaden its product offerings in existing market segments and
enter new segments, including surround sound, home theater and audio systems
for personal computers. The Company continually seeks to improve its market
position in its important loudspeaker business by introducing new products that
offer greater efficiency and reduced size. Further, the Company's advanced
technology in loudspeakers and electronics permits it to develop integrated
systems which offer substantial improvements in performance. One such example
is the recent introduction of Infinity's Compositions line, which incorporates
a powered subwoofer that enables the listener to enjoy home theater sound with
modest power requirements. Harman offers a complete line of home theater
products, including JBL's $50,000 flagship Synthesis I system; the Company
believes its breadth of product offerings positions it to capitalize on the
high-growth home theater market segment. Finally, the Company intends to pursue
opportunities in emerging product categories such as electronic components that
offer simplified digital controls, reduced size and high quality sound.
Comprehensive, Integrated Product Offerings. Management believes that the
ability to offer professional customers complete turnkey systems across its
principal market segments, including broadcast and recording, sound
reinforcement and musical instrument support, will permit the Company to
continue increasing sales in these professional market segments. In addition,
the Company believes that advances in motion picture audio and recording
technology will spur demand for loudspeakers and electronics in movie theaters
and recording studios. Management also expects that emerging markets in Eastern
Europe and Asia will increase demand for its professional audio products and
recording and broadcast equipment to satisfy infrastructure needs.
Fully-Integrated Automotive Audio Systems. The Company believes significant
growth opportunities exist within the automotive audio market to increase sales
by increasing product penetration in OEM models currently supplied, expanding
the number of automobile models offering its systems and adding new OEM
15
<PAGE>
customers. The recent Becker acquisition complements the Company's JBL,
Infinity and Harman Kardon automotive audio systems and enables the Company to
offer fully-integrated automotive audio systems for the first time, allowing
for a substantial increase in the unit price of its audio systems. The Company
believes that such systems, which incorporate a head unit, amplifiers,
loudspeakers and associated electronics, also provide a platform for the
Company's expansion into additional automotive electronic products such as
communications, security and navigation, thereby providing the opportunity for
further increases in system content.
Computer OEM Systems. In broadening its OEM business to include personal
computers, the Company has developed a series of branded audio systems for
Compaq, Gateway and other manufacturers of personal computers. These audio
systems provide high quality sound in a small package and substantially enhance
the entertainment appeal and capabilities of the personal computer. The Company
believes that the number of personal computers equipped with multimedia
capabilities will continue to increase at a high rate on a worldwide basis, and
that the Company is well positioned to capitalize on this emerging market
segment with its JBL, Infinity and Harman Kardon brand names.
New Technology. Through the extensive development of digital signal
processing capabilities by its electronic engineering organization, the Company
is generating a substantial body of intellectual property, including
proprietary software titled Harman Smart TV, which enables the personal
computer ("PC") to serve as a user-friendly television set. Harman Smart TV is
presently bundled in Gateway 2000's new Destination product. The Company has
also developed the ability to provide, on a paid subscriber basis, TV Guide(R)
information to buyers of PCs equipped with Harman Smart TV. The Company
currently is in discussions with other PC makers who have expressed interest in
Harman Smart TV.
The Company is also in discussions with PC makers who have indicated interest
in the Company's proprietary VMAx(TM) software, which generates virtual
surround sound images through only two speakers. The Company's 6 Axis(TM)
surround sound system employed in the new Harman Kardon Citation Processor is
of interest to a number of advanced technology users. The Company is now in
discussions with several potential customers to license this technology. These
and other technological developments form a body of intellectual property
around which the Company believes it can develop new revenue sources.
PRODUCTS
The Company designs, engineers, manufactures and markets worldwide a broad
range of high-quality, high-fidelity audio loudspeakers and electronics for the
consumer (both home and automotive aftermarket), professional (broadcast and
recording, sound reinforcement, and musical instrument support) and OEM
(automotive and personal computer) markets. For the first nine months of fiscal
1996, the Consumer Group accounted for approximately 33% of the Company's
sales, the Professional Group contributed approximately 34% of sales and the
OEM Group generated approximately 33% of sales.
Consumer Group. The Company designs, manufactures and markets loudspeakers
for the consumer market principally under the JBL and Infinity brand names.
Since its formation in 1948, JBL has designed loudspeakers to appeal to audio
enthusiasts who desire superior-quality sound reproduction. JBL loudspeakers
sold to the consumer market employ techniques originally developed by the
Company for professional use in recording studios, concert halls, theaters,
airports and other acoustically-demanding environments. JBL's diverse product
line gives customers a wide range of speaker choices: floorstanding, bookshelf,
built-in, wireless, powered, transportable and wall or ceiling mountable
loudspeakers, in styles and finishes ranging from high gloss piano lacquer to
genuine wood veneers. JBL's introduction of wireless technology in the
SoundEffects speaker system allows easy home theater and multi-room
installation.
From its beginning in 1968, Infinity has developed high quality loudspeakers
with their own audio character, which is commonly identified as "linear,"
"symmetrical" or "neutral." These characteristics are expressed in
sophisticated acoustic configurations utilizing injection-molded graphite
speaker cone material,
16
<PAGE>
electro-magnetic induction tweeters and mid-range drivers. Compositions,
Infinity's new home theater loudspeakers, has received excellent reviews from
the high fidelity audio press for outstanding design and performance.
The more expensive JBL and Infinity loudspeakers are housed in high-gloss
lacquer or wooden veneer cabinets which complement the quality components they
enclose. The Company has made significant investments in its loudspeaker
cabinet production facilities in California and in Denmark and believes that
they are among the most advanced cabinet production facilities in the world.
The Company designs, manufactures and markets a broad range of consumer audio
electronics products on a worldwide basis. Both JBL and Infinity also offer
premium automotive aftermarket loudspeaker and amplifier products. The
Company's consumer electronics products facilitate the marketing of complete
systems incorporating the Company's loudspeakers, such as surround sound home
theater installations.
Founded in 1953, Harman Kardon has been a leading innovator in the
development of high-quality audio components which improve the listening
experience and reflect a commitment to value and ease-of-use. The realization
of these principles is reflected in Harman Kardon's current product offerings,
including audio-video stereo receivers featuring Dolby Pro-Logic and AC-3
technology, and front-loading, bit stream compact disc changers.
In addition, the Company is a designer and manufacturer of Citation high-end
surround sound processors, amplifiers and loudspeakers manufactured in the
United States for the growing U.S. and international home theater market.
AudioAccess is a leader in the field of in-home, multi-source, multi-zone sound
system amplifiers and controls; and Madrigal is the manufacturer of the
renowned Mark Levinson and Proceed brand audiophile high-fidelity product
lines.
Professional Group. The Company designs, manufactures and markets products in
all principal segments of the professional market, offering complete systems
for professional installations around the world. The Professional Group
includes many of the most respected names in the industry including JBL,
Soundcraft, Allen & Heath, DOD, Lexicon, AKG, BSS, dbx, Orban, Turbosound,
Studer and UREI. Professional installations of Harman products include
stadiums, opera houses, concert halls, recording studios, broadcast studios,
theaters, cinemas and touring concerts. Sound systems incorporating components
manufactured by JBL, Lexicon, AKG, Turbosound, Studer and Soundcraft are in use
around the world in such places as the Great Hall of the People in Beijing,
China, the Royal Danish Theater in Copenhagen and Abbey Road Studio in England.
Performing artists such as Pink Floyd, U2, The Rolling Stones, Oasis and Wynton
Marsalis use Harman professional equipment when on tour.
The professional market has advanced rapidly and is heavily involved in
digital technology. Harman's Professional Group is a leader in this market. The
strength of the Professional Group is derived from its ability to share
research and development, engineering talent and other substantial digital
resources among its divisions. Soundcraft, Lexicon, Studer and DOD each have
substantial digital resources and work together to achieve common goals by
blending their respective areas of strength and expertise.
The Company believes that the Professional Group's loudspeaker products are
well-known for high quality and superior sound. The JBL Professional portfolio
of products includes studio monitors, loudspeaker systems, power amplifiers,
sound reinforcement systems, bi-radial horns, theater systems and surround
sound systems as well as industrial loudspeakers. The AKG acquisition has
provided the Company with additional professional loudspeaker market strength
through the addition of the Turbosound Floodlight and Flashlight loudspeaker
lines.
OEM Group. Harman is a leading global manufacturer of premium branded
automotive OEM audio systems. In its sale of loudspeakers, head units and other
audio products to the automotive OEM market, the
17
<PAGE>
Company takes advantage of its expertise in the design and manufacture of high-
quality loudspeakers, radios and other electronics, as well as the reputation
for quality associated with its JBL, Infinity, Harman Kardon and Becker brand
names. The Company's expertise in designing and manufacturing transducers
utilizing special materials allows the Company to collaborate with automobile
manufacturers to design lighter sound systems that contribute to increases in
automobile fuel efficiency. The addition of head unit and other electronics
expertise through the Becker acquisition now enables the Company to provide
complete high-fidelity audio systems solutions to automobile manufacturers.
The Company manufactures audiophile OEM sound systems for automobiles,
including Infinity systems sold to Chrysler and Mitsubishi in models such as
Chrysler's Jeep Grand Cherokee and Mitsubishi's 3000GT, JBL systems sold to
Ford in models such as Lincoln's Continental and Ford's Windstar Minivan and
Harman Kardon systems sold to BMW (3-series), Jaguar, Saab and Land Rover
(Range Rover), as well as a non-branded premium system sold to Toyota for the
Avalon. These premium OEM audio systems are engineered individually for each
automobile model to maximize acoustic performance. Becker supplies head units
and other electronics to Mercedes, BMW and Porsche.
The Company manufactures a series of "JBL-Pro" branded audio systems for
Compaq's Presario line of personal computers and a higher-powered Harman Kardon
system for Gateway's new Destination TV-PC product. Destination also includes
Harman's Smart TV. These audio systems provide high-quality sound and thus
enhance the appeal and capability of the personal computer as an entertainment
device.
MANUFACTURING
The Company believes that its manufacturing capabilities are essential to
maintaining and improving the quality and performance of its products. The
Company manufactures most of the loudspeakers and electronics products that it
sells other than Harman Kardon electronic components.
The Company's manufacturing capabilities with respect to loudspeakers include
producing high-gloss lacquer and wooden veneer loudspeaker enclosures, milling
wire, winding voice coils and using numerically controlled lathes and other
machine tools to produce its many precision components. Particularly with
respect to loudspeakers, better quality is often achieved through attention to
many relatively small details resulting in the ability to respond quickly to
changes in customer demands. The Company believes that its high degree of
manufacturing integration permits it to produce more consistently uniform high
performance products. Moreover, the Company has been able to apply technology
and materials developed for one line of products to other product lines. The
Company uses common manufacturing facilities to achieve economies of scale,
while maintaining competition among its subsidiaries in engineering, product
development and marketing.
The Company's principal domestic manufacturing facility is located in
Northridge, California, where it manufactures JBL and Infinity loudspeakers,
including cabinets, as appropriate, for consumer, professional, automotive
aftermarket and personal computer markets and amplifiers for the automotive OEM
market and the automotive aftermarket. The Company manufactures loudspeakers
and assembles sound systems for the OEM automotive market in Martinsville,
Indiana. DOD manufactures its professional electronic products at its facility
in Sandy, Utah. Lexicon manufactures its professional electronic products
predominantly at its Waltham, Massachusetts facility. Many of the Company's
manufacturing facilities are certified as conforming to the requirements of ISO
9000 for manufacturing, engineering and service, and Harman Motive enjoys a Q-1
certified supplier rating from Ford and holds the Q-E certification from
Chrysler.
In addition to the Company's U.S. manufacturing capacity, the Company has
established a strong manufacturing presence in Europe to better respond to
customer demands in that market. Audax Industries SNC ("Audax"), a manufacturer
of high-quality, high-performance tweeters, manufactures speakers in
18
<PAGE>
France, and the Company's Lydig of Scandinavia A/S ("Lydig") subsidiary
manufactures cabinet enclosures and assembles complete JBL and Infinity
loudspeakers in Denmark. The Company's international speaker manufacturing
facilities enable the Company to compete more effectively in Europe. Harman
manufactures automotive OEM loudspeakers and Soundcraft manufactures mixing
boards at their respective facilities in the United Kingdom. In Germany, Becker
manufacturers high quality head units for Mercedes Benz and other leading
European auto makers. Studer and AKG have professional electronics
manufacturing operations in Switzerland and Austria.
MARKETING AND DISTRIBUTION
The Company's products are sold domestically and internationally in the
consumer, OEM and professional markets. The consumer market for audio
entertainment systems consists of home and automotive aftermarket. The OEM
market includes automobile manufacturers who purchase components and systems on
either a branded or generic basis and manufacturers of personal computers. The
Company's professional market includes a wide range of professional uses, from
musical performances to commercial and public installations.
The Company primarily markets its consumer audio products through audio and
audio-video specialty stores and certain audio-video chain stores, such as
Circuit City in North America and MediaMarkt in Germany. The Company enjoys
broad distribution of its products and particularly seeks dealers who emphasize
high-quality audio systems and who are knowledgeable about the characteristics
of audio products. The Company's sales and marketing activities include dealer
education programs and comprehensive product literature. The Company's dealers
typically stock a number of home audio equipment lines including competing
products (sometimes both JBL and Infinity loudspeakers) and may also carry
automobile audio systems and other consumer-oriented electronics products.
The Company's professional audio products are marketed worldwide through
professional sound equipment dealers, including engineered-sound contractors
which directly assist major users. The Company's sales and marketing group for
its professional products is separate and independent from its consumer
products sales and marketing group.
The Company markets its branded OEM audio products to automobile and personal
computer manufacturers. OEM customers include Chrysler, Mercedes Benz, Ford,
Range Rover, Mitsubishi, BMW, Toyota, Porsche, Jaguar and Saab in the
automotive segment and Compaq and Gateway in the personal computer segment.
GEOGRAPHIC BUSINESS DATA
The Company's predominant business is the design, manufacture and worldwide
distribution of high-fidelity audio products. The following table shows net
sales by geographic segment for each of the fiscal years in the three-year
period ended June 30, 1995, and for the nine-month periods ended March 31, 1995
and 1996.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, MARCH 31,
---------------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- ----------- -------- ---------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales:
U.S.................................... $449,254 $673,305 $ 784,989 $559,387 $ 647,474
International...................... 228,052 282,191 502,809 355,206 479,184
Intercompany/interregion.. (62,393) (93,349) (117,574) (86,775) (138,176)
----------- ---------- ------------- ----------- ------------
Total............................... $664,913 $862,147 $1,170,224 $827,818 $ 988,482
======= ====== ======== ====== =======
</TABLE>
19
<PAGE>
MANAGEMENT
The following table sets forth the names, ages and positions of the Directors
and Executive Officers of the Company as of April 30, 1996.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Sidney Harman............................. 77 Chairman of the Board of
Directors and Chief Executive
Officer
Bernard A. Girod.......................... 54 President, Chief Operating
Officer, Chief Financial
Officer, Secretary and Director
Shirley Mount Hufstedler.................. 70 Director
Ann McLaughlin............................ 54 Director
Edward H. Meyer........................... 69 Director
Thomas Jacoby............................. 41 President-Harman Consumer Group
Philip Hart............................... 51 President-Harman Professional
Group
Gregory P. Stapleton...................... 49 President-Harman OEM Group
Jerome H. Feingold........................ 54 Vice President-Quality
Frank Meredith............................ 38 Vice President, General Counsel
and Assistant Secretary
Sandra B. Robinson........................ 36 Vice President-Financial
Operations
Floyd E. Toole............................ 57 Vice President-Engineering
William S. Palin.......................... 53 Vice President-International
Controller
</TABLE>
The principal occupation of each Director and Executive Officer for at least
the last five years is set forth below.
