-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WqPn79UFeg8Xv83l2IImFjN75oVKCtRRxN+SvrpyCovDzHOp3KxBUZBetp8przd9 xWJeHpGxjppHIZIulzbHcQ== 0000944209-96-000152.txt : 19960724 0000944209-96-000152.hdr.sgml : 19960724 ACCESSION NUMBER: 0000944209-96-000152 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19960719 EFFECTIVENESS DATE: 19960807 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARMONY HOLDINGS INC CENTRAL INDEX KEY: 0000878246 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 954333330 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-08525 FILM NUMBER: 96597096 BUSINESS ADDRESS: STREET 1: 1990 WESTWOOD BLVD STREET 2: SUITE 310 CITY: LOS ANGELES STATE: CA ZIP: 90025-4676 BUSINESS PHONE: 3104467700 MAIL ADDRESS: STREET 1: 1990 WESTWOOD INC CITY: LOA ANGLES STATE: CA ZIP: 90025 S-8 1 FORM S-8/ STOCK OPTION PLAN DATED 7-18-96 As filed with the Securities and Exchange Commission on July 19, 1996 Registration No. 333-_______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________________ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Containing a Reoffer Prospectus on Form S-3 _______________________________ HARMONY HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 95-4333330 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification Number) 1990 WESTWOOD BOULEVARD, SUITE 310 LOS ANGELES, CALIFORNIA 90025-4676 (Address of Principal Executive Offices) (Zip Code) STOCK OPTION PLAN (Full Title of the Plans) HARVEY BIBICOFF CHAIRMAN OF THE BOARD OF DIRECTORS 1990 WESTWOOD BOULEVARD, SUITE 310 LOS ANGELES, CALIFORNIA 90025-4676 (Name and Address of Agent for Service) (310) 446-7700 (Telephone Number, including Area Code, of Agent for Service) The Commission is requested to send copies of all notices and other communications to: MARK E. EZELL, ESQ. HASKELL SLAUGHTER & YOUNG, L.L.C. 1200 AMSOUTH/HARBERT PLAZA 1901 SIXTH AVENUE NORTH BIRMINGHAM, ALABAMA 35203 TEL: (205) 251-1000 FAX: (205) 324-1133 _________________________ THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IMMEDIATELY UPON FILING WITH THE SECURITIES AND EXCHANGE COMMISSION, AND SALES OF THE REGISTERED SECURITIES WILL THEREAFTER BE EFFECTED UPON OPTION EXERCISES UNDER THE STOCK OPTION PLAN (THE "PLAN"), OF WHICH 863,200 SHARES OF COMMON STOCK ARE AVAILABLE FOR FUTURE GRANT UNDER THE PLAN. CALCULATION OF REGISTRATION FEE
============================================================================================================== Proposed Maximum Proposed Maximum Title of Securities Amount to be Offering Price Aggregate Offering Amount of to be Registered Registered(1) Per Share(1) Price Registration Fee - --------------------------------------------------------------------------------------------------------------- Common Stock, par value $.01 150,800 $ 1.50 (3) $ 226,200 $ 78.00 per share shares (2) - --------------------------------------------------------------------------------------------------------------- Common Stock, par value $.01 863,200 per share shares (4) $1.9375 (5) $1,672,450 $ 568.63 - --------------------------------------------------------------------------------------------------------------- Common Stock, par value $.01 650,000 per share shares (6) $ 2.357 (7) $1,532,050 $ 528.29 - --------------------------------------------------------------------------------------------------------------- Total 1,664,000 shares -- $3,430,700 $1,174.92 - ---------------------------------------------------------------------------------------------------------------
(1) For the sole purpose of calculating the registration fee, the number of shares to be registered under this Registration Statement has been divided into three subtotals. (2) Shares issuable upon the exercise of options heretofore granted under the Plan. (3) Exercise price for options heretofore granted under the Plan. (4) Shares issuable upon exercise of options not yet granted under the Plan. (5) Computed in accordance with Rule 457(h) solely for the purpose of calculating the registration fee. The computation is based upon the last sale price of the Common Stock on the Nasdaq SmallCap Market on July 12, 1996, given that the price at which options to be granted in the future may be exercised is not currently determinable. (6) Shares underlying outstanding options under the Plan granted to affiliates of the Company. (7) Computed in accordance with Rule 457(h) solely for the purpose of calculating the registration fee. The computation is based on the weighted average exercise price at which the options whose exercise will result in the issuance of the shares being registered may be exercised and the actual exercise price of such shares previously issued under the Plan. APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE. PROSPECTUS HARMONY HOLDINGS, INC. 650,000 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE This Prospectus relates to the resale of up to 650,000 shares (the "Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of Harmony Holdings, Inc., a Delaware corporation (the "Company"), which may be offered hereby from time to time by any or all of the selling stockholders named herein (the "Selling Stockholders") for their own benefit. The Common Stock of the Company is quoted on the National Association of Dealers Automatic Quotation System ("Nasdaq") SmallCap Market. None of the Shares offered pursuant to this Prospectus have been registered under the Securities Act of 1933, as amended (the "Act"), prior to the filing of the Registration Statement of which this Prospectus is a part. _________________________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. _________________________ The Shares may be offered and sold by the Selling Stockholders directly or through broker-dealers designated from time to time. The Shares may be sold from time to time in one or more transactions at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at prices determined on a negotiated or competitive bid basis. Shares may be sold through a broker-dealer acting as agent or broker for a Selling Stockholder, or to a broker-dealer acting as principal. In addition to sales under this Prospectus, the Selling Stockholders may also effect sales of the Shares covered by this Prospectus pursuant to Rule 144, promulgated under the Act. These securities will be sold at market prices prevailing at the time of sale or at negotiated prices. All of the foregoing transactions will be made without payment of any underwriting commissions or discounts, other than the customary brokers' fees normally paid in connection with such transactions. With respect to expenses of issuance and distribution, the Company will pay the costs of preparation, reproduction and distribution of this Prospectus and any Registration Statement containing this Prospectus, any filing fee set forth in such Registration Statement and any related accountants' fees and expenses (all of which individually and in total are expected to be minimal) and the Selling Stockholders will bear other such expenses, if any, none of which are presently susceptible of reasonable estimation. The Company will receive no proceeds from the sale of these securities pursuant to this Prospectus. This Prospectus also relates to such additional shares as may be issued to the Selling Stockholders because of future stock dividends, stock distributions, stock splits or similar capital readjustments. The Shares have not been registered for sale under the securities law of any state or jurisdiction as of the date of this Prospectus. Brokers or dealers effecting transactions in the Shares should confirm the existence of any exemption from registration or the registration thereof under the securities laws of the states in which such transactions occur. THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS". _________________________ The date of this Prospectus is July 18, 1996. 1 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files periodic reports, proxy statements and other information (including the Registration Statement containing this Prospectus) with the Securities and Exchange Commission (the "Commission"), all of which may be inspected and copied at the public reference facilities maintained by the Commission, Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the following Regional Offices of the Commission: New York Regional Office, Seven World Trade Center, 13th Floor, New York, New York 10048 and Chicago Regional Office, Suite 1400, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60601. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is listed on the Nasdaq SmallCap Market, and the reports, proxy statements and certain other information filed by the Company may be obtained by calling the Nasdaq Public Reference Room Disclosure Group at (800) 638-8241 or (202) 728 - -8298. The Prospectus does not contain all of the information set forth in the Registration Statement, of which this Prospectus is a part, which the Company has filed with the Commission pursuant to the Act. For further information with respect to the Company and the securities offered hereby, reference is made to the Registration Statement, including the exhibits filed as part thereof, copies of which can be inspected at, or obtained at prescribed rates from, the Public Reference Section of the Commission at the address above set forth. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the Commission are not necessarily complete, and in each instance, reference is made to the copy of such document so filed. Each such statement is qualified in its entirety by such reference. Additional updating information with respect to the Company may be provided in the future by means of appendices, or supplements, to this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon written or oral request of such persons, a copy of any and all of the information that has been incorporated by reference in this Prospectus and any Registration Statement containing this Prospectus (not including exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference in the information that this Prospectus and any Registration Statement containing this Prospectus incorporates). Such requests should be made to Terri MacInnis, 1990 Westwood Boulevard, Suite 310, Los Angeles, California 90025-4676 (telephone (310) 446-7707), which address and telephone number are those of the Company's principal executive offices. 2 RISK FACTORS THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH DEGREE OF RISK. PRIOR TO MAKING AN INVESTMENT DECISION WITH RESPECT TO SUCH SECURITIES, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, ALONG WITH THE OTHER MATTERS DISCUSSED IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS: Operating Losses; Accumulated Deficit; Uncertainty of Future Results. The Company has reported losses for four of the last five fiscal years. These losses have ranged from a net loss of $3,206,097 for the fiscal year ended June 30, 1993, to a net loss of $685,898 for the fiscal year ended June 30, 1995. The Company incurred a net loss of $1,588,702 for the nine months ended March 31, 1996. These losses, incurred over a number of years, have resulted in an accumulated deficit of $7,945,162 at March 31, 1996. Management realizes that it has been too slow to react meaningfully to competition and negative industry trends. See "Risk Factors--Competition and Negative Industry Trends". While the Company can make no assurances that its future operations will result in consolidated profitable operations, management is actively pursuing ways to reduce both selling and production costs so as to realize the financial benefits to be gained from the Company's demonstrated revenue growth. Lack of Liquidity; Need for Additional Financing. Because of the extended period during which the Company has experienced operating losses, the Company has lacked liquidity for an extended period of time. As a result, the Company may need additional financing to continue its operations at their present levels. Such additional financing may be accomplished through one or more offerings of equity securities or debt instruments, or a combination thereof. There can be no guarantee that such additional financing (if needed) will be available to the Company at the times, in the amounts or on acceptable terms, when needed. Revenues Dependent on Commercial Directors. In the television commercial production industry, commercial production contracts are awarded based on many factors, including the expertise, reputation and creative vision of the directors associated with the television commercial production company. As a result, the Company's revenues are dependent upon its ability to attract and retain established directors of commercials. Most of the directors who are associated with the Company receive monthly draws against the directors' compensation for shooting commercials. The monthly draws equal the minimum guaranteed compensation payable to such directors. Although the draws are recoverable by the Company out of compensation otherwise payable to such directors, such directors are not obligated to repay such draws, if their fees for commercials produced do not exceed the monthly draws that have been paid. Consequently, the Company is obligated to provide a reduced level of compensation to these directors whether or not they are directing commercials. During the fiscal year ended June 30, 1995, the Company paid $1,192,804 in such draws to these directors, which sum exceeded the directors' fees earned by such directors by $65,039. The payment of these draws in excess of fees earned has increased the Company's losses. In addition, all of the Company's directors are free to provide services to third parties outside the area of television commercials. As a result, the Company's revenues could also be adversely affected by the unavailability of its directors due to their outside commitments. However, the Company's agreements with its directors prohibit the director from performing any service for television commercial production for any outside company or from performing services in connection with theatrical films or television episodes, if such services interfere with the director's services to the Company. The impact of such potential unavailability is difficult to quantify. 3 Competition and Negative Industry Trends. The Company operates in a highly competitive environment. In recent years the "mark-up" charged by the Company and other television production companies has been reduced due to increased competition in the industry and tighter advertising budgets. As a result, profit margins have declined and competition has increased. There can be no assurance that these trends will be reversed or that the Company will successfully adapt to the changes in the industry. Revenues Affected by Economy and Other Factors. The Company's business is adversely affected by economic uncertainty and to a lesser extent recessionary times as advertisers tend to reduce their advertising budgets during such periods. In addition, the Company's business can be adversely affected by strikes or threatened strikes by labor unions in the entertainment industry. Effect of Outstanding Options and Warrants. The Class C Warrants and outstanding options granted to the Company's employees and others and the warrants issued in connection with certain private placements provides the holders thereof with an opportunity to profit from a rise in the market price of the Company's Common Stock, with a resulting dilution in the interests of the other stockholders. As of February 22, 1996, 2,998,223 shares of Common Stock (or an additional 52.6% of the outstanding Common Stock) are issuable upon the exercise of such securities. Further, the terms on which the Company may obtain additional financing during the respective terms of these securities may be adversely affected by the existence of the Class C Warrants and such stock options and warrants. The holders of the Class C Warrants, and such stock options and warrants, may exercise them at a time when the Company might be able to obtain additional capital through a new offering of securities or other forms of financing on terms more favorable than those provided by the Class C Warrants and such stock options and warrants. No Dividends. The Company has never paid cash dividends on its Common Stock and anticipates that for the foreseeable future all earnings, if any, will be retained for the operation and expansion of the Company's business. Revolving Line of Credit. On May 10, 1995, the Company entered into a $3,000,000 revolving line of credit agreement with a bank. As of April 30, 1996, the Company had $1,000,000 outstanding under the line. In certain instances, the Company has not been in compliance with certain financial covenants contained in the line of credit agreement, which instances of noncompliance have been waived by the bank. There can be no assurance that future failures to comply with the requirements of such line of credit agreement (if any) will be waived by the bank. In the event of a default under the line of credit agreement, the bank has the contractual right to accelerate the repayment of all amounts then owed by the Company. 4 SELLING STOCKHOLDERS This Prospectus relates to the possible sale of Shares received in connection with the exercise of options granted under the Company's Stock Option Plan by the Selling Stockholders (some of whom are affiliates of the Company) as well as shares received in connection with the exercise of options granted under various other "Employee Benefit Plans" as defined by Rule 405 promulgated under the Act. The following table shows the names of the Selling Stockholders who are affiliates of the Company, the number of Shares and percentage of outstanding shares of Common Stock of the Company beneficially owned by each of them as of May 1, 1996, and the number of Shares available for resale hereunder. The address for each of the Selling Stockholders in the table below is: 1990 Westwood Boulevard, Suite 310, Los Angeles, California 90025-4676.
