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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN CONSENT STATEMENT
SCHEDULE 14A INFORMATION
CONSENT STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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[ ] Filed by the Registrant
[x] Filed by a Party other than the Registrant
Check the appropriate box:
[x] Preliminary Consent Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Consent Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Harmony Holdings, Inc.
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(Name of Registrant as Specified in Its Charter)
The Laken Committee
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(Name of Person(s) Filing Consent Statement, if other than the Registrant)
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PAYMENT OF FILING FEE (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PRELIMINARY COPY SUBJECT TO COMPLETION
CONSENT SOLICITATION STATEMENT OF THE LAKEN COMMITTEE
To the Stockholders of Harmony Holdings, Inc.:
The time has come for the stockholders of Harmony Holdings, Inc.,
a Delaware corporation (the "Company"), to take charge of the future of their
investments in the Company. Toward that end, a group of concerned stockholders
has formed The Laken Committee (the "Committee") in order to solicit consents
from the holders of common stock, par value $0.01 per share (the "Common
Stock"), of the Company to take the following actions without a stockholders'
meeting, as permitted by Delaware law:
1. Amend Sections 1, 2 and 12 of Article III of the Bylaws of the
Company to:
(a) set the number of directors that constitute the Board of
Directors of the Company (the "Board") at three;
(b) unambiguously provide that stockholders may remove any or all
directors, with or without cause, whether at an annual or special meeting or by
written consent;
(c) provide that vacancies created on the Board by the removal of
one or more directors be filled only by stockholder action; and
(d) repeal any and all By-Law provisions or amendments thereto
adopted after July 22, 1997 and prior to the effectiveness of the Committee's
proposed actions.
2. Remove all four of the present members of the Board and any
person or persons elected or appointed to the Board prior to the effective date
of the proposed actions set forth herein and any person or persons designated by
any such directors to fill any vacancy or newly created directorship; and
3. Elect Glenn B. Laken, Steven B. Nagler and Donald Sliter,
as directors of the Company (collectively, the "Committee Nominees"), to serve
until their successors are elected and qualified.
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The effectiveness of each of the foregoing actions (the "Proposals") is
subject to, and conditioned upon, the adoption of each of the other Proposals by
the holders of record, as of the close of business on the Record Date (as
hereinafter defined), of a majority of the Shares then outstanding (including
the receipt of consents from such holders to the removal of each member of the
Company's Board and to the election of each Nominee). THE COMMITTEE RECOMMENDS
THAT YOU CONSENT TO EACH OF THE PROPOSALS.
TO CONSENT TO THE REMOVAL OF THE BOARD, THE ELECTION OF THE COMMITTEE
NOMINEES AND THE OTHER PROPOSALS YOU MUST MARK, SIGN, DATE, AND RETURN PROMPTLY
THE ENCLOSED BLUE CONSENT CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. THE
FAILURE TO EXECUTE A CONSENT WILL HAVE THE SAME EFFECT AS WITHHOLDING A CONSENT.
SEE "THE CONSENT PROCEDURE SPECIAL INSTRUCTIONS."
This Consent Statement and the related Blue Consent Card are first
being sent or given on or about August_________, 1997, to holders of record of
Common Stock on the Record Date as hereinafter defined.
Section 213(b) of the DGCL provides that if no record date has
been fixed by the board of directors, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the board of directors is required, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business or an officer or
agent of the corporation having custody of the books in which proceedings of
meetings of the stockholders are recorded. No prior action is required by the
Board with respect to the Proposals. Since the first date on which a signed
written consent setting forth the action proposed to be taken was delivered was
August ___, 1997, the Record Date will be August ___, 1997.
If your shares of Common Stock are held in the name of a
brokerage firm, bank nominee or other institution, only it can execute a Consent
Card with respect to your shares. Accordingly, please contact the person
responsible for your account and give instructions for a Consent Card to be
signed representing your shares. The Committee requests that you confirm your
instructions to the person responsible for your account in writing and provide a
copy of such instructions to the Committee c/o _________________________ so that
the Committee will be aware of all instructions given and can attempt to ensure
that such instructions are followed.
THE PROPOSED ACTIONS WILL BECOME EFFECTIVE AT THE TIME, NOT
LATER THAN OCTOBER ___, 1997, THAT WRITTEN UNREVOKED CONSENTS OF THE HOLDERS OF
A MAJORITY OF THE SHARES OF COMMON STOCK OUTSTANDING AT THE CLOSE OF BUSINESS ON
THE RECORD DATE ARE
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DELIVERED TO THE COMPANY (THE "EFFECTIVE TIME").
If you have any questions about completing or signing the Consent
Card or require assistance, including assistance in assuring that any of your
shares held by brokers or other nominees are voted, please call _____________.
at (800) ___________.
REASONS FOR THE CONSENT SOLICITATION
The Committee is soliciting the consent of holders of the Common
Stock to actions that would result in the removal of all incumbent members of
the Board and their replacement with the Committee Nominees, who will devote
their energies to reorganizing and revitalizing the Company.
None of the present board of directors were elected by the stockholders
of the Company nor do the present directors of the Company represent a majority
of the outstanding shares of the Company. The present directors of the Company
were appointed on July 22, 1997 in connection with the resignation of all of the
then directors of the Company.
Such resignations and appointments were pursuant to the Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated July 21, 1997 among Children's
Broadcasting Corporation, a Minnesota corporation ("Children's"), Harvey
Bibicoff ("Bibicoff"), and the Company. Pursuant to such agreement, the present
directors of the Corporation resigned and Children's purchased from Bibicoff
600,000 shares of the Company's Common Stock and options to purchase an
additional 550,000 shares of Common Stock. Additionally, in connection with the
Stock Purchase Agreement, Children's entered in an agreement (the "Unimedia
Agreement") with Unimedia, S.A. ("Unimedia") pursuant to which Children's agreed
to purchase from Unimedia the 1,000,000 shares of the Company's Common Stock
owned by Unimedia and to settle the litigation in the action entitled Unimedia
S.A. V. Harmony Holdings, Inc. and Harvey Bibicoff (Case No. 96-7109 JGD (RNBx)
in the United States District Court for the Central District of California (the
"Pending Litigation"). However, notwithstanding the terms of the Unimedia
Agreement, Children's assigned to the Company the right to purchase 230,769
shares of the Company's Common Stock from Unimedia. The Company then repurchased
such 230,769 shares from Unimedia for $600,000.
The Committee believes that the present directors intend to run the
Company for the benefit of Children's and not the stockholders of the Company,
and given the manner of their appointment do not represent the stockholders of
the Company. Given the interests of Children's of potentially acquiring the
Company, the Committee does not believe that the present board has the
incentives to represent the best interests of the majority of the stockholders
of the Company and that the Committee does have such incentives.
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While the Committee Nominees would not necessarily reject a sale of the
Company, the Committee does not believe that the present directors, given their
positions with Children's, would be able to effectively negotiate a sale of the
Company. Moreover, in a transaction with Children's, the present members board
of directors would all have interests that would create a conflict of interest
in any negotiations that they might have with respect to such sale transaction.
The Committee believes that many of you share our discontent and
concerns. In order to address those concerns, the Committee seeks your help to
remove the directors now in office and elect two new directors who, we believe,
will be responsive to stockholders and firmly committed to the goal of
increasing stockholder value.
Your consent is important. No matter how many or how few shares
you own, please help us to improve stockholder value by completing, signing,
dating and mailing the enclosed BLUE Consent Card promptly.
BACKGROUND
THE COMMITTEE'S NOMINEES AND THEIR BUSINESS BACKGROUNDS
The Committee consists of Glenn B. Laken, Steven B. Nagler and Donald
Sliter, who are also the Committee's Nominee's for the Board of Directors of the
Company. Messrs. Laken, Nagler and Sliter beneficially own approximately 600,000
shares of Common Stock, including 200,000 options to purchase shares of Common
Stock, 9,974 shares of Common Stock and 192,292 shares of Common Stock,
respectively, which represents in the aggregate approximately 12.41% of the
Company's issued and outstanding shares of Common Stock (including the shares of
Common Stock underlying the 200,000 options as outstanding).
Glenn B. Laken, age 43, has been a futures trader on and a member of
the Chicago Mercantile Exchange for over ten years. Since 1993, Mr. Laken has
been the President of Lake Futures, Ltd., an introducing broker located in
Chicago, Illinois, which is engaged in the business of advising pension fund
managers regarding investments in commodities and commodity futures contracts.
The clients of Lake Futures include the pension funds for two Fortune 100
companies and several managers of funds each with assets in excess of a billion
dollars. Since 1995, Mr. Laken has the Executive Vice President of D & G
Futures, Inc., which is located in Chicago, Illinois. D & G Futures, Inc. is a
partner of First Options of Chicago, Inc. and is in the business of financing
and clearing transactions for futures traders. Mr. Laken also engages in private
investment activities.
Steven B. Nagler, age 53, has been an attorney engaged in the private
practice of law since 1969. From April 1992 through June 1997, Mr. Nagler was Of
Counsel to Siegel, Lynn & Capital in Northbrook, Illinois and has been Of
Counsel to Siegel & Capitel, in
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Bannockburn, Illinois, since June 1997. Mr. Nagler is also engaged in private
investment activities.