Sidney Harman, Ph.D., the Company's founder, has been Chairman of the Board
and Chief Executive Officer since the Company's formation in 1980. Dr. Harman
served as Under Secretary of Commerce of the United States from 1977 through
1978.
Bernard A. Girod has been President of the Company since March 1994, Chief
Operating Officer of the Company since March 1993, Chief Financial Officer of
the Company since September 1986, Secretary of the Company since November 1992
and a Director of the Company since 1993. From September 1979 to September
1986, Mr. Girod was the Vice President and General Manager of Permacel, a
subsidiary of Avery International and Vice President of Planning and Business
Development for Avery International. From 1977 to 1979, Mr. Girod was the Chief
Financial Officer of the Predecessor of the Company.
Shirley Mount Hufstedler has been a Director of the Company since September
1986. Ms. Hufstedler is and has been for the past fifteen years in private law
practice. She served as Secretary of Education of the United States from 1979
to 1981 and as a judge on the United States Court of Appeals for the Ninth
Circuit from 1968 to 1979. Ms. Hufstedler is a Director of U S WEST, Inc. and
Director Emeritus of Hewlett-Packard Company. She is currently with the firm of
Morrison & Foerster in Los Angeles, California and, from 1981 to March 1995,
was with the firm of Hufstedler & Kaus.
Ann McLaughlin has been a Director of the Company since November 14, 1995.
She served as Secretary of Labor of the United States under President Reagan
from 1987 until 1989. Ms. McLaughlin is a director of AMR, General Motors
Corporation, Kellogg Company and Nordstrom, Inc. She is a member of the Board
of Overseers of the Wharton School of the University of Pennsylvania and a
member of the Board of the Nixon Center for Peace and Freedom.
20
<PAGE>
Edward H. Meyer, who was elected a Director of the Company in July 1990, has
been the Chairman of the Board, Chief Executive Officer and President of Grey
Advertising, Inc., New York, New York, an advertising firm, since 1972. Mr.
Meyer serves as a Director for May Department Stores Company, Bowne & Co.,
Inc., Ethan Allen Interiors, Inc., and as a Director/trustee of thirty-five
mutual funds advised by Merrill Lynch Asset Management, Inc.
Thomas Jacoby has been President of the Harman Consumer Group since February
1993. Prior to that time, Mr. Jacoby served as President of JBL Consumer since
August 1990. From July 1988 to August 1990, Mr. Jacoby served as Executive Vice
President of Harman Kardon.
Philip J. Hart has been President of the Harman Professional Group since
November 1993. Prior to that time, Mr. Hart served as President of Soundcraft
since Harman's 1988 acquisition.
Gregory P. Stapleton has been President of the Harman OEM Group since October
1987. Prior to his association with the Company, he was Senior Vice President
of General Electric Venture Capital Corporation from January 1986 to September
1987, and was General Manager, Industrial Products Section, Factory Automation
Products Division of General Electric Corporation from October 1982 through
December 1985.
Jerome H. Feingold has been the Vice President-Quality of the Company since
January 1992. Prior to that time, Mr. Feingold served as President of Harman
Speaker Manufacturing since July 1985. Prior to 1985, Mr. Feingold held various
management positions within the manufacturing division of the Company.
Frank Meredith has been the Vice President, General Counsel and Assistant
Secretary of the Company since July 1992. Prior to that time, Mr. Meredith held
other positions within the Company since May 1985.
Sandra B. Robinson has been Vice President-Financial Operations since
November 1992. Prior to that time, Ms. Robinson was Director of Corporate
Accounting and has been employed by the Company since December 1984.
Floyd E. Toole, Ph.D., joined the Company as Vice President-Acoustic Research
in November 1991. Prior to joining the Company, Dr. Toole spent 25 years, most
recently as Senior Research Officer, with the National Research Council of
Canada's Acoustics and Signal Processing Group. At the National Research
Council, Dr. Toole worked to develop psychoacoustic-optimized adaptive digital
techniques for improving the performance of loudspeakers in rooms.
William S. Palin has been Vice President-International Controller of the
Company since March 1994. Prior to joining the Company, Mr. Palin was a partner
of MacHardy Palin & Co. from July 1978 to March 1994. From July 1978 to January
1982, Mr. Palin served as an officer of two of the Company's international
subsidiaries.
21
<PAGE>
SELLING STOCKHOLDERS
Sidney Harman, who has been the Chairman of the Board and Chief Executive
Officer of the Company since its founding in 1980, and the family members and
family-related entities set forth below (collectively, the "Selling
Stockholders"), are offering shares pursuant to this Prospectus. The table
below sets forth certain information regarding the beneficial ownership of
Common Stock, as of April 30, 1996, by the Selling Stockholders both before and
after giving effect to the Offering.
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Before the Offering After the Offering
-------------------------- ------------------------
Name and Address of Shares to be Sold
Selling Stockholders Number Percentage in the Offering Number Percentage
- ------------------------- -------- ------------- ----------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Sidney Harman .......... 2,816,706(1) 16.83% 1,450,000(2) 1,366,706(3)(4) 7.30%(4)
1101 Pennsylvania Ave.,
N.W., Suite 1010
Washington, D.C. 20004
The Sidney Harman
Charitable Remainder
Trust ......................... 500,000 3.07% 500,000 0 0.00%
c/o William Zabel, Trustee
Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
The Harman Family
Foundation .............. 50,000 0.31% 50,000 0 0.00%
1101 Pennsylvania Ave.,
N.W., Suite 1010
Washington, D.C. 20004
</TABLE>
- --------
(1) Includes 124,987 shares of Common Stock with respect to which Dr. Harman
has sole voting and investment power; 460,950 shares of Common Stock
subject to stock options exercisable as of April 30, 1996 or within 60 days
thereof; 1,486,107 shares held in a trust with respect to which Dr. Harman
has sole dispositive and sole voting power; 428,934 shares held in two
irrevocable trusts for various family members with respect to which Dr.
Harman has sole voting power but shared dispositive power; 312,578 shares
held by family members of which Dr. Harman has sole voting power pursuant
to 3-year revocable proxies and for which Dr. Harman disclaims beneficial
ownership; and 3,150 shares held by family members with respect to which
Dr. Harman has no voting power or dispositive power and also disclaims
beneficial ownership. The 460,950 shares of Common Stock subject to stock
options described above include a premium/performance option to purchase
315,000 shares of Common Stock (the "Option"), which was granted to Dr.
Harman on November 9, 1993.
(2) The 1,450,000 shares to be sold by Dr. Harman in the Offering will
include; all of the 124,987 shares of Common Stock with respect to which Dr.
Harman has sole voting and investment power; 784,679 shares held in the Sidney
Harman 1987 Revocable Trust with respect to which Dr. Harman has sole
dispositive power and sole voting power; 367,437 shares held in two irrevocable
trusts for various family members with respect to which Dr. Harman has sole
voting power but shared dispositive power with his spouse, The Honorable Jane
Harman; 171,847 shares held by family members (51,900 shares held by Barbara
Harman, 40,000 shares held by Paul Harman, 33,947 shares held by Lynn Harman,
and 46,000 shares held by Gina Harman) for which Dr. Harman has sole voting
power pursuant to 3-year revocable proxies and for which Dr. Harman disclaims
beneficial ownership; and 1,050 shares held by The Honorable Jane Harman with
respect to which Dr. Harman has no voting power or dispositive power and also
disclaims beneficial ownership. Certain Selling Stockholders have granted to
the Underwriters 30-day options to purchase, in the aggregate, up to 300,000
additional shares of Common Stock, solely to cover over-allotments, if any. If
these over-allotment options are exercised, the Sidney Harman 1987 Revocable
Trust will sell an additional 300,000 shares of Common Stock.
(3) Includes 460,950 shares of Common Stock subject to stock options
exercisable as of April 30, 1996 or with 60 days thereof; 685,717 shares held
in trust with respect to which Dr. Harman has sole dispositive power and
sole voting power; 77,208 shares held in two irrevocable trusts for various
family members with respect to which Dr. Harman has sole voting power but
shared dispositive power; 140,731 shares held by family members for which Dr.
Harman has sole voting power pursuant to 3-year revocable proxies and for
which Dr. Harman disclaims beneficial ownership; and 2,100 shares held by
family members with respect to which Dr. Harman has no voting power or
dispositive power and also disclaims beneficial ownership.
(4) If the over-allotment options granted by certain Selling Stockholders are
exercised in full, such Selling Stockholders would beneficially own 1,066,706
(5.60% of the outstanding Common Stock) after completion of the Offering.
22
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, par value $0.01 per share
(the "Preferred Stock"). As of April 30, 1996, 16,270,953 shares of Common
Stock were outstanding, held by approximately 222 holders of record and
1,172,538 shares of Common Stock were reserved for issuance upon the exercise
of outstanding stock options. Following the Offering the Company will have
30,556,509 authorized but unissued and unreserved shares of Common Stock
(30,256,509 assuming exercise of the Underwriters' over-allotment options in
full). As of the date of this Prospectus, the Company has no outstanding
Preferred Stock. The Common Stock has no conversion, redemption, cumulative
voting or preemptive rights. The following description of the Company's capital
stock is a summary and is qualified in its entirety by reference to the
documents incorporated by reference and to the Certificate and the By-Laws.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all matters
voted on by stockholders, including elections of directors. Except as otherwise
required by law or provided in any resolution adopted by the Board of Directors
of the Company with respect to any series of the Preferred Stock, the holders
of such shares exclusively possess all voting power. The Certificate does not
provide for cumulative voting in the election of directors. Holders of Common
Stock are entitled to receive such dividends as may be declared from time to
time by the Board of Directors out of funds legally available for such purpose,
after payment of dividends required to be paid on outstanding Preferred Stock,
if any. In the event of the liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to the rights of the
holders of any Preferred Stock then outstanding. All outstanding shares of
Common Stock are, and upon issuance the shares offered by the Company hereby
will be, fully paid and nonassessable.
The transfer agent and registrar for the Common Stock is Chemical Mellon
Shareholder Services, Encino, California.
PREFERRED STOCK
The Board of Directors has authority, without any further vote or action by
the stockholders, to issue Preferred Stock in one or more series and to fix the
rights, preferences, privileges and restrictions thereof, including the voting
rights, dividend rate, conversion rights, terms of redemption (including
sinking fund provisions), redemption price or prices, amounts payable upon
liquidation, and the number of shares constituting any series or the
designation of such series. The Company has no current plan to issue or sell
any of the Preferred Stock, but reserves the right to do so in the future.
CERTAIN PROVISIONS OF THE CERTIFICATE,
THE BY-LAWS AND DELAWARE LAW
The Certificate and the By-Laws contain certain provisions that could make
more difficult the acquisition of the Company by means of a tender offer, a
proxy contest or otherwise. These provisions are expected to discourage certain
types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of the Company first to negotiate
with the Company. The description set forth below is intended as a summary only
and is qualified in its entirety by reference to the Certificate and the By-
Laws.
FAIR PRICE PROVISIONS
The Certificate contains provisions (the "Fair Price Provisions") that raise
the affirmative vote required to approve certain "Business Combinations" (as
defined below) involving an "Interested Stockholder" (as defined below) to at
least 66 2/3% of the votes of the outstanding capital stock of the Company
entitled to
23
<PAGE>
vote generally in the election of directors (the "Voting Stock"), unless the
transaction is approved by a majority of disinterested directors or unless
specified price criteria described below and procedural requirements are
satisfied. A "Business Combination" is defined by the Certificate to include
any of the following transactions with, or proposed by, an Interested
Stockholder or affiliate: a merger or consolidation; a sale, lease or other
disposition of the Company's assets having an aggregate fair market value of
$10 million or more; the issuance or transfer by the Company of securities of
the Company having an aggregate fair market value of $10 million or more; a
plan of dissolution proposed by an Interested Stockholder; or a
reclassification of securities or recapitalization of the Company
disproportionately favorable to an Interested Stockholder. An "Interested
Stockholder" is defined by the Certificate to include any person or entity,
other than the Company or any subsidiary or employee benefit plan thereof,
which owns beneficially or controls directly or indirectly 20% or more of the
shares of the Voting Stock.
The 66 2/3% voting requirement is not applicable if certain procedural
requirements are met and if, in the case of a Business Combination involving
payments to holders of Common Stock, the fair market value per share of such
payments is equal to the greater of (i) the highest per share price paid by the
Interested Stockholder to purchase shares of Common Stock in the two-year
period prior to the first public announcement of the proposed Business
Combination (the "Announcement Date") or in the transaction in which it became
an Interested Stockholder (whichever is greater), and (ii) the fair market
value per share of Common Stock on the Announcement Date or on the date on
which the Interested Stockholder became an Interested Stockholder (whichever is
greater). In addition, the consideration to be paid to the Company's
stockholders must be either cash or the same consideration used by the
Interested Stockholder in acquiring the largest part of its Voting Stock prior
to the Announcement Date.
SUPERMAJORITY VOTE REQUIREMENTS
The Certificate provides that a vote of the holders of 66 2/3% or more of the
voting power of the Voting Stock is required to amend, alter or repeal, or to
adopt any provision inconsistent with, the Fair Price Provisions or the
provisions relating to the classified board of directors and ancillary matters.
The Certificate also provides that the stockholders may take action only at
meetings and that directors may only be removed for cause and by a 66 2/3%
vote.
ANTI-TAKEOVER STATUTE
Section 203 of the Delaware General Corporation Law ("DGCL") is applicable to
corporate takeovers in Delaware. Subject to certain exceptions set forth
herein, Section 203 of the DGCL provides that a corporation may not engage in
any business combination with any "interested stockholder" for a three-year
period following the time that such stockholder becomes an interested
stockholder unless: (i) prior to such time, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder; (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares); or (iii) subsequent to such time, the
business combination is approved by the board of directors of the corporation
and by the affirmative vote of at least 66 2/3% of the outstanding voting stock
which is not owned by the interested stockholder. Except as specified therein,
an interested stockholder is defined to include any person that is the owner of
15% or more of the outstanding voting stock of the corporation, or is an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation, at any time within three years
immediately prior to the relevant date, and the affiliates and associates of
such person. Under certain circumstances, Section 203 of the DGCL makes it more
difficult for an "interested stockholder" to effect various business
combinations with a corporation for a three-year period.
