<PAGE>
As filed with the Securities and Exchange Commission on February 16, 2000
Registration No. 333-90873
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- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
AMENDMENT NO. 7
TO
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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APROPOS TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
-----------
Illinois 7372 36-3644751
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or -----------
organization)
One Tower Lane, 28th Floor
Oakbrook Terrace, Illinois 60181
(630) 472-9600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-----------
Kevin G. Kerns
Chief Executive Officer and President
Apropos Technology, Inc.
One Tower Lane, 28th Floor
Oakbrook Terrace, Illinois 60181
(630) 472-9600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------
Copies to:
John P. Tamisiea Daniel G. Kelly, Jr.
McDermott, Will & Emery Davis Polk & Wardwell
227 W. Monroe Street 450 Lexington Avenue
Chicago, IL 60606 New York, NY 10017
(312) 372-2000 (212) 450-4000
-----------
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, 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,
check the following box. [_]
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 or until this registration statement shall become
effective on such date as the Securities and Exchange Commission acting
pursuant to said Section 8(a), may determine.
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PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Other expenses in connection with the issuance and distribution of the
securities to be registered hereunder, all of which will be paid by us, will be
substantially as set forth below. All amounts are estimated except the
Securities and Exchange Commission registration fee, the National Association
of Securities Dealers filing fee and the Nasdaq National Market listing fee.
<TABLE>
<CAPTION>
Item Amount
---- ----------
<S> <C>
Securities and Exchange Commission registration fee.............. $ 21,344
NASD filing fee.................................................. 8,585
Nasdaq National Market listing fee............................... 88,500
Accounting fees and expenses..................................... 300,000
Legal fees and expenses.......................................... 350,000
Transfer agent fees and expenses................................. 25,000
Printing and engraving expenses.................................. 250,000
Directors and officers insurance premiums........................ 450,000
Miscellaneous expenses........................................... 6,571
----------
Total.......................................................... $1,500,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Limitation of Liability and Indemnification Matters
We are incorporated under the laws of the State of Illinois. Section 8.75 of
the Illinois Business Corporation Act provides generally that an Illinois
corporation may indemnify its directors and officers against (1) expenses,
including attorneys' fees, in the case of actions by or in the right of the
corporation or (2) against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement in all other cases, actually and
reasonably incurred by them in connection with any action, suit, or proceeding
if, in connection with the matters in issue, they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best interests
of the corporation and, in connection with any criminal suit or proceeding, if
in connection with the matters in issue, they had no reasonable cause to
believe their conduct was unlawful. Section 8.75 further permits an Illinois
corporation to grant to its directors and officers additional rights of
indemnification through bylaw provisions, agreements, votes of shareholders or
disinterested directors, or otherwise. An Illinois corporation may also
purchase indemnity insurance on behalf of such indemnifiable persons and to
advance to such indemnifiable persons expenses incurred in defending a suit or
proceeding upon receipt of an undertaking by such persons to repay such amount
if it is ultimately determined that such person is not entitled to be
indemnified by us in accordance with Section 8.75.
Our amended and restated articles of incorporation provide that our
directors shall not be personally liable to us or our shareholders for monetary
damages for breach of fiduciary duty as a director, except for (1) for any
breach of the director's duty of loyalty to us, (2) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (3) under Section 8.65 of the Illinois Business Corporation Act, as the
same exists or hereafter may be amended or (4) for any transaction from which
the director derived an improper benefit. Our amended and restated articles of
incorporation also provide that if the Illinois Business Corporation Act is
amended to authorize the further elimination or limitation of the liability of
directors, then the liability of our directors shall be eliminated or limited
to the full extent authorized by the Illinois Business Corporation Act as
amended.
Our amended and restated bylaws provide that we shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or in the right of the
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corporation, by reason of the fact that he is or was one of our directors or
officers, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in and not opposed to our best interests, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. Such person is also entitled to indemnification in
connection with an action or suit by or in the right of us against expenses,
including attorneys' fees actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit, if such
person acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, our best interests provided that no such indemnification
may be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to us unless and only to the extent that
the court in which such action or suit was brought shall determine that,
despite the adjudication of liability but in consideration of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. In addition, all
of our directors and officers are expected to be covered by insurance policies
maintained by us against certain liabilities for actions taken in their
capacities as such, including liabilities under the Securities Act.
