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As filed with the Securities and Exchange Commission on May 4, 1999
Registration No. 333-74719
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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ZANY BRAINY, INC.
(Exact name of registrant as specified in its charter)
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<TABLE>
<CAPTION>
<S> <C> <C>
Pennsylvania 5945 23-2663337
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or organization) Classification Code No.) Identification No.)
</TABLE>
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308 East Lancaster Avenue
Wynnewood, PA 19096
(610) 896-1500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Keith C. Spurgeon
Chief Executive Officer
308 East Lancaster Avenue
Wynnewood, PA 19096
(610) 896-1500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of all communications to:
ALAN SINGER THOMAS C. SADLER
Morgan, Lewis & Bockius LLP Latham & Watkins
1701 Market Street 633 West 5th Street, Suite 4000
Philadelphia, PA 19103-2921 Los Angeles, CA 90071
(215) 963-5000 (213) 485-1234
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
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Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimated
except the Securities and Exchange Commission registration fee, the NASD filing
fee and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........... $ 27,174.50
National Association of Securities Dealers, Inc. filing fee... 10,275.00
Transfer Agent's fees and expenses............................ 5,000.00
Printing and engraving expenses............................... 175,000.00
Legal fees and expenses....................................... 300,000.00
Blue sky fees and expenses.................................... 7,500.00
Nasdaq National Market listing fee............................ 95,000.00
Accountants' fees and expenses................................ 300,000.00
Miscellaneous................................................. 430,050.50
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Total Expenses................................................ $1,350,000.00
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</TABLE>
Item 14. Indemnification of Directors and Officers.
The Pennsylvania Business Corporation Law and Zany Brainy's Amended and
Restated Bylaws limit the monetary liability of directors to Zany Brainy and to
its shareholders and provide for indemnification of Zany Brainy's officers and
directors for liabilities and expenses that they may incur in such capacities.
In general, officers and directors are indemnified with respect to actions
taken in good faith in a manner reasonably believed to be in, or not opposed
to, the best interests of Zany Brainy, and with respect to any criminal action
or proceeding, actions that the indemnitee had no reasonable cause to believe
were unlawful. In addition, Zany Brainy's Amended and Restated Bylaws provide
that Zany Brainy shall indemnify its officers and directors to the fullest
extent permitted by Pennsylvania law, including some instances in which
indemnification is otherwise discretionary under Pennsylvania law. Reference is
made to Zany Brainy's Amended and Restated Bylaws filed as Exhibit 3.2 hereto.
Zany Brainy has an insurance policy which insures the directors and officers
of Zany Brainy against certain liabilities which might be incurred in
connection with the performance of their duties.
Item 15. Recent Sales of Unregistered Securities
During the past three years, Zany Brainy has issued and sold unregistered
securities in the transactions described below.
Shares of Preferred Stock
1. Pursuant to a Purchase Agreement dated September 24, 1996 and November 27,
1996, Zany Brainy issued an aggregate of 749,984 shares of Series C
Convertible Preferred Stock to 39 accredited investors for a purchase price
of $22.50 per share, or an aggregate purchase price of $16,874,640.
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2. Pursuant to a Purchase Agreement dated September 24, 1996, Zany Brainy
issued an aggregate of 748,334 shares of Series BB Convertible Preferred
Stock to 35 holders of Zany Brainy's Series B Convertible Preferred Stock in
exchange for these holders' shares of Series B Convertible Preferred Stock.
Options to Purchase Common Stock
3. The Company from time to time has granted stock options to employees,
directors and consultants. The following table sets forth certain
information regarding such grants:
<TABLE>
<CAPTION>
No. of Range of
Shares Exercise Prices
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<S> <C> <C>
1996............................................... 758,101 $4.00
1997............................................... 1,169,507 $3.33 to $4.00
1998............................................... 472,497 $4.00 to $9.00
1999...............................................
</TABLE>
4. The following table sets forth certain information regarding option
exercises:
<TABLE>
<CAPTION>
No. of Range of
Shares Exercise Prices
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<S> <C> <C>
1996.................................................. 4,878 $3.33 to $4.00
1997.................................................. 10,392 $3.33 to $4.00
1998.................................................. 22,048 $3.33
1999..................................................
