<PAGE>
As filed with the Securities and Exchange Commission on July 19, 1996
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Containing a Reoffer Prospectus
on Form S-3
_______________________________
HARMONY HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-4333330
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
1990 WESTWOOD BOULEVARD, SUITE 310
LOS ANGELES, CALIFORNIA 90025-4676
(Address of Principal Executive Offices)
(Zip Code)
STOCK OPTION PLAN
(Full Title of the Plans)
HARVEY BIBICOFF
CHAIRMAN OF THE BOARD OF DIRECTORS
1990 WESTWOOD BOULEVARD, SUITE 310
LOS ANGELES, CALIFORNIA 90025-4676
(Name and Address of Agent for Service)
(310) 446-7700
(Telephone Number, including Area Code, of Agent for Service)
The Commission is requested to send copies of all notices and other
communications to:
MARK E. EZELL, ESQ.
HASKELL SLAUGHTER & YOUNG, L.L.C.
1200 AMSOUTH/HARBERT PLAZA
1901 SIXTH AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
TEL: (205) 251-1000
FAX: (205) 324-1133
_________________________
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IMMEDIATELY UPON
FILING WITH THE SECURITIES AND EXCHANGE COMMISSION, AND SALES OF THE
REGISTERED SECURITIES WILL THEREAFTER BE EFFECTED UPON OPTION EXERCISES
UNDER THE STOCK OPTION PLAN (THE "PLAN"), OF WHICH 863,200 SHARES OF
COMMON STOCK ARE AVAILABLE FOR FUTURE GRANT UNDER THE PLAN.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Aggregate Offering Amount of
to be Registered Registered(1) Per Share(1) Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 150,800 $ 1.50 (3) $ 226,200 $ 78.00
per share shares (2)
- ---------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 863,200
per share shares (4) $1.9375 (5) $1,672,450 $ 568.63
- ---------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 650,000
per share shares (6) $ 2.357 (7) $1,532,050 $ 528.29
- ---------------------------------------------------------------------------------------------------------------
Total 1,664,000
shares -- $3,430,700 $1,174.92
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the sole purpose of calculating the registration fee, the number
of shares to be registered under this Registration Statement has been
divided into three subtotals.
(2) Shares issuable upon the exercise of options heretofore granted under
the Plan.
(3) Exercise price for options heretofore granted under the Plan.
(4) Shares issuable upon exercise of options not yet granted under the
Plan.
(5) Computed in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee. The computation is based upon the last
sale price of the Common Stock on the Nasdaq SmallCap Market on July 12,
1996, given that the price at which options to be granted in the future
may be exercised is not currently determinable.
(6) Shares underlying outstanding options under the Plan granted to
affiliates of the Company.
(7) Computed in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee. The computation is based on the
weighted average exercise price at which the options whose exercise will
result in the issuance of the shares being registered may be exercised and
the actual exercise price of such shares previously issued under the Plan.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
<PAGE>
PROSPECTUS
HARMONY HOLDINGS, INC.
650,000 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
This Prospectus relates to the resale of up to 650,000 shares (the
"Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of
Harmony Holdings, Inc., a Delaware corporation (the "Company"), which may be
offered hereby from time to time by any or all of the selling stockholders named
herein (the "Selling Stockholders") for their own benefit. The Common Stock of
the Company is quoted on the National Association of Dealers Automatic Quotation
System ("Nasdaq") SmallCap Market. None of the Shares offered pursuant to this
Prospectus have been registered under the Securities Act of 1933, as amended
(the "Act"), prior to the filing of the Registration Statement of which this
Prospectus is a part.
_________________________
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
NOR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_________________________
The Shares may be offered and sold by the Selling Stockholders directly or
through broker-dealers designated from time to time. The Shares may be sold from
time to time in one or more transactions at a fixed price or prices, which may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at prices determined on a negotiated or
competitive bid basis. Shares may be sold through a broker-dealer acting as
agent or broker for a Selling Stockholder, or to a broker-dealer acting as
principal. In addition to sales under this Prospectus, the Selling Stockholders
may also effect sales of the Shares covered by this Prospectus pursuant to Rule
144, promulgated under the Act. These securities will be sold at market prices
prevailing at the time of sale or at negotiated prices. All of the foregoing
transactions will be made without payment of any underwriting commissions or
discounts, other than the customary brokers' fees normally paid in connection
with such transactions. With respect to expenses of issuance and distribution,
the Company will pay the costs of preparation, reproduction and distribution of
this Prospectus and any Registration Statement containing this Prospectus, any
filing fee set forth in such Registration Statement and any related accountants'
fees and expenses (all of which individually and in total are expected to be
minimal) and the Selling Stockholders will bear other such expenses, if any,
none of which are presently susceptible of reasonable estimation. The Company
will receive no proceeds from the sale of these securities pursuant to this
Prospectus.
This Prospectus also relates to such additional shares as may be issued to
the Selling Stockholders because of future stock dividends, stock distributions,
stock splits or similar capital readjustments.
The Shares have not been registered for sale under the securities law of
any state or jurisdiction as of the date of this Prospectus. Brokers or dealers
effecting transactions in the Shares should confirm the existence of any
exemption from registration or the registration thereof under the securities
laws of the states in which such transactions occur.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS".
_________________________
The date of this Prospectus is July 18, 1996.
1
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information
(including the Registration Statement containing this Prospectus) with the
Securities and Exchange Commission (the "Commission"), all of which may be
inspected and copied at the public reference facilities maintained by the
Commission, Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549, and at the following Regional Offices of the Commission: New York
Regional Office, Seven World Trade Center, 13th Floor, New York, New York 10048
and Chicago Regional Office, Suite 1400, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60601. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's Common
Stock is listed on the Nasdaq SmallCap Market, and the reports, proxy statements
and certain other information filed by the Company may be obtained by calling
the Nasdaq Public Reference Room Disclosure Group at (800) 638-8241 or (202) 728
- -8298.
The Prospectus does not contain all of the information set forth in the
Registration Statement, of which this Prospectus is a part, which the Company
has filed with the Commission pursuant to the Act. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement, including the exhibits filed as part thereof, copies
of which can be inspected at, or obtained at prescribed rates from, the Public
Reference Section of the Commission at the address above set forth. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
are not necessarily complete, and in each instance, reference is made to the
copy of such document so filed. Each such statement is qualified in its entirety
by such reference. Additional updating information with respect to the Company
may be provided in the future by means of appendices, or supplements, to this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such persons, a
copy of any and all of the information that has been incorporated by reference
in this Prospectus and any Registration Statement containing this Prospectus
(not including exhibits to the information that is incorporated by reference
unless such exhibits are specifically incorporated by reference in the
information that this Prospectus and any Registration Statement containing this
Prospectus incorporates). Such requests should be made to Terri MacInnis, 1990
Westwood Boulevard, Suite 310, Los Angeles, California 90025-4676 (telephone
(310) 446-7707), which address and telephone number are those of the Company's
principal executive offices.
