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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 2001
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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STUDENT ADVANTAGE, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 04-3263743
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>
280 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
(617) 912-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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RAYMOND V. SOZZI, JR.
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
STUDENT ADVANTAGE, INC.
280 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
(617) 912-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
MARK G. BORDEN, ESQ.
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
TEL: (617) 526-6000
FAX: (617) 526-5000
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] 333- .
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] 333- .
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
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Common Stock, $.01 par value per
share................................. 3,000,000(2) $3.4375 $10,312,500 $2,578.13
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act and based upon the average of the
high and low prices on the Nasdaq National Market on January 10, 2001.
(2) Consists of (i) 800,000 shares and 1,200,000 shares of Common Stock of
Student Advantage, Inc. (the "Company") acquired by At Home Corporation
("Excite") and John Hancock Small Cap Value Fund ("Hancock"), respectively,
pursuant to Securities Purchase Agreements, each dated October 27, 2000, by
and between the Company and each of Excite and Hancock, and (ii) 400,000
shares and 600,000 shares of Common Stock of the Company issuable to Excite
and Hancock, respectively, upon exercise of Common Stock Purchase Warrants,
each dated October 27, 2000, by and between the Company and each of Excite
and Hancock.
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THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
SHALL DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING STOCKHOLDERS NAMED IN THIS PROSPECTUS MAY NOT SELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
[SUBJECT TO COMPLETION, DATED JANUARY 16, 2001]
PROSPECTUS
STUDENT ADVANTAGE, INC.
3,000,000 SHARES OF COMMON STOCK
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This prospectus relates to resales of shares of common stock previously
issued by Student Advantage to At Home Corporation and John Hancock Small Cap
Value Fund in a private placement and resales of shares of common stock expected
to be issued by Student Advantage upon the exercise of warrants issued to At
Home Corporation and John Hancock Small Cap Value Fund in that private
placement.
We will not receive any proceeds from the sale of the shares. However, to
that extent warrants are exercised through payment of the purchase price in cash
(rather than a cashless exercise), we will receive the proceeds from such
exercise.
The selling stockholders identified in this prospectus, or their pledgees,
donees, transferees or other successors-in-interest, may offer the shares from
time to time through public or private transactions at prevailing market prices,
at prices related to prevailing market prices or at privately negotiated prices.
Our common stock is traded on the Nasdaq National Market under the symbol
"STAD." On January 10, 2001, the closing sale price of the common stock on
Nasdaq was $3.5625 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is , 2001.
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.......................................... 3
The Offering................................................ 3
Risk Factors................................................ 4
Special Note Regarding Forward-Looking Information.......... 13
Use Of Proceeds............................................. 14
Selling Stockholders........................................ 14
Plan Of Distribution........................................ 15
Legal Matters............................................... 16
Experts..................................................... 16
Where You Can Find More Information......................... 16
Incorporation Of Certain Documents By Reference............. 16
</TABLE>
Student Advantage's executive offices are located at 280 Summer Street,
Boston, Massachusetts 02210, our telephone number is (617) 912-2000 and our
internet address is www.studentadvantage.com. The information on our internet
website is not incorporated by reference in this prospectus. Unless the context
otherwise requires references in this prospectus to "Student Advantage," "we,"
"us," and "our" refer to Student Advantage, Inc. and its subsidiaries.
"Student Advantage", "FANSonly", "CollegeClub", "SA Cash", "eStudentLoan"
and "ScholarAid" are our registered trademarks.
We have not authorized anyone to provide you with information different
from that contained or incorporated by reference in this prospectus. The selling
stockholders are offering to sell, and seeking offers to buy, shares of our
common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of common stock.
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PROSPECTUS SUMMARY
This summary highlights important features of this offering and the
information included or incorporated by reference in this prospectus. This
summary does not contain all of the information that you should consider before
investing in our common stock. You should read the entire prospectus carefully,
especially the risks of investing in our common stock discussed under "Risk
Factors."
STUDENT ADVANTAGE
Student Advantage is dedicated to serving the needs of college students and
the businesses and universities that serve them, primarily through its leading
membership program and network of web sites. We provide college students with
discounts on a broad range of products and services nationwide through the
Student Advantage membership program, as well as our network of web sites and
magazine. Through our FANSonly Network, FANSonly.com, we provide sports fans
with comprehensive on-line information and analysis on college sports. We also
offer marketing services to businesses seeking to communicate effectively with
the college student market.
We began operations in 1992 as a sole proprietorship, converted to a
general partnership in 1995, converted to a limited liability company in 1996
and were incorporated in the State of Delaware on October 20, 1998.
THE OFFERING
Common Stock offered by selling
stockholders........................ 3,000,000 shares
Use of proceeds..................... Student Advantage will not receive any
proceeds from the sale of shares in
this offering. However, we may receive
proceeds from the exercise of warrants
issued to the selling stockholders
through payment of the purchase price
in cash, rather than through a cashless
exercise.
Nasdaq National Market symbol....... STAD
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RISK FACTORS
Investing in our common stock involves a high degree of risk. You should
carefully consider the risks and uncertainties described below before purchasing
our common stock. The risks and uncertainties described below are not the only
ones facing our company. Additional risks and uncertainties may also impair our
business operations. If any of the following risks actually occur, our business,
financial condition or results of operations would likely suffer. In that case,
the trading price of our common stock could fall, and you may lose all or part
of the money you paid to buy our common stock.
WE HAVE EXPERIENCED LOSSES IN THE PAST AND EXPECT FUTURE LOSSES
We have not achieved profitability and expect to continue to incur
operating losses for the foreseeable future. We incurred net losses of $10.5
million in 1998, $19.6 million in 1999, and $16.2 million in the first nine
months of 2000. As of September 30, 2000, our accumulated deficit was $60.3
million. We expect to continue to incur significant operating and capital
expenditures and, as a result, we will need to generate significant revenue to
achieve and maintain profitability.
We cannot assure you that we will achieve sufficient revenue for
profitability. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenue grows more slowly than we anticipate, or if operating
expenses exceed our expectations or cannot be adjusted accordingly, our
business, results of operations and financial condition will be materially and
adversely affected.
