As filed with the Securities and Exchange Commission on April 16, 1997.
Registration Statement No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
HANDY HARDWARE WHOLESALE, INC.
(Exact name of Registrant as specified in charter)
Texas 8300 Tewantin Drive 74-1381875
(State of Incorporation) Houston, Texas 77061 (I.R.S. Employer
(713) 644-1495 Identification No.)
(Address and telephone number of
Registrant's principal executive offices)
-------------------------
James D. Tipton Copy to:
President Donald W. Brodsky
Handy Hardware Wholesale, Inc. Deidre L. Treadwell
8300 Tewantin Drive Jenkens & Gilchrist,
Houston, Texas 77061 A Professional Corporation
(713) 644-1495 1100 Louisiana, Suite 1800
(Name, address and telephone number Houston, Texas 77002
of agent for service)
-------------------------
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: [X]
If the Registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box: [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum Proposed Maximum
Securities to be Number of Shares to Offering Price per Aggregate Offering Amount of
Registered be Registered Share Price Registration Fee
- ---------------------- ------------------- ------------------ ------------------ ----------------
<C> <C> <C> <C> <C>
Class A Common Stock,
$100 par value 2,200 $100.00 $ 220,000 $ 66.67
Class B Common Stock,
$100 par value 20,000 $100.00 $2,000,000 $ 606.06
Preferred Stock,
$100 par value 25,000 $100.00 $2,500,000 $ 757.58
------ ------- ---------- ---------
TOTAL 47,200 $4,720,000 $1,430.31
</TABLE>
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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
CROSS-REFERENCE SHEET
Between Items of Form S-2 and the Prospectus
Item No.
Prospectus Caption
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus............................. Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus.................... Available Information; Table
of Contents
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges..... The Company; Ratio of Earnings
to Combined Fixed Charges and
Preferred Stock Dividend
Requirements
4. Use of Proceeds........................ Cover Page; Use of Proceeds
5. Determination of Offering Price........ Determination of Offering
Price
6. Dilution............................... Inapplicable
7. Selling Security Holders............... Inapplicable
8. Plan of Distribution................... Plan of Distribution
9. Description of Securities to be
Registered............................. Description of Capital Stock;
Dividend Policy
10. Interests of Named Experts and Counsel. Inapplicable
11. Information with Respect to the
Registrant............................. The Company; Description of
Capital Stock; Available
Information; Incorporation of
Certain Documents by Reference
12. Incorporation of Certain Information
by Reference........................... Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities........................ Inapplicable
<PAGE>
PROSPECTUS
HANDY HARDWARE WHOLESALE, INC.
2,200 Shares of Class A Common Stock ($100 par value)
20,000 Shares of Class B Common Stock ($100 par value)
25,000 Shares of Preferred Stock ($100 par value)
There is no active trading market for any class of securities of HANDY
HARDWARE WHOLESALE, INC. (the "Company" or "Handy Hardware") offered hereby and
no market is expected to develop. The securities offered hereby are being
offered at their par value of $100 per share. See "Determination of Offering
Price." The securities are being offered in a continuous offering period through
April 30, 1998, unless extended by the Company.
<TABLE>
<CAPTION>
Underwriting Discounts
Class of Securities Price to Public and Commissions(1) Proceeds to Company(1)(2)
------------------------ --------------------- -------------------------
Per Share Total Per Share Total Per Share Total
- ----------------------- --------- ---------- --------- ----- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Class A Common Stock $100 $ 220,000 -0- -0- $100 $ 220,000
Class B Common Stock $100 $2,000,000 -0- -0- $100 $2,000,000
Preferred Stock $100 $2,500,000 -0- -0- $100 $2,500,000
</TABLE>
(1) No sales commissions are being charged by the Company, no underwriter
has been employed by the Company, and no one will receive a commission
in connection with this offering.
(2) Before deduction of expenses payable by the Company estimated at
$22,000.
Only holders of Class A Common Stock have voting rights. Holders of
Class B Common Stock and Preferred Stock have no voting rights. The holders of
the Preferred Stock have priority over holders of Class A and Class B Common
Stock upon liquidation of the Company and are entitled to a cumulative annual
dividend as declared by the Board of Directors of the Company of not less than
7% nor more than 20% of the par value of such shares. After payments to the
holders of Preferred Stock, the holders of Class A Common Stock and Class B
Common Stock would share ratably in the assets of the Company in the event of
its liquidation.