2
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH
DEGREE OF RISK. PRIOR TO MAKING AN INVESTMENT DECISION WITH RESPECT TO SUCH
SECURITIES, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, ALONG WITH THE
OTHER MATTERS DISCUSSED IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS:
Operating Losses; Accumulated Deficit; Uncertainty of Future Results. The
Company has reported losses for four of the last five fiscal years. These losses
have ranged from a net loss of $3,206,097 for the fiscal year ended June 30,
1993, to a net loss of $685,898 for the fiscal year ended June 30, 1995. The
Company incurred a net loss of $1,588,702 for the nine months ended March 31,
1996. These losses, incurred over a number of years, have resulted in an
accumulated deficit of $7,945,162 at March 31, 1996. Management realizes that it
has been too slow to react meaningfully to competition and negative industry
trends. See "Risk Factors--Competition and Negative Industry Trends". While the
Company can make no assurances that its future operations will result in
consolidated profitable operations, management is actively pursuing ways to
reduce both selling and production costs so as to realize the financial benefits
to be gained from the Company's demonstrated revenue growth.
Lack of Liquidity; Need for Additional Financing. Because of the extended
period during which the Company has experienced operating losses, the Company
has lacked liquidity for an extended period of time. As a result, the Company
may need additional financing to continue its operations at their present
levels. Such additional financing may be accomplished through one or more
offerings of equity securities or debt instruments, or a combination thereof.
There can be no guarantee that such additional financing (if needed) will be
available to the Company at the times, in the amounts or on acceptable terms,
when needed.
Revenues Dependent on Commercial Directors. In the television commercial
production industry, commercial production contracts are awarded based on many
factors, including the expertise, reputation and creative vision of the
directors associated with the television commercial production company. As a
result, the Company's revenues are dependent upon its ability to attract and
retain established directors of commercials. Most of the directors who are
associated with the Company receive monthly draws against the directors'
compensation for shooting commercials. The monthly draws equal the minimum
guaranteed compensation payable to such directors. Although the draws are
recoverable by the Company out of compensation otherwise payable to such
directors, such directors are not obligated to repay such draws, if their fees
for commercials produced do not exceed the monthly draws that have been paid.
Consequently, the Company is obligated to provide a reduced level of
compensation to these directors whether or not they are directing commercials.
During the fiscal year ended June 30, 1995, the Company paid $1,192,804 in such
draws to these directors, which sum exceeded the directors' fees earned by such
directors by $65,039. The payment of these draws in excess of fees earned has
increased the Company's losses. In addition, all of the Company's directors are
free to provide services to third parties outside the area of television
commercials. As a result, the Company's revenues could also be adversely
affected by the unavailability of its directors due to their outside
commitments. However, the Company's agreements with its directors prohibit the
director from performing any service for television commercial production for
any outside company or from performing services in connection with theatrical
films or television episodes, if such services interfere with the director's
services to the Company. The impact of such potential unavailability is
difficult to quantify.
3
<PAGE>
Competition and Negative Industry Trends. The Company operates in a highly
competitive environment. In recent years the "mark-up" charged by the Company
and other television production companies has been reduced due to increased
competition in the industry and tighter advertising budgets. As a result, profit
margins have declined and competition has increased. There can be no assurance
that these trends will be reversed or that the Company will successfully adapt
to the changes in the industry.
Revenues Affected by Economy and Other Factors. The Company's business is
adversely affected by economic uncertainty and to a lesser extent recessionary
times as advertisers tend to reduce their advertising budgets during such
periods. In addition, the Company's business can be adversely affected by
strikes or threatened strikes by labor unions in the entertainment industry.
Effect of Outstanding Options and Warrants. The Class C Warrants and
outstanding options granted to the Company's employees and others and the
warrants issued in connection with certain private placements provides the
holders thereof with an opportunity to profit from a rise in the market price of
the Company's Common Stock, with a resulting dilution in the interests of the
other stockholders. As of February 22, 1996, 2,998,223 shares of Common Stock
(or an additional 52.6% of the outstanding Common Stock) are issuable upon the
exercise of such securities. Further, the terms on which the Company may obtain
additional financing during the respective terms of these securities may be
adversely affected by the existence of the Class C Warrants and such stock
options and warrants. The holders of the Class C Warrants, and such stock
options and warrants, may exercise them at a time when the Company might be able
to obtain additional capital through a new offering of securities or other forms
of financing on terms more favorable than those provided by the Class C Warrants
and such stock options and warrants.
No Dividends. The Company has never paid cash dividends on its Common Stock
and anticipates that for the foreseeable future all earnings, if any, will be
retained for the operation and expansion of the Company's business.
Revolving Line of Credit. On May 10, 1995, the Company entered into a
$3,000,000 revolving line of credit agreement with a bank. As of April 30, 1996,
the Company had $1,000,000 outstanding under the line. In certain instances, the
Company has not been in compliance with certain financial covenants contained in
the line of credit agreement, which instances of noncompliance have been waived
by the bank. There can be no assurance that future failures to comply with the
requirements of such line of credit agreement (if any) will be waived by the
bank. In the event of a default under the line of credit agreement, the bank has
the contractual right to accelerate the repayment of all amounts then owed by
the Company.
4
<PAGE>
SELLING STOCKHOLDERS
This Prospectus relates to the possible sale of Shares received in
connection with the exercise of options granted under the Company's Stock Option
Plan by the Selling Stockholders (some of whom are affiliates of the Company) as
well as shares received in connection with the exercise of options granted under
various other "Employee Benefit Plans" as defined by Rule 405 promulgated under
the Act.
The following table shows the names of the Selling Stockholders who are
affiliates of the Company, the number of Shares and percentage of outstanding
shares of Common Stock of the Company beneficially owned by each of them as of
May 1, 1996, and the number of Shares available for resale hereunder. The
address for each of the Selling Stockholders in the table below is: 1990
Westwood Boulevard, Suite 310, Los Angeles, California 90025-4676.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF PERCENTAGE OF
SHARES SHARES COVERED NUMBER OF SHARES OUTSTANDING
POSITION WITH BENEFICIALLY BY THIS TO BE HELD AFTER SHARES AFTER
NAME COMPANY OWNED PROSPECTUS OFFERING OFFERING
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Bibicoff, Harvey Chairman of the 1225000 275000 950000 21.5%
Board and Chief
Executive
Officer
Rackohn, Brian Secretary and 50000 50000 0 **
Chief Financial
Officer
DeLeon, Larry President 50000 50000 0 **
Harmony Media,
Inc.
Oakes, Stephen President 50000 50000 0 **
Curious
Pictures, Inc.
Silver, Elizabeth President The 75000 75000 0 **
End, Inc.
Miller, Jonathan Director and 100000 100000 0 **
President
Harmony
Pictures, Inc.
Shuster, Harry Director 25000 25000 0 **
Berkowitz, Ivan Director 25000 25000 0
=======================================================================================================================
TOTAL -- 1600000 650000 950000 21.5%
=======================================================================================================================
</TABLE>
** Denotes less than one percent.
5
<PAGE>
USE OF PROCEEDS
The Company will receive no proceeds from the sale of the Shares sold by
the Selling Stockholders pursuant to this Prospectus.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they intend
to sell all or a portion of the Shares offered hereby from time to time in the
over-the-counter market and that sales will be made at prices prevailing at the
time of such sales. The Selling Stockholders may also make private sales
directly or through a broker or brokers, who may act as agent or as principal.