Donald Sliter, age 40, has been a member of the Chicago Mercantile
Exchange for approximately ten years. Mr. Sliter is President of D & G Futures,
Inc., which is located in Chicago, Illinois. D & G Futures is a partner of First
Options of Chicago, Inc. and is in the business of financing and clearing
transactions for futures traders. Mr. Sliter is also a private investor.
Certain additional information regarding the Committee's members
and the Committee Nominees, including stock ownership information regarding the
members of the Committee and the Committee Nominees, is set forth in Appendix I
attached to this Consent Solicitation Statement.
All information contained in this Consent Solicitation Statement
(including Appendices) concerning each member of the Committee and each
Committee Nominee has been provided to the Committee by that person.
THE COMMITTEE'S PROPOSALS
The Committee believes that a new Board must be elected in order
to further stockholder interests. To achieve that end, the Committee is
requesting stockholders to give their written consents to the following actions:
1. BY-LAW AMENDMENTS.
The Committee is proposing amendments (the "By-Law Amendments")
to certain provisions of the Company's By-Laws. Our first proposal concerning
the By-Laws relates to the size of the Board, the removal of directors and the
filling of vacancies on the Board. The purpose and effect of each of the
Committee's proposed By-Law Amendments is to facilitate the proposed removal and
replacement of all incumbent directors, as discussed further below.
Article III, Section 1 of the By-Laws, as now in effect, provides
that the number of directors who constitute the whole Board is to be determined
by resolution of the Board, but may not be less than three. The Committee
believes that the number of directors constituting the entire Board currently
consists of four directors.
The Committee's proposed amendment to Article III, Section 1,
if adopted, will fix the number of directors at three, while maintaining the
authority of the Board to increase or decrease the number of directors. The
proposed amendment is designed to ensure that the Committee Nominees, if
elected, will maintain majority representation on the Board in order to carry
out their plan of seeking to maximize stockholder value.
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Under the General Corporation Law of the State of Delaware
(the "DGCL"), directors of a corporation without a classified board and whose
certificate of incorporation does not otherwise provide may be removed with or
without cause by the holders of a majority of the outstanding shares entitled to
vote in the election of directors. The Company does not have a classified board,
and its Certificate of Incorporation makes no provision respecting the removal
of directors.
In addition, unless a Delaware corporation's certificate of
incorporation otherwise provides, the DGCL permits stockholders to take action
without a meeting and without prior notice if a consent or consents in writing,
setting forth the action so taken, are signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to take such action at a meeting at which all shares entitled to vote on that
action were present. Under the applicable provision of the DGCL, stockholder
action by written consent is effective when written consents from the holders of
record of the minimum number of shares of stock necessary to authorize the
action are executed and delivered to the corporation within 60 days of the
earliest dated consent so delivered.
Since the DGCL provides that the directors of a corporation
may be removed without cause unless otherwise provided in the certificate of
incorporation, and because the Company's Certificate of Incorporation contains
no contrary provision, we believe that one of the fundamental corporate rights
of the Company's stockholders is to exercise complete and unfettered discretion
in choosing and changing the persons who manage its business and affairs.
Section 12 of Article III of the By-Laws provides that directors may be removed
with cause by the affirmative note of the holders of a majority of the stock of
the corporation entitled to vote at an election of directors. The Committee
believes, therefore, that the By-Laws (as well as applicable provisions of the
DGCL) permit the removal of directors without cause through use of a written
consent solicitation like the one in which the Committee currently is engaged
and do not limit the exercise of the removal power to removal for cause only. In
order to achieve certainty, however, the Committee's Consent Card includes a
proposal to amend Article III, Section 12 of the By-Laws to unambiguously
provide that stockholders may remove any or all directors with or without cause,
whether at an annual or special meeting or by written consent. The adoption of
this amendment will facilitate the removal of all of the incumbent members of
the Board, as discussed below.
Section 2 of Article III of the By-Laws provide that vacancies
created by the death, resignation or removal of a director may be filled by the
majority vote of the remaining directors. These provisions permit such vacancies
to be filled without any stockholder participation.
The Committee proposes to amend Article III, Section 2 of the
By-Laws to require that vacancies created by the removal of a director be filled
only by stockholder action. This proposed amendment is intended to prevent the
incumbent Board of Directors from filling any of the vacancies which would be
created upon the removal of any of its members.
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The texts of Sections 1, 2 and 12 of Article III of the By-Laws, as
believed to be currently in effect, and as proposed to be amended, are set forth
in Appendix II attached to this Consent Solicitation Statement
Additionally, the By-Law Amendments we are proposing also
include the repeal of each provision of the Company's By-Laws or any amendment
thereto adopted by the incumbent Board after July 22, 1997, and prior to the
Effective Time. The reason for this proposed repeal is to address the
possibility that the Board may have taken, and not yet publicly disclosed,
actions that the Committee might be opposed to or that the Board might take
during the pendency of this solicitation. The Committee, however, is not aware
of the adoption by the incumbent Board after July 22, 1997, of any provision of
the Company's By-Laws or any amendment thereto, and the Committee has no reason
to believe at this time that the incumbent Board has adopted any such provisions
or amendments that have not been disclosed.
If the By-Law Amendments are adopted pursuant to this consent
solicitation, prompt notice, including a description of any repealed By-Law
provisions or amendments, must be given by the Company pursuant to Section
228(d) of the DGCL to stockholders who did not execute consents. Moreover, if
the By-Law Amendments are adopted pursuant to this consent solicitation, a
description of such repealed By-Law provisions or amendments will be included in
the report on Form 10-Q for the quarter in which the Effective Time occurs.
THE COMMITTEE RECOMMENDS THAT YOU EXECUTE THE ACCOMPANYING BLUE
CONSENT CARD FOR THE PROPOSED BY-LAW AMENDMENTS.
2. REMOVAL OF ALL INCUMBENT DIRECTORS.
Based on the Company's filings with the Commission, the
individuals who now sit on the Board are Christopher T. Dahl, William E.
Cameron, Richard W. Perkins and William M. Toles. The Committee believes that
the incumbent directors, because of their conflicts of interest, will not
maximize stockholder value and should be removed and replaced with the Committee
Nominees.
ACCORDINGLY, THE COMMITTEE RECOMMENDS THAT YOU EXECUTE THE
ACCOMPANYING BLUE CONSENT CARD FOR REMOVAL OF ALL OF THE PRESENT MEMBERS OF THE
COMPANY'S BOARD AND ANY PERSON ELECTED BY THE INCUMBENT DIRECTORS (WHETHER
BEFORE OR AFTER THE DATE OF THIS CONSENT SOLICITATION STATEMENT) TO FILL ANY
VACANCY OR NEWLY CREATED DIRECTORSHIP.
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3. PROPOSED ELECTION OF THE COMMITTEE NOMINEES.
If the proposed amendments to the By-Laws are adopted and the
Company's incumbent directors are removed, the entire Board will consist of
three directorships, all of which will be vacant. To fill those vacancies, the
Committee proposes the election of the Committee Nominees -- Glenn B. Laken,
Steven B. Nagler and Donald Sliter. Certain information concerning the
Committee's Nominees is set forth above under the caption "THE COMMITTEE AND ITS
NOMINEES" and in Appendix I attached to this Consent Solicitation Statement.
Each of the Committee Nominees has agreed to serve as a director of the Company,
if elected.
THE COMMITTEE RECOMMENDS THAT YOU EXECUTE THE ACCOMPANYING BLUE
CONSENT CARD FOR THE ELECTION OF THE COMMITTEE NOMINEES TO THE BOARD.
CONSENT PROCEDURE
Section 228 of the DGCL states that, unless otherwise provided in
the certificate of incorporation of a Delaware corporation, any action that is
required to be or may be taken at any annual or special meeting of stockholders
of that corporation may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, are signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted, and those consents are delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business or an officer or
agent of the corporation having custody of the books in which proceedings of
meetings of stockholders are recorded. The Company's certificate of
incorporation does not prohibit stockholder action by written consent.
Section 213(b) of the DGCL provides that if no record date has
been fixed by the board of directors, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the board of directors is required, will be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business or an officer or
agent of the corporation having custody of the books in which proceedings of
meetings of the stockholders are recorded. No prior actions is required by the
Company's Board with respect to the Proposals. Since the first date on which a
signed written consent setting forth the action proposed to be taken in the
Proposal was August ___, 1997, the Record Date will be August ___, 1997.
If the Proposals are adopted pursuant to this consent
solicitation, prompt notice must be given by the Company pursuant to Section
228(d) of the DGCL to stockholders who have not executed consents.
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EFFECTIVENESS AND REVOCATION OF CONSENTS
The Committee's proposals will become effective when properly
completed, unrevoked consents are signed by the holders of record as of the
Record Date of a majority of the outstanding Common Stock then outstanding and
such consents are delivered to the Company, provided that the requisite consents
are so delivered within 60 days of the earliest dated consent so delivered to
the Company.
The Committee plans to present the results of a successful
solicitation with respect to the corporate actions proposed herein to the
Company as soon as possible.
An executed consent card may be revoked at any time before the
action authorized by the executed consent becomes effective by marking, dating,
signing and delivering a written revocation. A revocation may be in any written
form validly signed by the record holder as long as it clearly states that the
consent previously given is no longer effective. The delivery of a subsequently
dated Consent Card which is properly completed will constitute a revocation of
any earlier consent. The revocation may be delivered either to the Committee, in
care of _________________________, or to the Company at 1900 Westwood Blvd.,
Suite 310, Los Angeles, California 90025-4674 (Attention: Corporate Secretary)
or any other address provided by the Company. Although a revocation is effective
if delivered to the Company, the Committee requests that either the original or
photostatic copies of all revocations of consents be mailed or delivered to the
Committee as set forth above, so that the Committee will be aware of all
revocations and can more accurately determine if and when the requisite consents
to the actions described herein have been received.