WE HAVE A LIMITED OPERATING HISTORY AND MAY FACE DIFFICULTIES ENCOUNTERED BY
EARLY STAGE COMPANIES IMPLEMENTING AN ON-LINE AND OFF-LINE STRATEGY
We have a limited operating history on which an investor can evaluate our
business. Our operations began in 1992. An investor in our common stock must
consider the risks and difficulties frequently encountered by early stage
companies implementing an on-line and off-line strategy. These risks include,
without limitation, our possible inability to:
- sustain historical revenue growth rates,
- generate sufficient revenue to achieve and maintain profitability,
- implement our business model,
- maintain the satisfaction of our members and users, and our university
and corporate partners,
- introduce new and enhanced web and off-line content, products and
services, and
- respond to competitive developments.
If we do not successfully manage these risks, our business, results of
operations and financial condition will be materially adversely affected. We
cannot assure you that we will successfully address these risks or that our
business strategy will be successful.
OUR ABILITY TO GENERATE SIGNIFICANT REVENUES AND PROFITS FROM CERTAIN
ESTABLISHED AND NEW PRODUCTS AND SERVICES IS UNCERTAIN
Our business model depends in part on increasing the amount of revenues and
profits derived from certain established and new products and services. Our
ability to generate significant revenues and profits from these products and
services will depend, in part, on our ability to achieve a significant presence
in university and college communities, and to generate sufficient user traffic
and transactional volume from students with demographic characteristics
attractive to our business partners. There is intense competition among offerors
of alternative payment methods, including stored-value cards, debit card and
credit cards, and among web sites that sell on-line advertising. It is difficult
for us to project future levels of transaction-related and advertising revenues
and profits.
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WE MAY NOT SUCCESSFULLY IMPLEMENT OUR INTERNET STRATEGY
In order to successfully implement our internet strategy, we must:
- establish our network of web sites as the primary vehicle for delivery
of our internet products and services, including member registration and
renewal, information regarding national and local sponsors, and customer
service,
- expand our network of web sites to include more content and services for
students and encourage our members to use the sites so that they become
more attractive for advertisers, and
- establish our network of web sites as an effective e-commerce platform.
In addition, with respect to collegeclub.com, we rely mostly on our users
to generate content that is attractive and pertinent to develop and maintain the
web site. A decline in engaging member-generated content could make
collegeclub.com and our other web sites less attractive. We cannot guarantee
that internet users will maintain interest in our network of web sites. A
decline in membership or usage of our network of web sites would decrease
revenue. Our failure to successfully implement our internet strategy could have
a material adverse effect on our business.
WE ARE DEPENDENT UPON AT&T FOR A LARGE PERCENTAGE OF OUR REVENUE AND WE EXPECT
THAT REVENUE TO DECLINE
Since February 1, 1997, we have had a relationship with AT&T through which
AT&T has paid us for a variety of goods and services, including memberships
provided free to students with an AT&T calling card and marketing services. In
June of 2000, we restructured the agreements with AT&T, through which AT&T will
pay us for a variety of goods and services, including those under the old
agreements, as well as on-line and off-line media placements and new marketing
services.
In 1998, we derived $11.8 million, or 61%, of our total revenue from AT&T.
In 1999, we derived $15.2 million, or 55%, of our total revenue from AT&T. In
the first nine months of 2000, we derived $13.6 million, or 39%, of our total
revenue from AT&T. During both the 1998-1999 academic year and the 1999-2000
academic year, almost all of our members received their Student Advantage
memberships at no charge from AT&T by either electing to apply for an AT&T
calling card in connection with their Student Advantage membership or by
receiving a free Student Advantage membership from AT&T. We obtained these
members as a result of AT&T's distribution of free Student Advantage memberships
to students who enrolled for an AT&T telecommunications service. Under the
restructured agreement, AT&T has a commitment to purchase 900,000 memberships
for the 2000-2001 academic year, of which approximately 206,000 had been
purchased as of September 30, 2000. AT&T is not required to purchase a minimum
number of memberships under the restructured agreement after the 2000-2001
academic year. In addition, to date a significant portion of our commerce
revenue has been attributable to fees that we earned from AT&T for obtaining
completed calling card applications from students. While we do not expect to
earn any fees for the acquisition of AT&T calling card customers in future
quarters, the restructured agreement allows us to earn fees for acquiring
customers for certain other AT&T products. Under the restructured AT&T
agreement, there can be no assurance that we will be successful in maintaining
or expanding our membership base and/or the level of our commerce revenue, and
we expect that revenue from AT&T will decline in both absolute terms and as a
percentage of revenue in future quarters.
Our new agreement with AT&T is due to expire in June 2003; however, AT&T
may terminate the agreement effective June 1, 2001. There are no guaranteed
revenues or membership commitments after September 30, 2001. The termination or
restructuring of our relationship with AT&T could have a material adverse effect
on our business.
OUR RELATIONSHIP WITH AT&T COULD HINDER OUR ABILITY TO ATTRACT ADDITIONAL
SPONSORS
Our agreement with AT&T prevents us from including companies that promote
goods and services competitive to AT&T in our AT&T/Student Advantage Membership
Program. Our agreement with
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AT&T also provides that AT&T will be the sole provider of free Student Advantage
Program memberships to college students in connection with the promotion of a
telecommunications product competitive with AT&T. Our relationship with AT&T
could hinder our ability to attract additional national sponsors for the card
program, particularly sponsors who distribute or promote telecommunications
products.
OUR BUSINESS IS SUBJECT TO SEASONAL FLUCTUATIONS, WHICH MAY AFFECT OUR REVENUES
AND OPERATING RESULTS
We tend to sell most of our memberships in the beginning of the fall and
winter academic terms. All of these memberships expire on August 31 of each
year. Because the aggregate number of memberships within a school year increases
as new members are added beginning on September 1, and we recognize revenue from
memberships ratably over the period from the time of subscription until the end
of our membership year, our subscription revenue will typically be higher in the
first and second quarters than in the fourth quarter of each fiscal year. It is
difficult to determine how the third quarter will typically compare, since it
includes two calendar months from the end of a membership year and the first
month of the subsequent membership year. Our limited operating history and rapid
growth make it difficult for us to more fully assess the impact of seasonal
factors on our business.