NUMBER OF NUMBER OF PERCENTAGE OF SHARES SHARES COVERED NUMBER OF SHARES OUTSTANDING POSITION WITH BENEFICIALLY BY THIS TO BE HELD AFTER SHARES AFTER NAME COMPANY OWNED PROSPECTUS OFFERING OFFERING ======================================================================================================================= Bibicoff, Harvey Chairman of the 1225000 275000 950000 21.5% Board and Chief Executive Officer Rackohn, Brian Secretary and 50000 50000 0 ** Chief Financial Officer DeLeon, Larry President 50000 50000 0 ** Harmony Media, Inc. Oakes, Stephen President 50000 50000 0 ** Curious Pictures, Inc. Silver, Elizabeth President The 75000 75000 0 ** End, Inc. Miller, Jonathan Director and 100000 100000 0 ** President Harmony Pictures, Inc. Shuster, Harry Director 25000 25000 0 ** Berkowitz, Ivan Director 25000 25000 0 ======================================================================================================================= TOTAL -- 1600000 650000 950000 21.5% =======================================================================================================================
** Denotes less than one percent. 5 USE OF PROCEEDS The Company will receive no proceeds from the sale of the Shares sold by the Selling Stockholders pursuant to this Prospectus. PLAN OF DISTRIBUTION The Company has been advised by the Selling Stockholders that they intend to sell all or a portion of the Shares offered hereby from time to time in the over-the-counter market and that sales will be made at prices prevailing at the time of such sales. The Selling Stockholders may also make private sales directly or through a broker or brokers, who may act as agent or as principal. In connection with any sales, the Selling Stockholders and any brokers participating in such sales may be deemed to be underwriters within the meaning of the Act. Any broker-dealer participating in such transactions as an agent may receive commissions from the Selling Stockholders (and, if such broker acts as agent for the purchaser of such shares, from such purchaser). Usual and customary brokerage fees will be paid by the Selling Stockholders. Any broker- dealer may agree with the Selling Stockholders to sell a specified number of Shares at a stipulated price per share, and, to the extent such a broker-dealer is unable to do so acting as an agent for the Selling Stockholders, to purchase as principal any unsold Shares at the price required to fulfill the broker- dealer commitment to the Selling Stockholders. Broker-dealers who acquire Shares as principal may thereafter resell such Shares from time to time in transactions (which may involve crosses and block transactions and which may involve sales to and through other broker-dealers, including transactions of the nature described above) in the over-the-counter market, in negotiated transactions or otherwise at market prices prevailing at the time or sale or at negotiated prices, and in connection with such resales may pay to or receive from the purchasers of such Shares commissions computed as described above. The Company has advised the Selling Stockholders that the anti-manipulative Rules 10b-6 and 10b-7 under the Exchange Act may apply to sales in the market, has furnished the Selling Stockholders with a copy of these Rules and has informed them of the possible need for delivery of copies of this Prospectus. The Selling Stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the Shares against certain liabilities, including liabilities arising under the Act. Any commissions paid or any discounts or concessions allowed to any such broker-dealers, and, if any such broker-dealers purchase Shares as principal, any profits received on the resale of such Shares, may be deemed to be underwriting discounts and commissions under the Act. Upon the Company's being notified by the Selling Stockholders that any material arrangement has been entered into with a broker-dealer of the sale of Shares through a cross or block trade, a supplemental prospectus will be filed under Rule 424(C) under the Act, setting forth the name of the participating broker-dealer(s), the number of Shares involved, the price at which such Shares were sold by the Selling Stockholders, the commission paid or discounts or concessions allowed by the Selling Stockholders to such broker-dealer(s), and where applicable, that such broker-dealer(s) did not conduct any investigation to verify the information set out in this Prospectus. Any securities covered by this Prospectus which qualify for sale pursuant to Rule 144 under the Act may be sold under that Rule rather than pursuant to this Prospectus. 6 There can be no assurances that the Selling Stockholders will sell any or all of the shares of Common Stock offered hereunder. INTERESTS OF NAMED EXPERTS AND COUNSEL No named Expert or Counsel has an interest in the Company with a fair market value that exceeds $50,000. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents listed in (I) through (iv) below are incorporated by reference in this Prospectus. (i) The Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995, as filed with the Commission under the Exchange Act. (ii) The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, as filed with the Commission under the Exchange Act. (iii) The Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995, as filed with the Commission under the Exchange Act. (iv) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, as filed with the Commission under the Exchange Act. (v) The description of securities to be registered contained in the Registration Statement filed with the Commission on Form 8-A under the Exchange Act on July 12, 1991, including any amendment or reports filed for the purpose of updating such description. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the effective date of this Registration Statement and prior to the filing of a post-effective amendment indicating that all the securities offered hereby have been sold, or deregistering all such securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. 7 INDEMNIFICATION The Company's Restated Certificate of Incorporation, as amended (the "Certificate") and its By-laws provide for the elimination of Directors' liability for monetary damages arising from a breach of certain fiduciary obligations and for the indemnification of Directors, officers and agents to the full extent permitted by the Delaware General Corporation Law ("DGCL"). These provisions generally provide for indemnification in the absence of gross negligence or willful misconduct and cannot be amended without the affirmative vote of a majority of the outstanding shares of the Company's Common Stock entitled to vote thereon. Insofar as indemnification for liabilities arising under the Act may be permitted to Directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. - -------------------------------------------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THIS PROSPECTUS RELATES OR AN OFFER TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. 8 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE There are hereby incorporated by reference in this Registration Statement, and specifically made a part hereof, the following documents heretofore filed by Harmony Holdings, Inc. (the "Company") with the Securities and Exchange Commission (the "Commission"), pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"): (a) The Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995, as filed with the Commission under the Exchange Act. (b) The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, as filed with the Commission under the Exchange Act. (c) The Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995, as filed with the Commission under the Exchange Act. (d) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, as filed with the Commission under the Exchange Act. (e) The description of securities to be registered contained in the Registration Statement filed with the Commission on Form 8-A under the Exchange Act on July 12, 1991, including any amendment or reports filed for the purpose of updating such description. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the effective date of this Registration Statement and prior to the filing of a post-effective amendment indicating that all the securities offered hereby have been sold, or deregistering all such securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. ITEM 4. DESCRIPTION OF SECURITIES The class of securities offered pursuant to this Registration Statement, the Company's Common Stock, is registered under Section 12(g) of the Exchange Act. II-1 ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL No Named Expert or Counsel has an interest in the Company with a fair market value that exceeds $50,000. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS The DGCL permits a corporation to indemnify officers, directors, employees and agents for actions taken in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation, and with respect to any criminal action, which they had no reasonable cause to believe was unlawful. The DGCL provides that a corporation may advance expenses of defense (upon receipt of a written undertaking to reimburse the corporation if indemnification is not appropriate) and must reimburse a successful defendant for expenses, including attorneys' fees, actually and reasonably incurred, and permits a corporation to purchase and maintain liability insurance for its directors and officers. The DGCL provides that indemnification may not be made for any claim, issue or matter as to which a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation, unless and only to the extent a court determines that the person is entitled to indemnity for such expenses as the court deems proper. Section 102(b)(7) of the DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breach or alleged breach of directors' fiduciary "duty of care". Section 102(b)(7) has no effect on a director's liability for: (a) breach of the director's duty of loyalty; (b) acts or omissions not in good faith or involving intentional misconduct or knowing violations of law; (C) a corporation's illegal payment of dividends; and (d) approval of any transaction from which the director derives an improper personal benefit. Pursuant to this Delaware statute, Article VII of the Company's Restated Certificate of Incorporation provides that, with certain exceptions, no director of the Company shall be liable to the company for monetary damages as a result of certain breaches of his fiduciary duties as a director. This limitation of liability provision does not eliminate a stockholder's right to seek nonmonetary, equitable remedies in order to redress action taken by directors. The Company's By-laws provide that each person who is involved in any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, will be indemnified by the Company to the full extent permitted by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted prior to such amendment) or by other applicable laws then in effect. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. II-2 ITEM 8. EXHIBITS
Exhibit Number Description of Exhibit - -------------- ---------------------- 4-1 Stock Option Plan of Harmony Holdings, Inc., filed as Exhibit 10.1 to the Company's Registration Statement on Form S-1 (Registration No. 33-42193), is hereby incorporated by reference. 4-2 Form of Incentive Stock Option Agreement, filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1 (Registration No. 333-2648), is hereby incorporated by reference. 4-3 Form of Non-Qualified Stock Option Agreement, filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1 (Registration No. 333-2648), is hereby incorporated by reference. 5 Opinion of Haskell Slaughter & Young, L.L.C. 10-1 Settlement Agreement and Mutual General Release of All Claims, dated February 12, 1996, between the Company and Gary Horowitz. 10-2 Consulting Agreement, dated February 12, 1996, between the Company and Gary Horowitz. 10-3 Stock Option Agreement, dated February 12, 1996, between the Company and Gary Horowitz. 23-1 Consent of BDO Seidman, LLP. See pages immediately following signature pages to this Registration Statement. 23-2 Consent of Coopers & Lybrand, LLP. See pages immediately following signature pages to this Registration Statement. 23-3 Consent of Haskell Slaughter & Young, L.L.C. (contained in the opinion of counsel filed as Exhibit 5 to this Registration Statement). 28 Power of Attorney (set forth on the signature page of this Registration Statement).
ITEM 9. UNDERTAKINGS The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; II-3 (2) That, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or, otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, State of California, on July 19, 1996. HARMONY HOLDINGS, INC. By /s/ Harvey Bibicoff --------------------------- Harvey Bibicoff Chairman of the Board and Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Harvey Bibicoff and Brian Rackohn, and each or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statements relating to the offering to which this Registration Statement relates, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Harvey Bibicoff Chairman of the Board July 19, 1996 - ---------------------- and Chief Executive Officer Harvey Bibicoff /s/ Brian Rackohn Secretary and Chief Financial Officer July 19, 1996 - ----------------------- (Principal Financial and Accounting Officer) Brian Rackohn /s/ Harry Shuster Director July 19, 1996 - ----------------------- Harry Shuster /s/ Ivan Berkowitz Director July 19, 1996 - ----------------------- Ivan Berkowitz
II-5 EXHIBIT INDEX
EXHIBIT PAGE NUMBER DESCRIPTION OF EXHIBIT NUMBER - ------- ---------------------- ------ 4-1 Stock Option Plan of Harmony Holdings, Inc., filed as Exhibit 10.1 to the Company's Registration Statement on Form S-1 (Registration No. 33-42193), is hereby incorporated by reference. 4-2 Form of Incentive Stock Option Agreement, filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1 (Registration No. 333-2648), is hereby incorporated by reference. 4-3 Form of Non-Qualified Stock Option Agreement, filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1 (Registration No. 333-2648), is hereby incorporated by reference. 5 Opinion of Haskell Slaughter & Young, L.L.C. 9 10-1 Settlement Agreement and Mutual General Release of All 11 Claims, dated February 12, 1996, between the Company and Gary Horowitz. 10-2 Consulting Agreement, dated February 12, 1996, between 15 the Company and Gary Horowitz. 10-3 Stock Option Agreement, dated February 12, 1996, 17 between the Company and Gary Horowitz. 23-1 Consent of BDO Seidman, LLP. See pages immediately 6 following signature pages to this Registration Statement. 23-2 Consent of Coopers & Lybrand, LLP. See pages 7 immediately following signature pages to this Registration Statement. 23-3 Consent of Haskell Slaughter & Young, L.L.C. (contained in the opinion of counsel filed as Exhibit 5 to this Registration Statement). 28 Power of Attorney (set forth on the signature page of this Registration Statement).
EX-5 2 OPINION OF HASKELL SLAUGHTER & YOUNG, L.L.C. LAW OFFICES Haskell Slaughter & Young, L.L.C. 1200 AMSOUTH/HARBERT PLAZA 1901 SIXTH AVENUE NORTH BIRMINGHAM, ALABAMA 35203-2618 FACSIMILE (205) 324-1133 TELEPHONE (205) 251-1000 MONTGOMERY OFFICE ----------------- 305 SOUTH LAWRENCE STREET MONTGOMERY, ALABAMA 36104 POST OFFICE BOX 4660 MONTGOMERY, ALABAMA 36103-4660 FACSIMILE (334) 264-7945 TELEPHONE (334) 265-8573 EXHIBIT 5 WYATT RUSHTON HASKELL WILLIAM M. SLAUGHTER FRANK M. YOUNG, III BENJAMIN B. SPRATLING III THOMAS T. GALLION, III ROBERT D. SHATTUCK, JR. E. ALSTON RAY JAMES C. HUCKABY, JR. MARK EDWARD EZELL STEPHEN L. POER THOMAS E. REYNOLDS BEVERLY POOLE BAKER ROSS N. COHEN RICHARD H. WALSTON CONSTANCE A. CALDWELL GWEN L. WINDLE MICHAEL K.K. CHOY ------------------------- CARTER H. DUKES PAULA B. CARROLL R. SCOTT WILLIAMS F. HAMPTON McFADDEN, JR. JOHN W. SCOTT BARRY D. WOODHAM GEORGIA S. ROBERSON SUSAN E. KENNEDY REBECCA HIGGINS HUNT PLEASE REPLY TO: BIRMINGHAM July 19, 1996 Harmony Holdings, Inc. 1990 Westwood Boulevard, Suite 310 Los Angeles, California 90025-4676 RE: REGISTRATION STATEMENT ON FORM S-8 -- STOCK OPTION PLAN Gentlemen: We have served as counsel for Harmony Holdings, Inc., a Delaware corporation (the "Company"), in connection with the registration under the Securities Act of 1933, as amended, of an aggregate of 1,014,000 shares (the "Shares") of the Company's authorized Common Stock, par value $.01 per share, to be issued to participants of the Company's Stock Option Plan (the "Plan") and 650,000 shares of Common Stock, $.01 par value, which may be sold by the selling stockholders, pursuant to the Company's Registration Statement on Form S-8, containing a Reoffer Prospectus on Form S-3, relating thereto (the "Registration Statement"). This opinion is furnished to you pursuant to the requirements of Form S-8. In connection with this opinion, we have examined and are familiar with originals or copies (certified or otherwise identified to our satisfaction) of such documents, corporate records and other instruments relating to the incorporation of the Company and to the authorization and issuance of the Shares and the authorization and adoption of the Plan as we have deemed necessary and appropriate. Based upon the foregoing, and having regard for such legal considerations as we have deemed relevant, it is our opinion that: 1. The Shares have been duly authorized. 