24
<PAGE>
UNDERWRITING
Montgomery Securities, Donaldson, Lufkin & Jenrette Securities Corporation,
Lehman Brothers Inc. and J.P. Morgan Securities Inc. (the "Underwriters") have
severally agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to purchase from the Company and the Selling
Stockholders the number of shares of Common Stock indicated below opposite
their respective names at the public offering price less the underwriting
discount set forth on the cover page of this Prospectus. The Underwriting
Agreement provides that the obligations of the Underwriters are subject to
certain conditions precedent and that the Underwriters are committed to
purchase all of the shares if they purchase any.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
--------------------- ---------
<S> <C>
Montgomery Securities...................................................
Donaldson, Lufkin & Jenrette Securities Corporation....
Lehman Brothers Inc.......................................................
J.P. Morgan Securities Inc. ............................................
---------
Total........................................................................... 4,000,000
========
</TABLE>
The Underwriters have advised the Company and certain Selling Stockholders
that they propose initially to offer the Common Stock to the public on the
terms set forth on the cover page of this Prospectus. The Underwriters may
allow to selected dealers a concession of not more than $ per share; and the
Underwriters may allow, and such dealers may reallow, a concession of not more
than $ per share to certain other dealers. After the Offering, the offering
price and other selling terms may be changed by the Underwriters. The Common
Stock is offered subject to receipt and acceptance by the Underwriters and to
certain other conditions, including the right to reject orders in whole or in
part.
The Company and the Selling Stockholders have granted options to the
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to a maximum of 300,000 additional shares of Common
Stock from the Company and 300,000 shares from such Selling Stockholders to
cover over-allotments, if any, at the same price per share as the initial
shares to be purchased by the Underwriters. Such options granted by the Company
and such Selling Stockholders must be exercised pro rata. To the extent that the
Underwriters exercise these options, each of the Underwriters will be
committed, subject to certain conditions, to purchase such additional shares in
approximately the same proportion as set forth in the table above. The
Underwriters may purchase such shares only to cover over-allotments made in
connection with this Offering.
The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act of 1933, as amended (the
"Securities Act"), or will contribute to payments the Underwriters may be
required to make in respect thereof.
Sidney Harman has agreed not to offer, sell or otherwise dispose of any
shares of Common Stock for a period of 90 days after the date of this
Prospectus without the prior written consent of Montgomery Securities, subject
to certain exceptions. The Company has also agreed not to offer, sell, contract
to sell or otherwise dispose of any shares of the Common Stock for a period of
90 days after the date of this Prospectus, without the prior written consent of
Montgomery Securities, subject to certain limited exceptions.
25
<PAGE>
EXPERTS
The consolidated financial statements and schedule of Harman International
Industries, Incorporated and subsidiaries as of June 30, 1995 and 1994 and for
each of the years in the three-year period ended June 30, 1995, incorporated
herein by reference, have been incorporated in this Prospectus in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference, and upon the authority of said firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed upon
for the Company by Jones, Day, Reavis & Pogue, Washington, D.C. and New York,
New York. Certain legal matters in connection with the Offering will be passed
upon for the Underwriters by Simpson Thacher & Bartlett (a partnership which
includes professional corporations), New York, New York.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form S-
3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the shares
of Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to herein are not necessarily
complete; with respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to such exhibit
for a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. Copies of the
Registration Statement and the exhibits may be inspected, without charge, at
the offices of the Commission, or obtained at prescribed rates from the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
The Company's Common Stock is listed on the NYSE. 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 Commission which may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at certain Regional
Offices of the Commission: 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material may be obtained from the Public Reference Section of
the Commission, at prescribed rates. In addition, such reports, proxy
statements and other information may be inspected at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
26
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended June 30,
1995;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
5. The Company's Current Report on Form 8-K filed on May 6, 1996; and
6. The Company's Form 8, Amendment No. 1, dated November 13, 1986, to its
Form 8-A Registration Statement.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of this Offering shall be deemed to be incorporated by
reference in this Prospectus and to be part hereof from the date of filing of
such documents. Any statement contained in a 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 is also incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of the documents incorporated by reference in this Prospectus (other than
exhibits to such documents unless such exhibits are specifically incorporated
by reference into such documents). Such requests should be directed to Harman
International Industries, Incorporated, 1101 Pennsylvania Avenue, N.W., Suite
1010, Washington, D.C. 20004 (telephone number (202) 393-1101), Attention:
Bernard A. Girod, President.
27
<PAGE>
Harman
worldwide
[MAP APPEARS HERE]
<TABLE>
<S> <C>
Europe 34%
Asia 16%
Mid-East Mediterranean 1%
Africa 1%
Pacific Rim 1%
North America 46%
South America,
Central America, Caribbean 1%
</TABLE>
Fiscal 1995 Sales Revenue
This map has been drawn to suggest
the relative proportion of the Company's fiscal 1995
sales in world markets where we are active.
<PAGE>
============================================================================
No dealer, sales representative, or any other person has been authorized to
give any information or to make any representations in connection with this
Offering other than those contained in this Prospectus, and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company, the Selling Stockholders or any of the Underwriters.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the shares of Common Stock to which it
relates or an offer to, or a solicitation of, any person in any jurisdiction
where such an offer or solicitation would be unlawful. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create an implication that there has been no change in the affairs of the
Company or that information contained herein is correct as of any time
subsequent to the date hereof.
-------------------
TABLE OF CONTENTS
-------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary................................................................................ 3
Risk Factors.............................................................................................. 7
Use of Proceeds........................................................................................ 9
Price Range for Common Stock............................................................... 9
Dividend Policy........................................................................................ 9
Capitalization........................................................................................... 10
Selected Consolidated Financial Data...................................................... 11
Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................................................. 12
Business................................................................................................... 14
Management............................................................................................ 20
Selling Stockholders................................................................................ 22
Description of Capital Stock................................................................... 23
Certain Provisions of the Certificate, the
By-Laws and Delaware Law.................................................................. 23
Underwriting........................................................................................... 25
Experts.................................................................................................... 26
Legal Matters.......................................................................................... 26
Available Information............................................................................ 26
Incorporation of Certain Information by Reference............................... 27
</TABLE>
============================================================================
============================================================================
4,000,000 SHARES
HARMAN INTERNATIONAL
INDUSTRIES, INCORPORATED
[LOGO OF HARMAN INTERNATIONAL APPEARS HERE]
COMMON STOCK
----------------
PROSPECTUS
----------------
MONTGOMERY SECURITIES
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
J.P. MORGAN & CO.
May , 1996
============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses of the Company in connection with the issuance and
distribution of the securities to be registered, other than underwriting
discounts and commissions, are as follows:
<TABLE>
<CAPTION>
ITEM AMOUNT
---- --------
<S> <C>
S.E.C. Registration Fee............................................ $ 75,444
NYSE Initial Listing Fee.......................................... 29,500
NASD Filing Fee...................................................... 22,379
Printing and Engraving Expenses............................. 200,000
Legal Fees and Expenses.......................................... 250,000
Accounting Fees and Expenses................................. 60,000
Blue Sky Fees and Expenses..................................... 15,000
Transfer Agent Fees and Expenses........................... 5,000
Miscellaneous............................................................ 17,677
--------
Total........................................................................ $675,000
========
</TABLE>
None of these expenses will be borne by the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Set forth below is a description of certain provisions of the Certificate,
the By-Laws and the DGCL, as such provisions relate to the indemnification of
the directors and officers of the Company. This description is intended only as
a summary and is qualified in its entirety by reference to the Certificate, the
By-Laws and the DGCL.
ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES
Article Tenth of the Certificate provides directors of the Company, to the
fullest extent permitted by law, insulation from personal liability to the
Company or to its stockholders or with respect to any acts or omissions in the
performance of the director's duties as a director of the Company. Section
102(b)(7) of the DGCL permits corporations to eliminate or limit the personal
liability of their directors by adding to the certificate of incorporation:
A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director: (i)
For any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for
[paying a dividend or approving a stock purchase that is a violation]
under section 174 of [the DGCL], or (iv) for any transaction from which
the director derived an improper personal benefit. No such provision
shall eliminate or limit the liability of a director for any act or
omission occurring prior to the date when such provision becomes
effective. All references in this paragraph to a director shall also be
deemed to refer (x) to a member of the governing body of a corporation
which is not authorized to issue capital stock, and (y) to such other
person or persons, if any, who, pursuant to a provision of the
certificate of incorporation in accordance with (S) 141(a) of [the
DGCL], exercise or perform any of the powers or duties otherwise
conferred or imposed upon the board of directors by this title.
While Article Tenth of the Certificate provides directors with protection
from awards for monetary damages for breaches of the duty of care, it does not
eliminate the directors' duty of care. Accordingly, the Certificate will have
no effect on the availability of equitable remedies such as an injunction or
rescission based on a director's breach of the duty of care. The provisions of
Article Tenth as described above apply to
II-1
<PAGE>
officers of the Company only if they are directors of the Company and are
acting in their capacity as directors, and does not apply to officers of the
Company who are not directors.
INDEMNIFICATION AND INSURANCE
Section 145 of the DGCL sets forth provisions which define the extent to
which a corporation organized under the laws of Delaware may indemnify
directors, officers and employees. Those provisions have been incorporated by
reference by the Company in Article VIII of the By-Laws. Section 145 provides
in pertinent part as follows:
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (2) if there are no
such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in
II-2
<PAGE>
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any,
as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under this section.
(h) For purposes of this section, references to "the corporation' shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises' shall
include employee benefit plans; references to "fines' shall include any
excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation' shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation' as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees).
ITEM 16. EXHIBITS.
EXHIBITS
The following exhibits are to be filed as a part of this Registration
Statement. Where such filing is made by incorporation by reference (IBR) to a
previously filed statement or report, such statement or report is identified in
parenthesis.
II-3
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- ----------
<C> <S> <C>
1.1 Form of Underwriting Agreement
4.1 Restated Certificate of Incorporation filed with the IBR
Delaware Secretary of State on October 7, 1986, as
amended by the Certificates of Amendment filed with
the Delaware Secretary of State on November 13, 1986
and on November 9, 1993. (Filed as Exhibit 4.1 to
Amendment 1 to the Company's Registration Statement
on Form S-3 dated November 15, 1993 (File No. 1-
9764) and hereby incorporated by reference.)
4.2 Amended By-Laws of Harman International Industries, IBR
Incorporated. (Filed as Exhibit 4.5 to the Quarterly
Report on Form 10-Q for the quarter ended March 31,
1992 (File No. 0-15147) and hereby incorporated by
reference.)
5.1 Opinion of Jones, Day, Reavis & Pogue
23.1 Consent of KPMG Peat Marwick LLP, Independent
Auditors
23.2 Consent of Jones, Day, Reavis & Pogue (included in
Exhibit 5.1)
24.1 * Power of Attorney (included on page II-5)
* Previously filed.
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
For purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF LOS ANGELES, STATE OF CALIFORNIA ON MAY 13, 1996.
Harman International Industries,
Incorporated
By: /s/ Bernard A. Girod
--------------------------------------
BERNARD A. GIROD
PRESIDENT, CHIEF OPERATING OFFICER,
CHIEF FINANCIAL OFFICER AND SECRETARY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------------ ------- -------
<S> <C> <C>
* Chairman of the May 13, 1996
- ------------------------------------- Board of Directors
SIDNEY HARMAN and Chief Executive
Officer (Principal
Executive Officer)
/s/ Bernard A. Girod President, Chief May 13, 1996
- ------------------------------------- Operating Officer,
BERNARD A. GIROD Chief Financial
Officer, Secretary
and Director (Principal
Financial and
Accounting Officer)
* Director May 13, 1996
- -------------------------------------------
SHIRLEY M. HUFSTEDLER
* Director May 13, 1996
- ----------------------------------------
EDWARD H. MEYER
* Director May 13, 1996
- -------------------------------------
ANN MCLAUGHLIN
* The undersigned by signing his name hereto does sign and execute this Amendment No. 1 to the
Registration Statement on Form S-3 on the date indicated below pursuant to the Powers of Attorney
executed on behalf of the above-named directors and previously filed with the Securities and Exchange
Commission.
/s/ Bernard A. Girod
--------------------------------
BERNARD A. GIROD
Attorney-in-Fact
May 13, 1996
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ------------------- ----------
<S> <C> <C>
1.1 Form of Underwriting Agreement
4.1 Restated Certificate of Incorporation filed with the IBR
Delaware Secretary of State on October 7, 1986, as
amended by the Certificates of Amendment filed with
the Delaware Secretary of State on November 13, 1986
and on November 9, 1993. (Filed as Exhibit 4.1 to
Amendment 1 to the Company's Registration Statement
on Form S-3 dated November 15, 1993 (File No.
1-9764) and hereby incorporated by reference.)
4.2 Amended By-Laws of Harman International Industries, IBR
Incorporated. (Filed as Exhibit 4.5 to the Quarterly
Report on Form 10-Q for the quarter ended March 31,
1992 (File No. 0-15147) and hereby incorporated by
reference.)