TO EXPAND OUR BUSINESS, WE MAY NEED ADDITIONAL CAPITAL, AND THE FUTURE FUNDING
OF THESE CAPITAL NEEDS IS UNCERTAIN
We require substantial working capital to fund our business. We may require
additional financing if capital requirements vary materially from those
currently planned.
Additional funds raised through the issuance of equity securities may have
the following negative effects on the then current common stockholders:
- dilution in percentage of ownership in Student Advantage, and
- the rights, preferences or privileges of the new security holders may be
senior to those of the common stockholders.
Additional financing may not be available when needed on terms favorable to
us or at all. Our $2.75 million bank line of credit and equipment lease credit
facility expired according to its term on August 31, 2000, and the financing
commitment obtained from Fleet National Bank on August 18, 2000 for a $10
million credit facility expired in accordance with its terms. We are currently
negotiating for a new credit facility. Our failure to raise additional funds, if
needed, or secure a new credit facility may result in our inability to:
- develop or enhance our services,
- take advantage of future opportunities, or
- respond to competitive pressures.
A LIMITED NUMBER OF CUSTOMERS REPRESENT A SIGNIFICANT PERCENTAGE OF OUR REVENUE
A limited number of customers currently account for a significant
percentage of our total revenues. In the first nine months of 2000, two
customers accounted for 56% of total revenues. We expect a limited number of
customers to continue to account for a significant percentage of total revenues
in the future and we believe that we must continue to acquire additional
customers to be successful. The loss of any one of these customers could have a
material adverse effect on our business.
While we anticipate that revenues from these limited number of customers
will decline as a percentage of total revenues, we expect that a limited number
of customers will continue to represent a significant percentage of our total
revenues.
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OUR QUARTERLY REVENUES AND OPERATING RESULTS ARE NOT INDICATIVE OF FUTURE
PERFORMANCE AND ARE DIFFICULT TO FORECAST
In addition to the seasonal fluctuations described above, our revenues and
operating results may vary from quarter to quarter for a variety of other
reasons, such as the timing of revenues from corporate sponsors or non-recurring
revenues or charges.
You should not rely on quarter-to-quarter comparisons of our operating
results for any particular quarter as indicative of our future performance. It
is possible that in some future periods our operating results may be below the
expectations of public market analysts and investors. In this event, the price
of our common stock might fall.
OUR OPERATING RESULTS DEPEND ON ENROLLING NEW MEMBERS EVERY YEAR
A significant portion of our revenue is derived from our membership
program. Members must join our program each year. A significant percentage of
our members graduate each year and, therefore, do not renew their memberships.
Our revenue growth is highly dependent upon our ability to market the value of
our membership to college students and to retain members on a yearly basis. To
date, we have not maintained sufficient data to determine the specific number of
members who renew on a yearly basis. A failure to acquire new members or renew
current members could have a material adverse effect on our business.
OUR OPERATING RESULTS DEPEND ON OUR ABILITY TO MAINTAIN AND INCREASE BUSINESS
ALLIANCES AND UNIVERSITY RELATIONSHIPS
We are dependent upon our sponsors, both national and local, to provide our
members with discounts on their products and services. We are also dependent on
maintaining college and university relationships to market and sell our products
and services. Our ability to maintain these alliances and relationships and to
develop new alliances and relationships is critical to our ability to maintain
our members. A failure to acquire or maintain alliances and relationships with
colleges and universities could have a material adverse effect on our business.
In addition, our agreements with a number of our sponsors preclude us from
entering into similar arrangements with their competitors. This restriction may
prevent us in some cases from offering attractive additional discounts to our
members.
COLLEGES AND UNIVERSITIES ARE INCREASINGLY RELUCTANT TO PERMIT BUSINESSES TO
MARKET PRODUCTS AND SERVICES ON CAMPUS
Colleges and universities are becoming increasingly wary of businesses
which market products and services to their students. Many colleges and
universities are seeking to decrease or eliminate such marketing. In particular,
colleges and universities are concerned that many students have incurred
substantial levels of credit card debt. As a result, colleges and universities
often attempt to prevent credit card companies and other companies that offer
credit from marketing to their students. We are sometimes mistaken for a credit
card company because we give students a plastic card and a unique identification
number to represent their membership, and because we participate in the issuance
by universities of a stored-value card used in conjunction with student ID cards
(SA Cash). This sometimes makes it difficult for us to gain access to college
and university students, and we have been denied access to certain college and
university campuses. To date, we have not maintained sufficient data to
determine the specific number of colleges and universities which have denied us
access to their campuses. Any inability to directly contact students on campus
could have a material adverse effect on our business.
WE FACE SIGNIFICANT COMPETITION ON THE INTERNET, WHICH COULD ADVERSELY AFFECT
OUR BUSINESS
The market for online users and advertisers on the internet is rapidly
evolving. Competition for members, visitors, sponsors and merchants is intense
and is expected to increase over time. Barriers to entry are relatively low. We
compete for visitors, traffic, sponsors and online merchants with web
directories, search engines, content sites, online service providers and
traditional media companies. We also
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face competition from other companies maintaining web sites dedicated to college
students as well as high-traffic web sites sponsored by companies such as AOL,
CBS, Disney, Excite, Lycos, Microsoft, MTV, Time Warner and Yahoo!
We also compete with other companies targeting the student population, such
as:
- publishers and distributors of traditional offline media, particularly
those targeting college students, such as campus newspapers, other print
media, television and radio; and
- vendors of college student information, merchandise, products and
services distributed through online and offline means, including retail
stores, mail and schools.
Increased competition from these and other sources could require us to
respond to competitive pressures by establishing pricing, marketing and other
programs or seeking out additional strategic alliances or acquisitions that may
be less favorable to us than we could otherwise establish or obtain.
Many of our competitors have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than we do. In addition, substantially all of
our current advertising customers have established collaborative relationships
with other high-traffic web sites. Our advertising customers might conclude that
other internet businesses, such as search engines, commercial online services
and sites that offer professional editorial content are more effective sites for
advertising than we are. Moreover, we may be unable to maintain either the level
of traffic on our web sites or a stable membership base, which would make our
sites less attractive than those of our competitors.