In connection with any sales, the Selling Stockholders and any brokers
participating in such sales may be deemed to be underwriters within the meaning
of the Act.
Any broker-dealer participating in such transactions as an agent may
receive commissions from the Selling Stockholders (and, if such broker acts as
agent for the purchaser of such shares, from such purchaser). Usual and
customary brokerage fees will be paid by the Selling Stockholders. Any broker-
dealer may agree with the Selling Stockholders to sell a specified number of
Shares at a stipulated price per share, and, to the extent such a broker-dealer
is unable to do so acting as an agent for the Selling Stockholders, to purchase
as principal any unsold Shares at the price required to fulfill the broker-
dealer commitment to the Selling Stockholders. Broker-dealers who acquire Shares
as principal may thereafter resell such Shares from time to time in transactions
(which may involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time or sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above.
The Company has advised the Selling Stockholders that the anti-manipulative
Rules 10b-6 and 10b-7 under the Exchange Act may apply to sales in the market,
has furnished the Selling Stockholders with a copy of these Rules and has
informed them of the possible need for delivery of copies of this Prospectus.
The Selling Stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the Shares against certain liabilities,
including liabilities arising under the Act. Any commissions paid or any
discounts or concessions allowed to any such broker-dealers, and, if any such
broker-dealers purchase Shares as principal, any profits received on the resale
of such Shares, may be deemed to be underwriting discounts and commissions under
the Act.
Upon the Company's being notified by the Selling Stockholders that any
material arrangement has been entered into with a broker-dealer of the sale of
Shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(C) under the Act, setting forth the name of the participating
broker-dealer(s), the number of Shares involved, the price at which such Shares
were sold by the Selling Stockholders, the commission paid or discounts or
concessions allowed by the Selling Stockholders to such broker-dealer(s), and
where applicable, that such broker-dealer(s) did not conduct any investigation
to verify the information set out in this Prospectus.
Any securities covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Act may be sold under that Rule rather than pursuant to
this Prospectus.
6
<PAGE>
There can be no assurances that the Selling Stockholders will sell any or
all of the shares of Common Stock offered hereunder.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No named Expert or Counsel has an interest in the Company with a fair
market value that exceeds $50,000.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents listed in (I) through (iv) below are incorporated
by reference in this Prospectus.
(i) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995, as filed with the Commission under the Exchange Act.
(ii) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995, as filed with the Commission under the Exchange
Act.
(iii) The Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1995, as filed with the Commission under the Exchange
Act.
(iv) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996, as filed with the Commission under the Exchange Act.
(v) The description of securities to be registered contained in the
Registration Statement filed with the Commission on Form 8-A under the
Exchange Act on July 12, 1991, including any amendment or reports filed for
the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the effective date of this Registration
Statement and prior to the filing of a post-effective amendment indicating that
all the securities offered hereby have been sold, or deregistering all such
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
7
<PAGE>
INDEMNIFICATION
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate") and its By-laws provide for the elimination of Directors'
liability for monetary damages arising from a breach of certain fiduciary
obligations and for the indemnification of Directors, officers and agents to the
full extent permitted by the Delaware General Corporation Law ("DGCL"). These
provisions generally provide for indemnification in the absence of gross
negligence or willful misconduct and cannot be amended without the affirmative
vote of a majority of the outstanding shares of the Company's Common Stock
entitled to vote thereon.
Insofar as indemnification for liabilities arising under the Act may be
permitted to Directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, the Company has been informed that in the opinion
of the Commission such indemnification is against public policy as expressed in
the Act and is therefore unenforceable.
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
STOCKHOLDERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THIS
PROSPECTUS RELATES OR AN OFFER TO OR SOLICITATION OF ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
8
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Registration Statement,
and specifically made a part hereof, the following documents heretofore filed by
Harmony Holdings, Inc. (the "Company") with the Securities and Exchange
Commission (the "Commission"), pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"):
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1995, as filed with the Commission under the Exchange Act.
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995, as filed with the Commission under the Exchange
Act.
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995, as filed with the Commission under the Exchange
Act.
(d) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, as filed with the Commission under the Exchange Act.
(e) The description of securities to be registered contained in the
Registration Statement filed with the Commission on Form 8-A under the
Exchange Act on July 12, 1991, including any amendment or reports
filed for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the effective date of this Registration
Statement and prior to the filing of a post-effective amendment indicating that
all the securities offered hereby have been sold, or deregistering all such
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The class of securities offered pursuant to this Registration Statement,
the Company's Common Stock, is registered under Section 12(g) of the Exchange
Act.
II-1
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
No Named Expert or Counsel has an interest in the Company with a fair
market value that exceeds $50,000.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The DGCL permits a corporation to indemnify officers, directors, employees
and agents for actions taken in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the corporation, and
with respect to any criminal action, which they had no reasonable cause to
believe was unlawful. The DGCL provides that a corporation may advance expenses
of defense (upon receipt of a written undertaking to reimburse the corporation
if indemnification is not appropriate) and must reimburse a successful defendant
for expenses, including attorneys' fees, actually and reasonably incurred, and
permits a corporation to purchase and maintain liability insurance for its
directors and officers. The DGCL provides that indemnification may not be made
for any claim, issue or matter as to which a person has been adjudged by a court
of competent jurisdiction, after exhaustion of all appeals therefrom, to be
liable to the corporation, unless and only to the extent a court determines that
the person is entitled to indemnity for such expenses as the court deems proper.
Section 102(b)(7) of the DGCL authorizes corporations to limit or eliminate
the personal liability of directors to corporations and their stockholders for
monetary damages for breach or alleged breach of directors' fiduciary "duty of
care". Section 102(b)(7) has no effect on a director's liability for: (a) breach
of the director's duty of loyalty; (b) acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law; (C) a
corporation's illegal payment of dividends; and (d) approval of any transaction
from which the director derives an improper personal benefit. Pursuant to this
Delaware statute, Article VII of the Company's Restated Certificate of
Incorporation provides that, with certain exceptions, no director of the Company
shall be liable to the company for monetary damages as a result of certain
breaches of his fiduciary duties as a director. This limitation of liability
provision does not eliminate a stockholder's right to seek nonmonetary,
equitable remedies in order to redress action taken by directors.
The Company's By-laws provide that each person who is involved in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she is or was
a director, officer, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan, will be indemnified
by the Company to the full extent permitted by the DGCL, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted prior to such amendment) or by
other applicable laws then in effect.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<C> <S>
4-1 Stock Option Plan of Harmony Holdings, Inc., filed as Exhibit
10.1 to the Company's Registration Statement on Form S-1
(Registration No. 33-42193), is hereby incorporated by
reference.
4-2 Form of Incentive Stock Option Agreement, filed as Exhibit 10.2
to the Company's Registration Statement on Form S-1
(Registration No. 333-2648), is hereby incorporated by
reference.