5.1 Opinion of Jones, Day, Reavis & Pogue
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors
23.2 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
24.1* Power of Attorney (included on page II-5)
* Previously filed
</TABLE>
1
<PAGE>
EXHIBIT 1.1
<PAGE>
4,000,000 Shares
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
Common Stock
UNDERWRITING AGREEMENT
May __, 1996
MONTGOMERY SECURITIES
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
J.P. MORGAN SECURITIES INC.
c/o MONTGOMERY SECURITIES
600 Montgomery Street
San Francisco, California 94111
Dear Sirs:
SECTION 1. Introductory. Harman International Industries,
Incorporated, a Delaware corporation (the "Company"), proposes to issue and
sell 2,000,000 shares of its authorized but unissued Common Stock (the "Common
Stock") and certain stockholders of the Company named in Schedule B annexed
hereto (the "Selling Stockholders") propose to sell an aggregate of 2,000,000
shares of the Company's issued and outstanding Common Stock to you (the
"Underwriters"). Said aggregate of 4,000,000 shares are herein called the
"Firm Common Shares." In addition, the Company proposes to grant to the
Underwriters an option to purchase up to 300,000 additional shares of Common
Stock and the Sidney Harman 1987 Revocable Trust, a Selling Stockholder,
proposes to grant to the Underwriters an option to purchase up
to 300,000 additional shares of Common Stock (such 600,000 additional shares
of Common Stock, the "Optional Common Shares"), as provided in Section 5
hereof. The Firm Common Shares and, to the extent such options are exercised,
the Optional Common Shares are hereinafter collectively referred to as the
"Common Shares."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
<PAGE>
2
SECTION 2. Representations and Warranties of the Company and certain
Selling Stockholders. The Company represents and warrants, and, in the case of
the representations and warranties contained in paragraph (b) below, the
Company, Sidney Harman, a Selling Stockholder (the "Principal Selling
Stockholder") and the Sidney Harman 1987 Revocable Trust, jointly and
severally, represent and warrant (provided that in the case of the Principal
Selling Stockholder and the Sidney Harman 1987 Revocable Trust, such
representation and warranty is made to the best knowledge of the Principal
Selling Stockholder and the Sidney Harman 1987 Revocable Trust), to the several
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-03189) with
respect to the Common Shares has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, and has been filed with
the Commission. The Company has prepared and has filed or proposes to file
prior to the effective date of such registration statement an amendment or
amendments to such registration statement, which amendment or amendments
have been or will be similarly prepared. There have been delivered to you two
signed copies of such registration statement and amendments, together with two
copies of each exhibit filed therewith. Conformed copies of such registration
statement and amendments (but without exhibits) and of the related preliminary
prospectus have been delivered to you in such reasonable quantities as you have
requested. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final prospectus or (ii) a
final prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations. As filed, the final prospectus shall include all Rule 430A
Information and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the date and time that this Agreement was executed and delivered by
the parties hereto, or, to the extent not completed at such date and time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the Company
shall have previously advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that such
term shall also include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations. The term
"Preliminary Prospectus"
<PAGE>
3
shall mean any preliminary prospectus referred to in the preceding paragraph
and any preliminary prospectus included in the Registration Statement at the
time it becomes effective that omits Rule 430A Information. The term
"Prospectus" as used in this Agreement shall mean either the prospectus
relating to the Common Shares in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no
filing pursuant to Rule 424(b) of the Rules and Regulations is required, shall
mean the form of final prospectus included in the Registration Statement at the
time such registration statement becomes effective. The term "Rule 430A
Information" means information with respect to the Common Shares and the
offering thereof permitted to be omitted from the Registration Statement when
it becomes effective pursuant to Rule 430A of the Rules and Regulations. Any
reference herein to any Preliminary Prospectus, the Prospectus or the
Registration Statement shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Form S-3 under the Act, as of the
date of such Preliminary Prospectus, Prospectus or Registration Statement, as
the case may be.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the Rules
and Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including each Closing
Date hereinafter mentioned, the Registration Statement and the Prospectus, and
any amendments or supplements thereto will contain all material statements and
information required to be included therein by the Act and the Rules and
Regulations and will in all material respects conform to the requirements of
the Act and the Rules and Regulations, and neither the Registration Statement,
nor any amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and neither the
Prospectus nor any amendment or supplement thereto, will include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
no representation or warranty contained in this subsection 2(b) shall be
applicable to information contained in or omitted from any Preliminary
Prospectus, the Registration Statement, the Prospectus or any such amendment or
supplement in reliance upon and in
<PAGE>
4
conformity with written information furnished to the Company by or on behalf of
any Underwriter specifically for use in the preparation thereof. The documents
incorporated by reference in the Prospectus, when they were filed with the
Commission, conformed in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder, and none of such documents, when
they were filed with the Commission, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
(c) Except as set forth on Schedule E hereto, the Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Exhibit 21 to the Annual Report on Form
10-K for the Company's most recent fiscal year. The Company and each of its
material subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective jurisdictions
of incorporation, with full power and authority (corporate and other) to own
and lease their properties and conduct their respective businesses as described
in the Prospectus; the Company owns beneficially, directly or indirectly, all
of the outstanding capital stock of its subsidiaries free and clear of all
claims, liens, charges and encumbrances; the Company and each of its
subsidiaries are in possession of and operating in compliance with all
authorizations, licenses, permits, consents, certificates and orders material
to the conduct of their respective businesses, all of which are valid and in
full force and effect; the Company and each of its subsidiaries are duly
qualified to do business and in good standing as foreign corporations in each
jurisdiction in which the ownership or leasing of properties or the conduct of
their respective businesses requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a material
adverse effect upon the Company and its subsidiaries taken as a whole; and no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable, are duly listed on the New York Stock
Exchange, have been issued in compliance with all federal and state securities
laws, were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and conform to the
description thereof contained
<PAGE>
5
in the Prospectus. All issued and outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company, and the related notes
thereto, included in the Prospectus, neither the Company nor any subsidiary has
outstanding any options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its capital
stock or any such options, rights, convertible securities or obligations. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or purchase
exist with respect to the issuance and sale of the Common Shares by the Company
pursuant to this Agreement. No holder of securities of the Company has any
right which has not been waived to require the Company to register the sale of
any shares owned by such holder under the Act in the public offering
contemplated by this Agreement. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Common Shares to be sold by the Company as
contemplated herein.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company in accordance with
its terms. The making and performance of this Agreement by the Company and the
consummation of the transactions herein contemplated will not violate any
provisions of the certificate of incorporation or bylaws, or other
organizational documents, of the Company or any of its subsidiaries, and will
not conflict with, result in the breach or violation of, or constitute, either
by itself or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of its
respective properties may be bound or affected, any statute
<PAGE>
6
or any authorization, judgment, decree, order, rule or regulation of any court
or any regulatory body, administrative agency or other governmental body
applicable to the Company or any of its subsidiaries or any of their respective
properties. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for compliance with the
Act, the Blue Sky laws applicable to the public offering of the Common Shares
by the several Underwriters, the approval by The New York Stock Exchange, Inc.
of the listing of the Common Shares and the clearance of such offering with the
National Association of Securities Dealers, Inc. (the "NASD").
(g) To the best of the Company's knowledge, KPMG Peat Marwick LLP, who
have expressed their opinion with respect to the financial statements and
schedules filed with the Commission as a part of the Registration Statement and
included in the Prospectus and in the Registration Statement, are independent
accountants as required by the Act and the Rules and Regulations.
(h) The consolidated financial statements and schedules of the Company
and its subsidiaries, and the related notes thereto, included in the
Registration Statement and the Prospectus present fairly the financial position
of the Company and its subsidiaries as of the respective dates of such
financial statements and schedules, and the results of operations and cash
flows of the Company and its subsidiaries for the respective periods covered
thereby. Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis as certified by the independent accountants named in
subsection 2(g). No other financial statements or schedules are required to be
included in the Registration Statement. The selected financial data set forth
in the Prospectus under the captions "Capitalization" and "Selected
Consolidated Financial Data" fairly present the information set forth therein
on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, and except as to any breaches,
violations or defaults which individually or in the aggregate would not be
material to the Company and its subsidiaries taken as a whole, neither the
Company nor any of its subsidiaries is in violation or default of any provision
of its certificate of incorporation or bylaws, or other organizational
documents, or is in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of
<PAGE>
7
its properties are bound; and there does not exist any state of facts which
constitutes an event of default on the part of the Company or any such
subsidiary as defined in such documents or which, with notice or lapse of time
or both, would constitute such an event of default, except where any such event
or default would not individually or in the aggregate have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company and its subsidiaries taken as a whole.
(j) There are no contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations which have not been
described or filed as required. The contracts described in the Prospectus are
in full force and effect on the date hereof; and neither the Company nor any of
its subsidiaries, nor to the best of the Company's knowledge, any other party
is in breach of or default under any of such contracts which, in the case of
any such breach or default by a third party, would give rise to rights of the
Company or any of its subsidiaries under any such document.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is or may be a party or of which property owned or leased by the Company or any
of its subsidiaries is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings might, individually
or in the aggregate, prevent or adversely affect the transactions contemplated
by this Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business, results of operations or
prospects of the Company and its subsidiaries; and no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is imminent which
is likely to affect materially and adversely such condition, properties,
business, results of operations or prospects. Neither the Company nor any of
its subsidiaries is a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body which has had or could
reasonably be expected to have a material adverse effect on its condition
(financial or otherwise), properties, business, results of operations or
prospects.
(l) The Company or the applicable subsidiary has good and marketable
title to all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject to
no lien, mortgage, pledge, charge or encumbrance of any kind
<PAGE>
8
except (i) those, if any, reflected in such financial statements (or elsewhere
in the Prospectus), or (ii) those which are not material in amount and do not
adversely affect the use made and proposed to be made of such property by the
Company and its subsidiaries. The Company or the applicable subsidiary holds
its leased properties under valid and binding leases, with such exceptions as
are not materially significant in relation to the business of the Company.
Except as disclosed in the Prospectus, the Company owns or leases all such
properties as are necessary to its operations as now conducted or as proposed
to be conducted.
(m) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business
or which could result in a material reduction in the future earnings of the
Company and its subsidiaries; (ii) the Company and its subsidiaries have not
sustained any material loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other calamity, whether or
not covered by insurance; (iii) the Company has not paid or declared any
dividends or other distributions with respect to its capital stock and the
Company and its subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any
change in the capital stock (other than (A) upon the sale of the Common Shares
hereunder and (B) upon the exercise of options described in the Registration
Statement) or indebtedness material to the Company and its subsidiaries (other
than in the ordinary course of business); and (v) there has not been any
material adverse change in the condition (financial or otherwise), business,
properties, results of operations or prospects of the Company and its
subsidiaries taken as a whole.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries have sufficient trademarks, trade
names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct their businesses as described in the
Prospectus; the expiration of any trademarks, trade names, patent rights, mask
works, copyrights, licenses, approvals or governmental authorizations would not
have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries taken as a whole; and the Company has no knowledge of any material
infringement by it or its subsidiaries of trademark, trade name rights, patent
rights, mask works,
<PAGE>
9
copyrights, licenses, trade secret or other similar rights of others, and there
is no claim being made against the Company or its subsidiaries regarding
trademark, trade name, patent, mask work, copyright, license, trade secret or
other infringement which could have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects of the
Company and its subsidiaries taken as a whole.
(o) The Company has not been advised, and has no reason to believe, that
either it or any of its subsidiaries is not conducting business in compliance
with all applicable laws, rules and regulations of the jurisdictions in which
it is conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where failure to
be so in compliance would not materially adversely affect the condition
(financial or otherwise), business, results of operations or prospects of the
Company and its subsidiaries taken as a whole.
(p) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes
shown as due thereon; and the Company has no knowledge of any tax deficiency
which has been or might be asserted or threatened against the Company or its
subsidiaries which could materially and adversely affect the business,
operations or properties of the Company and its subsidiaries taken as a whole.
(q) The Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior to the
First Closing Date any offering material in connection with the offering and
sale of the Common Shares other than the Preliminary Prospectus, the
Prospectus, the Registration Statement and the other materials permitted by the
Act.
(s) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for its business, including,
but not limited to, insurance covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(t) Neither the Company nor any of its subsidiaries has at any time
during the last five years (i) made any unlawful contribution to any candidate
for foreign office, or failed to disclose fully any contribution in violation
of
<PAGE>
10
law, or (ii) made any payment to any federal or state, governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
(u) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.
(v) The Company is eligible to use a Registration Statement on Form S-3
under the Act and the Rules and Regulations thereunder for purposes of
registering the Common Shares under the Act.
SECTION 3. Representations, Warranties and Covenants of the Selling
Stockholders.
(a) Each of the Selling Stockholders, severally and not jointly,
represents and warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has, and on the First Closing Date and the
Second Closing Date (if applicable) hereinafter mentioned will have, good and
valid title to the Common Shares proposed to be sold by such Selling
Stockholder hereunder on such Closing Date and full right, power and authority
to enter into this Agreement and to sell, assign, transfer and deliver such
Common Shares hereunder, free and clear of all voting trust arrangements,
liens, encumbrances, equities, security interests, restrictions and claims
whatsoever; and upon delivery of and payment for such Common Shares hereunder,
the Underwriters will acquire good and valid title thereto, free and clear of
all liens, encumbrances, equities, claims, restrictions, security interests,
voting trusts or other defects of title whatsoever.
(ii) Such Selling Stockholder has executed and delivered a Power of
Attorney and caused to be executed and delivered on his behalf a Custody
Agreement (hereinafter collectively referred to as the "Stockholders
Agreement") and in connection herewith such Selling Stockholder further
represents, warrants and agrees that such Selling Stockholder has deposited in
custody, under the Stockholders Agreement, with the agent named therein
(the "Agent") as custodian, certificates in negotiable form for the Common
Shares to be sold hereunder by such Selling Stockholder, for the purpose of
further delivery pursuant to this Agreement. Such Selling Stockholder agrees
that the
<PAGE>
11
Common Shares to be sold by such Selling Stockholder on deposit with the Agent
are subject to the interests of the Company and the Underwriters, that the
arrangements made for such custody are to that extent irrevocable, and that
the obligations of such Selling Stockholder hereunder shall not be terminated,
except as provided in this Agreement or in the Stockholders Agreement, by any
act of such Selling Stockholder, by operation of law, by the death or
incapacity of such Selling Stockholder or by the occurrence of any other event.
If the Selling Stockholder should die or become incapacitated, or if any other
event should occur, before the delivery of the Common Shares hereunder, the
documents evidencing Common Shares then on deposit with the Agent shall be
delivered by the Agent in accordance with the terms and conditions of this
Agreement as if such death, incapacity or other event had not occurred,
regardless of whether or not the Agent shall have received notice thereof.
The Agreement and the Stockholders Agreement have been duly executed and
delivered by or on behalf of such Selling Stockholder and the form of such
Stockholders Agreement has been delivered to you.
(iii) The performance of this Agreement and the Stockholders Agreement
and the consummation of the transactions contemplated hereby and by the
Stockholders Agreement will not result in a breach or violation by such Selling
Stockholder of any of the terms or provisions of, or constitute a default by
such Selling Stockholder under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license or other
agreement or instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder or any of its properties is bound, any statute,
or any judgment, decree, order, rule or regulation of any court or governmental
agency or body applicable to such Selling Stockholder or any of its properties.
(iv) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
the Common Shares.
(v) Each Preliminary Prospectus and the Prospectus, to the extent any
statements or omissions have been made therein in reliance upon and in
conformity with information furnished to the Company by such Selling
Stockholder specifically for use therein, has conformed in all material
respects to the
<PAGE>
12
requirements of the Act and the Rules and Regulations and has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made; and neither the Registration
Statement nor any amendment or supplement thereto, to the extent any statements
or omissions have been made therein in reliance upon and in conformity with
information furnished to the Company by such Selling Stockholder specifically
for use therein, will include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and neither the Prospectus, nor any
amendment or supplement thereto, to the extent any statements or omissions have
been made therein in reliance upon and in conformity with information furnished
to the Company by such Selling Stockholder specifically for use therein, will
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(b) The Principal Selling Stockholder agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise
dispose of any shares of Common Stock or securities convertible into or
exchangeable for any shares of Common Stock owned by the Principal Selling
Stockholder or as to which the Principal Selling Stockholder has or shares
dispositive power, for a period of 90 days after the first date that any of the
Common Shares are released by you for sale to the public, without the prior
written consent of Montgomery Securities; provided that the Principal Selling
Stockholder shall not be prohibited from exercising options to purchase Common
Stock granted to the Principal Selling Stockholder pursuant to stock options or
plans described in the Prospectus or from transferring shares of Common Stock
by gift provided that the recipient of such gift shall agree not to further
transfer such shares during the remainder of such 90-day period.