We believe that our ability to compete depends upon many factors, including
the following:
- the market acceptance of our web sites and on-line services,
- the success of our brand building and sales and marketing efforts,
- the performance, price and reliability of services developed by us or
our competitors,
- the effectiveness of our customer service efforts,
- user affinity and loyalty,
- demographic focus,
- critical mass of users,
- the ability of our competitors to maintain or establish cooperative
relationships among themselves or with strategically aligned third
parties, and
- the emergence of new competitors.
We believe that the principal competitive factors in attracting and
retaining sponsors and advertisers are:
- the amount of traffic on a web site,
- brand recognition,
- the demographics of a site's users,
- the ability to offer targeted audiences,
- the average duration of user visits, and
- cost-effectiveness.
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OUR MEMBERSHIP PROGRAM EXPERIENCES SIGNIFICANT COMPETITION FROM OTHER MARKETING
ACTIVITIES
We compete for client marketing budget dollars with other marketing
activities and, in particular, other forms of direct marketing activities, such
as direct mail. In recent years, there have been significant advances in new
forms of direct marketing, such as the development of interactive shopping and
data collection through television, the internet and other media. Many industry
experts predict that electronic interactive commerce, such as shopping and
information exchange through the internet, will proliferate significantly in the
foreseeable future. To the extent such proliferation occurs, it could have a
material adverse effect on the demand for membership programs.
WE MAY BE UNABLE TO MAKE ATTRACTIVE ACQUISITIONS OR INTEGRATE ACQUIRED COMPANIES
As part of our business strategy, we plan to continue to acquire or make
investments in complementary businesses, products, services or technologies to
increase our on-line traffic and obtain new technologies. However, we cannot
assure you that we will be able to identify suitable acquisition or investment
candidates. Even if we do identify suitable candidates, we cannot assure you
that we will be able to make such acquisitions or investments on commercially
acceptable terms. If we buy a business, we could have difficulty in assimilating
that company's personnel, operations, products, services or technologies into
our operations. These difficulties could disrupt our ongoing business, distract
our management and employees, increase our expenses and adversely affect our
results of operations.
We have acquired several businesses; most recently we acquired
substantially all of the assets of CollegeClub.com and certain of its
affiliates. Achieving the anticipated benefits of these acquisitions will depend
in part upon whether the integration of these businesses is accomplished in an
efficient, effective and timely manner. In some cases, the difficulty associated
with integrating these businesses may be increased by the necessity of
coordinating geographically separated organizations. There can be no assurance
that the anticipated benefits of these acquisitions will be achieved.
WE MAY BE UNABLE TO SUCCESSFULLY MANAGE CHANGES IN OUR BUSINESS
We have experienced a period of significant growth. This growth has placed
significant demands on our management and strains on our resources. Revenue
increased from approximately $1.8 million in 1996 to $27.6 million in 1999, and
to $35.3 million in the first nine months of 2000, as compared to $18.3 million
in the first nine months of 1999. During that same time period, we increased
from fewer than 50 to more than 425 employees.
Our ability to manage changes in our business will depend on our ability to
continue to enhance our operating, financial and management information systems.
We cannot assure you that our personnel, systems and controls will be adequate
to support our growth, if any. If we are unable to manage change effectively,
maintain the quality of our products and services and retain key personnel, our
operating results and financial condition could be significantly affected.
OUR MANAGEMENT TEAM HAS LIMITED EXPERIENCE IN RUNNING A PUBLIC COMPANY
Our management team has had limited significant experience in a leadership
role in a public company. We cannot assure you that the management team as
currently configured will be able to continue to successfully lead a public
company. The failure of the management team to continue to adequately handle
this challenge could have a material adverse effect on our business.
WE MUST ATTRACT AND RETAIN KEY MANAGEMENT AND OTHER HIGHLY-QUALIFIED PERSONNEL
IN A COMPETITIVE LABOR MARKET
Our success depends largely upon the continued service of our executive
officers, including Raymond V. Sozzi, Jr., our president and chief executive
officer, and other key management and technical personnel, and our ability to
continue to attract, retain and motivate other qualified personnel. Competition
for such personnel is intense. We have experienced, and we expect to continue to
experience in the future, difficulty
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in hiring highly skilled employees with the appropriate qualifications. If we do
not succeed in attracting new personnel or retaining and motivating our current
personnel, our business could be adversely affected.
OUR SYSTEMS MAY FAIL OR EXPERIENCE A SLOWDOWN
Substantially all of our communications hardware and certain of our other
computer hardware operations are located at third-party locations such as Exodus
Communications, Inc. in Waltham, Massachusetts. Fire, floods, earthquakes, power
loss, telecommunications failures, break-ins and similar events could damage
these systems. Computer viruses, electronic break-ins or other similar
disruptive problems could also adversely affect our web site. Our business could
be adversely affected if our systems were affected by any of these occurrences.
Our insurance policies may not adequately compensate us for any losses that may
occur due to any failures or interruptions in our systems. We do not presently
have any secondary "off-site" systems or a formal disaster recovery plan,
however we are developing a formal disaster recovery program.
Our network of web sites must accommodate a high volume of traffic and
deliver frequently updated information. Our web sites have in the past and may
in the future experience slower response times or decreased traffic for a
variety of reasons. These types of occurrences could cause users to perceive our
web sites as not functioning properly and therefore cause them to use another
web site or other methods to obtain information.
In addition, our users depend on internet service providers, on-line
service providers and other web site operators for access to our network of web
sites. Many of them have experienced significant outages in the past, and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems.
OUR NETWORKS MAY BE VULNERABLE TO UNAUTHORIZED ACCESS, COMPUTER VIRUSES AND
OTHER DISRUPTIVE PROBLEMS
A party who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our operations.
Internet and online service providers have in the past experienced, and may in
the future experience, interruptions in service as a result of the accidental or
intentional actions of internet users, current and former employees or others.
Moreover, any well-publicized compromise of security could deter people from
using the internet or from using it to conduct transactions that involve
transmitting confidential information. We may be required to expend significant
capital or other resources to protect against the threat of security breaches or
to alleviate problems caused by such breaches. Although we intend to continue to
implement industry-standard security measures, there can be no assurance that
the measures we implement will not be circumvented in the future. Eliminating
computer viruses and alleviating other security problems may require
interruptions, delays or cessation of service to users accessing web pages that
deliver our content and services, any of which could harm our business, our
financial condition and the results of our operations.