4-3 Form of Non-Qualified Stock Option Agreement, filed as Exhibit
10.3 to the Company's Registration Statement on Form S-1
(Registration No. 333-2648), is hereby incorporated by
reference.
5 Opinion of Haskell Slaughter & Young, L.L.C.
10-1 Settlement Agreement and Mutual General Release of All Claims,
dated February 12, 1996, between the Company and Gary Horowitz.
10-2 Consulting Agreement, dated February 12, 1996, between the
Company and Gary Horowitz.
10-3 Stock Option Agreement, dated February 12, 1996, between the
Company and Gary Horowitz.
23-1 Consent of BDO Seidman, LLP. See pages immediately following
signature pages to this Registration Statement.
23-2 Consent of Coopers & Lybrand, LLP. See pages immediately
following signature pages to this Registration Statement.
23-3 Consent of Haskell Slaughter & Young, L.L.C. (contained in the
opinion of counsel filed as Exhibit 5 to this Registration
Statement).
28 Power of Attorney (set forth on the signature page of this
Registration Statement).
</TABLE>
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions or, otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, State of
California, on July 19, 1996.
HARMONY HOLDINGS, INC.
By /s/ Harvey Bibicoff
---------------------------
Harvey Bibicoff
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Harvey Bibicoff and Brian Rackohn,
and each or either of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement and any subsequent registration statements relating to the
offering to which this Registration Statement relates, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully and to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or either of them,
or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Harvey Bibicoff Chairman of the Board July 19, 1996
- ---------------------- and Chief Executive Officer
Harvey Bibicoff
/s/ Brian Rackohn Secretary and Chief Financial Officer July 19, 1996
- ----------------------- (Principal Financial and Accounting Officer)
Brian Rackohn
/s/ Harry Shuster Director July 19, 1996
- -----------------------
Harry Shuster
/s/ Ivan Berkowitz Director July 19, 1996
- -----------------------
Ivan Berkowitz
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBER
- ------- ---------------------- ------
<C> <S> <C>
4-1 Stock Option Plan of Harmony Holdings, Inc., filed as
Exhibit 10.1 to the Company's Registration Statement on
Form S-1 (Registration No. 33-42193), is hereby
incorporated by reference.
4-2 Form of Incentive Stock Option Agreement, filed as
Exhibit 10.2 to the Company's Registration Statement on
Form S-1 (Registration No. 333-2648), is hereby
incorporated by reference.
4-3 Form of Non-Qualified Stock Option Agreement, filed as
Exhibit 10.3 to the Company's Registration Statement on
Form S-1 (Registration No. 333-2648), is hereby
incorporated by reference.
5 Opinion of Haskell Slaughter & Young, L.L.C. 9
10-1 Settlement Agreement and Mutual General Release of All 11
Claims, dated February 12, 1996, between the Company
and Gary Horowitz.
10-2 Consulting Agreement, dated February 12, 1996, between 15
the Company and Gary Horowitz.
10-3 Stock Option Agreement, dated February 12, 1996, 17
between the Company and Gary Horowitz.
23-1 Consent of BDO Seidman, LLP. See pages immediately 6
following signature pages to this Registration Statement.
23-2 Consent of Coopers & Lybrand, LLP. See pages 7
immediately following signature pages to this Registration
Statement.
23-3 Consent of Haskell Slaughter & Young, L.L.C. (contained in the
opinion of counsel filed as Exhibit 5 to this Registration
Statement).
28 Power of Attorney (set forth on the signature page of this
Registration Statement).
</TABLE>
<PAGE>
LAW OFFICES
Haskell Slaughter & Young, L.L.C.
1200 AMSOUTH/HARBERT PLAZA
1901 SIXTH AVENUE NORTH
BIRMINGHAM, ALABAMA 35203-2618
FACSIMILE (205) 324-1133
TELEPHONE (205) 251-1000
MONTGOMERY OFFICE
-----------------
305 SOUTH LAWRENCE STREET
MONTGOMERY, ALABAMA 36104
POST OFFICE BOX 4660
MONTGOMERY, ALABAMA 36103-4660
FACSIMILE (334) 264-7945
TELEPHONE (334) 265-8573
EXHIBIT 5
WYATT RUSHTON HASKELL
WILLIAM M. SLAUGHTER
FRANK M. YOUNG, III
BENJAMIN B. SPRATLING III
THOMAS T. GALLION, III
ROBERT D. SHATTUCK, JR.
E. ALSTON RAY
JAMES C. HUCKABY, JR.
MARK EDWARD EZELL
STEPHEN L. POER
THOMAS E. REYNOLDS
BEVERLY POOLE BAKER
ROSS N. COHEN
RICHARD H. WALSTON
CONSTANCE A. CALDWELL
GWEN L. WINDLE
MICHAEL K.K. CHOY
-------------------------
CARTER H. DUKES
PAULA B. CARROLL
R. SCOTT WILLIAMS
F. HAMPTON McFADDEN, JR.
JOHN W. SCOTT
BARRY D. WOODHAM
GEORGIA S. ROBERSON
SUSAN E. KENNEDY
REBECCA HIGGINS HUNT
PLEASE REPLY TO: BIRMINGHAM
July 19, 1996
Harmony Holdings, Inc.
1990 Westwood Boulevard, Suite 310
Los Angeles, California 90025-4676
RE: REGISTRATION STATEMENT ON FORM S-8 -- STOCK OPTION PLAN
Gentlemen:
We have served as counsel for Harmony Holdings, Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended, of an aggregate of 1,014,000 shares (the "Shares") of the
Company's authorized Common Stock, par value $.01 per share, to be issued to
participants of the Company's Stock Option Plan (the "Plan") and 650,000 shares
of Common Stock, $.01 par value, which may be sold by the selling stockholders,
pursuant to the Company's Registration Statement on Form S-8, containing a
Reoffer Prospectus on Form S-3, relating thereto (the "Registration Statement").
This opinion is furnished to you pursuant to the requirements of Form S-8.
In connection with this opinion, we have examined and are familiar with
originals or copies (certified or otherwise identified to our satisfaction) of
such documents, corporate records and other instruments relating to the
incorporation of the Company and to the authorization and issuance of the Shares
and the authorization and adoption of the Plan as we have deemed necessary and
appropriate.
Based upon the foregoing, and having regard for such legal considerations as we
have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized.
2. Upon issuance, sale and delivery of the Shares as contemplated in the
Registration Statement and the Plan, the Shares will be legally issued, fully
paid and nonassessable.
We do hereby consent to the filing of this Opinion as an Exhibit to the
Registration Statement.
Very truly yours,
HASKELL SLAUGHTER & YOUNG, L.L.C.
By /s/ Mark Ezell
-----------------------
Mark Ezell
<PAGE>
EXHIBIT 10.1
SETTLEMENT AGREEMENT AND MUTUAL GENERAL
RELEASE OF ALL CLAIMS
THIS SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE OF ALL CLAIMS
("Release") is made as of February 12, 1996, in the County of Los Angeles, State
of California, by and between Harmony Holdings, Inc., a Delaware corporation
("Harmony") and Gary Horowitz ("Horowitz"), whereby each of the parties,
pursuant to Section 1541 of the California Civil Code, extinguishes their rights
and claims against the other as herein enumerated.