SECTION 4. Representations and Warranties of the Underwriters. The
Underwriters represent and warrant to the Company and to the Selling
Stockholders that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under "Underwriting" in the Prospectus was furnished
to the Company by and on behalf of the Underwriters for use in connection with
the preparation of the Registration Statement and the Prospectus and is correct
in all material respects.
<PAGE>
13
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, (i) the Company agrees to issue and
sell to the Underwriters 2,000,000 of the Firm Common Shares, and (ii) the
Selling Stockholders agree, severally and not jointly, to sell to the
Underwriters in the respective amounts set forth in Schedule B hereto, an
aggregate of 2,000,000 of the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholders, respectively, the number of Firm Common Shares set forth opposite
such Underwriters' names in Schedule B hereto. The purchase price per share to
be paid by the several Underwriters to the Company and to the Selling
Stockholders, respectively, shall be $_____ per share.
The obligation of each Underwriter to the Company shall be to purchase from the
Company that number of full shares set forth opposite the name of such
Underwriter in Schedule A hereto. The obligation of each Underwriter to the
Selling Stockholders shall be to purchase from the Selling Stockholders that
number of full shares set forth opposite the name of such Underwriter in
Schedule B hereto.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Montgomery
Securities, 600 Montgomery Street, San Francisco, California (or such other
place as may be agreed upon by the Company and the Underwriters) at such time
and date, not later than the third (or, if the Firm Common Shares are priced,
as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 P.M.
Washington D.C. time, the fourth) full business day following the first date
that any of the Common Shares are released by you for sale to the public, as
you shall designate by at least 48 hours prior notice to the Company (or at
such other time and date, not later than one week after such third (or fourth)
full business day as may be agreed upon by the Company and the Underwriters
(the "First Closing Date").
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company and the Selling Stockholders to you with respect to the
Firm Common Shares to be sold by the Company and by the Selling Stockholders
against payment by you of the purchase price therefor by a wire transfer of
federal funds to an account designated by the Company and of the Agent in
proportion to the number of Firm Common Shares to be sold by the Company and
the Selling Stockholders, respectively. The certificates for the Firm Common
Shares shall be registered in such names and denominations as you shall have
requested at least two full business days prior to the First Closing Date, and
shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may be
designated by you. Time shall be of the essence,
<PAGE>
14
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 300,000 Optional Common Shares
and the Sidney Harman 1987 Revocable Trust hereby grants to the several
Underwriters an option to purchase, severally and not jointly, up to an
aggregate of 300,000 Optional Common Shares, in each case at the purchase price
per share to be paid for the Firm Common Shares and for use solely in covering
any over-allotments made by you in the sale and distribution of the Firm Common
Shares. The options granted hereunder may be exercised at any time (but not
more than once) within 30 days after the first date that any of the Common
Shares are released by you for sale to the public, upon notice by you to the
Company and the Sidney Harman 1987 Revocable Trust setting forth the aggregate
number of Optional Common Shares as to which the Underwriters are exercising
the options, the names and denominations in which the certificates for such
shares are to be registered and the time and place at which such certificates
will be delivered. Any such exercise by the Underwriters shall be for an equal
number of Optional Common Shares subject to the respective options granted by
the Company and the Sidney Harman 1987 Revocable Trust. Such time of delivery
(which may not be earlier than the First Closing Date), being herein referred
to as the "Second Closing Date," shall be determined by you, but if at any time
other than the First Closing Date shall not be earlier than three nor later
than five full business days after delivery of such notice of exercise. The
number of Optional Common Shares to be purchased by each Underwriter shall be
determined by multiplying the number of Optional Common Shares to be sold by
the Company and the Sidney Harman 1987 Revocable Trust pursuant to such notice
of exercise by a fraction, the numerator of which is the number of Firm Common
Shares to be purchased by such Underwriter as set forth opposite its name in
Schedule A and the denominator of which is 2,000,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be
made available for checking and packaging on the business day preceding the
Second Closing Date at a location in New York, New York, as may be designated
by you. The manner of payment for and delivery of the Optional Common Shares
shall be the same as for the Firm Common Shares purchased from the Company and
the Selling Stockholders as specified in the two preceding paragraphs. At any
time before lapse of the options, you may cancel such options by giving written
notice of such cancellation to the Company and the Sidney Harman 1987 Revocable
Trust. If the options are cancelled or expire unexercised in whole or in part,
the Company will deregister under the Act the number of Option Shares
as to which the option has not been exercised.
<PAGE>
15
Subject to the provisions of Section 12 hereof, you may (but shall not be
obligated to) make payment for any Common Shares to be purchased by any
Underwriter whose funds shall not have been received by you by the First
Closing Date or the Second Closing Date, as the case may be, for the account
of such Underwriter, but any such payment shall not relieve such Underwriter
from any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to make a
public offering of their respective portions of the Firm Common Shares as soon
after the effective date of the Registration Statement as in your judgment is
advisable and at the public offering price set forth on the cover page of and
on the terms set forth in the Prospectus.
SECTION 6. Covenants of the Company. The Company covenants
and agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed, pursuant
to the applicable paragraph of Rule 424(b) of the Rules and Regulations within
the time period prescribed and will provide evidence satisfactory to you of
such timely filing. The Company will promptly advise you in writing (i) of the
receipt of any comments of the Commission, (ii) of any request of the
Commission for amendment of or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or the
Prospectus or for additional information, (iii) when the Registration Statement
shall have become effective, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose. If the Commission shall enter
any such stop order at any time, the Company will use its best efforts to
obtain the lifting of such order at the earliest possible moment. The Company
will not file any amendment or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or the
Prospectus of which you have not been furnished with a copy a reasonable time
prior to such filing or to which you reasonably object or which is not in
compliance with the Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly upon
your request, any amendments or supplements to the Registration Statement or
the Prospectus
<PAGE>
16
which in your judgment may be necessary or advisable to enable the several
Underwriters to continue the distribution of the Common Shares and will use its
best efforts to cause the same to become effective as promptly as possible.
The Company will fully and completely comply with the provisions of Rule 430A
of the Rules and Regulations, if applicable, with respect to information
omitted from the Registration Statement in reliance upon such Rule.
(c) If at any time during the period in which a prospectus relating to
the Common Shares is required to be delivered under the Act any event occurs,
as a result of which the Prospectus, including any amendments or supplements,
would include an untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements, to comply with the Act or
the Rules and Regulations, the Company will promptly advise you thereof and
will promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment or supplement which will effect such compliance and will use its best
efforts to cause the same to become effective as soon as possible; and, in case
any Underwriter is required to deliver a prospectus after such period, the
Company upon request, but at the expense of such Underwriter, will promptly
prepare such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after the end of
the first quarter ending after one year following the "effective date of the
Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of Section
11(a) of the Act.
(e) During such period as a prospectus is required by law to be delivered
in connection with sales by an Underwriter or dealer, the Company, at its
expense, but only for the nine-month period after the effective date of the
Registration Statement, will furnish to you or mail to your order copies of the
Registration Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may request, for the purposes
contemplated by the Act.
<PAGE>
17
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as you designate,
will comply with such laws and will continue such qualifications, registrations
and exemptions in effect so long as reasonably required for the distribution of
the Common Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified. The Company will advise you
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company, with your cooperation,
will use its best efforts to obtain the withdrawal thereof.
(g) During the shorter of the period of five years hereafter or the
period in which the Common Stock is registered under the Exchange Act, the
Company will furnish to the Underwriters: (i) as soon as practicable after the
end of each fiscal year, copies of the Annual Report of the Company containing
the balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public accountants;
(ii) as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K or other report filed by the Company with the Commission,
the NASD or any securities exchange; and (iii) as soon as available, copies of
any report or communication of the Company mailed generally to holders of its
Common Stock.
(h) During the period of 90 days after the first date that any of the
Common Shares are released by you for sale to the public, without the prior
written consent of Montgomery Securities, the Company will not other than
pursuant to outstanding stock options and warrants disclosed in the Prospectus
issue, offer, sell, grant options to purchase or otherwise dispose of any of
the Company's equity securities or any other securities convertible into or
exchangeable with its Common Stock or other equity security (other than (i) the
sale of the Common Shares to the Underwriters hereunder and (ii) as a result of
the granting or exercise of options to acquire shares of Common Stock pursuant
to stock options or plans described in the Prospectus).
<PAGE>
18
(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain exemptions
from the application of) the Blue Sky laws of the State of California (and
thereby permit market making transactions and secondary trading in the
Company's Common Stock in California), will comply with such Blue Sky laws and
will continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(k) The Company will use its best efforts to list, subject to official
notice of issuance, on the New York Stock Exchange, the Common Stock to be
issued and sold by the Company.
You may, in your sole discretion, waive in writing the performance by
the Company of any one or more of the foregoing covenants or extend the time
for their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or
is terminated, the Company agrees to pay all costs, fees and expenses incurred
in connection with the performance of the obligations of the Company and the
Selling Stockholders hereunder and in connection with the transactions
contemplated hereby, including without limiting the generality of the
foregoing, (i) all expenses incident to the issuance and delivery of the Common
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Common Shares to the Underwriters, (iv) all fees and expenses of the
Company's counsel, the Selling Stockholders' counsel and the Company's
independent accountants, (v) all costs and expenses incurred in connection with
the preparation, printing, filing, shipping and distribution of the
Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all amendments and
supplements provided for herein, this Agreement, the Agreement Among
Underwriters, the Selected Dealers Agreement, the Underwriters' Questionnaire,
the Underwriters' Power of Attorney and the Blue Sky memorandum, (vi) all
filing fees, attorneys' fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the Blue Sky laws, (vii) the filing fee
of the NASD, and (viii) all other fees, costs and expenses referred to in Item
14 of the Registration Statement. Except as provided in this Section 7,
<PAGE>
19
Section 9 and Section 11 hereof, the Underwriters shall pay all of their own
expenses, including the fees and disbursements of their counsel (excluding
those relating to qualification, registration or exemption under the Blue Sky
laws and the Blue Sky memorandum referred to above). This Section 7 shall not
affect any agreements relating to the payment of expenses between the Company
and the Selling Stockholders.
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholders made pursuant to the provisions hereof,
to the performance by the Company and the Selling Stockholders of their
respective obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., Washington, D.C. time on the date of this Agreement, or at such
later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and
Regulations; and prior to such Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or,
to the knowledge of the Company, the Selling Stockholders or you, shall be
contemplated by the Commission; and any request of the Commission for inclusion
of additional information in the Registration Statement, or otherwise, shall
have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there
shall not have been any change in the capital stock, other than pursuant to the
exercise of outstanding options disclosed in the Prospectus, of the Company or
any of its subsidiaries or any material change in the indebtedness (other than
in the ordinary course of business) of the Company or any of its subsidiaries,
(ii) except as set forth in or contemplated by the Registration Statement or
the Prospectus, no material verbal or written agreement or other transaction
shall have been entered into by the Company or any of its subsidiaries, which
is not in the ordinary course of business or which could result in a material
reduction in the future earnings
<PAGE>
20
of the Company and its subsidiaries taken as a whole, (iii) no loss or damage
(whether or not insured) to the property of the Company or any of its
subsidiaries shall have been sustained which materially and adversely affects
the condition (financial or otherwise), business, results of operations or
prospects of the Company and its subsidiaries taken as a whole, (iv) no legal
or governmental action, suit or proceeding affecting the Company or any of its
subsidiaries which is material to the Company and its subsidiaries taken as a
whole or which affects or may affect the transactions contemplated by this
Agreement or which, individually or in the aggregate, if adversely determined,
would have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries shall have been instituted or threatened, and (v) there shall not
have been any material change in the condition (financial or otherwise),
business, senior management, results of operations or prospects of the Company
and its subsidiaries which makes it impracticable or inadvisable in your
judgment to proceed with the public offering or purchase the Common Shares as
contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in form
and substance satisfactory to you, except as otherwise expressly provided
below:
(i) An opinion of Jones, Day Reavis & Pogue, counsel for the Company and
the Principal Selling Stockholder, addressed to the Underwriters and dated the
First Closing Date, or the Second Closing Date, as the case may be, in the form
attached hereto as Schedule C.
(ii) An opinion of Schulte Roth & Zabel, counsel for the Selling
Stockholders, other than the Principal Selling Stockholder, addressed to the
Underwriters and dated the First Closing Date, or the Second Closing Date, as
the case may be, in the form attached hereto as Schedule E.
(iii) An opinion of Barnes & Thornburg, Indiana counsel for the Company,
addressed to the Underwriters and dated the First Closing Date, or the Second
Closing Date, as the case may be, covering the matters set forth in Schedule D.
(iv) An opinion of Van Cott, Bagley, Cornwall & McCarthy, Utah counsel
for the Company, addressed to the Underwriters and dated the First Closing
Date, or the Second Closing Date, as the case may be, covering the matters set
forth in Schedule D.
<PAGE>
21
(v) An opinion of Connecticut counsel for the Company, addressed to the
Underwriters and dated the First Closing Date, or the Second Closing Date, as
the case may be, covering the matters set forth in Schedule D.
(vi) An opinion of Denton, Hall, Burgin & Warrens, English counsel for
the Company, addressed to the Underwriters and dated the First Closing Date, or
the Second Closing Date, as the case may be, covering the matters set forth in
Schedule D.
(vii) An opinion of Jones, Day, Reavis & Pogue, German counsel for the
Company, addressed to the Underwriters and dated the First Closing Date, or the
Second Closing Date, as the case may be, covering the matters set forth in
Schedule D.
(viii) An opinion of Austrian counsel for the Company, addressed to the
Underwriters and dated the First Closing Date, or the Second Closing Date, as
the case may be, covering the matters set forth in Schedule D.
(ix) An opinion of Swiss counsel for the Company, addressed to the
Underwriters and dated the First Closing Date, or the Second Closing Date, as
the case may be, covering the matters set forth in Schedule D.