The underwriting agreement also provides for indemnification by the
underwriters of our officers and directors for specified liabilities under the
Securities Act of 1933.
We have entered into agreements to indemnify our directors and some of our
executive officers, in addition to the indemnification provided for in our
amended and restated bylaws. These agreements, among other things, will
indemnify our directors and such executive officers for all direct and indirect
expenses and costs including, without limitation, all reasonable attorneys'
fees and related disbursements, other out of pocket costs and reasonable
compensation for time spent by such persons for which they are not otherwise
compensated by us or any third person, and liabilities of any type whatsoever,
including, but not limited to, judgments, fines and settlement fees, actually
and reasonably incurred by such person in connection with either the
investigation, defense, settlement or appeal of any threatened, pending or
completed action, suit or other proceeding, including any action by or in the
right of the corporation, arising out of such person's services as a director
or officer or as a director, officer, employee or other agent of any of our
subsidiaries or any other company or enterprise to which the person provides
services at our request if such director or officer acted in good faith and in
a manner he or she reasonably believed to be in, or not opposed to, our best
interests and, with respect to any criminal action or proceeding, if he or she
had no reasonable cause to believe his or her conduct was unlawful. We believe
that these provisions and agreements are necessary to attract and retain
talented and experienced directors and officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following information reflects our recent sales of unregistered
securities:
On or about March 19, 1996, we issued 1,242,858 shares of Series A
convertible preferred shares to three investors consisting of partnerships for
an aggregate consideration of $2,175,000.
On or about December 20, 1996, we issued 1,599,888 shares of Series B
convertible preferred shares to five investors consisting of partnerships and a
corporation for an aggregate consideration of $6,000,000.
On or about March 11, 1998, we issued 1,152,737 shares of our Series C
convertible preferred shares to four investors consisting of partnerships and a
corporation for an aggregate consideration of $8,000,000.
In June 1999, we issued subordinated convertible promissory notes with a
face value of $1.5 million and a stated interest rate of 10% per annum. In
connection with these notes, we issued warrants to purchase 43,228 shares of
our Series C convertible preferred shares to these holders at an exercise price
of $6.94 per
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share. The warrants to purchase our Series C convertible preferred shares
automatically convert to warrants to purchase 75,649 of our common shares at an
exercise price of $3.97 per share upon completion of this offering.
In May 1999, we also issued a warrant to purchase 17,500 shares of our
Series C convertible preferred shares at an exercise price of $6.94 per share
to Silicon Valley Bank. This warrant will automatically convert to a warrant to
purchase 30,625 of our common shares at an exercise price of $3.97 per share
upon completion of this offering. Silicon Valley Bank is also entitled to an
additional identical warrant if we do not repay the portion of the outstanding
amount under our revolving line of credit that is in excess of the borrowing
base, which amount could be up to $1.5 million, by March 16, 2000.
In November 1999, a $5.0 million secured bridge loan was made to Apropos by
Access Technology Partners, L.P., a fund of investors that is managed by an
entity associated with Hambrecht & Quist LLC, one of the managing underwriters
in this offering. Certain employees and entities associated with Hambrecht &
Quist LLC have a $1.4 million participation in this loan and ARCH Venture Fund
III, L.P., one of the investors in our convertible preferred shares, has a
$500,000 participation in this loan. Apropos granted to Access Technology
Partners, L.P. warrants that can be exercised to purchase 236,250 common shares
in connection with this loan and the employees and entities associated with
Hambrecht & Quist LLC that are participating in this loan have the right to
receive their pro rata portion of the warrants granted. Apropos also granted
ARCH Venture Fund III, L.P. warrants that can be exercised to purchase 26,250
common shares. The exercise price of the warrants is initially $5.34 per share
but is subject to adjustment.
No underwriters were involved in any of the transactions described above. We
issued all of the securities in the foregoing transactions in reliance upon the
exemption from registration available under Section 4(2) of the Securities Act,
including Regulation D promulgated thereunder, as transactions by an issuer not
involving any public offering and the transactions involved the issuance and
sale of our securities to financially sophisticated entities or individuals who
represented that they were aware of our activities and business and financial
condition, and who took these securities for investment purposes and understood
the ramifications of their actions. Each security holder represented that they
acquired such securities for investment for their own account and not for
distribution. All certificates representing the stock issued have a legend
imprinted on them stating that the shares have not been registered under the
Securities Act and cannot be transferred until properly registered under the
Securities Act or an exemption applies.