In consideration of the mutual promises and covenants herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is agreed as follows:
1. Release by Harmony. Harmony, on behalf of itself, and on behalf of
------------------
its directors, officers, agents, principals, employees, attorneys, assigns,
parents, subsidiaries, affiliates, divisions, predecessors and successors
(collectively "Agents of Harmony") hereby fully and forever releases and
discharges Horowitz, and his agents, principals, employees, attorneys, heirs,
executors, administrators, affiliates and successors (collectively "Agents of
Horowitz") from each, any and all claims, demands, duties, debts, liabilities,
liens, obligations, acts, omissions and causes of action, of every type, nature,
kind or description, known or unknown, which Harmony and/or the Agents of
Harmony might or may hold or claim to exist against Horowitz and/or the Agents
of Horowitz, arising out of or in connection with any contract, transaction,
act, cause, matter, thing or representation existing at the time of execution
hereof, including but not limited to (I) the prior employment of Horowitz, (ii)
the termination letter, dated December 19, 1996, terminating Horowitz'
employment with Harmony and (iii) the subject matter of the Arbitration;
provided, however, that this Release shall not release Horowitz or the Agents of
Horowitz from any obligations created in this Release or in that certain
Consulting Agreement and Stock Option Agreement, dated as of the date hereof
("Option Agreement"), a photocopy of which is attached hereto as Exhibit "A" and
incorporated herein by this reference. Horowitz shall forthwith prepare and file
any and all documents that Harmony or the American Arbitration Association may
reasonably request in order to evidence the complete and final settlement of the
Arbitration, with prejudice.
2. Release by Horowitz. Horowitz, on behalf of himself, and on behalf of
-------------------
the Agents of Horowitz, hereby fully releases and discharges Harmony and the
Agents of Harmony, from each, any and all claims, demands, duties, debts,
liabilities, liens, obligations, acts, omissions and causes of action, of every
type, nature, kind or description, known or unknown, which Horowitz and/or the
Agents of Horowitz might or may hold or claim to exist against Harmony and/or
the Agents of Harmony, or any shareholders of Harmony who did communicate or
whom Horowitz has alleged communicated, directly or indirectly, with any of the
directors or officers of Harmony regarding the decision to terminate Horowitz'
employment with Harmony, arising out of or in connection with any contract,
transaction, act,
<PAGE>
cause, matter, thing or representation existing at the time of execution hereof,
including but not limited to (I) the prior employment of Horowitz, (ii) the
termination letter, dated December 19, 1996, terminating Horowitz' employment
with Harmony and (iii) the subject matter of the Arbitration; provided, however,
that this Release shall not release Harmony or the Agents of Harmony from any
obligations created in this Release or in the Option Agreement.
3. Release of Unknown Claims. Each party expressly acknowledges that he/
-------------------------
she/it may hereafter discover facts different from or in addition to those now
known or believed to be true with respect to such claims, demands, duties,
debts, liabilities, liens, obligations, acts, omissions or causes of action and
agrees that this Release shall be and remain effective in all respects
notwithstanding any such different or additional facts.
4. Civil Code Section 1542 Waiver. Each party expressly acknowledges an
------------------------------
awareness of the provisions of California Civil Code Section 1542, and
understands the significance and consequences of waiving same, and does hereby
expressly waive any and all rights each may have under such Section or any
similar law of any State or territory of the United States, which, for purposes
of demonstrating each party's intent to so waive, is set forth in full as
follows:
" 1542. General Release; Extent
-----------------------
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with
the debtor."
By virtue of each party's specific waiver of the above-quoted Section, each
party hereby assumes full responsibility for and does execute this Release.
5. Voluntary Execution. Each party expressly acknowledges that he/she/it
-------------------
has carefully read this Release and is completely familiar with and understands
each and every provision hereof, that this Release is fair and just in all of
its particulars, and that he/she/it enters into, executes and accepts this
Release freely and voluntarily, without reliance upon any statements,
representations, promises, covenants or inducements made by the other, or any of
the other's representatives, except as may be provided in this Release or in the
Option Agreement.
6. No Assignment of Claims. Each party represents and warrants that he/
-----------------------
she/it has not heretofore assigned or transferred, or purported to assign or
transfer, to any person or entity whatsoever any claim, demand, duty, debt,
liability, lien, obligation, action or cause of action herein released. Each
party agrees to indemnify and hold the other harmless from and against any
claim, demand, duty, debt, liability, lien, obligation, action, cause of action,
cost and expense (including but not limited to attorneys' fees) asserted against
or imposed upon or incurred by the other party based on, arising out of or in
connection with any such assignment or transfer or purported assignment or
transfer.
<PAGE>
7. Cancellation of Agreements; Entire Agreement. All prior agreements
--------------------------------------------
and understandings between the parties, written and oral and including but not
limited to all of the agreements attached as Exhibits to Horowitz's Demand for
Arbitration in the Arbitration, are hereby acknowledged to be cancelled, voided
and of no force or effect whatsoever. Any and all existing option or warrants
(other than the Option Agreement) that Horowitz may hold or claim to hold with
respect to Harmony are hereby cancelled, voided and of no force or effect. This
Release, the Consulting Agreement and the Option Agreement constitute the entire
agreement and understanding between the parties concerning the subject matter
hereof, and supersede and replace all prior negotiations, proposed agreements
and agreements, written and oral, relating to the subject matter hereof.
8. Options. Concurrent with the execution and delivery of this Release,
-------
Harmony and Horowitz shall enter into the Option Agreement.
9. Liability Denied. Each party acknowledges and agrees that this
----------------
Release affects the claims of each party against the other party which were
denied and contested by each other and that nothing contained in this Release
shall be construed as an admission of liability by or on behalf of them, by whom
liability is expressly denied.
10. California Law. This Release shall be interpreted, construed and
--------------
governed by, in accordance with and consistent with the laws of the State of
California, which shall apply in all respects, including statutes of limitation,
to any disputes or controversies arising out of or pertaining to this Release.
11. Counterparts. This Release may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which, when
taken together, shall constitute one and the same document.
12. Grammar. Whenever required by the context hereof, the singular shall
-------
be deemed to include the plural, the plural shall be deemed to include the
singular; the masculine, the feminine and neuter gender shall be deemed to
include the others.
13. Additional Documents. Each party agrees that he/she/it shall execute
--------------------
and, if appropriate, acknowledge any and all additional and other documents,
checks, drafts, instruments and writings which may be necessary or reasonable to
facilitate the purposes of this Release.
14. Binding Effect. All terms, conditions and covenants of this Release
--------------
shall be applicable to and binding upon, and shall inure to the benefit of, each
party's directors, officers, agents, principals, employees, attorneys, heirs,
executors, administrators, assigns, parents, subsidiaries, affiliates,
divisions, predecessors and successors.