(x) An opinion of Frank Meredith, Esquire, Tax/Legal Counsel for the
Company, addressed to the Underwriters and dated the First Closing Date, or the
Second Closing Date, as the case may be, to the effect that:
(1) Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no outstanding
options, warrants or other rights calling for the issuance of, and no
commitments, plans or arrangements to issue, any, shares of capital stock of
the Company or any security convertible into or exchangeable for capital stock
of the Company;
(2) Neither the Company nor any subsidiary is in violation of its
certificate of incorporation or bylaws, or other organizational documents or to
the best of such counsel's knowledge, in breach of or default with respect to
any provision of any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to such counsel
<PAGE>
22
to which the Company or any such subsidiary is a party or by which it or any of
its properties may be bound or affected, except where such default would not
materially adversely affect the Company and its subsidiaries; and, to the best
of such counsel's knowledge, the Company and its subsidiaries are in compliance
with all laws, rules, regulations, judgments, decrees, orders and statutes of
any court or jurisdiction to which they are subject, except where noncompliance
would not materially adversely affect the Company and its subsidiaries taken as
a whole;
(3) To the best of such counsel's knowledge, no holders of securities of
the Company have rights (which rights have not been waived) to require the
Company to register any shares of Common Stock or other securities, because of
the filing of the Registration Statement by the Company or the offering
contemplated hereby;
In rendering such opinions, such counsel may rely as to matters of local
law, on opinions of local counsel, and as to matters of fact, on certificates
of officers of the Company and of governmental officials, in which case their
opinions are to state that they are so doing and that the Underwriters are
justified in relying on such opinions or certificates and copies of said
opinions or certificates are to be attached to the opinion. Such counsel shall
also include a statement to the effect that nothing has come to such counsel's
attention that would lead such counsel to believe that either at the effective
date of the Registration Statement or at the applicable Closing Date, the
Registration Statement, the Prospectus or any amendment or supplement thereto,
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(xi) Such opinion or opinions of Simpson Thacher & Bartlett, counsel for
the Underwriters dated the First Closing Date or the Second Closing Date, as
the case may be, with respect to the incorporation of the Company, the
sufficiency of all corporate proceedings and other legal matters relating to
this Agreement, the validity of the Common Shares, the Registration Statement
and the Prospectus and other related matters as you may reasonably require, and
the Company and the Selling Stockholders shall have furnished to such counsel
such documents and shall have exhibited to them such papers and records as they
may reasonably request
<PAGE>
23
for the purpose of enabling them to pass upon such matters. In connection with
such opinions, such counsel may rely on representations or certificates of
officers of the Company and governmental officials.
(xii) A certificate of the Company executed by the Chairman of the Board
and the chief financial or accounting officer of the Company, dated the First
Closing Date or the Second Closing Date, as the case may be, to the effect
that:
(1) The representations and warranties of the Company set forth in
Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date, as the
case may be, and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied on or prior to such
Closing Date;
(2) The Commission has not issued any order preventing or suspending the
use of the Prospectus or any Preliminary Prospectus filed as a part of the
Registration Statement or any amendment thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to the best of
the knowledge of the respective signers, no proceedings for that purpose have
been instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of the certificate has carefully
examined the Registration Statement and the Prospectus; in his opinion and to
the best of his knowledge, the Registration Statement and the Prospectus and
any amendments or supplements thereto contain all statements required to be
stated therein regarding the Company and its subsidiaries; and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading;
(4) Since the initial date on which the Registration Statement was filed,
no agreement, written or oral, transaction or event has occurred which should
have been set forth in an amendment to the Registration Statement or in a
supplement to or amendment of any prospectus which has not been disclosed in
such a supplement or amendment;
<PAGE>
24
(5) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as disclosed in or
contemplated by the Prospectus, (i) there has not been any material adverse
change or a development involving a material adverse change in the condition
(financial or otherwise), business, properties, results of operations,
management or prospects of the Company and its subsidiaries taken as a whole;
(ii) no legal or governmental action, suit or proceeding is pending or
threatened against the Company or any of its subsidiaries which is material to
the Company and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, or which may adversely affect
the transactions contemplated by this Agreement; (iii) since such dates and
except as so disclosed, neither the Company nor any of its subsidiaries has
entered into any verbal or written agreement or other transaction which is not
in the ordinary course of business or which could result in a material
reduction in the future earnings of the Company or incurred any material
liability or obligation, direct, contingent or indirect, made any change in its
capital stock, made any material change in its short-term debt or funded debt
or repurchased or otherwise acquired any of the Company's capital stock; and
(iv) the Company has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to stockholders of
record on a date prior to the First Closing Date or Second Closing Date; and
(6) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus and except as disclosed in or
contemplated by the Prospectus, the Company and its subsidiaries taken as a
whole have not sustained a material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not insured).
(xiii) On the First Closing Date or the Second Closing Date, as the case
may be, a certificate, dated such Closing Date and addressed to you, signed by
or on behalf of each of the Selling Stockholders to the effect that the
representations and warranties of such Selling Stockholder in this Agreement
are true and correct, as if made at and as of the First Closing Date or the
Second Closing Date, as the case may be, and such Selling Stockholder has
complied with all the agreements and satisfied all the conditions on his part
<PAGE>
25
to be performed or satisfied prior to the First Closing Date or the Second
Closing Date, as the case may be.
(xiv) On the date before this Agreement is executed and also on the First
Closing Date and the Second Closing Date a letter addressed to you from KPMG
Peat Marwick LLP, independent accountants, the first one to be dated the day
before the date of this Agreement, the second one to be dated the First Closing
Date and the third one (in the event of a Second Closing) to be dated the
Second Closing Date, in form and substance satisfactory to you.
(xv) On or before the First Closing Date, a letter from the Principal
Selling Stockholder, in form and substance satisfactory to you, confirming
that for a period of 90 days after the first date that any of the Common Shares
are released by you for sale to the public, such person will not directly or
indirectly sell or offer to sell or otherwise dispose of any shares of Common
Stock owned by the Principal Selling Stockholder or as to which the Principal
Selling Stockholder has or shares dispositive power, or any right to acquire
any such shares or any securities convertible into or exchangeable for such
shares of Common Stock, without the prior written consent of Montgomery
Securities; provided that such agreement shall not prohibit the Principal
Selling Stockholder from exercising options to purchase Common Stock granted
to the Principal Selling Stockholder pursuant to stock options or plans
described in the Prospectus or from transferring shares of Common Stock by gift
provided that the recipient of such gift shall agree not to further transfer
such shares during the remainder of such 90-day period.
All such opinions, certificates, letters and documents shall be in compliance
with the provisions hereof only if they are reasonably satisfactory to you and
to Simpson Thacher & Bartlett, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you reasonably request. Any certificate
signed by any officer of the Company and delivered to you or to counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you to the Company and the
Selling Stockholders without liability on the part of any Underwriter, the
Company or the Selling Stockholders except for the expenses to be paid or
<PAGE>
26
reimbursed by the Company pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses.
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 8, or if the sale to the Underwriters of
the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse you upon demand for all out-of-pocket
expenses that shall have been reasonably incurred by you in connection with the
proposed purchase and the sale of the Common Shares, including but not limited
to fees and disbursements of counsel, printing expenses, travel expenses,
postage, telegraph charges and telephone charges relating directly to the
offering contemplated by the Prospectus. Any such termination shall be without
liability of any party to any other party except that the provisions of this
Section, Section 7 and Section 11 shall at all times be effective and shall
apply.
SECTION 10. Effectiveness of Registration Statement. You, the Company
and the Selling Stockholders will use your, its and their best efforts to cause
the Registration Statement to become effective, to prevent the issuance of any
stop order suspending the effectiveness of the Registration Statement and, if
such stop order be issued, to obtain as soon as possible the lifting thereof.
SECTION 11. Indemnification. (a) The Company, the Principal Selling
Stockholder and the Sidney Harman 1987 Revocable Trust, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading, or arise out of or are based in whole or in part on any inaccuracy
in the representations and warranties of the Company, the Principal Selling
Stockholder or the Sidney Harman 1987 Revocable Trust contained herein or any
failure of the Company, the Principal Selling Stockholder or the Sidney Harman
1987 Revocable Trust to
<PAGE>
27
perform their respective obligations hereunder or under law; and will
reimburse each Underwriter and each such controlling person for any legal and
other expenses as such expenses are reasonably incurred by such Underwriter or
such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that neither the Company, the Principal Selling
Stockholder nor the Sidney Harman 1987 Revocable Trust will be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with the information furnished to the
Company pursuant to Section 4 hereof; further provided, however, that the
indemnification contained in this paragraph (a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Common Shares by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
Rules and Regulations, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the several Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. The Company, the Principal
Selling Stockholder and the Sidney Harman 1987 Revocable Trust may agree, as
among themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible. In addition to its other obligations under this Section
11(a), the Company, the Principal Selling Stockholder and the Sidney Harman
1987 Revocable Trust agree that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission, or
any inaccuracy in the representations and warranties of the Company, the
Principal Selling Stockholder or the Sidney Harman 1987 Revocable Trust herein
or failure to perform its obligations hereunder, all as described in this
Section 11(a), they will reimburse each Underwriter on a quarterly basis for
all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of their obligations to reimburse each
Underwriter for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to
<PAGE>
28
the Company, the Principal Selling Stockholder or the Sidney Harman 1987
Revocable Trust, as the case may be, together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by Bank
of America NT&SA, San Francisco, California (the "Prime Rate"). Any such
interim reimbursement payments which are not made to an Underwriter within 30
days of a request for reimbursement shall bear interest at the Prime Rate from
the date of such request. Notwithstanding the foregoing provisions of this
Section 11(a), (i) the liability of the Principal Selling Stockholder and the
Sidney Harman 1987 Revocable Trust pursuant to this Section 11(a) shall be
limited to an amount equal to the aggregate net proceeds received by the
Principal Selling Stockholder and the Sidney Harman 1987 Revocable Trust from
their sale of Common Shares hereunder and (ii) no Underwriter or person who
controls any Underwriter shall exercise its rights to receive indemnification
from the Principal Selling Stockholder or the Sidney Harman 1987 Revocable
Trust pursuant to this Section 11(a) unless (A) demand for indemnification has
been made against the Company in accordance with the provisions of this Section
11 and (B) the Company shall not have satisfied its indemnification obligations
in full on the 120th day after receipt of such demand. This indemnity
agreement will be in addition to any liability which the Company, the Principal
Selling Stockholder or the Sidney Harman 1987 Revocable Trust may otherwise
have.
(b) Each Selling Stockholder, other than the Principal Selling
Stockholder and the Sidney Harman 1987 Revocable Trust (such stockholders,
the "Other Selling Stockholders"), will severally and not jointly indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Underwriter or such
controlling person may become subject, under the Act, the Exchange Act, or
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with information furnished to the Company by such Other
Selling Stockholder specifically for inclusion therein, or arise out of or are
based
<PAGE>
29
in whole or in part on any inaccuracy in the representations and warranties of
such Other Selling Stockholder contained herein or any failure of such Other
Selling Stockholder to perform its obligations hereunder or under law; and will
reimburse the Underwriters or controlling persons for any legal and other
expense reasonably incurred by the Underwriters or controlling persons in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. In addition to its
other obligations under this Section 11(b), each Other Selling Stockholder
severally agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, or any
inaccuracy in the representations and warranties of such Other Selling
Stockholder herein or failure to perform its obligations hereunder, all as
described in this Section 11(b), it will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of their
obligations to reimburse each Underwriter for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, each Underwriter shall promptly
return it to such Other Selling Stockholder, together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to an Underwriter within 30 days of
a request for reimbursement, shall bear interest at the Prime Rate from the
date of such request. Notwithstanding the foregoing provisions of this Section
11(b), the liability of each Other Selling Stockholder pursuant to this Section
11(b) shall be limited to an amount equal to the aggregate net proceeds
received by such Selling Stockholder from its sale of Common Shares hereunder.
This indemnity agreement will be in addition to any liability which the Other
Selling Stockholders may otherwise have.
(c) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement, the Selling Stockholders and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of the Act,
against any losses, claims, damages, liabilities or expenses to which the
Company, or any such director, officer, Selling Stockholder or controlling
person may become subject, under the Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or
<PAGE>
30
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 4 hereof, or arise out of or are
based in whole or in part on any inaccuracy in the representations and
warranties of the Underwriters contained herein or any failure of the
Underwriters to perform their obligations hereunder or under law; and will
reimburse the Company, or any such director, officer, Selling Stockholder or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer, Selling Stockholder or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. In addition
to its other obligations under this Section 11(c), each Underwriter severally
agrees that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section 11(c) which relates to information furnished to the Company pursuant to
Section 4 hereof, it will reimburse the Company (and, to the extent applicable,
each officer, director, controlling person or Selling Stockholder) on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or Selling Stockholder)
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that
any such interim reimbursement payment is so held to have been improper, the
Company (and, to the extent applicable, each officer, director, controlling
person or Selling Stockholder) shall promptly return it to the Underwriters
together with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made to the
Company within 30 days of a request for reimbursement, shall bear interest at
the Prime Rate from the date of such request. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action,
<PAGE>
31
such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section, notify the indemnifying party
in writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought against
any indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled
to participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded,
upon consultation with counsel, that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel, approved by the Underwriters in the
case of paragraph (a) or (b), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.
(e) If the indemnification provided for in this Section 11 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a) through
(d) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses
<PAGE>
32
referred to herein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Selling Stockholders and the
Underwriters from the offering of the Common Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, the Selling
Stockholders and the Underwriters in connection with the statements or
omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The respective relative benefits
received by the Company, the Selling Stockholders and the Underwriters shall
be deemed to be in the same proportion, in the case of the Company and the
Selling Stockholders as the total price paid to the Company and to the Selling
Stockholders, respectively, for the Common Shares sold by them to the
Underwriters (net of underwriting commissions but before deducting expenses)
bears to the total price to the public set forth on the cover of the
Prospectus, and in the case of the Underwriters as the underwriting commissions
received by them bears to the total price to the public set forth on the cover
of the Prospectus. The relative fault of the Company, the Selling Stockholders
and the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company, the Selling Stockholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in subparagraph (d) of this Section 11, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating
or defending any action or claim. The provisions set forth in subparagraph (d)
of this Section 11 with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this subparagraph (e);
provided, however, that no additional notice shall be required with respect to
any action for which notice has been given under subparagraph (d) for purposes
of indemnification. The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 11 were determined solely by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 11, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by
<PAGE>
33
it and distributed to the public and no Selling Stockholder shall be required
to contribute any amount in excess of the amount of the aggregate net proceeds
received by such Selling Stockholder in connection with the sale of Common
Shares by such Selling Stockholder hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 11 are several in proportion to their respective underwriting
commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 11(a), (b) and (c)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors of
The New York Stock Exchange, Inc. or pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 11(a), (b) and (c)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 11(a), (b) or (c) hereof.
SECTION 12. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company and the Selling Stockholders to
sell and deliver the Common Shares hereunder, and of each Underwriter to
purchase the Common Shares in the manner as described herein, that, except as
hereinafter in this paragraph provided, each of the Underwriters shall purchase
and pay for all the Common Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Underwriters of all such shares in accordance with
the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Common Shares hereunder on either the First or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date
does not exceed 10% of the total number of Common Shares which the Underwriters
are obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Common Shares which such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Common Shares with respect
to which such default occurs
<PAGE>
34
is more than the above percentage and arrangements satisfactory to the
non-defaulting Underwriters and the Company for the purchase of such Common
Shares by other persons are not made within 48 hours after such default, this
Agreement will terminate without liability on the party of any non-defaulting
Underwriter or the Company or the Selling Stockholders except for the expenses
to be paid by the Company pursuant to Section 7 hereof and except to the extent
provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to be purchased
by the non-defaulting Underwriters or by another party or parties, the
non-defaulting Underwriters or the Company shall have the right to postpone
the First or Second Closing Date, as the case may be, for not more than five
business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement
has not become effective, at 2:00 P.M., California time, on the first full
business day following the effectiveness of the Registration Statement
(provided that this Agreement shall nevertheless become effective at such
earlier time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the Common
Shares for sale to the public) or (ii) if at the time of execution of this
Agreement the Registration Statement has been declared effective, upon
execution and delivery of this Agreement by the parties hereto. For the
purposes of this Section 13, the Common Shares shall be deemed to have been
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams
(i) advising Underwriters that the Common Shares are released for public
offering, or (ii) offering the Common Shares for sale to securities dealers,
whichever may occur first.