2. Upon issuance, sale and delivery of the Shares as contemplated in the Registration Statement and the Plan, the Shares will be legally issued, fully paid and nonassessable. We do hereby consent to the filing of this Opinion as an Exhibit to the Registration Statement. Very truly yours, HASKELL SLAUGHTER & YOUNG, L.L.C. By /s/ Mark Ezell ----------------------- Mark Ezell EX-10.1 3 SETTLEMENT AGREEMENT DATED 2-12-96 EXHIBIT 10.1 SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE OF ALL CLAIMS THIS SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE OF ALL CLAIMS ("Release") is made as of February 12, 1996, in the County of Los Angeles, State of California, by and between Harmony Holdings, Inc., a Delaware corporation ("Harmony") and Gary Horowitz ("Horowitz"), whereby each of the parties, pursuant to Section 1541 of the California Civil Code, extinguishes their rights and claims against the other as herein enumerated. In consideration of the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows: 1. Release by Harmony. Harmony, on behalf of itself, and on behalf of ------------------ its directors, officers, agents, principals, employees, attorneys, assigns, parents, subsidiaries, affiliates, divisions, predecessors and successors (collectively "Agents of Harmony") hereby fully and forever releases and discharges Horowitz, and his agents, principals, employees, attorneys, heirs, executors, administrators, affiliates and successors (collectively "Agents of Horowitz") from each, any and all claims, demands, duties, debts, liabilities, liens, obligations, acts, omissions and causes of action, of every type, nature, kind or description, known or unknown, which Harmony and/or the Agents of Harmony might or may hold or claim to exist against Horowitz and/or the Agents of Horowitz, arising out of or in connection with any contract, transaction, act, cause, matter, thing or representation existing at the time of execution hereof, including but not limited to (I) the prior employment of Horowitz, (ii) the termination letter, dated December 19, 1996, terminating Horowitz' employment with Harmony and (iii) the subject matter of the Arbitration; provided, however, that this Release shall not release Horowitz or the Agents of Horowitz from any obligations created in this Release or in that certain Consulting Agreement and Stock Option Agreement, dated as of the date hereof ("Option Agreement"), a photocopy of which is attached hereto as Exhibit "A" and incorporated herein by this reference. Horowitz shall forthwith prepare and file any and all documents that Harmony or the American Arbitration Association may reasonably request in order to evidence the complete and final settlement of the Arbitration, with prejudice. 2. Release by Horowitz. Horowitz, on behalf of himself, and on behalf of ------------------- the Agents of Horowitz, hereby fully releases and discharges Harmony and the Agents of Harmony, from each, any and all claims, demands, duties, debts, liabilities, liens, obligations, acts, omissions and causes of action, of every type, nature, kind or description, known or unknown, which Horowitz and/or the Agents of Horowitz might or may hold or claim to exist against Harmony and/or the Agents of Harmony, or any shareholders of Harmony who did communicate or whom Horowitz has alleged communicated, directly or indirectly, with any of the directors or officers of Harmony regarding the decision to terminate Horowitz' employment with Harmony, arising out of or in connection with any contract, transaction, act, cause, matter, thing or representation existing at the time of execution hereof, including but not limited to (I) the prior employment of Horowitz, (ii) the termination letter, dated December 19, 1996, terminating Horowitz' employment with Harmony and (iii) the subject matter of the Arbitration; provided, however, that this Release shall not release Harmony or the Agents of Harmony from any obligations created in this Release or in the Option Agreement. 3. Release of Unknown Claims. Each party expressly acknowledges that he/ ------------------------- she/it may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such claims, demands, duties, debts, liabilities, liens, obligations, acts, omissions or causes of action and agrees that this Release shall be and remain effective in all respects notwithstanding any such different or additional facts. 4. Civil Code Section 1542 Waiver. Each party expressly acknowledges an ------------------------------ awareness of the provisions of California Civil Code Section 1542, and understands the significance and consequences of waiving same, and does hereby expressly waive any and all rights each may have under such Section or any similar law of any State or territory of the United States, which, for purposes of demonstrating each party's intent to so waive, is set forth in full as follows: " 1542. General Release; Extent ----------------------- A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." By virtue of each party's specific waiver of the above-quoted Section, each party hereby assumes full responsibility for and does execute this Release. 5. Voluntary Execution. Each party expressly acknowledges that he/she/it ------------------- has carefully read this Release and is completely familiar with and understands each and every provision hereof, that this Release is fair and just in all of its particulars, and that he/she/it enters into, executes and accepts this Release freely and voluntarily, without reliance upon any statements, representations, promises, covenants or inducements made by the other, or any of the other's representatives, except as may be provided in this Release or in the Option Agreement. 6. No Assignment of Claims. Each party represents and warrants that he/ ----------------------- she/it has not heretofore assigned or transferred, or purported to assign or transfer, to any person or entity whatsoever any claim, demand, duty, debt, liability, lien, obligation, action or cause of action herein released. Each party agrees to indemnify and hold the other harmless from and against any claim, demand, duty, debt, liability, lien, obligation, action, cause of action, cost and expense (including but not limited to attorneys' fees) asserted against or imposed upon or incurred by the other party based on, arising out of or in connection with any such assignment or transfer or purported assignment or transfer. 7. Cancellation of Agreements; Entire Agreement. All prior agreements -------------------------------------------- and understandings between the parties, written and oral and including but not limited to all of the agreements attached as Exhibits to Horowitz's Demand for Arbitration in the Arbitration, are hereby acknowledged to be cancelled, voided and of no force or effect whatsoever. Any and all existing option or warrants (other than the Option Agreement) that Horowitz may hold or claim to hold with respect to Harmony are hereby cancelled, voided and of no force or effect. This Release, the Consulting Agreement and the Option Agreement constitute the entire agreement and understanding between the parties concerning the subject matter hereof, and supersede and replace all prior negotiations, proposed agreements and agreements, written and oral, relating to the subject matter hereof. 8. Options. Concurrent with the execution and delivery of this Release, ------- Harmony and Horowitz shall enter into the Option Agreement. 9. Liability Denied. Each party acknowledges and agrees that this ---------------- Release affects the claims of each party against the other party which were denied and contested by each other and that nothing contained in this Release shall be construed as an admission of liability by or on behalf of them, by whom liability is expressly denied. 