15. Severability. In the event that any term, provision, condition or
------------
other portion of this Release is determined to be invalid, void or unenforceable
by a forum of competent jurisdiction, the same shall not affect any other term,
provision, condition or other portion
<PAGE>
hereof, and the remainder of this Release shall remain in full force and effect,
as if such invalid, void or unenforceable term, provision, condition or other
portion of this Release did not appear herein.
16. No Third Party Claim. Horowitz, on behalf of himself and on behalf of
--------------------
the Agents of Horowitz, covenants, represents and warrants that he/she/it/they
shall not hereafter assert any claim, liability, demand or cause of action
against any third party or any director, officer, agent, principal, employee,
attorney, heir, executor, administrator, assign, parent, subsidiary, affiliate,
division, predecessor or successor of any third party for any contract,
transaction, act, cause, matter, thing or representation involving or relating
to any matter released by this Release. Horowitz shall indemnify and hold
Harmony and the Agents of Harmony harmless from and against any and all claims,
liabilities, demands, causes of action, costs and expenses (including but not
limited to attorneys' fees) asserted against or imposed upon or incurred by
Harmony or by the Agents of Harmony, based on, arising out of or in connection
with the assertion by Horowitz of any such claim, liability, demand or cause of
action against a third party.
17. Counsel. Each party does hereby expressly acknowledge that he/she/it
-------
has been represented by independent counsel of his/her/its own choice in
connection with this Release, the Consultation Agreement and Option Agreement
and that he/she/it has been fully advised of his/her/its rights under applicable
law and of the facts as ascertained by his/her/its counsel.
18. Attorneys' Fees. In the event that any suit in law or equity or
---------------
arbitration is instituted to enforce or interpret any part of this Release or
the Option Agreement, or to recover damages for breach thereof, the prevailing
party shall be entitled to recover costs of suit incurred therein, and to also
recover as an element of such costs (but not as damages) reasonable attorneys
fees incurred by such prevailing party. For purposes of this Release and the
Option Agreement, the term "prevailing party" shall be the party who is entitled
to recover costs of suit, whether or not the proceeding is brought to final
judgment or award. A party not entitled to recover costs shall not recover
attorneys' fees. No sum of attorneys' fees shall be included in any computation
of the amount of judgment or award for purposes of determining whether a party
is entitled to recover costs or attorneys' fees.
IN WITNESS WHEREOF, this Release has been executed and made effective as of
the date and in the place first written above.
HARMONY HOROWITZ
By:
---------------------------- ------------------------
Harvey Bibicoff, Chairman Gary Horowitz
<PAGE>
Exhibit 10.2
CONSULTING AGREEMENT
THIS AGREEMENT is entered into as of February 12, 1996 at Irvine,
California between HARMONY HOLDINGS, INC. ("Company") and GARY HOROWITZ
("Horowitz").
RECITAL
In consideration of the premises and the mutual covenants herein, the
parties agree as follows:
1. Until April 15, 1997, Horowitz shall make himself available for the
consulting services prescribed herein.
2. Horowitz shall consult with the Company, upon Company's requests, with
respect to the customers and business of the Company. Horowitz shall be
available for individual telephonic consulting not longer than three (3) hours
per month, and not more frequently than once a month at mutually convenient time
or times.
3. Horowitz' fees for services rendered under this Agreement shall be One
Hundred Dollars ($100.00) per hour of consultation. As additional consideration
for Horowitz' agreement to make himself available and to perform such services,
the Company and Horowitz concurrently are entering into a Stock Option Agreement
which provides for the grant of options to purchase 225,000 shares of Company's
Common Stock.
4. Horowitz shall at all times be an independent contractor of the
Company with respect to this Agreement and the consulting services contracted
for herein. In no event shall Horowitz be considered the agent of the Company.
The Company shall issue Internal Revenue Service Form 1099s with respect to any
fees paid to Horowitz under this Agreement.
5. In the event that Horowitz' obligations to perform services under this
Agreement conflict with any business opportunity Horowitz shall be presented
with in the future, and, so long as Horowitz (a) pursues such business
opportunity and (b) uses his reasonable efforts to resolve such conflict
whenever it reasonably can be resolved, Horowitz shall be under no obligation to
perform the services provided for hereunder while such conflict exists.
6. This Agreement is made in the State of California and shall be
governed by and construed in accordance with the laws of said State.
HARMONY HOLDINGS, INC.
<PAGE>
By: ____________________________
________________________________
GARY HOROWITZ
<PAGE>
Exhibit 10.3
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Option Agreement") is made and entered into
as of February 12, 1996, by and among HARMONY HOLDINGS, INC., a Delaware
Corporation ("Company") and GARY HOROWITZ ("Horowitz") and HARVEY BIBICOFF
("Bibicoff").
1. Grant of Option. The Company, wishing to provide Horowitz an
----------------
opportunity to purchase shares of the Company's Common Stock par value, $.01 per
share ("Common Stock"), hereby grants to Horowitz and Horowitz hereby accepts a
non-qualified option to purchase Two Hundred Twenty-Five Thousand (225,000)
shares of Common Stock ("Option Shares") at a price of $1.50 per share
("Exercise Price") on the terms and conditions stated herein ("Option"). At the
request of Horowitz, Company shall cooperate, in all reasonable ways, to allow
Horowitz to exercise his Option through an established brokerage firm so as to
enable Horowitz to effect a "cashless exercise" as that term is generally
understood in the securities industry.
2. Term of Option. Horowitz shall be entitled to purchase the "vested"
---------------
Option Shares, in whole or in part (subject to (S)6) at any time and from time
to time prior to 5:00 p.m. Los Angeles time on May 1, 1997, after which this
Option shall expire and terminate and be of no force or effect.
3. Non-Transferability of Option. Except as otherwise provided in this
-----------------------------
Option Agreement and except for a transfer to Horowitz' heirs, executors or
administrators upon the death of Horowitz, the Option shall not be transferred,
assigned, pledged, hypothecated or otherwise disposed of in any way, whether by
operation of law or otherwise. The Option is exercisable only by Horowitz,
regardless of any community property interest therein of the spouse of Horowitz.
Notwithstanding anything to the contrary contained herein, in the event that
Bibicoff has paid the Put Price to Horowitz for each of the Remaining Option
Shares in accordance with Section 4 of this Option Agreement, Bibicoff may
thereafter transfer, assign, pledge, hypothecate or otherwise dispose of the
Option in any way, whether by operation of law or otherwise.
4. Put.
---
4.1 Put. Only from 8:00 a.m. Los Angeles time on August 15, 1996 to
---
5:00 p.m. Los Angeles time on August 26, 1996 ("Put Period"), Horowitz shall
have the right to put the Option to Bibicoff ("Put") by giving written notice of
the Put to Bibicoff during the Put Period. Such written notice shall state that
Horowitz exercises his right to require Bibicoff to purchase the Option as
provided in this Section 4 and shall specify the number of Option Shares as to
which the Put is exercised. Upon delivery by Horowitz of such notice, Bibicoff
shall be
<PAGE>
unconditionally obligated to purchase the Option or portion thereof for the
purchase price provided herein.