WE ARE DEPENDENT ON THIRD PARTIES FOR SOFTWARE, SYSTEMS AND RELATED SERVICES
We are dependent on various third parties for software, systems and related
services. For example, a third party provides warehousing, distribution,
fulfillment, mail and data processing services for us. As a result, our ability
to deliver various services to our users may be adversely affected by the
failure of these third parties to provide reliable software, systems and related
services to us.
We have in the past and may in the future experience slower response times
or delays in the processing of applications for students and the delivery of
membership identification cards to our members. Many of these delays have been
caused by third parties upon which we rely for fulfillment services. If we are
unsuccessful in providing our members with membership identification cards or
delivering products and services on a timely basis, our business may be
adversely affected.
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<PAGE> 12
WE MAY BE SUED FOR INFORMATION RETRIEVED FROM THE INTERNET
We may be subjected to claims for defamation, invasion of privacy,
negligence, copyright or trademark infringement, personal injury or other legal
theories relating to the information we publish on our network of web sites or
in our publications or the use of our academic search engine in the form of web
crawling or framing. These types of claims have been brought, sometimes
successfully, against on-line services as well as other print publications in
the past. We could also be subjected to claims based upon the content that is
accessible from our network of web sites through links to other web sites or
through content and materials that may be posted by members in chat rooms or
bulletin boards including those located on the collegeclub.com web site acquired
through our recent acquisition. Our insurance may not adequately protect us
against these types of claims.
WE MAY LOSE MEMBERS AND OUR REPUTATION MAY SUFFER BECAUSE OF UNSOLICITED BULK
E-MAIL OR SPAM
Unsolicited bulk e-mail, or spam, and our attempts and others' attempts to
control spam could harm our business and our reputation. To the extent our
spam-blocking efforts are not effective, our systems may become unavailable or
may suffer from reduced performance. Spam-blocking efforts by others may also
result in others blocking our members' legitimate messages. Additionally, our
reputation may be harmed if e-mail addresses with our domain names are used in
this manner. Any of these events may cause members to become dissatisfied and
discontinue their use of our network of web sites, including collegeclub.com.
CONSUMER PROTECTION PRIVACY CONCERNS AND REGULATIONS COULD IMPAIR OUR ABILITY TO
OBTAIN AND USE INFORMATION ABOUT OUR USERS AND MAY SUBJECT US TO LITIGATION
Our network of web sites captures information regarding our members and
users in order to provide information to them, enable them to access the
services offered on our web sites, tailor content to them or assist advertisers
in targeting their advertising campaigns to particular demographic groups.
However, privacy concerns may cause users to resist providing the personal data
necessary to support this tailoring capability. Even the perception of security
and privacy concerns, whether or not valid, may indirectly inhibit market
acceptance of our network of web sites.
Our network of web sites currently uses cookies to track demographic
information and user preferences. A cookie is information keyed to a specific
server, file pathway or directory location that is stored on a user's hard
drive, possibly without the user's knowledge, but is generally removable by the
user. Germany has imposed laws limiting the use of cookies, and a number of
internet commentators, advocates and governmental bodies in the United States
and other countries have urged the passage of laws limiting or abolishing the
use of cookies. If these laws are passed, our business, financial condition and
results of operations could be materially harmed.
Legislative or regulatory requirements may heighten privacy concerns if
businesses must notify internet users that the data may be used by marketing
entities to direct product promotion and advertising to the user. The Federal
Trade Commission and state agencies have been investigating various internet
companies regarding their use of personal information. In 1998, the United
States Congress enacted the Children's On-line Privacy Protection Act of 1998.
We depend upon collecting personal information from our customers and the
regulations promulgated under this act have made it more difficult for us to
collect personal information from some of our customers. If third parties are
able to penetrate our network security or otherwise misappropriate our users'
personal information, we could be subject to liability. We could also be liable
for claims based on unauthorized purchases with credit card information,
impersonation or other similar fraud claims. We could also be held responsible
for disclosing personal information or images, such as our disclosing such
information for unauthorized marketing purposes or for including it in our photo
gallery and web cam section on collegeclub.com. These claims could result in
litigation. In addition, we could incur additional expenses if new regulations
regarding the use of personal information are introduced or if our privacy
practices are investigated. Other countries and political entities, such as the
European Economic Community, have adopted such legislation or regulatory
requirements. If consumer privacy concerns are not adequately addressed, our
business, financial condition
11
<PAGE> 13
and results of operations could be materially harmed. We may also be subject to
additional state and Federal banking regulations (Federal Reserve) in connection
with the introduction of some of our new products such as SA Cash, eStudentLoan,
and ScholarAid.
Although we carry general liability insurance, this insurance may not be
available to cover a particular claim or may be insufficient. Additionally, our
user community on collegeclub.com exists in part because of our members'
willingness to provide information about themselves. If claims, litigation,
regulation or the acts of third parties reduce our members' willingness to share
this information or our ability to use it, the attractiveness of the web site
will decline, which would reduce our ability to generate revenue through the
affected web site.
WE MAY BE SUBJECT TO LITIGATION WHICH COULD HAVE A MATERIAL ADVERSE EFFECT UPON
OUR BUSINESS
Our industry has been the subject of substantial amounts of litigation
regarding intellectual property and contractual rights. Consequently, there can
be no assurance that third parties will not allege claims against us with
respect to current or future trademarks, advertising or marketing strategies,
business processes or other proprietary rights, or that we will counterclaim
against any such parties in such actions. Any such claims or counterclaims could
be time-consuming, result in costly litigation, diversion of management's
attention, require us to redesign our products or advertising/marketing
strategies or require us to enter into royalty or licensing agreements, any of
which could have a material adverse effect upon our business, results of
operations and financial condition. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to us or at all.