The securities offered hereby are being offered in a continuous
offering period through April 30, 1998, unless extended by the Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR STATE SECURITIES ADMINISTRATORS
NOR HAS THE COMMISSION OR ANY SUCH ADMINISTRATOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May ___ 1997.
1
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION..........................................................2
THE COMPANY....................................................................3
THE OFFERING...................................................................3
USE OF PROCEEDS................................................................3
DIVIDEND POLICY................................................................4
DETERMINATION OF OFFERING PRICE................................................4
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS....................................5
PLAN OF DISTRIBUTION...........................................................6
DESCRIPTION OF CAPITAL STOCK...................................................8
SUMMARY OF DEALER CONTRACT.....................................................9
LEGAL MATTERS..................................................................9
EXPERTS........................................................................9
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................10
--------------------
No person has been authorized to give any information or to make any
representation not contained in this Prospectus in connection with the offer
made by this Prospectus. If given or made, such information or representation
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer of any securities other than the
registered securities to which it relates or an offer to any person in any
jurisdiction where such an offer would be unlawful. Neither the delivery of the
Prospectus nor sale hereunder shall create an implication that there has been no
change in the affairs of the Company since the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 5th Street, N.W., Room
1024, Washington, D.C. 20549, and at the Commission's regional offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048,
at prescribed rates. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission at http://www.sec.gov. The Company
has delivered to each purchaser of the securities offered hereby a complete and
legible copy of the Company's most recent annual report on Form 10-K and will
deliver its most recent quarterly report on Form 10-Q.
The Company has filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act of 1933, as amended, with
respect to the securities offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits
thereto. For further information with respect to the Company and the
Registration Statement, reference is hereby made to the Registration Statement
and the exhibits thereto. Copies of the Registration Statement may be inspected
without charge at the principal office of the Commission in Washington, D.C.,
and copies of all or any part thereof may be obtained from the Commission upon
payment of the charges prescribed by the Commission.
2
<PAGE>
THE COMPANY
Handy Hardware was formed by 13 independent hardware dealers in 1961
for the purpose of providing warehouse facilities and centralized purchasing
services that would allow interested independent hardware dealers
("Member-Dealers") to compete more effectively in areas of price and service.
The Company sells merchandise to its Member-Dealers at its cost plus a markup
charge, resulting generally in a lower price than the Member-Dealers could have
obtained on their own. The Company is owned entirely by its Member-Dealers (and
former Member-Dealers who have not sold their shares back to the Company) and is
operated for the benefit of those dealers. As of April 1, 1997, the Company had
937 active Member-Dealers. The Company utilizes a central warehouse and office
facility located in Houston, Texas, and maintains a fleet of 39 trailers owned
by the Company and 43 leased power units and trailers which are used for
merchandise delivery. At the date of this Prospectus, all of Handy Hardware's
Member-Dealers were located in Texas, Louisiana, Mississippi, Alabama, Florida,
Oklahoma, Arkansas, Mexico and Central America. For a more detailed description
of the Company's business and operations, see Items 1 and 2 on pages 1-7 of the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
The Company's executive offices are located at 8300 Tewantin Drive,
Houston, Texas 77061, and its telephone number is (713) 644-1495.