10. California Law. This Release shall be interpreted, construed and -------------- governed by, in accordance with and consistent with the laws of the State of California, which shall apply in all respects, including statutes of limitation, to any disputes or controversies arising out of or pertaining to this Release. 11. Counterparts. This Release may be executed in any number of ------------ counterparts, each of which shall be deemed an original but all of which, when taken together, shall constitute one and the same document. 12. Grammar. Whenever required by the context hereof, the singular shall ------- be deemed to include the plural, the plural shall be deemed to include the singular; the masculine, the feminine and neuter gender shall be deemed to include the others. 13. Additional Documents. Each party agrees that he/she/it shall execute -------------------- and, if appropriate, acknowledge any and all additional and other documents, checks, drafts, instruments and writings which may be necessary or reasonable to facilitate the purposes of this Release. 14. Binding Effect. All terms, conditions and covenants of this Release -------------- shall be applicable to and binding upon, and shall inure to the benefit of, each party's directors, officers, agents, principals, employees, attorneys, heirs, executors, administrators, assigns, parents, subsidiaries, affiliates, divisions, predecessors and successors. 15. Severability. In the event that any term, provision, condition or ------------ other portion of this Release is determined to be invalid, void or unenforceable by a forum of competent jurisdiction, the same shall not affect any other term, provision, condition or other portion hereof, and the remainder of this Release shall remain in full force and effect, as if such invalid, void or unenforceable term, provision, condition or other portion of this Release did not appear herein. 16. No Third Party Claim. Horowitz, on behalf of himself and on behalf of -------------------- the Agents of Horowitz, covenants, represents and warrants that he/she/it/they shall not hereafter assert any claim, liability, demand or cause of action against any third party or any director, officer, agent, principal, employee, attorney, heir, executor, administrator, assign, parent, subsidiary, affiliate, division, predecessor or successor of any third party for any contract, transaction, act, cause, matter, thing or representation involving or relating to any matter released by this Release. Horowitz shall indemnify and hold Harmony and the Agents of Harmony harmless from and against any and all claims, liabilities, demands, causes of action, costs and expenses (including but not limited to attorneys' fees) asserted against or imposed upon or incurred by Harmony or by the Agents of Harmony, based on, arising out of or in connection with the assertion by Horowitz of any such claim, liability, demand or cause of action against a third party. 17. Counsel. Each party does hereby expressly acknowledge that he/she/it ------- has been represented by independent counsel of his/her/its own choice in connection with this Release, the Consultation Agreement and Option Agreement and that he/she/it has been fully advised of his/her/its rights under applicable law and of the facts as ascertained by his/her/its counsel. 18. Attorneys' Fees. In the event that any suit in law or equity or --------------- arbitration is instituted to enforce or interpret any part of this Release or the Option Agreement, or to recover damages for breach thereof, the prevailing party shall be entitled to recover costs of suit incurred therein, and to also recover as an element of such costs (but not as damages) reasonable attorneys fees incurred by such prevailing party. For purposes of this Release and the Option Agreement, the term "prevailing party" shall be the party who is entitled to recover costs of suit, whether or not the proceeding is brought to final judgment or award. A party not entitled to recover costs shall not recover attorneys' fees. No sum of attorneys' fees shall be included in any computation of the amount of judgment or award for purposes of determining whether a party is entitled to recover costs or attorneys' fees. IN WITNESS WHEREOF, this Release has been executed and made effective as of the date and in the place first written above. HARMONY HOROWITZ By: ---------------------------- ------------------------ Harvey Bibicoff, Chairman Gary Horowitz EX-10.2 4 CONSULTING AGREEMENT DATED 2-12-96 Exhibit 10.2 CONSULTING AGREEMENT THIS AGREEMENT is entered into as of February 12, 1996 at Irvine, California between HARMONY HOLDINGS, INC. ("Company") and GARY HOROWITZ ("Horowitz"). RECITAL In consideration of the premises and the mutual covenants herein, the parties agree as follows: 1. Until April 15, 1997, Horowitz shall make himself available for the consulting services prescribed herein. 2. Horowitz shall consult with the Company, upon Company's requests, with respect to the customers and business of the Company. Horowitz shall be available for individual telephonic consulting not longer than three (3) hours per month, and not more frequently than once a month at mutually convenient time or times. 3. Horowitz' fees for services rendered under this Agreement shall be One Hundred Dollars ($100.00) per hour of consultation. As additional consideration for Horowitz' agreement to make himself available and to perform such services, the Company and Horowitz concurrently are entering into a Stock Option Agreement which provides for the grant of options to purchase 225,000 shares of Company's Common Stock. 4. Horowitz shall at all times be an independent contractor of the Company with respect to this Agreement and the consulting services contracted for herein. In no event shall Horowitz be considered the agent of the Company. The Company shall issue Internal Revenue Service Form 1099s with respect to any fees paid to Horowitz under this Agreement. 5. In the event that Horowitz' obligations to perform services under this Agreement conflict with any business opportunity Horowitz shall be presented with in the future, and, so long as Horowitz (a) pursues such business opportunity and (b) uses his reasonable efforts to resolve such conflict whenever it reasonably can be resolved, Horowitz shall be under no obligation to perform the services provided for hereunder while such conflict exists. 6. This Agreement is made in the State of California and shall be governed by and construed in accordance with the laws of said State. HARMONY HOLDINGS, INC. By: ____________________________ ________________________________ GARY HOROWITZ EX-10.3 5 STOCK OPTION AGREEMENT Exhibit 10.3 STOCK OPTION AGREEMENT This Stock Option Agreement ("Option Agreement") is made and entered into as of February 12, 1996, by and among HARMONY HOLDINGS, INC., a Delaware Corporation ("Company") and GARY HOROWITZ ("Horowitz") and HARVEY BIBICOFF ("Bibicoff"). 1. Grant of Option. The Company, wishing to provide Horowitz an ---------------- opportunity to purchase shares of the Company's Common Stock par value, $.01 per share ("Common Stock"), hereby grants to Horowitz and Horowitz hereby accepts a non-qualified option to purchase Two Hundred Twenty-Five Thousand (225,000) shares of Common Stock ("Option Shares") at a price of $1.50 per share ("Exercise Price") on the terms and conditions stated herein ("Option"). At the request of Horowitz, Company shall cooperate, in all reasonable ways, to allow Horowitz to exercise his Option through an established brokerage firm so as to enable Horowitz to effect a "cashless exercise" as that term is generally understood in the securities industry. 2. Term of Option. Horowitz shall be entitled to purchase the "vested" --------------- Option Shares, in whole or in part (subject to (S)6) at any time and from time to time prior to 5:00 p.m. Los Angeles time on May 1, 1997, after which this Option shall expire and terminate and be of no force or effect. 3. Non-Transferability of Option. Except as otherwise provided in this ----------------------------- Option Agreement and except for a transfer to Horowitz' heirs, executors or administrators upon the death of Horowitz, the Option shall not be transferred, assigned, pledged, hypothecated or otherwise disposed of in any way, whether by operation of law or otherwise. The Option is exercisable only by Horowitz, regardless of any community property interest therein of the spouse of Horowitz. Notwithstanding anything to the contrary contained herein, in the event that Bibicoff has paid the Put Price to Horowitz for each of the Remaining Option Shares in accordance with Section 4 of this Option Agreement, Bibicoff may thereafter transfer, assign, pledge, hypothecate or otherwise dispose of the Option in any way, whether by operation of law or otherwise. 