CONSENTS REQUIRED
The consent of the holders of shares representing a majority of
the votes of all shares of Common Stock outstanding as of the Record Date is
required to adopt and approve each of the Committee's proposals. According to
the information set forth in public filings made by the Company, there were
6,462,369 shares of Common Stock outstanding on the Record Date. Each share of
Common Stock entitles the Record-Date holder thereof to one vote on the
Committee's proposals. Accordingly, written consents by Record-Date holders of
approximately 3,231,200 shares of Common Stock will be required to adopt and
approve each of the Committee's proposals.
As of the Record Date, the Committee's members, the Committee
Nominees and their respective affiliates and associates beneficially owned an
aggregate of 786,686 shares of Common Stock, constituting approximately 12.17%
of the Common Stock believed to be outstanding as of the Record Date (excluding
200,000 shares of the Company's Common Stock beneficially owned by Glenn Laken
pursuant to presently exercisable options), and expect to execute (or cause to
be executed) consents to all of the actions for which
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consents are being solicited by the Committee with respect to all such shares.
As a result, in addition to the consents of the Committee's members and the
Committee Nominees, the unrevoked consents of other Record-Date holders owning
approximately 38.9% of the outstanding shares of Common Stock on the Record Date
are required to adopt the Proposals.
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, telegraph,
telex, facsimile transmission, electronic mail and in person. Solicitations of
consents will be made by all or some of the Committee's members and the
Committee Nominees and by employees of Glenn Laken's firm, Lake Futures Ltd.
In addition, the Committee may retain a nationally known
solicitation firm to assist in the solicitation and has executed an engagement
letter with ________________ providing for the payment of a fee of
$______________ plus reimbursement of expenses. The engagement letter provides
_________________ with indemnity from certain liabilities, including liabilities
arising under Federal securities laws.
Brokers, custodians, nominees and fiduciaries will be
requested to forward solicitation material to beneficial owners of the Common
Stock. The Committee will reimburse brokers, custodians, nominees and
fiduciaries for their reasonable expenses for sending soliciting the beneficial
owners of Common Stock.
Subject to the following two paragraphs, the cost of
solicitation will be borne by Glenn Laken. Total expenditures for the
solicitation, including fees for attorneys, solicitors, advertising, printing,
transportation, litigation and other costs incidental to the solicitation are
estimated to be approximately $______________. The total amount of such
expenditures made to date is estimated to be approximately $________________,
which amount includes expenditures incurred to date for attorneys' fees.
The Committee will seek reimbursement of the costs of this
solicitation from the Company to the extent legally permissible. The Committee
does not intend that the question of the Company's reimbursement of solicitation
expenses will be submitted to a vote of stockholders unless such submission is
required by law.
SPECIAL INSTRUCTIONS
If you were a record holder as of the close of business on the
Record Date, you may elect to consent to, withhold consent to or abstain with
respect to each of the Committee's proposals by marking the "CONSENTS", "DOES
NOT CONSENT" or "ABSTAINS" box, as applicable, underneath each such proposal on
the accompanying BLUE Consent Card and returning it promptly in the enclosed
postage-paid envelope.
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IF THE STOCKHOLDER WHO HAS EXECUTED AND RETURNED THE CONSENT
CARD HAS FAILED TO CHECK A BOX MARKED "CONSENTS", "DOES NOT CONSENT" OR
"ABSTAINS" FOR ANY OR ALL OF THE PROPOSALS, SUCH STOCKHOLDER WILL BE DEEMED TO
HAVE CONSENTED TO SUCH PROPOSAL OR PROPOSALS.
THE COMMITTEE RECOMMENDS THAT YOU CONSENT TO EACH OF THE
PROPOSALS. YOUR CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED
BLUE CONSENT CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY.
FAILURE TO RETURN YOUR CONSENT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE
PROPOSALS.
If you have any questions about completing or signing the
Consent Card or require assistance, including assistance in assuring that any of
your shares held by brokers or other nominees are voted, please call
_____________________ or (800) _____________.
If your shares are held in the name of a brokerage firm, bank
nominee or other institution, only it can execute a consent with respect to your
shares and only upon receipt of specific instructions from you. Accordingly, you
should contact the person responsible for your account and give instructions for
the BLUE Consent Card to be signed representing your shares. The Committee urges
you to confirm in writing your instructions to the person responsible for your
account and provide a copy of those instructions to the Committee in care of
_______________, so that the Committee will be aware of all instructions given
and can attempt to ensure that such instructions are followed.
ADDITIONAL INFORMATION
Certain information regarding ownership of voting securities of
the Company by certain members of the Company's management and principal
stockholders other than the Committee is contained in Appendix III attached to
this Consent Solicitation Statement.
The information concerning the Company contained in this
Consent Solicitation Statement has been taken from or based upon publicly
available reports, proxy statements and other documents on file with the
Commission and other public sources. Such reports, proxy statements and other
documents on file with the Commission may be inspected without charge at public
reference facilities maintained by the Commission office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection at the
regional offices of the Commission located in 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies may be obtained from the Commission on payment of the
Commission's prescribed rates through the Commission's Public Reference Section
by writing to its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549.
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Although the Committee does not have any knowledge that would
indicate that any statement contained herein based upon such reports, proxy
statements and other documents is untrue, the Committee does not take any
responsibility for the accuracy or completeness of the information contained in
such other documents, or for any failure by the Company or any of its
subsidiaries to disclose events that may affect the significance or accuracy of
any such information.
The Company's principal executive offices are at 1990 Westwood
Blvd., Suite 310, Los Angeles, California 90025-4676, and its telephone number
at that address is (310) 446-7700.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THE
ENCLOSED BLUE CONSENT CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE
PROVIDED.
Dated: ____________, 1997
THE LAKEN COMMITTEE
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APPENDIX I
This Appendix I sets forth certain information regarding each Committee
member, each of whom is a nominee for Director.
A. The following table sets forth with respect to each such person such
person's (i) name and business address, (ii) present principal occupation or
employment and the name, principal business and address of any corporation or
other organization in which such employment is carried on.
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR
EMPLOYMENT
Glenn Laken President of Lake Futures, Ltd. which is
30 South Wacker Drive engaged in business in the futures industry
Suite 1606 as an introducing broker and adviser to
Chicago, Illinois 60606 pension fund managers, including pension
managers for two Fortune 100 companies and
several billion dollar funds. Executive Vice
President of D&G Futures, Inc., a partner of
First Options of Chicago, Inc., engaged in
the business of financing and clearing
transactions for futures traders.
Steven B. Nagler Of counsel, Siegel & Capital, Ltd., which is
2275 Half Day Road, suite 320 a law firm engaged in the practice of law.
Bannockburn, Illinois 60015
Donald Sliter Executive Vice President of D & Futures,
30 South Wacker Drive Inc., a partner of First Options of Chicago
Suite 1606 Inc., engaged in the business of financing
Chicago, Illinois 60606 and clearing transactions for futures traders.
B. The following table and the notes thereto set forth the aggregate
number of Shares of Common Stock beneficially owned, directly or indirectly, as
of the date of this Consent Solicitation Statement by each of the Committee's
members, who are the Committee's nominees for director, and their respective
"associates," individually and as a group. Unless otherwise indicated, each
person has sole voting and investment power with respect to the shares of Common
Stock listed.
15
<PAGE>
Percentage of
Issued and
Shares of Outstanding
Name Common Stock (1) Common Stock (1)
- ---- ---------------- ----------------
Glenn Laken 600,000 (2)(3) 9.0%
Steven B. Nagler 9,974 (3) .15%
Donald Sliter 192,292 2.98%
All Committee Members
(and Nominees) as a 802,266 (1, 2, 3) 12.41%
group (3 persons)
(1) For purposes of this table, the number of shares which a person or group of
persons is deemed to "beneficially own" includes any shares that such
person has the right to acquire within 60 days. For purposes of computing
the percentage of outstanding shares held by each person or group of
persons named above on a given date, any security that such person or
persons has the right to acquire within 60 days is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person, but such securities
have been excluded in the computation for the group. Such computations are
based on information concerning the number of Shares of Stock issued and
outstanding as of May 7, 1997, as reported by the Company in the Form 10-Q
dated May 7, 1997 ("May 7 10-Q") and information regarding the repurchase
of Share by the Company on July 25, 1997 as reported by the Company in the
Form 8-K dated July 30, 1997 (the "8-K").
(2) Includes 200,000 currently exercisable options to purchase shares of Common
Stock of the Company, at a price of $1.50 per share held by Mr. Laken.
(3) Glenn B. Laken, Steven B. Nagler and Donald Sliter are part of a group of
persons that beneficially own in the aggregate 986,686 shares of Common
Stock of the Company, including Mr. Laken's 200,000 options to purchase
shares of Common Stock of the Company. The members of the group have agreed
to vote their shares of Common Stock at Mr. Laken's direction.
C. Except as otherwise described herein, no member of the Committee,
Committee Nominee or "associate" of any of the foregoing owns securities of the
Company of record but not beneficially.