SECTION 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof.
(a) This Agreement may be terminated by the Company by notice to you and
the Selling Stockholders or by you by notice to the Company and the Selling
Stockholders at any time prior to the time this Agreement shall become
effective as to all its provisions, and any such termination shall be without
liability on the part of the Company or the Selling Stockholders to any
Underwriter (except for the expenses to be paid or reimbursed by the Company
pursuant to Sections 7
<PAGE>
35
and 9 hereof and except to the extent provided in Section 11 hereof) or of any
Underwriter to the Company or the Selling Stockholders (except to the extent
provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company and the Selling Stockholders (i) if
additional material governmental restrictions, not in force and effect on the
date hereof, shall have been imposed upon trading in securities generally or
minimum or maximum prices shall have been generally established on the New York
Stock Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by federal,
New York or California authorities, (ii) if an outbreak of major hostilities or
other national or international calamity or any substantial change in
political, financial or economic conditions shall have occurred or shall have
accelerated or escalated to such an extent, as, in the judgment of the
Underwriters, to affect adversely the marketability of the Common Shares,
(iii) if any adverse event shall have occurred or shall exist which makes
untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or Prospectus or which is not reflected
in the Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information contained therein not misleading in
any material respect, or (iv) if there shall be any action, suit or proceeding
pending or threatened, or there shall have been any development or prospective
development involving particularly the business or properties or securities of
the Company or any of its subsidiaries or the transactions contemplated by this
Agreement, which, in the reasonable judgment of the Underwriters, may
materially and adversely affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares. Any
termination pursuant to this subsection (b) shall be without liability on the
part of any Underwriter to the Company or the Selling Stockholders or on the
part of the Company or the Selling Stockholders to any Underwriter (except for
expenses to be paid or reimbursed by the Company pursuant to Sections 7 and 9
hereof and except to the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California time, on
the tenth full business day after the Registration Statement shall have become
effective if the initial public offering price of the Common Shares shall not
then as yet have been determined as provided in Section 5 hereof. Any
termination pursuant to this subsection (c) shall be without liability on the
part of any Underwriter to
<PAGE>
36
the Company or the Selling Stockholders or on the part of the Company or the
Selling Stockholders to any Underwriter (except for expenses to be paid or
reimbursed by the Company pursuant to Sections 7 and 9 hereof and except to
the extent provided in Section 11 hereof).
SECTION 15. Failure of the Selling Stockholders to Sell and Deliver. If
one or more of the Selling Stockholders shall fail to sell and deliver to the
Underwriters the Common Shares to be sold and delivered by such Selling
Stockholders at the First Closing Date under the terms of this Agreement, then
the Underwriters may at their option, by written notice from you to the Company
and the Selling Stockholders, either (i) terminate this Agreement without any
liability on the part of any Underwriter or, except as provided in Sections 7,
9 and 11 hereof, the Company or the Selling Stockholders, or (ii) purchase the
shares which the Company and other Selling Stockholders have agreed to sell and
deliver in accordance with the terms hereof. In the event of a failure by one
or more of the Selling Stockholders to sell and deliver as referred to in this
Section, either you or the Company shall have the right to postpone the Closing
Date for a period not exceeding seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected.
SECTION 16. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholders,
as the case may be, and will survive delivery of and payment for the Common
Shares sold hereunder and any termination of this Agreement.
SECTION 17. Notices. All communications hereunder shall be in writing
and, if sent to you shall be mailed, delivered or telegraphed and confirmed to
you at 600 Montgomery Street, San Francisco, California 94111, Attention: John
Berg, with a copy to Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017, Attention: Laura Palma, Esq.; and if sent to the Company
or the Selling Stockholders shall be mailed, delivered or telegraphed and
confirmed to the Company or such Selling Stockholder at Harman International
Industries, 8500 Balboa Boulevard, Northridge, California 91329, Attention:
Dr. Sidney Harman and Frank Meredith, Esq., with a copy to Jones, Day, Reavis &
Pogue, 599 Lexington Avenue, New York, New York 10022, Attention: Robert A.
Profusek, Esq. and a copy to Schulte Roth & Zabel, 900 Third Avenue, New
York, New York 10022, Attention: William Zabel, Esq. The Company, the Selling
Stockholders
<PAGE>
37
or you may change the address for receipt of communications hereunder by
giving notice to the others.
SECTION 18. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other
person will have any right or obligation hereunder. No such assignment shall
relieve any party of its obligations hereunder. The term "successors" shall
not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
SECTION 19. Partial Unenforceability. The invalidity or unenforceability
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made
such minor changes (and only such minor changes) as are necessary to make it
valid and enforceable.
SECTION 20. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 21. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect
to the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the singular
and the plural include one another. The section headings in this Agreement
are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, the Selling Stockholders and
you.
Any person executing and delivering this Agreement as Attorney-in-fact for a
Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-fact by such Selling Stockholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-fact to take such
action. Any action taken under this Agreement by any of the Attorneys-in-fact
will be binding on all the Selling Stockholders.
<PAGE>
38
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholders and the
several Underwriters, all in accordance with its terms.
Very truly yours,
HARMAN INTERNATIONAL INDUSTRIES,
INCORPORATED
By:___________________________
Title:
[INSERT EACH SELLING STOCKHOLDER NAME]
By:___________________________
(Attorney-in-fact)
SIDNEY HARMAN 1987 REVOCABLE TRUST
By:___________________________
(Attorney-in-fact)
SIDNEY HARMAN CHARITABLE REMAINDER TRUST
By:___________________________
(Attorney-in-fact)
HARMAN FAMILY FOUNDATION
By:___________________________
(Attorney-in-fact)
The foregoing Underwriting
Agreement is hereby confirmed
and accepted by us in San Francisco,
California as of the date first
above written.
MONTGOMERY SECURITIES
By:___________________________
Managing Director
<PAGE>
39
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:____________________________
Managing Director
LEHMAN BROTHERS INC.
By:____________________________
Managing Director
J.P. MORGAN SECURITIES INC.
By:____________________________
Managing Director
<PAGE>
SCHEDULE A
<TABLE>
Number of Firm Common
Shares to be Purchased
Name of Underwriter from Company
- -------------------------- --------------------------------
<S> <C>
Montgomery Securities...............
Donaldson, Lufkin & Jenrette
Securities Corporation.............
Lehman Brothers Inc...................
J.P. Morgan Securities
Inc...........................................
TOTAL.............. ______________
______________
</TABLE>
<PAGE>
SCHEDULE B
<TABLE>
Number of Firm Common
Shares to be Sold by
Name of Underwriter [Name Selling Stockholder]
- -------------------------- --------------------------------
<S> <C>
Montgomery Securities...............
Donaldson, Lufkin & Jenrette
Securities Corporation.............
Lehman Brothers Inc...................
J.P. Morgan Securities
Inc...........................................
</TABLE>
<TABLE>
Number of Firm Common
Shares to be Sold by
Name of Underwriter [Name Selling Stockholder]
- -------------------------- --------------------------------
<S> <C>
Montgomery Securities...............
Donaldson, Lufkin & Jenrette
Securities Corporation.............
Lehman Brothers Inc...................
J.P. Morgan Securities
Inc...........................................
</TABLE>
<TABLE>
Number of Firm Common
Shares to be Sold by
Sidney Harman Charitable
Name of Underwriter Remainder Trust
- -------------------------- --------------------------------
<S> <C>
Montgomery Securities...............
Donaldson, Lufkin & Jenrette
Securities Corporation.............
Lehman Brothers Inc...................
J.P. Morgan Securities
Inc...........................................
TOTAL.............. ______________
______________
</TABLE>
<PAGE>
<TABLE>
Number of Firm Common
Shares to be Sold by
Name of Underwriter Harman Family Foundation
- -------------------------- ---------------------------------
<S> <C>
Montgomery Securities...............
Donaldson, Lufkin & Jenrette
Securities Corporation.............
Lehman Brothers Inc...................
J.P. Morgan Securities
Inc...........................................
TOTAL.............. ______________
</TABLE>
<PAGE>
43
SCHEDULE C
[FORM OF COMPANY COUNSEL'S OPINION]
________ __, 1996
Montgomery Securities
Donaldson, Lufkin & Jenrette
Securities Corporation
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California
Re: Underwritten Public Offering of 4,000,000 Shares
of Common Stock, par value $0.01 per share, of
Harman International Industries, Incorporated
Ladies and Gentlemen:
We have acted as counsel to Harman International Industries, Incorporated,
a Delaware corporation (the "Company"), and Dr. Sidney Harman (the
"Stockholder"), in connection with the issuance and sale by the Company of
2,000,000 shares, and the sale by the Stockholder of ___________ shares, of
Common Stock, par value $0.01 per share, of the Company (such _________ shares,
collectively, the "Shares"), pursuant to the Underwriting Agreement, dated
May __, 1996 (the "Underwriting Agreement"), by and among Montgomery
Securities, Donaldson, Lufkin & Jenrette Securities Corporation, Lehman
Brothers Inc. and J.P. Morgan Securities Inc. (the "Underwriters"), the Selling
Stockholders named therein and the Company. This opinion is being furnished
to you pursuant to Section 8(c)(i) of the Underwriting Agreement. Unless
otherwise defined herein, terms used in this opinion that are defined in the
Underwriting Agreement are used herein as so defined.
For purposes of this opinion (i) Domestic Subsidiaries shall mean Harman
Investment Company, a Delaware corporation, Harman-Kardon Incorporated, a
Delaware corporation, JBL Incorporated, a Delaware corporation, Fosgate Inc., a
Delaware corporation, Harman Motive, Inc., a Delaware corporation, Orban, Inc.,
a Delaware corporation and Infinity Systems, Inc., a California corporation and
(ii) Subsidiaries shall mean the Domestic Subsidiaries and all other direct and
indirect subsidiaries of the Company.
<PAGE>
44
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering the opinions
herein, we are expressing no opinion as to the laws of any jurisdiction other
than the United States, the District of Columbia and the States of Delaware
and California.
Based upon the foregoing, and subject to the qualifications, assumptions
and limitations set forth herein, we are of the opinion that:
1. The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware and is duly qualified to transact
business as a foreign corporation and is in good standing in the District of
Columbia and the States of California and New York, and has full corporate
power and authority to own its properties and conduct its business as described
in the Registration Statement.
2. Each Domestic Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
as set forth opposite its name in Schedule A attached hereto, is duly qualified
to transact business as a foreign corporation and is in good standing in the
states set forth opposite its name on Schedule A attached hereto, and has full
corporate power and authority to own its properties and conduct its business as
described in the Registration Statement.
3. The authorized capital stock of the Company is as set forth under the
caption "Capitalization" in the Prospectus, and all of the outstanding shares
of capital stock of the Company that were issued in the Company's initial
public offering or at any time thereafter have been duly authorized and validly
issued and are fully paid and nonassessable. All of the issued and outstanding
shares of Common Stock that were issued in the Company's initial public
offering or at any time thereafter have been issued in compliance with federal
securities laws and were not issued in violation of or subject to any
preemptive rights or, to our knowledge, other rights to subscribe for or
purchase any securities.
4. All of the issued and outstanding shares of capital stock of each
Domestic Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable. To our knowledge, all of the issued and outstanding
shares of each Domestic Subsidiary are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, security interests, voting
trusts or claims.
5. The certificates evidencing the Shares to be delivered by the Company
under the Underwriting Agreement are in due and proper form under Delaware law,
and when duly countersigned by the Company's transfer agent and registrar, and
delivered to you or upon your order against payment of the agreed
<PAGE>
45
consideration therefor in accordance with the provisions of the Underwriting
Agreement, the Shares represented thereby will be duly authorized and validly
issued, fully paid and nonassessable, and will not have been issued in
violation of or subject to any preemptive rights, or to our knowledge other
rights to subscribe for or purchase securities of the Company.
6. The Company has the corporate power and authority to enter into the
Underwriting Agreement and to sell and deliver the Shares to be sold by it to
the Underwriters. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
7. No approval, authorization, order, consent, registration, filing or
qualification of or with any court or governmental agency is required for the
execution and delivery of the Underwriting Agreement by the Company or the
consummation of the transactions contemplated therein, except registration
under the Act, and such as may be required under applicable state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters, the approval by The New York Stock Exchange, Inc. of the
listing of the Shares and the clearance of such offering by the NASD.
8. Neither the execution and delivery of the Underwriting Agreement by
the Company nor the performance by the Company of the transactions therein
contemplated will (a) result in a breach or violation by the Company, or
constitute a default by the Company under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument that is material to the
Company and the Subsidiaries taken as a whole and known to us to which the
Company or any Subsidiary or any of their respective property is bound, or will
conflict with the Restated Certificate of Incorporation or By-Laws of the
Company, each as amended, or (b) assuming the Shares have been duly registered
under such state securities and Blue Sky laws as may be required in connection
with the purchase and distribution of the Shares by the Underwriters, result in
the violation of (i) any statute or regulation of the United States,
California, Delaware or the District of Columbia applicable to the Company or
any of its Subsidiaries or any of their respective properties or (ii) any order
or decree known to us of any court or governmental authority binding on the
Company or any of its Subsidiaries or any of their properties.
9. Except as disclosed on Schedule B attached hereto, we are not acting
as counsel for the Company or any Subsidiary in any pending litigation in
which the Company or any Subsidiary is a party involving a loss contingency in
excess of $250,000, and we have not had referred to us by the Company or any
Subsidiary for legal advice or legal representation any litigation matter or
other matter that we believe might be deemed to be overtly threatened
litigation in which the Company or any Subsidiary may become a party involving
a loss contingency in excess of
<PAGE>
46
$250,000. The statement set forth in the preceding sentence is limited to
those matters that the Company or any Subsidiary has referred to us for legal
representation or about which the Company or any Subsidiary has consulted us as
counsel and with respect to which we have given substantive attention
subsequent to June 30, 1995. We have identified those matters by making
inquiry of lawyers currently in our firm who, according to our records, have
been engaged in legal services on behalf of the Company or any Subsidiary
during that period, and by examining certain current records that we maintain
for our internal operations. In that process, we have not undertaken any
independent review of documents or records that are in our possession
concerning the Company or any Subsidiary.
10. The Company is not an investment company as that term is defined in
the Investment Company Act of 1940, as amended.