THE OFFERING
Securities offered..................... 2,200 shares of Class A Common Stock
($100 par value)
20,000 shares of Class B Common Stock
($100 par value)
25,000 shares of Preferred Stock
($100 par value)
Price of each share offered............ $100.00
Use of proceeds........................ Expansion of inventory and purchase of
equipment
USE OF PROCEEDS
The shares of capital stock of the Company offered hereby and remaining
available for sale are projected to be sold over a period of one year (unless
extended by the Company) on a monthly basis, beginning in May 1997. The gross
proceeds to the Company from the sale of the securities offered hereby is
$4,720,000, (before deduction of expenses of the offering, and without taking
into account any amounts paid to repurchase shares of capital stock of the
Company during this period). This estimate is based upon two assumptions: (1)
continuation of the current policy of stock purchases being made in amounts
equal to 2% of warehouse purchases; and (2) warehouse purchases for 1997 and
beyond remaining at the same levels as in 1996. The Company expects to utilize
proceeds from the offering in the following manner and priority order based upon
anticipated budgets and capital expenditures for 1997: approximately $4,060,000
would be used for expansion of inventory, $150,000 for upgrading computer
equipment, $350,000 for expansion and upgrading of warehouse equipment, $60,000
to upgrade company cars, $25,000 for upgrading office equipment and $75,000 for
upgrading catalog equipment. If gross proceeds of the offering are less than
$4,720,000, the Company will use working capital as required to provide the
necessary level of funding of the above-mentioned projects.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained on pages 9-12 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
3
<PAGE>
DIVIDEND POLICY
One of the goals of the Company is to provide its Member-Dealers with
quality merchandise at a low cost, together with services that will increase the
profit of the individual Member-Dealers as opposed to the profits of the
Company. For this reason, the Company has attempted to keep its net income as a
percentage of sales (and thus the funds that would be available for the payment
of dividends) relatively constant from year to year. It is the present policy of
the Company's Board of Directors to retain all earnings not needed for Preferred
Stock dividends to finance the development and growth of the Company's business.
The Company has not declared or paid a cash dividend on either class of its
Common Stock since its inception and does not anticipate doing so in the
foreseeable future. The Company's future dividend policy with respect to
Preferred Stock will depend upon its earnings, capital requirements, financial
condition and other relevant factors.
The Company is required by its Articles of Incorporation to pay a
dividend on its outstanding shares of Preferred Stock of not less than 7% and
not more than 20% of the par value of such shares each year, the exact rate to
be determined by the Board of Directors. The record date for payment of
dividends on Preferred Stock is January 31 of each year and only shareholders of
record on that date are eligible to receive the dividend. In February of each
year listed below the Board of Directors has declared such a dividend, which was
paid in the following month, at the percentages of par value indicated:
1997 -- 13%
1996 -- 12%
1995 -- 10%
1994 -- 12%
1993 -- 15%
DETERMINATION OF OFFERING PRICE
The offering price of $100 per share for the shares offered hereby is
equal to the par value of the stock, the price at which the Company always has
sold its shares. To the knowledge of the Company the only secondary trading in
the securities of the Company has been the transfer of Preferred Stock to
certain affiliates of its Member-Dealers and the repurchase of shares from
retiring Member-Dealers by the Company at a price of $100 per share. For more
information regarding the repurchase program, see "Plan of Distribution -
Repurchases From Overinvested Member-Dealers" below. There is no assurance that
the Company will continue to repurchase shares from retiring Member-Dealers in
the future, or if repurchases are made, that the repurchase price will be $100
per share. For more information regarding the market for the Company's shares,
see "Market for Registrant's Common Equity and Related Stockholder Matters" on
page 7 of the Company's Annual Report on Form 10-K for the year ended December
31, 1996.
4
<PAGE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The ratio of earnings to combined fixed charges and preferred stock
dividend requirements of the Company for each of the last five fiscal years is
as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
EARNINGS(1)
Pretax Income $1,857,326 $1,568,634 $ 887,785 $ 766,101 $ 617,215
Plus: Fixed Charges 333,464 338,758 352,012 409,074 409,188
---------- ---------- ---------- ---------- ----------
TOTAL EARNINGS $2,190,790 $1,907,392 $1,239,797 $1,175,175 $1,026,403
========== ========== ========== ========== ==========
FIXED CHARGES(2)
Interest Expense 172,483 236,743 248,746 272,478 318,964
Rental Expense 160,981 102,015 103,266 101,596 87,724
Amortization of Debt Expense -0- -0- -0- 35,000 2,500
---------- ---------- ---------- ---------- ----------
TOTAL FIXED CHARGES 333,464 338,758 352,012 409,074 409,188
PREFERRED DIVIDEND REQUIREMENTS(3) 792,352 617,162 685,397 771,611 704,237
---------- ---------- ---------- ---------- ----------
TOTAL FIXED CHARGES AND PREFERRED
DIVIDEND REQUIREMENTS $1,125,816 $ 955,920 $1,037,409 $1,180,685 $1,113,425
========== ========== ========== ========== ==========
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED DIVIDEND 1.95 2.00 1.19 .99 .92
========== ========== ========== ========== ==========
REQUIREMENTS
Coverage Deficiency $ 5,510 $ 87,022
========== ==========
</TABLE>
- --------------
(1) "Earnings" include pretax income from continuing operations, to which
has been added back fixed charges.