D. Except as described in this Appendix or elsewhere in the Consent
Solicitation Statement,
(1) except Messrs, Laken's, Nagler's and Sliter's disclosures
regarding their
16
<PAGE>
participation in a group that beneficially owns 986,686 shares of
Common Stock of the Company and Mr. Laken's Schedule 13D, none of the
members of the Committee or the Committee Nominees is, or was within
the past year, a party to any contract, arrangement or understanding
with any person with respect to any securities of the Company,
including, but not limited to joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of losses or profits, or the giving or withholding of
proxies;
(2) none of the members of the Committee, the Committee
Nominees or any of their respective associates has had any transaction,
or series of similar transactions, since July 1, 1996, or any
currently proposed transaction, or series of similar transactions, to
which the Company or any of its subsidiaries was or is to be a party,
in which the amount involved exceeds $60,000 and in which any such
participant had, or will have, a direct or indirect material interest;
(3) none of the members of the Committee, the Committee
Nominees or any of their respective associates has been indebted to the
registrant or its subsidiaries at any time since July 1, 1996, in an
amount in excess of $60,000;
(4) none of the members of the Committee, the Committee
Nominee's or any of their respective associates, has, since July 1,
1996, except as otherwise disclosed herein,
(i) owned, of record or beneficially in excess of ten
percent equity interest in, any business or professional
entity that has made during the Company's last full fiscal
year, or proposes to make during the Company's current fiscal
year, payments to the Company or its subsidiaries for property
or services in excess of five percent of the Company's
consolidated gross revenues for its last full fiscal year, or
any such other entity's consolidated gross revenues for its
last full fiscal year;
(ii) owned, or owns of record or beneficially in
excess of ten percent equity interest in or is an executive
officer of, any business or professional entity to which the
Company or its subsidiaries has made during the Company's last
full fiscal year, or proposes to make during the Company's
current fiscal year, payments for property or services in
excess of five percent of (a) the Company's consolidated gross
revenues for its last full fiscal year, or (b) any such other
entity's consolidated gross revenues for its last full fiscal
year;
(iii) owned, or owns of record or beneficially in
excess of ten percent equity interest in or is an executive
officer of, any business or professional entity to which the
Company or its subsidiaries was indebted at the end of the
Company's last full fiscal year in an aggregate amount in
excess of five percent
17
<PAGE>
of the Company's total consolidated assets at the end of
such fiscal year;
(iv) been a member of, or of counsel to, a law firm
that the Company has retained or proposes to retain during the
current fiscal year;
(v) been a partner or executive officer of any
investment banking firm that has performed services for the
Company or that the Company proposes to have perform services
during the current year; or
(vi) had any other relationships that are
substantially similar in nature and scope to those
relationships listed in paragraphs 4(i) through (v) above.
(5) none of the members of the Committee, the Committee
Nominees, or any of their respective associates has any arrangement or
understanding with any person (i) with respect to any future employment
by the Company or its affiliates; or (ii) with respect to any future
transactions to which the Company or any of its affiliates will or may
be a party;
(6) no person who is a party to an arrangement or
understanding pursuant to which a Committee Nominee is proposed to be
elected, has any substantial interest, direct or indirect, by security
holdings or otherwise, in any matter to be acted upon by the
stockholders of the Company;
(7) there are no material proceedings to which any member of
the Committee, Committee Nominee or any associate of any such Committee
Nominee, is a party adverse to the Company or any of its subsidiaries
or has a material interest adverse to the Company or any of its
subsidiaries; and
(8) no Committee Nominee has been party to any of the
following events that occurred during the past five years and that are
material to an evaluation of the ability or integrity of any person
nominated to become a director of the Company:
(a) a petition under the Federal bankruptcy laws or
any state insolvency law was filed by or against, or a
receiver, fiscal agent or similar officer was appointed by a
court for the business or property of such person, or any
partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or
business association of which he was an executive officer at
or within two years before the time of such filing;
(b) such person was convicted in a criminal
proceeding or is a named subject of a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
18
<PAGE>
(c) such person was the subject of any order,
judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining him from, or otherwise limiting, the
following activities:
i) acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant,
any other person regulated by the Commodity Futures
Trading Commission, or an associated person of any of
the foregoing, or as an investment advisor,
underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any
investment company, bank, savings and loan association
or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;
ii) engaging in any type of business practice; or
iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in
connection with any violation of Federal or State
securities laws or Federal commodities laws;
(d) such person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or
vacated, of any Federal or State authority barring,
suspending or otherwise limiting for more than 60 days
the right of such person to engage in any activity
described in paragraph D.(8)(c)(i) of this Appendix, or
to be associated with persons engaged in any such
activity;
(e) such person was found by a court of competent
jurisdiction in a civil action or by the Commission to
have violated any Federal or State securities law, and
the judgment in such civil action or finding by the
Commission has not been subsequently reversed,
suspended, or vacated; or
(f) such person was found by a court of competent
jurisdiction in a civil action or by the Commodity
Futures Trading Commission to have violated any Federal
commodities law, and the judgment in such civil action
or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or
vacated.
E. Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's
19
<PAGE>
officers and directors, and persons who beneficially own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership of the Company's securities and changes in such ownership with the
SEC. Officers, directors and 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
None of the Committee Nominees failed to timely file a Form 3,
4 or 5 or amendments thereto during the Company's last fiscal year (July 1, 1996
through June 30, 1997) or thereafter through the date of this Consent
Solicitation.
F. Compensation Paid to Committee Members. Except for the grant of the
Options to Glenn Laken described below, neither the Company nor any of its
subsidiaries paid, set aside or accrued any salary or other remuneration or
bonus, or any amount pursuant to a profit-sharing, pension, retirement, deferred
compensation or other similar plan, during its last fiscal year, or during its
current fiscal year, to or for any of the Committee Members.
Options. On February 13, 1997, in consideration for Glenn Laken's
consulting services rendered to the Company, the Company granted Mr. Laken
options (the "Options") to purchase up to 200,000 shares of the Company's common
stock ("Option Shares"). The Options are exercisable until 2000 at a price of
$1.50 per share, the closing price of the Company's common stock on the date of
grant.
Compensation The following table summarizes the total consulting fees
received by Glenn Laken during the 1997 fiscal year. None of Glen Laken, or
Steven Nagler or Donald Sliter, the other Committee Members, have ever received
any compensation from the Company except as set forth below.
Summary Compensation Table for the Company
Name/principal Annual Compensation Long Term
Position Year Salary Compensation Options
- -------- ---- ------ --------------------
Glenn Laken(1) 1997 - 200,000
Consultant
The following tables set forth information with respect to Mr. Laken
concerning exercise of options of stock of the Company during the current and
the last fiscal year and unexercised options on stock of the Company held
currently and held as of the end of the last fiscal year.
20
<PAGE>
Option/SAR Grants by the Company
for the Fiscal Year ended June 30, 1997:
- ----------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in or Base Expiration
Name Granted (#) Fiscal Year ($/SH) Date
- ---- ----------- ----------- ------ ----
Glenn Laken(2) 200,000 200,000 $1.50 February 13,
2000
Aggregated Option/SAR on the Company
Exercises for the Year Ended June 30, 1997
and Option/SAR Values on the Company as of June 30, 1997:
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money
on Value Options/SARs Options/SARs
Exercise Realized at 6/30/97 at 6/30/97
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
-------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Glenn Laken 0 0 200,000 0 200,000 0
</TABLE>
- --------------
1 Represents the Options issued to Glenn Laken on or about February 13, 1997.
2 As of the date of this Consent Solicitation, Mr. Laken holds 200,000
Options exercisable at $1.50 per share, approximately $0.59 per share below
market value as of the date of this Consent Solicitation.
For purposes of the foregoing, the term "associate" has the meaning set
forth in Rule 14a-1 promulgated pursuant to the Securities and Exchange Act of
1934.
21
<PAGE>
F. Set forth below are the shares of common stock of the Company that were
purchased and sold within the past two years by each Committee member.