Between January 1, 1997 and January 1, 2000 we issued options to purchase
1,874,600 common shares at exercise prices ranging from $0.214 to $5.94 to
employees.
Between January 1, 1997 and January 1, 2000, an aggregate of 347,445 common
shares were issued upon exercise of options under our stock option plan
No underwriters were involved in any of the transactions relating to options
that are described above. We issued all of the securities in the foregoing
transactions in reliance upon the exemption from registration available under
Section 4(2) of the Securities Act, including Rule 701 promulgated thereunder,
as transactions by an issuer not involving any public offering and pursuant to
a written compensatory benefit plan.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
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<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Form of Amended and Restated Articles of Incorporation.
3.2* Form of Amended and Restated Bylaws.
</TABLE>
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<TABLE>
<CAPTION>
<C> <S>
4.1* Specimen Common Share Certificate of the Registrant.
5.1 Opinion of McDermott, Will & Emery.
10.1* Employment Agreement dated January 1, 2000 between the Registrant and
Kevin G. Kerns.
10.2* Employment Agreement dated March 19, 1996 between the Registrant and
Patrick K. Brady, as amended.
10.3* Employment Agreement dated April 23, 1997 between the Registrant and
Richard D. Brown.
10.4* Employment Agreement dated January 19, 2000 between the Registrant and
Jody P. Wacker.
10.5* 2000 Omnibus Incentive Plan.
10.6* Employee Stock Purchase Plan of 2000.
10.7* Form of Indemnity Agreement.
10.8* Registration Rights Agreement dated March 19, 1996, between the
Registrant and the persons listed on the signature pages thereto, as
amended.
10.9* Amended and Restated Registration Right Agreement dated November 5,
1999, by and among Silicon Valley Bank, Access Technology Partners,
L.P., ARCH Venture Fund III, L.P. and the Registrant.
21* Subsidiaries of the Registrant.
23.1* Consent of Ernst & Young LLP.
23.2 Consent of McDermott, Will & Emery (incorporated by reference into
Exhibit 5.1).
24.1* Power of Attorney (set forth on the signature page to this registration
statement).
27.1* Financial Data Schedule.
</TABLE>
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* Previously filed.
Financial Statements and Schedule:
Financial Statements:
Consolidated financial statements filed as a part of this registration
statement are listed in the Index to consolidated financial statements on page
F-1.
Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing of the offering 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 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 of 1933 and will be governed by the final adjudication of such
issue.
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The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, 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 of 1933 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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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Oakbrook Terrace, State of Illinois, on February 16, 2000.
Apropos Technology, Inc.
/s/ Michael J. Profita
By: _________________________________
Michael J. Profita
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed on February 16, 2000, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
Name and Signatures Title
------------------- -----
<S> <C>
/s/ Kevin G. Kerns* Director, Chief Executive Officer and
___________________________________________ President
Kevin G. Kerns
/s/ Michael J. Profita Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Michael J. Profita
/s/ Patrick K. Brady* Director
___________________________________________
Patrick K. Brady
/s/ Catherine R. Brady* Director
___________________________________________
Catherine R. Brady
/s/ Keith L. Crandell* Director
___________________________________________
Keith L. Crandell
/s/ Ian Larkin* Director
___________________________________________
Ian Larkin
/s/ Maurice A. Cox, Jr.* Director
___________________________________________
Maurice A. Cox, Jr.
/s/ George B. Koch* Director
___________________________________________
</TABLE> George B. Koch
/s/ Michael J. Profita
*By: ________________________________
Michael J. Profita
Attorney-in-fact
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<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
APROPOS TECHNOLOGY, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Additions
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Charged Charged to Balance
Balance at to Costs Other at End
Beginning and Accounts-- Deductions-- of
Description of Period Expenses Describe Describe Period
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<S> <C> <C> <C> <C> <C>
Year ended December 31,
1996
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts... $ -- 65,000 -- 3,000 (1) $ 62,000
Year ended December 31,
1997
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts... $ 62,000 46,000 -- 58,000 (1) $ 50,000
Year ended December 31,
1998
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts... $ 50,000 101,000 -- $151,000
Year ended December 31,
1999
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts... $151,000 311,000 -- -- $462,000
</TABLE>
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(1) Uncollectible accounts written off, net of recoveries.