4. Put. --- 4.1 Put. Only from 8:00 a.m. Los Angeles time on August 15, 1996 to --- 5:00 p.m. Los Angeles time on August 26, 1996 ("Put Period"), Horowitz shall have the right to put the Option to Bibicoff ("Put") by giving written notice of the Put to Bibicoff during the Put Period. Such written notice shall state that Horowitz exercises his right to require Bibicoff to purchase the Option as provided in this Section 4 and shall specify the number of Option Shares as to which the Put is exercised. Upon delivery by Horowitz of such notice, Bibicoff shall be unconditionally obligated to purchase the Option or portion thereof for the purchase price provided herein. Within five (5) business days after the delivery of said notice to Bibicoff, Bibicoff shall pay to Horowitz, by cashier's check or wire transfer, an amount equal to One Dollar and Fifteen and 556/1000 Cents ($1.15556) ("Put Price") for each of the Option Shares underlying the Option with respect to which Horowitz has exercised the Put and has not previously exercised the Option ("Remaining Option Shares"). 4.2 Call. If at any time up to and through the end of the Put ---- Period, the Common Stock trades at Two Dollars and Seventy-Five Cents ($2.75) per share or more ("Call Trigger"), Bibicoff shall have the right to purchase the Option or portion thereof by giving written notice thereof to Horowitz and specifying the number of Option Shares as to which the Call is exercised and, within seventy-two (72) hours of said notice, by delivering to Horowitz payment by cashier's check or wire transfer in an amount equal to the Put Price for each of the Remaining Option Shares. Upon delivery of such payment, Horowitz shall be deemed to have transferred the Option or portion thereof, and Bibicoff may exercise his rights under the Option or portion thereof at any time in accordance with this Option Agreement. By giving written notice thereof, Horowitz shall have the right to cancel Bibicoff's right to purchase under this Section 4.2 at any time through and including noon Los Angeles time of the day following the date on which Bibicoff shall have provided notice of the Call to Horowitz; provided that upon Horowitz' cancellation of Bibicoff's Call right pursuant hereto, Horowitz' right to Put the Option (or portion thereof, as the case may be) to Bibicoff, pursuant to Section 4.1, shall thereupon expire and terminate. 4.3 Security Interest. In order to secure Bibicoff's obligation to ----------------- pay Horowitz the aggregate Put Price as provided herein, Bibicoff grants to Horowitz a security interest in 200,000 shares of unrestricted Common Stock of Harmony Holdings, Inc. pursuant to a Pledge Agreement entered into concurrently herewith between Bibicoff and Horowitz. Upon the failure of Bibicoff to pay Horowitz the aggregate Put Price as provided herein when due, Horowitz shall have all of the rights and remedies provided by the Uniform Commercial Code in effect in California, specifically including the right to sell the collateral after such default at a private sale and the right to be a purchaser at such private sale. 5. Adjustments. ------------ 5.1 Subdivisions or Combinations. If, at any time during the term ----------------------------- hereof, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, immediately following the record date fixed for the determination of holders of Common Stock subject to such stock dividend, subdivision or split-up, the number of shares of Common Stock issuable upon exercise of this Option shall be increased and the Exercise Price, Put Price and Call Trigger shall be decreased in proportion to such increase in outstanding shares. If, at any time during the term hereof, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock, then immediately following the record date for such combination, the number of shares of Common Stock issuable upon exercise of this Option shall be decreased and the Exercise Price, Put Price and Call Trigger shall be increased in proportion to such decrease in the outstanding shares. 5.2 Reorganization; Merger; Sale of Assets. If any capital --------------------------------------- reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of the Company's assets to another corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, then lawful and adequate provision shall be made whereby the holder of this Option shall thereafter have the right to purchase and receive, upon exercise of this Option and payment of the Exercise Price then in effect in lieu of the shares of the Common Stock then subject to this Option such shares of stock, securities or assets to which a holder of Common Stock deliverable upon exercise of this Option would have been entitled on such capital reorganization, reclassification, consolidation, merger or sale if this Option had been exercised immediately before such event. In any such case appropriate provision shall be made with respect to the rights and interests of the holder of this Option to the end that the provisions hereof (including without limitation provisions for adjustments of the Exercise Price and of the number of shares purchasable upon the exercise of this Option) shall thereafter be applicable, as nearly as may be practicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. 5.3 Determination of Issuance Date in Certain Events. In case the ------------------------------------------------- Company shall not set a record date of the holders of its Common Stock with respect to a dividend or other distribution payable in Common Stock or a subdivision, combination, reorganization, merger or other event specified in this Section 5, then the record date shall be deemed to be the date of the issuance of the shares of Common Stock deemed to have been issued or the effective date of such subdivision, combination, reorganization, merger or other event (as the case may be) specified in this Section 5. 5.4 Minimum Adjustment. The Exercise Price shall be subject to ------------------- adjustment from time to time as hereinabove provided. No adjustment shall be made in an amount less than $.01 per share in the case of an adjustment to the Exercise Price or one-tenth (1/10) of a share in the case of an adjustment to the number of shares purchasable hereunder, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $.01 per share or more or one-tenth (1/10) of a share, as the case may be; provided, however, no fractional shares shall be issuable hereunder. The adjustment provisions hereunder shall similarly apply to successive combinations, stock splits, reorganizations, reclassification, consolidations and mergers. 6. Mechanics. This Option may be exercised by Horowitz by giving ---------- written notice of exercise to the Company specifying the number of shares to be purchased, which in no event shall be less than Twenty-Five Thousand (25,000) and the total purchase price, accompanied by payment of such purchase price, in cash or by cashier's check made payable to Company. Nothing herein shall be construed to require Horowitz to exercise the Option as a condition to the exercise of the Put and receipt of the Put Price. 7. Withholding Taxes. Company shall have the right to require Horowitz ------------------ to pay to Company any and all sums equal to any taxes which Company may be required to withhold by reason of the Option or the Option Shares. 8. Rights Before Issuance and Delivery. Horowitz shall not be entitled ------------------------------------ to the privileges of stock ownership with respect to the Option Shares unless and until such shares have been issued to Horowitz as fully paid shares. 9. Registration of Option Shares. The Company has prepared a Form S-8 ------------------------------ Registration Statement ("Registration Statement") to be filed with the U.S. Securities and Exchange Commission ("SEC") to register the shares underlying the Option. A copy of the Registration Statement has previously been delivered to Horowitz. The Registration Statement has been prepared and will be filed in accordance with the Rules and Regulations of the SEC. The Company shall transmit the Registration Statement for filing with the SEC in the same form as provided to Horowitz within 24 hours after the execution of the Consulting Agreement and this Option Agreement by the parties thereto and hereto. 