HARMONY HOLDINGS
===============================================================================
TYPE OF NO OF
NAME TRADE DATE TRANSACTION SHARES
===============================================================================
Glen Bradley Laken 07/23/97 Bought 5,200
- -------------------------------------------------------------------------------
Bought 5,000
- -------------------------------------------------------------------------------
07/22/97 Bought 5,000
- -------------------------------------------------------------------------------
Bought 2,000
- -------------------------------------------------------------------------------
Bought 5,000
- -------------------------------------------------------------------------------
07/15/97 Bought 2,500
- -------------------------------------------------------------------------------
07/14/97 Bought 1,000
- -------------------------------------------------------------------------------
07/11/97 Bought 500
- -------------------------------------------------------------------------------
Bought 2,000
- -------------------------------------------------------------------------------
Bought 100
- -------------------------------------------------------------------------------
07/10/97 Bought 2,500
- -------------------------------------------------------------------------------
Bought 200
- -------------------------------------------------------------------------------
Bought 2,000
- -------------------------------------------------------------------------------
07/07/97 Bought 200
- -------------------------------------------------------------------------------
Bought 1,000
- -------------------------------------------------------------------------------
07/03/97 Bought 200
- -------------------------------------------------------------------------------
07/02/97 Bought 2,000
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
Bought 200
- -------------------------------------------------------------------------------
Bought 200
- -------------------------------------------------------------------------------
06/30/97 Bought 200
- -------------------------------------------------------------------------------
06/27/97 Bought 500
- -------------------------------------------------------------------------------
Bought 2,000
- -------------------------------------------------------------------------------
Bought 2,000
- -------------------------------------------------------------------------------
Bought 2,000
- -------------------------------------------------------------------------------
22
<PAGE>
===============================================================================
TYPE OF NO OF
NAME TRADE DATE TRANSACTION SHARES
===============================================================================
Bought 3,000
- -------------------------------------------------------------------------------
06/26/97 Bought 2,400
- -------------------------------------------------------------------------------
06/25/97 Bought 3,000
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
06/20/97 Bought 5,000
- -------------------------------------------------------------------------------
Bought 100
- -------------------------------------------------------------------------------
06/17/97 Bought 2,000
- -------------------------------------------------------------------------------
Bought 500
- -------------------------------------------------------------------------------
06/16/97 Bought 10,000
- -------------------------------------------------------------------------------
06/06/97 Bought 500
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
Bought 1,000
- -------------------------------------------------------------------------------
05/16/97 Bought 200
- -------------------------------------------------------------------------------
05/12/97 Bought 5,000
- -------------------------------------------------------------------------------
05/06/97 Bought 200
- -------------------------------------------------------------------------------
05/02/97 Bought 2,500
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
04/30/97 Bought 2,000
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
04/29/97 Bought 5,000
- -------------------------------------------------------------------------------
03/27/97 Bought 12,000
- -------------------------------------------------------------------------------
Bought 200
- -------------------------------------------------------------------------------
03/21/97 Bought 2,500
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
Bought 1,000
- -------------------------------------------------------------------------------
02/05/97 Bought 100
- -------------------------------------------------------------------------------
23
<PAGE>
===============================================================================
TYPE OF NO OF
NAME TRADE DATE TRANSACTION SHARES
===============================================================================
02/04/97 Bought 5,000
- -------------------------------------------------------------------------------
Bought 400
- -------------------------------------------------------------------------------
01/31/97 Bought 1,000
- -------------------------------------------------------------------------------
01/30/97 Bought 5,000
- -------------------------------------------------------------------------------
01/29/97 Bought 5,000
- -------------------------------------------------------------------------------
01/24/97 Bought 5,000
- -------------------------------------------------------------------------------
Bought 5,000
- -------------------------------------------------------------------------------
12/20/96 Bought 2,500
- -------------------------------------------------------------------------------
12/04/96 Bought 1,000
- -------------------------------------------------------------------------------
11/20/96 Bought 2,500
- -------------------------------------------------------------------------------
11/01/96 Bought 2,500
- -------------------------------------------------------------------------------
10/22/96 Bought 5,000
- -------------------------------------------------------------------------------
10/21/96 Bought 5,000
- -------------------------------------------------------------------------------
10/17/96 Bought 3,000
- -------------------------------------------------------------------------------
09/27/96 Bought 100
- -------------------------------------------------------------------------------
09/18/96 Sold 1,000
- -------------------------------------------------------------------------------
09/16/96 Bought 100
- -------------------------------------------------------------------------------
09/13/96 Bought 100
- -------------------------------------------------------------------------------
09/09/96 Sold 2,000
- -------------------------------------------------------------------------------
08/12/96 Bought 2,000
- -------------------------------------------------------------------------------
Bought 1,300
- -------------------------------------------------------------------------------
Bought 1,500
- -------------------------------------------------------------------------------
Bought 1,200
- -------------------------------------------------------------------------------
08/09/96 Bought 10,000
- -------------------------------------------------------------------------------
Bought 3,000
- -------------------------------------------------------------------------------
Bought 2,000
- -------------------------------------------------------------------------------
24
<PAGE>
===============================================================================
TYPE OF NO OF
NAME TRADE DATE TRANSACTION SHARES
===============================================================================
07/30/96 Bought 2,300
- -------------------------------------------------------------------------------
07/29/96 Bought 5,000
- -------------------------------------------------------------------------------
07/26/96 Bought 2,500
- -------------------------------------------------------------------------------
Bought 2,000
- -------------------------------------------------------------------------------
07/24/96 Sold 9,900
- -------------------------------------------------------------------------------
07/22/96 Bought 10,000
- -------------------------------------------------------------------------------
07/19/96 Bought 5,000
- -------------------------------------------------------------------------------
Bought 10,000
- -------------------------------------------------------------------------------
Bought 5,000
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
Bought 500
- -------------------------------------------------------------------------------
07/18/96 Bought 2,400
- -------------------------------------------------------------------------------
Bought 2,600
- -------------------------------------------------------------------------------
Bought 2,400
- -------------------------------------------------------------------------------
Bought 5,000
- -------------------------------------------------------------------------------
07/17/96 Bought 5,000
- -------------------------------------------------------------------------------
07/16/97 Sold 9,000
- -------------------------------------------------------------------------------
Bought 5,000
- -------------------------------------------------------------------------------
Sold 400
- -------------------------------------------------------------------------------
Sold 200
- -------------------------------------------------------------------------------
07/03/96 Bought 5,000
- -------------------------------------------------------------------------------
Bought 4,000
- -------------------------------------------------------------------------------
07/01/96 Bought 1,000
- -------------------------------------------------------------------------------
06/14/96 Bought 5,000
- -------------------------------------------------------------------------------
04/22/96 Sold 1,000
- -------------------------------------------------------------------------------
04/10/96 Bought 1,000
- -------------------------------------------------------------------------------
25
<PAGE>
===============================================================================
TYPE OF NO OF
NAME TRADE DATE TRANSACTION SHARES
===============================================================================
Bought 1,000
- -------------------------------------------------------------------------------
03/27/96 Bought 2,500
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
03/21/96 Bought 900
- -------------------------------------------------------------------------------
Bought 2,300
- -------------------------------------------------------------------------------
Bought 1,800
- -------------------------------------------------------------------------------
03/14/96 Bought 5,000
- -------------------------------------------------------------------------------
Donald Sliter 08/04/97 Sold 4,760
- -------------------------------------------------------------------------------
08/01/97 Sold 25,000
- -------------------------------------------------------------------------------
07/29/97 Bought 3,000
- -------------------------------------------------------------------------------
07/25/97 Bought 6,200
- -------------------------------------------------------------------------------
07/23/97 Bought 10,000
- -------------------------------------------------------------------------------
Bought 4,850
- -------------------------------------------------------------------------------
07/22/97 Bought 5,180
- -------------------------------------------------------------------------------
07/18/97 Bought 3,000
- -------------------------------------------------------------------------------
07/16/97 Bought 3,820
- -------------------------------------------------------------------------------
Bought 5,000
- -------------------------------------------------------------------------------
07/15/97 Bought 7,000
- -------------------------------------------------------------------------------
07/14/97 Bought 3,150
- -------------------------------------------------------------------------------
06/23/97 Sold 712
- -------------------------------------------------------------------------------
06/20/97 Sold 250
- -------------------------------------------------------------------------------
06/16/97 Bought 712
- -------------------------------------------------------------------------------
Bought 5,155
- -------------------------------------------------------------------------------
06/13/97 Bought 20,000
- -------------------------------------------------------------------------------
05/12/97 Bought 8,000
- -------------------------------------------------------------------------------
Bought 3,442
- -------------------------------------------------------------------------------
26
<PAGE>
===============================================================================
TYPE OF NO OF
NAME TRADE DATE TRANSACTION SHARES
===============================================================================
05/09/97 Bought 4,000
- -------------------------------------------------------------------------------
Bought 6,000
- -------------------------------------------------------------------------------
05/08/97 Bought 5,600
- -------------------------------------------------------------------------------
Bought 7,500
- -------------------------------------------------------------------------------
04/10/97 Bought 9,115
- -------------------------------------------------------------------------------
03/03/97 Bought 5,600
- -------------------------------------------------------------------------------
02/26/97 Sold 5,700
- -------------------------------------------------------------------------------
02/04/97 Bought 5,000
- -------------------------------------------------------------------------------
10/29/96 Bought 6,000
- -------------------------------------------------------------------------------
10/23/96 Sold 70
- -------------------------------------------------------------------------------
10/10/96 Bought 7,800
- -------------------------------------------------------------------------------
10/09/96 Bought 10,700
- -------------------------------------------------------------------------------
10/08/96 Bought 10,300
- -------------------------------------------------------------------------------
10/04/96 Bought 32,000
- -------------------------------------------------------------------------------
Steven B. Nagler 06/19/97 Bought 2,500
- -------------------------------------------------------------------------------
Bought 2,500
- -------------------------------------------------------------------------------
05/14/96 Bought 1,000
- -------------------------------------------------------------------------------
09/26/95 Bought 1,500
- -------------------------------------------------------------------------------
08/08/95 Sold 2,000
- -------------------------------------------------------------------------------
05/01/95 Bought 2,000
===============================================================================
27
<PAGE>
APPENDIX II
This Appendix sets forth the text, in relevant part, of the By-Laws
which are proposed by the Committee to be amended, as the Company indicated such
By-Laws were in effect on August 5, 1997 and as they will appear after adoption
of the Committee's proposed By-Law Amendments. With respect to Sections 2 and
12, language proposed to be deleted is marked in brackets and language proposed
to be added is capitalized. The Committee is not aware of any amendments to the
By-Laws since July 22, 1997. To the extent any such By-Law amendments have been
adopted subsequently, such intervening amendments shall be repealed by the
adoption of the following amendments if inconsistent therewith.