11. The Underwriting Agreement and the Stockholders Agreement have been
duly executed and delivered by or on behalf of the Stockholder; the Agent has
been duly and validly authorized to act as the custodian of the Shares to be
sold by the Stockholder; and the performance by the Stockholder of the
Underwriting Agreement and the Stockholders Agreement and the consummation by
the Stockholder of the transactions contemplated thereby will not result in a
breach of, or constitute a default under, any material indenture, material
mortgage, material deed of trust, material trust,
material loan agreement, material lease or other material agreement or material
instrument known to us to which the Stockholder is a party or by which he or
his property is bound, or violate any statute, judgment, decree, order or rule
known to us of any court or governmental body having jurisdiction over the
Stockholder or any of his properties. To the best of our knowledge, no consent
of any court, administrative agency or other governmental body is required for
the execution and delivery of the Underwriting Agreement or the Stockholders
Agreement or the consummation by the Stockholder of the transactions
contemplated by the Underwriting Agreement, except such as have been obtained
and are in full force and effect under the Act and such as may be required
under the rules of the NASD and applicable Blue Sky laws.
12. The Stockholder has full right and power to enter into the
Underwriting Agreement and the Stockholders Agreement and to sell, transfer,
and deliver the Shares to be sold on the date hereof by the Stockholder under
the Underwriting Agreement and, to our knowledge, good and marketable title to
such Shares so sold, free and clear of all liens, encumbrances, equities,
claims, restrictions, security interests, voting trusts, or other defects of
title, has been transferred to the Underwriters (whom we assume to be bona fide
purchasers) under the Underwriting Agreement.
<PAGE>
47
13. The Stockholders Agreement is the valid and binding agreement of the
Stockholder enforceable in accordance with its terms, except as enforceability
may be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally.
14. No transfer taxes are required to be paid in connection with the sale
and delivery of the Shares to the Underwriters under the Underwriting
Agreement.
We are of the opinion that the Registration Statement and the
Prospectus (except for the operating statistics, financial statements,
financial schedules and other financial data included therein and except for
the information referred to under the caption "Experts" as having been included
in the Registration Statement and the Prospectus on the authority of KPMG Peat
Marwick LLP as experts, as to which we express no view) comply as to form in all
material respects with the Act and the Rules and Regulations. We do not know
of any contracts or other documents of a character required to be filed as
exhibits to the Registration Statement that are not filed as required.
We have not independently verified and are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness (except
as set forth in the preceding paragraph) of the information contained in the
Registration Statement and the Prospectus. We have participated in the
preparation of the Registration Statement and the Prospectus. From time to
time we have had discussions with officers, directors and employees of the
Company, KPMG Peat Marwick LLP, the independent certified public accountants who
examined the consolidated financial statements of the Company and its
Subsidiaries incorporated by reference in the Registration Statement and the
Prospectus, and representatives of the Underwriters concerning the information
contained in the Registration Statement and the Prospectus and proposed
responses to various items in Form S-3 under the Act. Based thereon, no facts
have come to our attention that cause us to believe that the Registration
Statement (except for operating statistics, financial statements, financial
schedules and other financial data included therein and except for the
information referred to under the caption "Experts" as having been included in
the Registration Statement and the Prospectus on the authority of KPMG Peat
Marwick LLP as experts, as to which we express no view), at the time it became
effective and at the date hereof, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or that the
Prospectus (except for the operating statistics, financial statements,
financial schedules and other financial data included therein and except for
the information referred to under the caption "Experts" as having been included
in the Registration Statement and the Prospectus on the authority of KPMG Peat
<PAGE>
48
Marwick LLP as experts, as to which we express no view) at the time it became
effective and at the date hereof contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Registration Statement has become effective under the Act and to the
best of our knowledge no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose are
pending or threatened by the Commission.
The opinions set forth herein are subject to the following assumptions,
qualifications and limitation:
a. We have assumed, with your permission and without independent
investigation: (i) that the signatures on all documents examined by us are
genuine and that where any such signature purports to have been made in a
corporate, governmental, fiduciary or other capacity, the person who affixed
such signature to such documents had authority to do so (other than if such
person is an officer of the Company or its Subsidiaries), (ii) the authenticity
of documents submitted to us as originals, and the conformity to authentic
original documents of all documents submitted to us as certified, conformed or
photostatic copies, and (iii) the correctness of public files, records and
certificates of, or furnished by, governmental or regulatory agencies or
authorities.
b. We have assumed, with your permission and without independent
investigation, that the Underwriting Agreement has been duly authorized,
executed and delivered by each of the parties thereto (other than the Company)
and constitutes the valid and binding obligation of such parties, enforceable
against such parties in accordance with its terms.
c. In rendering the opinions set forth in paragraph 1 as to the good
standing of the Company and each of the Domestic Subsidiaries under the laws
of the jurisdiction of its incorporation or formation and the good standing of
the Company and the Domestic Subsidiaries as foreign corporations in the
specific jurisdictions, we have relied exclusively on certificates of public
officials, all of which have been furnished to you.
d. In rendering the opinions set forth in paragraph 3 hereof concerning the
Company's compliance with federal securities laws with regard to the issuance
of shares of Common Stock in the initial public offering or at any time
thereafter: our opinion with respect to
<PAGE>
49
compliance with federal securities laws is limited to compliance with the
registration requirements of the Act.
e. In rendering the opinions set forth in paragraphs 4 and 5, as to the
matters set forth in the certificates of officers of the Company and its
Domestic Subsidiaries, copies of which have been furnished to you previously
today or are attached hereto, we have assumed the correctness of, and are
relying solely upon, the statements set forth in such certificates without
making any independent investigation or inquiry whatsoever with respect to the
accuracy of such statements, other than a review of the relevant minute books
and stock transfer records (excluding the stock certificates for the Domestic
Subsidiaries, which were not available for our review).
f. In rendering the opinion set forth in paragraph 4 hereof with respect to
the ownership of shares of capital stock of each Domestic Subsidiary, we have
relied exclusively upon a review of the relevant stock transfer records of each
of the Domestic Subsidiaries which records have been certified to us as correct
by an officer of each such Domestic Subsidiary, without making any independent
investigation with respect to the completeness and accuracy of such records.
g. In rendering the opinions set forth in paragraphs 8 and 11 hereof as to
material agreements and other material instruments of the Company, its
Subsidiaries and the Stockholder, we have assumed the completeness and accuracy
of, and are relying solely upon, the statements in the certificates of officers
of the Company and the Subsidiaries and of the Stockholder, copies of which
have been furnished to you, identifying all of the material agreements and
other material instruments to which the Company, any Subsidiary and the
Stockholder is a party or by which the Company, any Subsidiary or the
Stockholder is bound, without making any independent investigation with respect
to the completeness and accuracy of the statements contained therein and, based
solely upon our review of the reports filed by the Company prior to the date
hereof pursuant to the Exchange Act, we have no knowledge of any other
material agreements or material instruments to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound.
h. Until December 31, 1992, Jane Harman was of Counsel to our firm and an
officer and director of the Company, and she is presently a beneficial owner of
shares of Common Stock of the Company and the wife of the Stockholder. For
purposes of this opinion, any
<PAGE>
50
knowledge of or information known by Jane Harman that is not known by any
other lawyer in our firm shall not be deemed to be knowledge of or information
known by our firm.
i. As to matters of fact, we have relied solely upon certificates of
executive officers of the Company and the Stockholder, copies of which have
been delivered to you.
This opinion is furnished by us, as counsel for the Company and the
Stockholder, to you solely for your benefit and solely with respect to the
purchase of the Shares from the Company and the Stockholder by you, upon the
understanding that we are not hereby assuming any professional responsibility
to any other person whatsoever.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE>
SCHEDULE D
[FORM OF FOREIGN SUBSIDIARY OPINION]
________ __, 1996
Montgomery Securities
Donaldson, Lufkin & Jenrette
Securities Corporation
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California
Re: Underwritten Public Offering of 4,000,000 Shares
of Common Stock, par value $0.01 per share, of
Harman International Industries, Incorporated
Ladies and Gentlemen:
We have acted as counsel to [company], a corporation organized and
existing under the laws of [country] (the "Company").
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering the opinions
herein, we are expressing no opinion as to the laws of any jurisdiction other
than the laws of [country].
Based upon the foregoing, and subject to the qualifications, assumptions
and limitations set forth herein, we are of the opinion that:
1. The Company is duly organized, validly existing and in good standing
under the laws of [country] and is duly qualified to do business as a [country]
corporation.
2. To the best of our knowledge, all of the issued and outstanding shares
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable. To the best of our knowledge, all of the issued and
outstanding shares of the Company are owned directly or indirectly by Harman
International Industries, Incorporated, free and clear of all liens,
encumbrances, security interests, voting trusts or claims.
3. [Except as disclosed on Schedule A attached hereto,] to the best of
our knowledge, there are no legal or governmental actions, suits or proceedings
pending or threatened against the Company.
<PAGE>
52
This opinion is furnished by us, as counsel for the Company, to you solely
for your benefit and solely with respect to the purchase by your of the Shares
referred to above, upon the understanding that we are not hereby assuming any
professional responsibility to any other person whatsoever.
Very truly yours,
<PAGE>
53
SCHEDULE E
[FORM OF OPINION OF COUNSEL TO SELLING STOCKHOLDERS]
________ __, 1996
Montgomery Securities
Donaldson, Lufkin & Jenrette
Securities Corporation
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California
Re: Underwritten Public Offering of 4,000,000 Shares
of Common Stock, par value $0.01 per share, of
Harman International Industries, Incorporated
Ladies and Gentlemen:
We have acted as counsel to the Sidney Harman 1987 Revocable Trust, the
Harman Family Foundation and the Sidney Harman Charitable Remainder Trust
(collectively, the "Selling Stockholders"), in connection with the sale by the
Selling Stockholders of _________ shares of Common Stock, par value $0.01 per
share (the "Shares"), of Harman International Industries, Incorporated
(the "Company"), pursuant to the Underwriting Agreement, dated May __, 1996
(the "Underwriting Agreement"), by and among Montgomery Securities, Donaldson,
Lufkin & Jenrette Securities Corporation, Lehman Brothers Inc. and J.P. Morgan
Securities Inc. (the "Underwriters"), Dr. Sidney Harman, the Selling
Stockholders and the Company. This opinion is being furnished to you pursuant
to Section 8(c)(ii) of the Underwriting Agreement. Unless otherwise defined
herein, terms used in this opinion that are defined in the Underwriting
Agreement are used herein as so defined.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. In rendering the opinions
herein, we are expressing no opinion as to the laws of any jurisdiction other
than the United States and the States of _____________.
Based upon the foregoing, and subject to the qualifications, assumptions
and limitations set forth herein, we are of the opinion that:
1. The Underwriting Agreement and the Stockholders Agreement have been
duly authorized, executed and delivered by or on behalf of each of the Selling
Stockholders; the Agent has been
<PAGE>
54
duly and validly authorized to act as the custodian of the Shares to be sold by
the Selling Stockholders; and the performance by the Stockholder of the
Underwriting Agreement and the Stockholders Agreement and the consummation
by the Stockholder of the transactions contemplated thereby will not result in
a breach of, or constitute a default under, any material indenture, material
mortgage, material deed of trust, material trust,
material loan agreement, material lease or other material agreement or material
instrument of which we have knowledge to which any Selling Stockholder is a
party or by which it or its property is bound, or violate any statute,
judgment, decree, order or rule known to us of any court or governmental body
having jurisdiction over any Selling Stockholder or any of its properties; and
to the best of such counsel's knowledge, no consent of any court, regulatory
body, administrative agency or other governmental body is required for the
execution and delivery of the Underwriting Agreement or the Stockholders
Agreement or the consummation by the Selling Stockholders of the transactions
contemplated by the Underwriting Agreement, except such as have been obtained
and are in full force and effect under the Act and such as may be required
under the rules of the NASD and applicable Blue Sky laws.
2. Each Selling Stockholder has full right, power and authority to enter
into the Underwriting Agreement and the Stockholders Agreement and to sell,
transfer, and deliver the Shares to be sold on the date hereof by such Selling
Stockholder under the Underwriting Agreement and, assuming each of the several
Underwriters who purchases Shares acquires them in good faith and without
notice of any adverse claim (as such term is defined in Section 8-302 of the
Uniform Commercial Code), upon delivery of such Shares and payment therefor in
accordance with the Underwriting Agreement, such Underwriters will have
acquired good and valid title to such Shares, free and clear of any pledges,
liens, claims, encumbrances, security interests and other adverse claims other
than those created by the action or inaction of any Underwriter.
3. The Stockholders Agreement is the valid and binding agreement of each
Selling Stockholder enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally.
4. No transfer taxes are required to be paid in connection with the sale
and delivery by the Selling Stockholders of the Shares to the Underwriters
under the Underwriting Agreement.
<PAGE>
55
This opinion is furnished by us, as counsel for the Selling Stockholders,
to you solely for your benefit and solely with respect to the purchase of the
Shares from the Selling Stockholders by you, upon the understanding that we
are not hereby assuming any professional responsibility to any other person
whatsoever.
Very truly yours,
Schulte Roth & Zabel
<PAGE>
Exhibit 5.1
May 13, 1996
Harman International Industries, Incorporated
1101 Pennsylvania Avenue, N.W.
Suite 1010
Washington, D.C. 20004
Ladies and Gentlemen:
We have acted as counsel to Harman International Industries, Incorporated,
a Delaware corporation (the "Company"), in connection with the preparation
and filing by the Company of a Registration Statement on Form S-3,
Registration No. 333-03189 (the "Registration Statement"), under the
Securities Act of 1933, as amended, with respect to the registration of (i)
4,000,000 shares of Common Stock of the Company (2,000,000 to be offered
and sold by the Company and 2,000,000 shares to be offered and sold by
certain Selling Stockholders) and (ii) 600,000 shares of Common Stock of the
Company reserved for over-allotment options granted to the Underwriters
(defined below) (300,000 shares reserved for over-allotment option granted by
the Company and 300,000 shares reserved for over-allotment option granted
by certain Selling Stockholders) (collectively, such 4,600,000 shares of
Common Stock are referred to herein as the "Shares"). The Shares will be
sold pursuant to an Underwriting Agreement (the "Underwriting Agreement")
by and among the Company, the Selling Stockholders named therein and
Montgomery Securities, Donaldson, Lufkin & Jenrette Securities Corporation,
Lehman Brothers Inc., and J.P. Morgan & Co. (the "Underwriters").
We have examined such documents, records and matters of law as we have
deemed necessary for the purposes of this opinion, and based thereupon we
are of the opinion that:
The Shares have been duly authorized and, when issued by the Company or
sold by the Selling Stockholders and delivered to the Underwriters pursuant to
the Underwriting Agreement against payment of the consideration therefor as
provided therein, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm in the Registration
Statement under the caption "Legal Matters."
Very truly yours,
/s/ Jones, Day, Reavis & Pogue
---------------------------------------
Jones, Day, Reavis & Pogue
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Harman International Industries, Incorporated:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the headings of "Selected Consolidated
Financial Data" and "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
------------------------------------
KPMG Peat Marwick LLP
Los Angeles, California
May 13, 1996