10. Representations and Warranties; Additional Covenants ---------------------------------------------------- 10.1 The Company and Bibicoff each has the full power and authority to execute and deliver this Option Agreement and to consummate the transactions contemplated hereby. All necessary corporate proceedings on the part of the Company necessary to authorize this Option Agreement and the transactions contemplated hereby have been duly and validly taken. This Option Agreement and the transactions contemplated hereby have been duly and validly executed and delivered by each of the Company and Bibicoff and constitute the legal, valid and binding agreements and obligations of the Company and Bibicoff, enforceable against each in accordance with its terms. 10.2 Neither the execution and deliver of this Option Agreement by the Company or Bibicoff nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the Articles of Incorporation or Bylaws of the Company, (ii) require any consent, approval, authorization or permit from, or, except for the filing of the Registration Statement, filing with or notification to, any United States or foreign governmental authority or other third party; (iii) result in a breach of the terms, conditions or provisions of, or constitute a default (or in an event which, upon notice or lapse of time or both, would constitute a default) under, any of the terms, conditions or provisions of any agreement to which the Company or Bibicoff is a party or by which the Company, Bibicoff or their respective assets may be bound; or (iv) conflict with or result in a violation of any provision of (A) any statute, rule, regulation or ordinance which conflict or violation might have a material adverse impact on Horowitz or the ability of the Company or Bibicoff to perform their obligations hereunder, or (B) any material order, writ, injunction, award, decree, permit or license applicable to the Company or Bibicoff or any of their respective assets. 10.3 Bibicoff has delivered to Horowitz a balance sheet of Bibicoff, dated April 1996 (the "Balance Sheet"). Bibicoff represents and warrants that the Balance Sheet is true, complete and accurate and fairly presents the financial position of Bibicoff as of its date. Horowitz shall not disclose the Balance Sheet or its contents to any person except as required by law. 10.4 The Company acknowledges, represents and warrants that Horowitz is not, and as a result of the grant of the Option will not be, an "officer," "director," or "beneficial owner" of more than ten percent of the Company's Common Stock within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. There are a total of 5,693,198 shares of Common Stock outstanding as of February 12, 1996. 10.5 Bibicoff acknowledges and agrees that his obligation to pay the Put Price upon timely and appropriate exercise by Horowitz of the Put in accordance with this Option Agreement, except as otherwise provided in Section 4 hereof or elsewhere in this Option Agreement, is unconditional and shall be enforceable notwithstanding (I) the price of the Company's Common Stock at the time of said exercise, (ii) any restrictions which are or may be imposed upon Bibicoff's ability to purchase or sell any of the company's securities, whether imposed by law, contract or otherwise, (iii) any action or omission by the Company in respect of its securities or otherwise affecting the price or trading activity in the Company's securities, and (iv) the unenforceability of the Option or the occurrence of any event which has reduced or eliminated the value of the Option or the Option Shares and (v) the consummation of any transaction described in Section 5.2 of this Option Agreement. 10.6 The Company hereby unconditionally guarantees to Horowitz the due and punctual payment when due of the Put Price for the Option Shares payable by Bibicoff pursuant to Section 4 or Section 5 of this Option Agreement. 11. Engagement Obligation. Except as provided in the Consulting ---------------------- Agreement, nothing in this Agreement shall be construed to confer upon Horowitz any right to continued engagement by the Company or its affiliates or to restrict in any way the right of the Company or its affiliates. 12. Notices. Any notice required or permitted under this Option -------- Agreement shall be effective only if in writing and delivered in person, or mailed by certified or registered mail return receipt requested, or transmitted by facsimile transmission with electronic confirmation of receipt to the addressee's address or facsimile number set forth below (or such other address or facsimile number as the party changing its address specifies in a notice to the other party specifically referring to this section): If to Horowitz: Gary Horowitz 13032 Sky Valley Road Los Angeles, California 90049 With copy to: Parker, Milliken, Clark, O'Hara & Samuelian 333 South Hope Street, 27th Floor Los Angeles, California 90071 Fax: 213-683-6669 Attention: Richard A. Clark, Esq. If to Company: Harmony Holdings, Inc. 1990 Westwood Blvd., Suite 310 Los Angeles, California 90025 Attention: Harvey Bibicoff With copy to: Silver & Freedman, APLC 1925 Century Park East, Suite 2100 Los Angeles, California 90067-2722 Fax: (310) 556-0832 Attention: Perry S. Silver, Esq. If to Bibicoff: Harvey Bibicoff c/o Harmony Holdings, Inc. 1990 Westwood Blvd., Suite 310 Los Angeles, California 90025 Notice shall be deemed given as of the date actually received by the last of the addressee party and that party's copy recipient to receive the notice as evidenced by acknowledgement of receipt, delivery in person, the date on the postal return receipt, or electronic confirmation in the case of facsimile transmissions. 13. Attorneys Fees. In the event that any action is instituted to --------------- enforce the obligations of the Company or Bibicoff hereunder, the prevailing party in such action shall be entitled to recover all reasonable costs and expenses incurred including without limitation, reasonable attorneys' fees and disbursements. 14. Miscellaneous. This Option Agreement shall in all respects, be -------------- interpreted, construed and governed by in accordance with and consistent with the laws of the State of California applicable to agreements executed and to be wholly performed within the State of California. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. This Option Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which, when taken together, shall constitute one and the same document. Whenever required by the context hereof, the singular shall be deemed to include the plural, the plural shall be deemed to include the singular; the masculine, the feminine and neuter gender shall be deemed to include the others. Each party agrees that he/she/it shall execute and, if appropriate, acknowledge any and all additional and other documents, checks, drafts, instruments and writings which may be reasonably necessary or reasonable to facilitate the purposes of this Option Agreement. All terms, conditions and covenants of this Option Agreement shall be applicable to and binding upon, and shall inure to the benefit of, each party's agents, principals, employees, attorneys, heirs, executors, administrators, assigns, entities in which such party has an interest, parents, subsidiaries, affiliates, predecessors and successors. IN WITNESS WHEREOF, the parties have entered into this Stock Option Agreement as of the date first written above. "HOROWITZ": _________________________________ GARY HOROWITZ "COMPANY": HARMONY HOLDINGS, INC. a Delaware Corporation By_______________________________ "BIBICOFF": _________________________________ HARVEY BIBICOFF EX-23.1 6 CONSENT OF BDO SEIDMAN, LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Harmony Holdings, Inc. Los Angeles, California We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of our report dated August 25, 1995, relating to the consolidated financial statements of Harmony Holdings, Inc., appearing in the Company's Annual Report on Form 10-K for the year ended June 30, 1995. BDO SEIDMAN, LLP Los Angeles, California July 12, 1996 EX-23.2 7 CONSENT OF COOPERS & LYBRAND, LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to inclusion in this Registration Statement on Form S-8 of our report dated September 16, 1994, on our audits of the financial statements of Harmony Holdings, Inc. COOPERS & LYBRAND, LLP Sherman Oaks, California July 12, 1996 -----END PRIVACY-ENHANCED MESSAGE-----