Old Section 1
Section 1. Number of Directors; Terms. The initial number of Directors
of the corporation shall be three (3). The number of directors which shall
thereafter constitute the whole Board of Directors shall be determined from time
to time by resolution of the Board of Directors. Directors shall be elected
annually by the stockholders except that each of the initial Directors shall be
elected by the incorporator of the corporation and shall hold office until his
successor is duly elected and qualified or until he sooner dies, resigns, is
removed or becomes disqualified.
New Section 1
Section 1. Number of Directors; Terms. The number of Directors of the
corporation which shall constitute the whole Board of Directors shall be THREE
(3) unless and until changed from time to time by resolution of the Board of
Directors. Directors shall be elected annually by the stockholders except as
provided in Section 2 of this Article III and shall hold office until his
successor is duly elected and qualified or until he sooner dies, resigns, is
removed or becomes disqualified.
Section 2. Vacancies. Subject to the provisions of the certificate of
incorporation, vacancies in the Board of Directors OTHER THAN VACANCIES CREATED
BY THE REMOVAL OF DIRECTORS BY THE STOCKHOLDERS may be filled by a majority of
the Directors then in office, though less than a quorum, or by a sole remaining
Director, and any Director so chosen shall hold office for the remainder of the
full term of the Director whose place he has been elected to fill or of the
class for which he has been designated and until his successor is duly elected
and shall qualify. If there are no Directors in office, then an election of
Directors may be held in the manner provided by statute.
Further subject to the provisions of the certificate of incorporation,
a vacancy or vacancies in the Board of Directors shall be deemed to exist in
case of the death, resignation
28
<PAGE>
or removal of any Director, or if the stockholders fail at any annual or special
meeting of stockholders at which any Director or Directors are required to be
elected to elect the full authorized number of Directors to be voted for at that
meeting, or if there are newly created Directorships resulting from any increase
in the authorized numbers of Directors.
A VACANCY OR VACANCIES CREATED BY THE REMOVAL OF ONE OR MORE DIRECTORS
MAY ONLY BE FILLED BY ACTION OF THE HOLDERS OF SHARES REPRESENTING A MAJORITY OF
THE SHARES OF THE CORPORATION'S COMMON STOCK THEN OUTSTANDING AND ENTITLED TO
VOTE AND SUCH ACTION MAY BE TAKEN AT THE SAME ANNUAL OR SPECIAL MEETING, OR BY
MEANS OF THE SAME WRITTEN CONSENT OR CONSENTS, OF STOCKHOLDERS AT OR BY WHICH
SUCH DIRECTOR OR DIRECTORS WERE REMOVED OR MAY BE TAKEN AT A DIFFERENT MEETING
OR BY A SEPARATE WRITTEN CONSENT OR CONSENTS.
Section 12. Removal of Directors. Subject to the provisions of the
certificate of incorporation and except as may otherwise be provided by the
General Corporation Law, the entire Board of Directors or one or more Directors
may be removed from office [for] WITH OR WITHOUT cause by the affirmative vote
of the holders of a majority of the stock of the corporation entitled to vote at
an election of Directors AT ANY ANNUAL MEETING OR SPECIAL MEETING OF
STOCKHOLDERS DULY CALLED FOR THE PURPOSE OF THE REMOVAL OF SUCH DIRECTOR OR
DIRECTORS OR BY ACTION OF THE STOCKHOLDERS BY WRITTEN CONSENT.
29
<PAGE>
APPENDIX III
PRINCIPAL STOCKHOLDERS OF THE COMPANY AND
STOCK HOLDINGS OF MANAGEMENT
Schedule 14A adopted by the Commission under the Exchange Act requires
the Committee to disclose, to the extent known to the Committee, certain
information regarding ownership of voting securities of the Company. The
information set forth in this Appendix is provided in response to that
requirement. Except with respect to information concerning the Committee and its
members, all information contained in the following tables (including the
footnotes) has been taken from or is based upon the Company's Amendment No. 5 to
Form S-1 dated February 28, 1997 and other information contained in other
filings by the Company with the Commission.
The following table sets forth the number of shares of Common Stock of
the Company beneficially owned as of December 31, 1996, by: (i) each person who
beneficially owns more than five percent of the Company's Common Stock; (ii)
each Director and Named Executive Officer of the Company as that term is defined
by Rule 402(a)(3); and (iii) all executive officers and Directors of the Company
as a group. Changes to the December 31, 1996 information that are known to the
Committee are disclosed in the footnotes. Except as noted, each person named as
sole voting and dispositive power over the total number of shares beneficially
owned:
Amount and
Name and Nature of Percentage
Address of Beneficial of Outstanding
Beneficial Owner (1)(2) Ownership (3) Common Stock
- ----------------------- ------------- ------------
Harvey Bibicoff 1,285,000 (4) 19.2%
Brian Rackohn 50,000 (5) 0.0%
Ivan Berknowitz 25,000 0.0%
Harry Shuster 25,000 0.0%
Unimedia 1,000,000 (6) 15.0%
All officers and Directors
as a group (6 persons)(7) 1,385,000 (3) 27.1%
30
<PAGE>
- -----------------
(1) The address of all executive officers and Directors is 1990 Westwood
Boulevard, Suite 310, Los Angeles, California 90025.
(2) Subsequent to December 31, 1996, (i) Glenn Laken disclosed beneficial
ownership of 600,000 shares of the Common Stock of the Company, including
200,000 currently exercisable options to purchase shares of Common Stock
(or 9.0% of the outstanding shares of Common Stock of the Company), and the
existence of a group pursuant to which Mr. Laken could be deemed to
beneficially own 956,686 shares of Common Stock of the Company, including
the 200,000 currently exercisable options to purchase share of Common Stock
of the Company (or 12.17% of the outstanding shares of Common Stock of the
Company) and (ii) Children's Broadcasting filed a Schedule 13D dated July
31, 1997 disclosing beneficial ownership of 1,991,231 shares of Common
Stock of the Company, including 550,000 currently exercisable options to
purchase shares of Common Stock of the Company (or 27.4% of the outstanding
shares of Common Stock of the Company).
(3) Except as noted below, beneficial owners of Common Stock possess sole
voting and investment power with respect to the shares listed opposite
their names.
(4) On July 22, 1997, Harvey Bibicoff sold 1,150,000 shares of Common Stock of
the Company to Children's Broadcasting Corporation, including 550,000
currently exercisable options to purchase shares of Common Stock of the
Company.
(5) Consists of immediately exercisable options. Does not include options to
purchase Common Stock that are not immediately exercisable held by the
following persons: Mr. Rackohn - 25,000.
(6) The Company repurchased 230,769 of the shares held by Unimedia on or about
July 25, 1997 and Children's Broadcasting Corporation purchased the
remaining 769,231 shares held by Unimedia on or about July 25, 1997.
(7) On July 22, 1997, Harvey Bibicoff, Ivan Berkowitz and Harry Shuster
resigned as members of the Board of Directors of the Company and the
following persons were appointed as members of the Board of Directors of
the Company: Christopher T. Dahl, William E. Cameron, Richard W. Perkins
and William Toles. The Committee does not have any information regarding
the holdings of securities of the Company of Messrs. Dahl, Cameron, Perkins
or Toles.
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CHANGE IN CONTROL OF THE COMPANY
The following transactions were reported by the Company in the Form 8-K
dated July 30, 1997 and in a Schedule 13D filed by Children's Broadcasting
Corporation dated July 21, 1997.
On July 22, 1997, Christopher T. Dahl was appointed to the Board of
Directors and named chairman. Following Mr. Dahl's appointment the other members
of the board resigned and the following new directors were appointed: William E.
Cameron, Richard W. Perkins and William Toles. Messrs. Dahl, Cameron, Perkins
and Toles now constitute the entire board of directors.
On July 25, 1997, the Company acquired 230,769 shares of Company Common
Stock from Unimedia, S.A., a French company ("Unimedia"), at a price of $2.60
per share. The closing price on July 25, 1997 was $2,63. As part of the
transaction Unimedia dismissed the lawsuit filed on October 9, 1996 against the
Company and its Chairman of the Board in the United States District Court for
the Central District of California with prejudice.
On July 21, 1997, the Company, Harvey Bibicoff ("Bibicoff") and the
Company entered into an agreement (the "Bibicoff Stock Purchase Agreement")
whereby Bibicoff agreed to sell, and Children's Broadcasting Corporation agreed
to buy, 600,000 shares of Common Stock of the Company (the "Bibicoff Shares"),
together with options to purchase 550,000 shares of Common Stock of the Company
(the "Options") at an exercise price of $1.50 per share, for $1,760,000. In
addition to such cash consideration, Children's Broadcasting Corporation issued
60,000 shares of its Common Stock, par value $.02 per share, to Bibicoff. Such
shares had a fair market value of $247,500 based upon the last reported sale
price for such stock on July 22, 1997.
On July 21, 1997, Children's Broadcasting Corporation and Unimedia a
privately held societe anonyme organized and existing under the laws of France,
entered into an agreement (the "Unimedia Stock Purchase Agreement") whereby
Unimedia agreed to sell, and Children's Broadcasting Corporation agreed to buy,
1,000,000 shares of Common Stock of the Company (the "Unimedia Shares") and
Unimedia agreed to dismiss the litigation entitled UNIMEDIA S.A. V. HARMONY
HOLDINGS, INC. AND HARVEY BIBICOFF, case no. CV 96-7109 JGD (RNBx), pending in
the United States District Court for the Central District of California, for
$2,600,000. Children's Broadcasting Corporation assigned its right to buy
230,769 of the Unimedia Shares to the Company reducing the purchase price for
Children's Broadcasting Corporation's stock purchase to $2,000,000. The Company
exercised its right to purchase the 230,279 shares for $600,000 in cash, thereby
reducing the number of issued and outstanding shares of Common Stock of the
Company.