WE MAY BE UNABLE TO RESPOND TO THE RAPID TECHNOLOGICAL CHANGE IN OUR INDUSTRY
Our market is characterized by rapidly changing technologies, frequent new
product and service introductions and evolving industry standards. The recent
growth of the internet and intense competition in our industry exacerbates these
market characteristics. To achieve our goals, we need to integrate effectively
the various software programs and tools required to enhance and improve our
product offerings and manage our business. Our future success will depend on our
ability to adapt to rapidly changing technologies by continually improving the
performance features and reliability of our products and services. We may
experience difficulties that could delay or prevent the successful development,
introduction or marketing of new products and services. In addition, our new
enhancements must meet the requirements of our current and prospective members
and must achieve significant market acceptance. We could also incur substantial
costs if we need to modify our service or infrastructures to adapt to these
changes or comply with new regulations.
OUR INTELLECTUAL PROPERTY RIGHTS MAY BE VIOLATED OR SUBJECT TO LITIGATION AND WE
MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS
We believe that protection of our patent, copyrights, service marks,
trademarks, trade secrets, proprietary technology and similar intellectual
property is important to the success of some of our services. We rely on the
following mechanisms to protect such intellectual property:
- patent, trademark and copyright law,
- trade secret protection, and
- confidentiality agreements with employees, customers, independent
contractors, sponsors and others.
Despite our best efforts, we cannot assure you that our intellectual
property rights will not be infringed, violated or legally imitated. Failure to
protect our intellectual property could have a material adverse effect on our
business.
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<PAGE> 14
We have been, and may be, sued or named as a defendant in the future for
infringement of the trademark and other intellectual property rights of third
parties. Any such proceedings or claims could have a material adverse effect on
our business, financial condition and results of operations.
CERTAIN CURRENT STOCKHOLDERS OWN A LARGE PERCENTAGE OF OUR VOTING STOCK
As of November 22, 2000, our executive officers, directors and affiliated
entities, together beneficially own approximately 52% of our outstanding common
stock. Therefore, these stockholders are able to control all matters requiring
stockholder approval and, thereby, our management and affairs. Matters that
typically require stockholder approval include:
- election of directors,
- merger or consolidation, and
- sale of substantially all of our assets.
This concentration of ownership may delay, deter or prevent acts that would
result in a change of control, which in turn could reduce the market price of
our common stock.
OUR STOCK PRICE COULD BE EXTREMELY VOLATILE AND MAY RESULT IN LITIGATION AGAINST
US
The stock market has experienced significant price and volume fluctuations,
and our market price has been in the past and could continue to be volatile. In
the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted.
Litigation could result in substantial costs and a diversion of management's
attention and resources.
OUR CHARTER DOCUMENTS MAY INHIBIT A TAKEOVER
Provisions in our charter and bylaws may have the effect of delaying or
preventing a change of control or changes in our management that a stockholder
might consider favorable. These provisions include, among others:
- the division of the Board of Directors into three separate classes,
- the right of the Board to elect a director to fill a vacancy created by
the expansion of the Board, and
- the requirement that a special meeting of stockholders be called by the
Chairman of the Board, President or Board of Directors.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus includes and incorporates forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included or incorporated in this prospectus regarding our
strategy, future operations, financial position, future revenues, projected
costs, prospects, plans and objectives of management are forward-looking
statements. The words "anticipates," "believes," "estimates," "expects,"
"intends," "may," "plans," "projects," "will," "would" and similar expressions
are intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. We cannot guarantee
that we actually will achieve the plans, intentions or expectations disclosed in
our forward-looking statements and you should not place undue reliance on our
forward-looking statements. Actual results or events could differ materially
from the plans, intentions and expectations disclosed in the forward-looking
statements we make. We have included important factors in the cautionary
statements included or incorporated in this prospectus, particularly under the
heading "Risk Factors", that we believe could cause actual results or events to
differ materially from the forward-looking statements that we make. Our
forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments we may make.
We do not assume any obligation to update any forward-looking statements.
13
<PAGE> 15
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the selling
stockholders. However, we may receive proceeds from the exercise of warrants
issued to the selling stockholders through payment of the purchase price in
cash, rather than through a cashless exercise.
The selling stockholders will pay any underwriting discounts and
commissions and expenses incurred by the selling stockholders for brokerage,
accounting, tax or legal services or any other expenses incurred by the selling
stockholders in disposing of the shares. We will bear all other costs, fees and
expenses incurred in effecting the registration of the shares covered by this
prospectus, including, without limitation, all registration and filing fees,
Nasdaq listing fees and fees and expenses of our counsel and our accountants.
SELLING STOCKHOLDERS
We issued 2,000,000 shares of common stock covered by this prospectus in a
private placement on October 27, 2000, and will issue the remaining 1,000,000
shares covered by this prospectus upon exercise of warrants issued in that
private placement. The following table sets forth, to our knowledge, certain
information about the selling stockholders as of December 22, 2000.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to shares. Shares of common stock issuable under warrants that are
exercisable within 60 days after December 22, 2000 are deemed outstanding for
computing the percentage ownership of the person holding the warrants but are
not deemed outstanding for computing the percentage ownership of any other
person. Unless otherwise indicated below, to our knowledge, all persons named in
the table have sole voting and investment power with respect to their shares of
common stock, except to the extent authority is shared by spouses under
applicable law. The inclusion of any shares in this table does not constitute an
admission of beneficial ownership for the person named below.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK SHARES OF COMMON STOCK
BENEFICIALLY OWNED PRIOR TO TO BE BENEFICIALLY OWNED
OFFERING (1) NUMBER OF SHARES AFTER OFFERING(1)(2)
--------------------------- OF COMMON STOCK -------------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENTAGE BEING OFFERED NUMBER PERCENTAGE
--------------------------- ----------- ------------ ---------------- --------- ------------
<S> <C> <C> <C> <C> <C>
At Home Corporation................. 1,200,000 3.00% 1,200,000 0 --
John Hancock Small Cap Value Fund... 2,792,400 6.96% 1,800,000 992,400 2.51%
</TABLE>
---------------
(1) The number of shares indicated as owned by At Home Corporation and John
Hancock Small Cap Value Fund includes 400,000 shares and 600,000 shares,
respectively, issuable upon the exercise of common stock purchase warrants
issued to such selling stockholder in the private placement.
(2) We do not know when or in what amounts a selling stockholder may offer
shares for sale. The selling stockholders may not sell any or all of the
shares offered by this prospectus. Because the selling stockholders may
offer all or some of the shares pursuant to this offering, and because
there are currently no agreements, arrangements or understandings with
respect to the sale of any of the shares, we cannot estimate the number of
the shares that will be held by the selling stockholders after completion
of the offering. However, for purposes of this table, we have assumed that,
after completion of the offering, none of the shares covered by this
prospectus will be held by the selling stockholders.