Within five (5) business days after the delivery of said notice to
Bibicoff, Bibicoff shall pay to Horowitz, by cashier's check or wire transfer,
an amount equal to One Dollar and Fifteen and 556/1000 Cents ($1.15556) ("Put
Price") for each of the Option Shares underlying the Option with respect to
which Horowitz has exercised the Put and has not previously exercised the Option
("Remaining Option Shares").
4.2 Call. If at any time up to and through the end of the Put
----
Period, the Common Stock trades at Two Dollars and Seventy-Five Cents ($2.75)
per share or more ("Call Trigger"), Bibicoff shall have the right to purchase
the Option or portion thereof by giving written notice thereof to Horowitz and
specifying the number of Option Shares as to which the Call is exercised and,
within seventy-two (72) hours of said notice, by delivering to Horowitz payment
by cashier's check or wire transfer in an amount equal to the Put Price for each
of the Remaining Option Shares. Upon delivery of such payment, Horowitz shall be
deemed to have transferred the Option or portion thereof, and Bibicoff may
exercise his rights under the Option or portion thereof at any time in
accordance with this Option Agreement. By giving written notice thereof,
Horowitz shall have the right to cancel Bibicoff's right to purchase under this
Section 4.2 at any time through and including noon Los Angeles time of the day
following the date on which Bibicoff shall have provided notice of the Call to
Horowitz; provided that upon Horowitz' cancellation of Bibicoff's Call right
pursuant hereto, Horowitz' right to Put the Option (or portion thereof, as the
case may be) to Bibicoff, pursuant to Section 4.1, shall thereupon expire and
terminate.
4.3 Security Interest. In order to secure Bibicoff's obligation to
-----------------
pay Horowitz the aggregate Put Price as provided herein, Bibicoff grants to
Horowitz a security interest in 200,000 shares of unrestricted Common Stock of
Harmony Holdings, Inc. pursuant to a Pledge Agreement entered into concurrently
herewith between Bibicoff and Horowitz. Upon the failure of Bibicoff to pay
Horowitz the aggregate Put Price as provided herein when due, Horowitz shall
have all of the rights and remedies provided by the Uniform Commercial Code in
effect in California, specifically including the right to sell the collateral
after such default at a private sale and the right to be a purchaser at such
private sale.
5. Adjustments.
------------
5.1 Subdivisions or Combinations. If, at any time during the term
-----------------------------
hereof, the number of shares of Common Stock outstanding is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split-up of
shares of Common Stock, then, immediately following the record date fixed for
the determination of holders of Common Stock subject to such stock dividend,
<PAGE>
subdivision or split-up, the number of shares of Common Stock issuable upon
exercise of this Option shall be increased and the Exercise Price, Put Price and
Call Trigger shall be decreased in proportion to such increase in outstanding
shares. If, at any time during the term hereof, the number of shares of Common
Stock outstanding is decreased by a combination of the outstanding shares of
Common Stock, then immediately following the record date for such combination,
the number of shares of Common Stock issuable upon exercise of this Option shall
be decreased and the Exercise Price, Put Price and Call Trigger shall be
increased in proportion to such decrease in the outstanding shares.
5.2 Reorganization; Merger; Sale of Assets. If any capital
---------------------------------------
reorganization or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of the Company's assets to another corporation shall be
effected in such a way that holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then lawful and adequate provision shall be made whereby the holder of this
Option shall thereafter have the right to purchase and receive, upon exercise of
this Option and payment of the Exercise Price then in effect in lieu of the
shares of the Common Stock then subject to this Option such shares of stock,
securities or assets to which a holder of Common Stock deliverable upon exercise
of this Option would have been entitled on such capital reorganization,
reclassification, consolidation, merger or sale if this Option had been
exercised immediately before such event. In any such case appropriate provision
shall be made with respect to the rights and interests of the holder of this
Option to the end that the provisions hereof (including without limitation
provisions for adjustments of the Exercise Price and of the number of shares
purchasable upon the exercise of this Option) shall thereafter be applicable, as
nearly as may be practicable, in relation to any shares of stock, securities or
assets thereafter deliverable upon the exercise hereof.
5.3 Determination of Issuance Date in Certain Events. In case the
-------------------------------------------------
Company shall not set a record date of the holders of its Common Stock with
respect to a dividend or other distribution payable in Common Stock or a
subdivision, combination, reorganization, merger or other event specified in
this Section 5, then the record date shall be deemed to be the date of the
issuance of the shares of Common Stock deemed to have been issued or the
effective date of such subdivision, combination, reorganization, merger or other
event (as the case may be) specified in this Section 5.
5.4 Minimum Adjustment. The Exercise Price shall be subject to
-------------------
adjustment from time to time as hereinabove provided. No adjustment shall be
made in an amount less than $.01 per share in the case of an adjustment to the
Exercise Price or one-tenth (1/10) of a share in the case of an adjustment to
the number of shares purchasable hereunder, but any such lesser adjustment shall
be carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried forward
<PAGE>
shall amount to $.01 per share or more or one-tenth (1/10) of a share, as the
case may be; provided, however, no fractional shares shall be issuable
hereunder. The adjustment provisions hereunder shall similarly apply to
successive combinations, stock splits, reorganizations, reclassification,
consolidations and mergers.
6. Mechanics. This Option may be exercised by Horowitz by giving
----------
written notice of exercise to the Company specifying the number of shares to be
purchased, which in no event shall be less than Twenty-Five Thousand (25,000)
and the total purchase price, accompanied by payment of such purchase price, in
cash or by cashier's check made payable to Company. Nothing herein shall be
construed to require Horowitz to exercise the Option as a condition to the
exercise of the Put and receipt of the Put Price.
7. Withholding Taxes. Company shall have the right to require Horowitz
------------------
to pay to Company any and all sums equal to any taxes which Company may be
required to withhold by reason of the Option or the Option Shares.
8. Rights Before Issuance and Delivery. Horowitz shall not be entitled
------------------------------------
to the privileges of stock ownership with respect to the Option Shares unless
and until such shares have been issued to Horowitz as fully paid shares.
9. Registration of Option Shares. The Company has prepared a Form S-8
------------------------------
Registration Statement ("Registration Statement") to be filed with the U.S.
Securities and Exchange Commission ("SEC") to register the shares underlying the
Option. A copy of the Registration Statement has previously been delivered to
Horowitz. The Registration Statement has been prepared and will be filed in
accordance with the Rules and Regulations of the SEC. The Company shall transmit
the Registration Statement for filing with the SEC in the same form as provided
to Horowitz within 24 hours after the execution of the Consulting Agreement and
this Option Agreement by the parties thereto and hereto.
10. Representations and Warranties; Additional Covenants
----------------------------------------------------
10.1 The Company and Bibicoff each has the full power and authority
to execute and deliver this Option Agreement and to consummate the transactions
contemplated hereby. All necessary corporate proceedings on the part of the
Company necessary to authorize this Option Agreement and the transactions
contemplated hereby have been duly and validly taken. This Option Agreement and
the transactions contemplated hereby have been duly and validly executed and
delivered by each of the Company and Bibicoff and constitute the legal, valid
and binding agreements and obligations of the Company and Bibicoff, enforceable
against each in accordance with its terms.