The closing on the purchase of the Bibicoff Shares and the Options
occurred on July 22, 1997. The closing on the purchase of the Unimedia Shares
occurred on July 25, 1997.
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Funds for the transactions described above originated from multiple
sources: (i) $2,400,000 pursuant to the Children's Broadcasting Corporation's
Amended and Restated Loan and Security Agreement with Foothill Capital
Corporation, (ii) $500,000 pursuant to a loan from Pyramid Partners, L.P., an
entity controlled by Richard W. Perkins, a director of Children's Broadcasting
Corporation, (iii) $500,000 pursuant to a loan from Rodney P. Burwell, a
director of Children's Broadcasting Corporation, (iv) $250,000 pursuant to a
loan from William M. Toles, a shareholder of Children's Broadcasting
Corporation, and (v) $110,000 of the working capital of Children's Broadcasting
Corporation. The 10.0% percent one-year loans listed in items (ii) through (iv)
above are secured by 192,308 and 96,154 shares of the Company's Common Stock
reported herein, respectively. In addition to receiving promissory notes from
Children's Broadcasting Corporation, such lenders received five-year warrants to
purchase 50,000, 50,000 and 25,000 shares of Children's Broadcasting
Corporation's Common Stock, respectively, at an exercise price of $4.00 per
share. Children's Broadcasting Corporation's Board of Directors has approved the
related party transactions listed in items (ii) and (iii).
Except as otherwise described above and elsewhere herein, none of the
members of the Committee knows of any arrangement, the operation of which may at
a subsequent date result in a change of control of the Company, or of any other
change of control of the Company that has occurred since July 1, 1996.
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<PAGE>
[BACK COVER OF SOLICITATION STATEMENT]
IMPORTANT
1. If your shares are held in your own name, please sign, date and mail the
enclosed BLUE Consent Card to our solicitation agent, ______________, in the
postage-paid envelope provided.
2. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can execute a consent with respect to your shares and
only upon receipt of your specific instructions. Accordingly, you should contact
the person responsible for your account and give instructions for a BLUE Consent
Card to be signed representing your shares. The Committee urges you to confirm
in writing your instructions to the person responsible for your account and to
provide a copy of those instructions to The Laken Committee in care of
_________________________, at the address set forth below so that the Committee
will be aware of all instructions given and can attempt to ensure that such
instructions are followed.
If you have any questions or require any assistance in executing your
consent, please call
________________________
________________________
________________________
________________________ Toll Free: (800) _______________
Banks and Brokerage firms, please call collect:
(212) _______________
34
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
99.1 Letter to Stockholders
99.2 Form of Consent Card
35
<PAGE>
EXHIBIT 99.1
To the Stockholders of Harmony Holdings, Inc.:
This Consent Statement is being furnished by Glenn Laken, Steven Nagler
and Donald Sliter (the "Laken Committee") to the holders of shares of common
stock ("Shares") of Harmony Holdings, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of stockholder consents:
(i) to remove all four of the Company's current directors;
(ii) to elect the Committee's nominees, Glenn B. Laken, Steven B.
Nagler and Donald Sliter (collectively the "Nominees"), as the
directors of the Company; and
(iii) to amend the Company's bylaws to facilitate the above changes.
The specific features of the Committee's proposals as well as the consent
procedure itself are described in the accompanying Consent Statement. PLEASE
READ THE INSTRUCTIONS CAREFULLY.
The Laken Committee beneficially owns approximately 12.5% of the
outstanding Shares of the Company and believes it better represents the
interests of the majority of the Company's shareholders than the current the
board of directors. All of the present board of directors were elected at the
request of Children's Broadcasting Corporation("CB"). None of the present board
members were elected by the stockholders of the Corporation. None of the current
board has any prior experience with the Company.
The present board was appointed as a result of a series of agreements
and transactions between the Company, its former Chairman of the Board and chief
executive officer and a dissident minority stockholder that was suing the
Company in a suit that the Company believed was primarily a nuisance suit. As a
result of these transactions, the Company is now controlled by a potential
acquiror in a transaction that resulted in no premium to the Company's
stockholders. These transactions have placed control of the Company in the hands
of another media company whose interests the Committee believes are adverse to
that of the majority of the Company's stockholders.
The Committee's understanding of the agreements and transactions
resulting in the complete change of the membership of the Board of Directors is
as follows. In the first of these agreements, as of July 21, 1997, CB agreed to
purchase from an officer and director of the Company, who prior to the
transaction was the Chairman of the Board of the Company, 600,000 Shares and
options for an additional 550,000 Shares. In an agreement with the dissident
stockholder, CB agreed to purchase 1,000,000 shares, which represented its
entire
36
<PAGE>
interest in the Company, and to have its lawsuit against the Company settled for
$2,600,000. Prior to the close of the transactions required by the second
agreement, with the approval of the Company's new Board of Directors, CB forced
the Company to accept the assignment of its obligation to purchase $600,000
worth of the Company's shares from the dissident shareholder (230,769 shares),
thereby substantially reducing CB's cost of the originally agreed upon
transaction at the Company's expense.
The result of these transactions was that CB, a 27% shareholder in a
related industry that had been considered as a possible acquiror of the Company,
assumed control of the Company for $3,760,000 and 60,000 shares of its common
stock. Moreover, the Company, which had previously been considering various
possible acquisitions was stripped of $600,000 and received no revenue producing
assets in return.
The Committee believes that the present directors intend to manage the
Company for the benefit of CB and not the stockholders of the Company as a
whole. Given the manner of their appointment the current board does not
represent the stockholders of the Company as a whole. Given the interests of CB
to potentially acquire the Company, or to acquire a controlling block of stock
of the Company, the Committee believes it is in CB's interests to acquire such
stock for the lowest possible price. Accordingly, the Committee does not believe
that the present Board of Directors has the incentives necessary to represent
the best interests of the majority of the stockholders of the Company. The
Committee's Nominees have such incentives, and have no conflicts of interest as
do the present board of directors.
While the Committee Nominees would not necessarily reject a sale of the
Company, the Committee does not believe that the present directors, given their
positions with CB, would be able to effectively negotiate a sale of the Company.
Moreover, in a transaction with CB, the present members of the Board of
Directors would all have serious conflicts of interest.
The Committee believes that many of you share its discontent and
concerns. In order to address those concerns, the Committee seeks your help to
remove the directors now in office and elect three new directors who, the
Committee believes, will be responsive to stockholders and firmly committed to
the goal of increasing stockholder value.
Glenn Laken, a member of the Committee, has been a beneficial owner of
Shares of the Company for over two years and first became familiar with the
Company prior to such time while acting as a fund trader. Over the past two
years, Mr. Laken, acting in a consulting capacity to the Company, has worked
closely with the management of the Company to turn the Company around from a
business that was losing money into a profitable operation. During fiscal year
1997, ended June 30, 1997, the Company had record earnings and for the first
time experienced four consecutive profitable quarters. Mr. Laken believes that
his contributions to the Company are reflected in these results and have been
integral to its success.
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<PAGE>
Glenn Laken has been a futures trader on and a member of the Chicago
Mercantile Exchange for over ten years and has been involved with the Company
over two years as a consultant and private investor. Steven B. Nagler has been
an attorney engaged in the private practice of law since 1969. Donald Sliter has
been a futures trader on and a member of the Chicago Mercantile Exchange for
approximately ten years and is a partner of Mr. Laken in D & G Futures, Inc., a
firm that clears and finances transactions for futures traders.
Stockholders of record as of the close of business on August , 1997 (the
"Consent Record Date") are entitled, and urged by the Committee, to express
their consent to the Proposals by marking, dating and signing the enclosed BLUE
consent card and returning it AS SOON AS POSSIBLE to the Laken Committee:
c/o Glenn Laken
30 South Wacker Drive Suite 1606
Chicago, Illinois 60606
If you have any questions or require any assistance in executing your
consent, please call Glenn Laken at(312) 648-3727 (CALL COLLECT).
Very truly yours,
THE LAKEN COMMITTEE
IMPORTANT
1. If your Shares are held in your own name, please sign, date and mail the
enclosed BLUE consent card to Glenn Laken ("Laken") in the post-paid
envelope provided.
2. If your Shares are held in the name of a brokerage firm, bank nominee or
other institution, you should contact the person for your account and give
instructions for the BLUE consent card representing your Shares to be
mailed, dated and signed. Only that institution can execute a BLUE consent
card with respect to your Shares and only upon receipt of specific
instructions from you. The Committee urges you to confirm in writing your
instructions to the person responsible for your account and to provide a
copy of those instructions to the Committee in care of Glenn Laken at the
address set forth below using the stamped self-addressed envelope included
in the packet so that the Committee will be aware of all instructions given
and can attempt to ensure that such instructions are followed. Since the
Committee must receive consents from a majority of the Company's
outstanding Shares in order for the Proposals to be adopted, a broker
non-vote or direction
38
<PAGE>
to withhold authority to vote on the blue card will have the same effect as
a "no" vote with respect to the Committee's solicitation. Broker non-votes,
abstaining or not returning a signed consent will have the same effect as
withholding consent to the proposed actions. The Committee urges each
stockholder to ensure that the record holder of his or her Shares marks,
signs, dates and returns the enclosed consent as soon as possible.