None of the selling stockholders has held any position or office with, or
has otherwise had a material relationship with, us or any of our subsidiaries
within the past three years.
14
<PAGE> 16
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time to
time by the selling stockholders. The term "selling stockholders" includes
donees, pledgees, transferees or other successors-in-interest selling shares
received after the date of this prospectus from a selling stockholder as a gift,
pledge, partnership distribution or other non-sale related transfer. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. Such sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and under
terms then prevailing or at prices related to the then current market price or
in negotiated transactions. The selling stockholders may sell their shares by
one or more of, or a combination of, the following methods:
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- block trades in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
- an over-the-counter distribution in accordance with the rules of the
Nasdaq National Market;
- in privately negotiated transactions; and
- in options transactions.
In addition, any shares that qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this prospectus.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In connection with
distributions of the shares or otherwise, the selling stockholders may enter
into hedging transactions with broker-dealers or other financial institutions.
In connection with such transactions, broker-dealers or other financial
institutions may engage in short sales of the common stock in the course of
hedging the positions they assume with selling stockholders. The selling
stockholders may also sell the common stock short and redeliver the shares to
close out such short positions. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
which require the delivery to such broker-dealer or other financial institution
of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction). The selling stockholders may also pledge
shares to a broker-dealer or other financial institution, and, upon a default,
such broker-dealer or other financial institution, may effect sales of the
pledged shares pursuant to this prospectus (as supplemented or amended to
reflect such transaction).
In effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers to participate. Broker-dealers
or agents may receive commissions, discounts or concessions from the selling
stockholders in amounts to be negotiated immediately prior to the sale.
In offering the shares covered by this prospectus, the selling stockholders
and any broker-dealers who execute sales for the selling stockholders may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. Any profits realized by the selling stockholders and
the compensation of any broker-dealer may be deemed to be underwriting discounts
and commissions.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, we will make copies of this prospectus available to the selling
stockholders
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<PAGE> 17
for the purpose of satisfying the prospectus delivery requirements of the
Securities Act. 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 Securities Act.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
We have agreed to indemnify the selling stockholders against certain
liabilities, including certain liabilities under the Securities Act.
We have agreed with the selling stockholders to keep the Registration
Statement of which this prospectus constitutes a part effective until the
earlier of (i) such time as all of the shares covered by this prospectus have
been disposed of pursuant to and in accordance with the Registration Statement
or (ii) October 27, 2001.
LEGAL MATTERS
The validity of the shares offered by this prospectus has been passed upon
by Hale and Dorr LLP.
EXPERTS
The consolidated balance sheets of Student Advantage, Inc. as of December
31, 1998 and 1999 and the consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1999, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of PricewaterhouseCoopers
LLP, independent auditors, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated balance sheets of CollegeClub.com, Inc. as of December 31,
1998 and 1999 and the consolidated statements of operations, stockholders'
deficit and cash flows for each of the years in the two-year period ended
December 31, 1999, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of PricewaterhouseCoopers
LLP, independent auditors, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other documents with the Securities
and Exchange Commission. You may read and copy any document we file at the SEC's
public reference room at Judiciary Plaza Building, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. You should call 1-800-SEC-0330 for more
information on the public reference room. Our SEC filings are also available to
you on the SEC's Internet site at http://www.sec.gov.
This prospectus is part of a registration statement that we filed with the
SEC. The registration statement contains more information than this prospectus
regarding us and our common stock, including certain exhibits and schedules. You
can obtain a copy of the registration statement from the SEC at the address
listed above or from the SEC's Internet site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC requires us to "incorporate" into this prospectus information that
we file with the SEC in other documents. This means that we can disclose
important information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus. Information contained in this prospectus and information
that we file with the SEC
16
<PAGE> 18
in the future and incorporate by reference in this prospectus automatically
updates and supersedes previously filed information. We incorporate by reference
the documents listed below and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior
to the sale of all the shares covered by this prospectus.
(1) Our Annual Report on Form 10-K for the year ended December 31, 1999;
(2) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
(3) Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000;
(4) Our Quarterly Report on Form 10-Q for the quarter ended September 30,
2000;
(5) Our Current Report on Form 8-K dated October 31, 2000, as amended by a
Form 8-K/A filed on January 16, 2001;
(6) All of our filings pursuant to the Exchange Act after the date of
filing the initial registration statement and prior to effectiveness
of the registration statement; and
(7) The description of our common stock contained in our Registration
Statement on Form 8-A dated May 24, 1999.
You may request a copy of these documents, which will be provided to you at
no cost, by writing or by telephoning us using the following contact
information:
Student Advantage, Inc.
280 Summer Street
Boston, MA 02210
Attention: Investor Relations
Telephone: (617) 912-2000
17
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be incurred in
connection with the sale and distribution of the securities being registered
hereby, all of which will be borne by Student Advantage, Inc. (except any
underwriting discounts and commissions and expenses incurred by the selling
stockholders for brokerage, accounting, tax or legal services or any other
expenses incurred by the selling stockholders in disposing of the shares). All
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
<TABLE>
<S> <C>
Filing Fee -- Securities and Exchange Commission............ $ 2,578.13
Legal fees and expenses..................................... $15,000.00
Accounting fees and expenses................................ $13,000.00
Miscellaneous expenses...................................... $ 4,421.87
----------
Total Expenses.................................... $35,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102 of the Delaware General Corporation Law allows a corporation to
eliminate the personal liability of directors of a corporation to the
corporation or its stockholders for monetary damages for a breach of fiduciary
duty as a director, except where the director breached his duty of loyalty,
failed to act in good faith, engaged in intentional misconduct or knowingly
violated a law, authorized the payment of a dividend or approved a stock
repurchase in violation of Delaware corporate law or obtained an improper
personal benefit. Student Advantage has included such a provision in its
Certificate of Incorporation.