10.2 Neither the execution and deliver of this Option Agreement by
the Company or Bibicoff nor the consummation of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision
<PAGE>
of the Articles of Incorporation or Bylaws of the Company, (ii) require any
consent, approval, authorization or permit from, or, except for the filing of
the Registration Statement, filing with or notification to, any United States or
foreign governmental authority or other third party; (iii) result in a breach of
the terms, conditions or provisions of, or constitute a default (or in an event
which, upon notice or lapse of time or both, would constitute a default) under,
any of the terms, conditions or provisions of any agreement to which the Company
or Bibicoff is a party or by which the Company, Bibicoff or their respective
assets may be bound; or (iv) conflict with or result in a violation of any
provision of (A) any statute, rule, regulation or ordinance which conflict or
violation might have a material adverse impact on Horowitz or the ability of the
Company or Bibicoff to perform their obligations hereunder, or (B) any material
order, writ, injunction, award, decree, permit or license applicable to the
Company or Bibicoff or any of their respective assets.
10.3 Bibicoff has delivered to Horowitz a balance sheet of Bibicoff,
dated April 1996 (the "Balance Sheet"). Bibicoff represents and warrants that
the Balance Sheet is true, complete and accurate and fairly presents the
financial position of Bibicoff as of its date. Horowitz shall not disclose the
Balance Sheet or its contents to any person except as required by law.
10.4 The Company acknowledges, represents and warrants that Horowitz
is not, and as a result of the grant of the Option will not be, an "officer,"
"director," or "beneficial owner" of more than ten percent of the Company's
Common Stock within the meaning of Section 16 of the Securities Exchange Act of
1934, as amended, and the rules promulgated thereunder. There are a total of
5,693,198 shares of Common Stock outstanding as of February 12, 1996.
10.5 Bibicoff acknowledges and agrees that his obligation to pay the
Put Price upon timely and appropriate exercise by Horowitz of the Put in
accordance with this Option Agreement, except as otherwise provided in Section 4
hereof or elsewhere in this Option Agreement, is unconditional and shall be
enforceable notwithstanding (I) the price of the Company's Common Stock at the
time of said exercise, (ii) any restrictions which are or may be imposed upon
Bibicoff's ability to purchase or sell any of the company's securities, whether
imposed by law, contract or otherwise, (iii) any action or omission by the
Company in respect of its securities or otherwise affecting the price or trading
activity in the Company's securities, and (iv) the unenforceability of the
Option or the occurrence of any event which has reduced or eliminated the value
of the Option or the Option Shares and (v) the consummation of any transaction
described in Section 5.2 of this Option Agreement.
10.6 The Company hereby unconditionally guarantees to Horowitz the due
and punctual payment when due of the Put Price for the Option Shares payable by
Bibicoff pursuant to Section 4 or Section 5 of this Option Agreement.
<PAGE>
11. Engagement Obligation. Except as provided in the Consulting
----------------------
Agreement, nothing in this Agreement shall be construed to confer upon Horowitz
any right to continued engagement by the Company or its affiliates or to
restrict in any way the right of the Company or its affiliates.
12. Notices. Any notice required or permitted under this Option
--------
Agreement shall be effective only if in writing and delivered in person, or
mailed by certified or registered mail return receipt requested, or transmitted
by facsimile transmission with electronic confirmation of receipt to the
addressee's address or facsimile number set forth below (or such other address
or facsimile number as the party changing its address specifies in a notice to
the other party specifically referring to this section):
If to Horowitz: Gary Horowitz
13032 Sky Valley Road
Los Angeles, California 90049
With copy to: Parker, Milliken, Clark, O'Hara
& Samuelian
333 South Hope Street, 27th Floor
Los Angeles, California 90071
Fax: 213-683-6669
Attention: Richard A. Clark, Esq.
If to Company: Harmony Holdings, Inc.
1990 Westwood Blvd., Suite 310
Los Angeles, California 90025
Attention: Harvey Bibicoff
With copy to: Silver & Freedman, APLC
1925 Century Park East, Suite 2100
Los Angeles, California 90067-2722
Fax: (310) 556-0832
Attention: Perry S. Silver, Esq.
If to Bibicoff: Harvey Bibicoff
c/o Harmony Holdings, Inc.
1990 Westwood Blvd., Suite 310
Los Angeles, California 90025
Notice shall be deemed given as of the date actually received by the last of the
addressee party and that party's copy recipient to receive the notice as
evidenced by acknowledgement of receipt, delivery in person, the date on the
postal return receipt, or electronic confirmation in the case of facsimile
transmissions.
<PAGE>
13. Attorneys Fees. In the event that any action is instituted to
---------------
enforce the obligations of the Company or Bibicoff hereunder, the prevailing
party in such action shall be entitled to recover all reasonable costs and
expenses incurred including without limitation, reasonable attorneys' fees and
disbursements.
14. Miscellaneous. This Option Agreement shall in all respects, be
--------------
interpreted, construed and governed by in accordance with and consistent with
the laws of the State of California applicable to agreements executed and to be
wholly performed within the State of California. Nothing contained herein shall
be construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision contained herein and any
present or future statute, law, ordinance or regulation contained herein and any
present or future statute, law, ordinance or regulation contrary to which the
parties have no legal right to contract, the latter shall prevail but the
provision of this document which is affected shall be curtailed and limited only
to the extent necessary to bring it within the requirements of the law. This
Option Agreement may be executed in any number of counterparts, each of which
shall be deemed an original but all of which, when taken together, shall
constitute one and the same document. Whenever required by the context hereof,
the singular shall be deemed to include the plural, the plural shall be deemed
to include the singular; the masculine, the feminine and neuter gender shall be
deemed to include the others. Each party agrees that he/she/it shall execute
and, if appropriate, acknowledge any and all additional and other documents,
checks, drafts, instruments and writings which may be reasonably necessary or
reasonable to facilitate the purposes of this Option Agreement. All terms,
conditions and covenants of this Option Agreement shall be applicable to and
binding upon, and shall inure to the benefit of, each party's agents,
principals, employees, attorneys, heirs, executors, administrators, assigns,
entities in which such party has an interest, parents, subsidiaries, affiliates,
predecessors and successors.
IN WITNESS WHEREOF, the parties have entered into this Stock Option
Agreement as of the date first written above.
"HOROWITZ":
_________________________________
GARY HOROWITZ
"COMPANY":
HARMONY HOLDINGS, INC.
<PAGE>
a Delaware Corporation
By_______________________________
"BIBICOFF":
_________________________________
HARVEY BIBICOFF
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Harmony Holdings, Inc.
Los Angeles, California
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated August
25, 1995, relating to the consolidated financial statements of Harmony Holdings,
Inc., appearing in the Company's Annual Report on Form 10-K for the year ended
June 30, 1995.
BDO SEIDMAN, LLP
Los Angeles, California
July 12, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to inclusion in this Registration Statement on Form S-8 of our
report dated September 16, 1994, on our audits of the financial statements of
Harmony Holdings, Inc.
COOPERS & LYBRAND, LLP
Sherman Oaks, California
July 12, 1996