</TABLE>
Zany Brainy believes that the issuance of shares and under the Purchase
Agreements described above did not involve a public offering and were exempt
from registration under Section 4(2) of the Securities Act because such
issuances were made to a limited group of persons, each of whom was believed to
have been a sophisticated investor or had a pre-existing business or personal
relationship with Zany Brainy or its management and because each such person
was purchasing for investment without a view to further distribution.
Restrictive legends were placed on stock certificates and are contained in
stock option agreements evidencing the securities described above. Shares
issued upon exercise of options were exempt from registration under Rule 3(b)
of the Securities Act and Rule 701 promulgated thereunder.
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Item 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed as part of this registration statement:
EXHIBITS
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Exhibit
Number Description
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<C> <S>
1** Form of Underwriting Agreement
3.1** Form of Amended and Restated Articles of Incorporation
3.2* Amended and Restated Bylaws
5* Opinion of Morgan, Lewis & Bockius LLP regarding the legality of the
shares of common stock being registered
10.1** 1993 Stock Incentive Plan
10.2** 1998 Equity Compensation Plan
10.3** Form of Stock Purchase Agreement providing registration rights to
certain shareholders
10.4** Employment Agreement with Keith C. Spurgeon
10.5** Employment Agreement with Thomas G. Vellios
10.6** Employment Agreement with Robert A. Helpert
10.7** Amended and Restated Loan and Security Agreement dated October 9,
1997, as amended, between Zany Brainy, Inc. and First Union
Corporation, as successor in interest to CoreStates Bank, N.A.
21** Subsidiaries
23.1 Consent of Arthur Andersen LLP
Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed
23.2* as Exhibit 5 hereto)
Power of Attorney (included on signature page to this Registration
24.1** Statement)
27** Financial Data Schedule
</TABLE>
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** Previously filed.
* To be filed by amendment.
(b) Financial statement schedules have been omitted because they are
inapplicable, are not required under applicable provisions of Regulation S-X,
or the information that would otherwise be included in such schedules is
contained in the registrant's financial statements or accompanying notes.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
(b) 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 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 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
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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.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this Registration Statement as of the time
it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 2 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
Wynnewood, Pennsylvania on May 4, 1999.
ZANY BRAINY, INC.
/s/ Keith C. Spurgeon
By:
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Keith C. Spurgeon
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Signature Capacity Date
/s/ Keith C. Spurgeon Chairman of the May 4, 1999
- ----------------------------------- Board and Chief
Keith C. Spurgeon Executive Officer
(principal executive officer)
* Chief Financial May 4, 1999
- ----------------------------------- Officer (principal
Robert A. Helpert financial and
accounting officer)
*
- ----------------------------------- Director May 4, 1999
C. Donald Dorsey
* Director May 4, 1999
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Robert A. Fox
* Director May 4, 1999
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Gerald R. Gallagher
*
- ---------------------------------- Director May 4, 1999
Henry Nasella
* Director May 4, 1999
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Yves B. Sisteron
* Director May 4, 1999
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David V. Wachs
/s/ Keith C. Spurgeon
By_____________________________
Attorney-in-Fact
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<C> <S>
1** Form of Underwriting Agreement
3.1** Form of Amended and Restated Articles of Incorporation
3.2* Amended and Restated Bylaws
5* Opinion of Morgan, Lewis & Bockius LLP regarding the legality of the
shares of common stock being registered
10.1** 1993 Stock Incentive Plan
10.2** 1998 Equity Compensation Plan
10.3** Form of Stock Purchase Agreement providing registration rights to
certain shareholders
10.4** Employment Agreement with Keith C. Spurgeon
10.5** Employment Agreement with Thomas G. Vellios
10.6** Employment Agreement with Robert A. Helpert
10.7** Amended and Restated Loan and Security Agreement dated October 9,
1997, as amended, between Zany Brainy, Inc. and First Union
Corporation, as successor in interest to CoreStates Bank, N.A.
21** Subsidiaries
23.1 Consent of Arthur Andersen LLP
Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed
23.2* as Exhibit 5 hereto)
Power of Attorney (included on signature page to this Registration
24.1** Statement)
27** Financial Data Schedule
</TABLE>
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** Previously filed.
* To be filed by amendment.
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Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated March 5, 1999 included herein and to all references to our Firm included
in this registration statement.
Philadelphia, Pa.,
May 3, 1999 /s/ Arthur Andersen LLP