Section 145 of the General Corporation Law of Delaware provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
Article EIGHTH of Student Advantage's Amended and Restated Certificate of
Incorporation provides that no director of the Student Advantage shall be
personally liable for any monetary damages for any breach of fiduciary duty as a
director, except to the extent that the Delaware General Corporation Law
prohibits the elimination or limitation of liability of directors for breach of
fiduciary duty.
Article NINTH of Student Advantage's Amended and Restated Certificate of
Incorporation provides that a director or officer of Student Advantage (a) shall
be indemnified by Student Advantage against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement incurred in connection
with any litigation or other legal proceeding (other than an action by or in the
right of Student Advantage) brought against him by virtue of his position as a
director or officer of Student Advantage if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
Student Advantage, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful and (b) shall be
indemnified by Student Advantage against all expenses (including attorneys'
fees) and amounts paid in settlement incurred in connection with any action by
or in the right of Student Advantage brought against him by virtue of his
position as a director or officer of Student Advantage if he acted in good faith
and in a manner he reasonably believed to be in, or
II-1
<PAGE> 20
not opposed to, the best interests of Student Advantage, except that no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to Student Advantage, unless the Court of
Chancery of Delaware determines that, despite such adjudication but in view of
all of the circumstances, he is entitled to indemnification of such expenses.
Notwithstanding the foregoing, to the extent that a director or officer has been
successful, on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, he is required to be indemnified by
Student Advantage against all expenses (including attorneys' fees) incurred in
connection therewith. Expenses shall be advanced to a director or officer at his
request, unless it is determined that he did not act in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
Student Advantage, and, with respect to any criminal action or proceeding had
reasonable cause to believe that his conduct was unlawful, provided that he
undertakes to repay the amount advanced if it is ultimately determined that he
is not entitled to indemnification for such expenses.
Indemnification is required to be made unless Student Advantage determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by Student Advantage that the director
or officer did not meet the applicable standard of conduct required for
indemnification, or if Student Advantage fails to make an indemnification
payment within 60 days after such payment is claimed by such person, such person
is permitted to petition the court to make an independent determination as to
whether such person is entitled to indemnification. As a condition precedent to
the right of indemnification, the director or officer must give Student
Advantage notice of the action for which indemnity is sought and Student
Advantage has the right to participate in such action or assume the defense
thereof.
Article NINTH of Student Advantage's Amended and Restated Certificate of
Incorporation further provides that the indemnification provided therein is not
exclusive, and provides that in the event that the Delaware General Corporation
Law is amended to expand the indemnification permitted to directors or officers,
Student Advantage must indemnify those persons to the fullest extent permitted
by such law as so amended.
Student Advantage has entered into agreements to indemnify its directors
and officers, in addition to the indemnification provided for in Student
Advantage's Amended and Restated Certificate of Incorporation. These agreements,
among other things, indemnify Student Advantage's directors and officers for
certain expenses (including attorneys' fees and associated legal expenses),
judgments, fines and amounts paid in settlement amounts, actually and reasonably
incurred by any such person's services as a director or officer of Student
Advantage or any other company or enterprise to which the person provides
services at the request of Student Advantage, if such officer or director acted
in good faith and in a manner which he or she reasonably believed to be in, or
not opposed to the best interests of Student Advantage and with respect to any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful.
Student Advantage has purchased directors' and officers' liability
insurance which would indemnify its directors and officers against damages
arising out of certain kinds of claims which might be made against them based on
their negligent acts or omissions while acting in their capacity as such.
II-2
<PAGE> 21
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Certificate of Incorporation of the Registrant (incorporated
herein by reference to Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1999).
4.2 By-laws of the Registrant (incorporated herein by reference
to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1999).
5.1 Opinion of Hale and Dorr LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Hale and Dorr LLP, included in Exhibit 5.1 filed
herewith.
24.1 Power of Attorney (See page II-5 of this Registration
Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
Item 512(a) of Regulation S-K. 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 prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included is a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in this Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each 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 the 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.
Item 512(b) of Regulation S-K. The Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or 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 this Registration Statement shall be deemed to be a
new registration statement relating to the securities
II-3
<PAGE> 22
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Item 512(h) of Regulation S-K. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the indemnification provisions
described herein, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts, on January 16,
2001.
STUDENT ADVANTAGE, INC.
By: /s/ RAYMOND V. SOZZI, JR.
------------------------------------
RAYMOND V. SOZZI, JR.
Chairman of the Board, President and
Chief Executive Officer
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of Student Advantage, Inc.,
hereby severally constitute and appoint Raymond V. Sozzi, Jr., Kenneth S.
Goldman, and Mark G. Borden and each of them singly, our true and lawful
attorneys with full power to any of them, and to each of them singly, to sign
for us and in our names in the capacities indicated below the Registration
Statement on Form S-3 filed herewith and any and all pre-effective and
post-effective amendments to said Registration Statement and generally to do all
such things in our name and behalf in our capacities as officers and directors
to enable Student Advantage, Inc. to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ RAYMOND V. SOZZI, JR. Chairman of the Board, January 16, 2001
--------------------------------------------------- President and Chief
RAYMOND V. SOZZI, JR. Executive Officer (Principal
Executive Officer)
/s/ KENNETH S. GOLDMAN Executive Vice President, January 16, 2001
--------------------------------------------------- Chief Financial Officer and
KENNETH S. GOLDMAN Treasurer (Principal
Financial and Accounting
Officer)
/s/ JOHN M. CONNOLLY Director January 16, 2001
---------------------------------------------------
JOHN M. CONNOLLY
/s/ WILLIAM S. KAISER Director January 16, 2001
---------------------------------------------------
WILLIAM S. KAISER
Director January 16, 2001
---------------------------------------------------
JOHN S. KATZMAN
/s/ MARC J. TURTLETAUB Director January 16, 2001
---------------------------------------------------
MARC J. TURTLETAUB
/s/ CHARLES E. YOUNG Director January 16, 2001
---------------------------------------------------
CHARLES E. YOUNG
</TABLE>
II-5
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Certificate of Incorporation of the Registrant (incorporated
herein by reference to Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1999).
4.2 By-laws of the Registrant (incorporated herein by reference
to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1999).
5.1 Opinion of Hale and Dorr LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Hale and Dorr LLP, included in Exhibit 5.1 filed
herewith.
24.1 Power of Attorney (See page II-5 of this Registration
Statement).
</TABLE>