39
<PAGE>
EXHIBIT 99.2
[FRONT OF FORM OF CONSENT CARD]
PRELIMINARY COPY--SUBJECT TO COMPLETION
WRITTEN CONSENT BY STOCKHOLDERS OF
HARMONY HOLDINGS, INC.
TO ACTION WITHOUT A MEETING
Solicited by
THE LAKEN COMMITTEE
Unless otherwise indicated below, the undersigned, a stockholder of
record of Harmony Holdings, Inc., a Delaware corporation (the "Company"), on
__________, __, 1997 (the "Record Date"), hereby consents pursuant to Section
228(a) of the Delaware General Corporation Law with respect to all shares of
common stock, par value $0.01 per share (the "Common Stock"), of the Company
held by the undersigned to the taking of each of the following actions without a
meeting, without prior notice and without a vote:
THE COMMITTEE STRONGLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY
CONSENT TO ALL OF THE FOLLOWING RESOLUTIONS. EACH OF THE RESOLUTIONS REQUIRES
THE APPROVAL OF A MAJORITY OF THE COMMON STOCK OUTSTANDING ON THE RECORD DATE.
THIS CONSENT CARD IS CONTINUED ON THE REVERSE SIDE. PLEASE MARK, SIGN
AND DATE THIS CONSENT CARD ON THE REVERSE SIDE BEFORE RETURNING THIS CONSENT
CARD IN THE ENCLOSED ENVELOPE.
1.A. Fix the number of directors at THREE (3).
RESOLVED, that Section 1 of Article III of the By-Laws be amended to
read as follows:
40
<PAGE>
Section 1. Number of Directors; Terms. The number of Directors of
the corporation which shall constitute the whole Board of Directors shall be
THREE (3) unless and until changed from time to time by resolution of the Board
of Directors. Directors shall be elected annually by the stockholders except as
provided in Section 2 of this Article III and shall hold office until his
successor is duly elected and qualified or until he sooner dies, resigns, is
removed or becomes disqualified.
/ / CONSENTS / / CONSENT WITHHELD / / ABSTAIN
1.B. Require that any vacancies created by the removal of a director
may be filled only by stockholder action.
RESOLVED, that Section 2 of Article III of the By-Laws be amended to
read as follows:
Section 2. Vacancies. Subject to the provisions of the
certificate of incorporation, vacancies in the Board of Directors other than
vacancies created by the removal of directors by the stockholders may be filled
by a majority of the Directors then in office, though less than a quorum, or by
a sole remaining Director, and any Director so chosen shall hold office for the
remainder of the full term of the Director whose place he has been elected to
fill or of the class for which he has been designated and until his successor is
duly elected and shall qualify. If there are no Directors in office, then an
election of Directors may be held in the manner provided by statute.
Further subject to the provisions of the certificate of incorporation,
a vacancy or vacancies in the Board of Directors shall be deemed to exist in
case of the death, resignation or removal of any Director, or if the
stockholders fail at any annual or special meeting of stockholders at which any
Director or Directors are required to be elected to elect the full authorized
number of Directors to be voted for at that meeting, or if there are newly
created Directorships resulting from any increase in the authorized numbers of
Directors.
A vacancy or vacancies created by the removal of one or more directors
may only be filled by action of the holders of shares representing a majority of
the shares of the corporation's common stock then outstanding and entitled to
vote and such action may be taken at the same annual or special meeting, or by
means of the same written consent or consents, of stockholders at or by which
such director or directors were removed or may be taken at a different meeting
or by a separate written consent or consents.
/ / CONSENTS / / CONSENT WITHHELD / / ABSTAIN
1.C. Authorize the stockholders to remove any or all directors, with or
without cause,
41
<PAGE>
at any meeting or by written consent of a majority of the stockholders.
RESOLVED, that Section 12 of Article III of the By-Laws be amended to
read as follows:
Section 12. Removal of Directors. Subject to the provisions of the
certificate of incorporation and except as may otherwise be provided by the
General Corporation Law, the entire Board of Directors or one or more Directors
may be removed from office with or without cause by the affirmative vote of the
holders of a majority of the stock of the corporation entitled to vote at an
election of Directors. Such vote may be taken at any annual meeting or special
meeting of stockholders duly called for the purpose of the removal of such
director or directors or by action of the stockholders by written consent.
/ / CONSENTS / / CONSENT WITHHELD / / ABSTAIN
1.D. Delete any provision of the Company's By-Laws, and delete any
amendment to the Company's By-Laws, in each case adopted on or after July 22,
1997, and prior to the Effective Time.
RESOLVED, that any provision of the Company's By-Laws, and any
amendment to the Company's By-Laws, in each case adopted on or after July 22,
1997 and on or prior to the date that written unrevoked consents of the holders
of a majority of the shares of Common Stock outstanding at the close of business
on the Record Date are delivered to the Company be deleted.
/ / CONSENTS / / CONSENT WITHHELD / / ABSTAIN
2. Removal of the incumbent directors of the Company.
RESOLVED, that the following incumbent directors of the Company are
hereby removed from such directorships without cause: Christopher T. Dahl,
William E. Cameron, Richard W. Perkins and William Toles, and any other person
elected by the incumbent directors to fill any vacancy or newly created
directorship.
/ / CONSENTS / / CONSENT WITHHELD / / ABSTAIN
INSTRUCTION: To consent, withhold consent or abstain from consenting to
the removal of all the above-named directors and any other person who is a
director of the Company at the time the action taken by this written consent
becomes effective, check the appropriate box above. IF YOU WISH TO CONSENT TO
THE REMOVAL OF CERTAIN OF THE ABOVE-NAMED DIRECTORS AND/OR CERTAIN OF THE
DIRECTORS NOT NAMED
42
<PAGE>
ABOVE WHO ARE DIRECTORS OF THE COMPANY AT THE TIME THE ACTION TAKEN BY THIS
WRITTEN CONSENT BECOME EFFECTIVE, BUT NOT ALL OF THEM, CHECK THE "CONSENTS" BOX
ABOVE AND WRITE THE NAME OF EACH PERSON YOU DO NOT WISH REMOVED IN THE FOLLOWING
SPACE:
-----------------------------------------------------------------
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS PROPOSAL, THE
UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL, EXCEPT THAT THE
UNDERSIGNED WILL NOT BE DEEMED TO CONSENT TO THE REMOVAL OF ANY INCUMBENT
DIRECTOR WHOSE NAME IS WRITTEN IN THE SPACE PROVIDED ABOVE.
3. Election of new directors to the Board.
RESOLVED, that the following persons are hereby elected directors of
the Company to hold office until their successors are elected and qualified:
Glenn B. Laken, Steven B. Nagler and Donald Sliter (the "Nominees").
/ / CONSENTS / / CONSENT WITHHELD / / ABSTAIN
INSTRUCTION: TO CONSENT, WITHHOLD CONSENT OR ABSTAIN FROM CONSENTING TO
THE ELECTION OF ALL THE ABOVE-NAMED PERSONS, CHECK THE APPROPRIATE BOX ABOVE. IF
YOU WISH TO CONSENT TO THE ELECTION OF CERTAIN OF THE ABOVE-NAMED PERSONS, BUT
NOT ALL OF THEM, CHECK THE "CONSENTS" BOX ABOVE AND WRITE THE NAME OF EACH SUCH
PERSON YOU DO NOT WISH ELECTED IN THE FOLLOWING SPACE:
----------------------------------------------------------------
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS PROPOSAL, THE
UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL, EXCEPT THAT THE
UNDERSIGNED WILL NOT BE DEEMED TO CONSENT TO THE ELECTION OF ANY NOMINEE WHOSE
NAME IS WRITTEN IN THE SPACE PROVIDED ABOVE.
The invalidity, illegality or unenforceability of any particular
provision of this Consent shall be construed in all respects as if such invalid,
illegal or unenforceable provision were omitted without affecting the validity,
legality or enforceability of the remaining provisions hereof.
IN THE ABSENCE OF DISSENT OR ABSTENTION BEING INDICATED ABOVE,
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<PAGE>
THE UNDERSIGNED HEREBY CONSENTS TO EACH ACTION LISTED ABOVE.
[REVERSE OF FORM OF CONSENT CARD]
Please sign exactly as name appears on stock certificates or
on label affixed hereto. When shares are registered in more
than one name, all such persons should sign. When signing as
attorney, executor, administrator, trustee, guardian,
corporate officer, partner, etc., sign in official capacity,
giving full title as such. If a corporation, please sign in
the full corporate name by president or other authorized
officer. If a partnership, please sign in the partnership
name by authorized person.
DATED:__________________________________
________________________________________
Signature
________________________________________
Signature, if held jointly
________________________________________
Title or Authority (if applicable)
IN ORDER FOR YOUR CONSENT TO BE VALID, IT MUST BE DATED. PLEASE SIGN,
DATE AND MAIL YOUR CONSENT PROMPTLY IN THE POSTAGE-PAID ENVELOPE ENCLOSED. THE
FAILURE TO EXECUTE A CONSENT WILL HAVE THE SAME EFFECT AS WITHHOLDING A CONSENT.
44