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying consolidated balance sheets of Apropos
Technology, Inc. as of December 31, 1998 and 1999, and the related consolidated
statements of operations, shareholders' deficit, and cash flows for each of the
three years in the period ended December 31, 1999, and have issued our report
thereon dated January 13, 2000 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Item 16(b) of this Registration Statement. This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Chicago, Illinois
January 13, 2000
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
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<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Form of Amended and Restated Articles of Incorporation.
3.2* Form of Amended and Restated Bylaws.
4.1* Specimen Common Share Certificate of the Registrant.
5.1 Opinion of McDermott, Will & Emery.
10.1* Employment Agreement dated January 1, 2000 between the Registrant and
Kevin G. Kerns.
10.2* Employment Agreement dated March 19, 1996 between the Registrant and
Patrick K. Brady, as amended.
10.3* Employment Agreement dated April 23, 1997 between the Registrant and
Richard D. Brown.
10.4* Employment Agreement dated January 19, 2000 between the Registrant and
Jody P. Wacker.
10.5* 2000 Omnibus Incentive Plan.
10.6* Employee Stock Purchase Plan of 2000.
10.7* Form of Indemnity Agreement.
10.8* Registration Rights Agreement dated March 19, 1996, between the
Registrant and the persons listed on the signature pages thereto, as
amended.
10.9* Amended and Restated Registration Right Agreement dated November 5,
1999, by and among Silicon Valley Bank, Access Technology Partners,
L.P., ARCH Venture Fund III, L.P. and the Registrant.
21* Subsidiaries of the Registrant.
23.1* Consent of Ernst & Young LLP.
23.2 Consent of McDermott, Will & Emery (incorporated by reference into
Exhibit 5.1).
24.1* Power of Attorney (set forth on the signature page to this
registration statement).
27.1* Financial Data Schedule.
</TABLE>
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* Previously filed.
<PAGE>
Exhibit 5.1
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
February 16, 2000
Apropos Technology, Inc.
One Tower Lane, 28th Floor
Oakbrook Terrace, IL 60181
Re: Registration Statement on Form S-1
File No. 333-90873
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Ladies and Gentlemen:
You have requested our opinion in connection with the above-
referenced registration statement (the "Registration Statement"), under which
(i) Apropos Technology, Inc. (the "Company") intends to issue and sell in an
initial public offering 3,700,000 common shares, par value $.01 per share, of
the Company (the "Common Shares"), plus up to an additional 277,500 Common
Shares which may be issued and sold pursuant to an option granted to the
underwriters by the Company to cover over-allotments (collectively, plus any
additional Common Shares which may be registered and sold by the Company
pursuant to Rule 462(b) of the Securities Act of 1933, the "Primary Shares") and
(ii) a certain shareholder of the Company may issue and sell up to 277,500
Common Shares pursuant to an option granted to the underwriters to cover over-
allotments (together, with any additional Common Shares which may be registered
and sold by such shareholder pursuant to Rule 462(b) of the Securites Act of
1933, the "Secondary Shares").
In arriving at our opinion expressed below, we have examined the
Registration Statement and such other documents as we have deemed necessary to
enable us to express the opinion hereinafter set forth. In addition, we have
examined and relied, to the extent we deem proper, on certificates of officers
of the Company as to factual matters, and on the originals or copies certified
or otherwise identified to our satisfaction, of all such corporate records of
the Company and such other instruments and certificates of public officials and
other persons as we have deemed appropriate. In our examination, we have
assumed the authenticity of all documents submitted to us as originals, the
conformity to the original documents of all documents submitted to us as copies,
the genuineness of all signatures on documents reviewed by us and the legal
capacity of natural persons.
Based upon and subject to the foregoing, we are of the opinion
that upon filing the Amended and Restated Articles of Incorporation of the
Company filed as Exhibit 3.1 to the Registration Statement, (i) the Primary
Shares will have been duly
<PAGE>
authorized and, when issued in accordance with the terms and conditions set
forth in the Registration Statement, will be validly issued, fully paid and
non-assessable, and (ii) the Secondary Shares will have been duly authorized and
will have been validly issued and fully paid and will be non-assessable.
We hereby consent to the references to our firm under the
caption "Legal Matters" in the Registration Statement and to the use of this
opinion as an exhibit to the Registration Statement. In giving this consent, we
do not hereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ McDermott, Will & Emery