(2) "Fixed charges" include interest expense, rental expense representative
of an interest factor, and amortization of debt expense.
(3) "Preferred dividend requirements" constitute the amount of pre-tax
earnings required to cover, after taxes, the dividends paid on all
issued and outstanding shares of Preferred Stock of the Company.
For the fiscal years 1993 and 1992 earnings were inadequate to cover
fixed charges and Preferred Stock dividends, and the coverage deficiencies were
$5,510, and $87,022, respectively. For the fiscal years 1996, 1995 and 1994,
earnings exceeded fixed charges and preferred stock dividends. Fixed charges and
Preferred Stock dividends were paid from working capital in fiscal years 1993
and 1992, which would be the source for payment of fixed charges and/or
dividends if future coverage deficiencies occur.
5
<PAGE>
PLAN OF DISTRIBUTION
The shares of Class A Common Stock, Class B Common Stock and Preferred
Stock offered hereby will be sold only to Member-Dealers of the Company. Each of
the Company's Member-Dealers is an independent hardware store that has entered
into a contract with the Company in order that it might buy some or all of its
merchandise through the Company. Prior to becoming a new Member-Dealer of the
Company, the independent hardware store enters into a Dealer Contract ("Dealer
Contract") and a Stock Subscription Agreement. Pursuant to these agreements,
each Member-Dealer agrees to make a fixed initial purchase of Class A Common
Stock followed by periodic purchases of Class B Common Stock and Preferred
Stock. At the time this Prospectus is delivered, it will be accompanied by a
Dealer Contract and a Stock Subscription Agreement if the investor is not
already a Member-Dealer and has not previously executed a Dealer Contract and a
Stock Subscription Agreement or if such investor is already a Member-Dealer but
has opened a new store that will also be a Member-Dealer.
Purchase of Class A Common Stock
At the time the investor becomes a Member-Dealer, he is required to
purchase, in cash, 10 shares of Class A Common Stock at $100 per share.
Purchases of Class B Common Stock and Preferred Stock
General. In approximately March of each fiscal year, the Company
calculates a minimum desired level of stock ownership for each Member-Dealer
("Desired Stock Ownership"), based on (i) the dollar amount of Class A Common
Stock, Class B Common Stock and Preferred Stock owned by the Member-Dealer as of
December 31 of the preceding fiscal year ("Actual Stock Ownership") and (ii) the
Member-Dealer's total purchases of merchandise from the Company during that
preceding fiscal year ("Total Purchases"). The minimum Desired Stock Ownership
for a Member-Dealer is $10,000. If the Member-Dealer's Actual Stock Ownership is
less than his Desired Stock Ownership, then throughout the period from April 1
of the current fiscal year to March 31 of the following fiscal year the Company
will collect funds from the Member-Dealer for the purchase of additional Class B
Common Stock and Preferred Stock ("Purchase Funds").
Calculation of Desired Stock Ownership. Each Member-Dealer's Desired
Stock Ownership is calculated as set forth in the following table:
<TABLE>
<CAPTION>
Actual Stock
Ownership Desired Stock Ownership(1)
- ------------------- -----------------------------------------------
<S> <C>
$1 to $31,249 $1.00 for every $8.00 of Total Purchases
$31,250 to $56,249 $1.00 for every $8.00 of Total Purchases
from $1 to $250,000
+ $1.00 for every $10.00 of Total Purchases
over $250,000
$56,250 to $74,999 $1.00 for every $8.00 of Total Purchases
from $1 to $250,000
+ $1.00 for every $10.00 of Total Purchases
from $250,000 to $500,000
+ $1.00 for every $13.33 of Total Purchases
over $500,000
$75,000 to $87,499 $1.00 for every $8.00 of Total Purchases
from $1 to $250,000
+ $1.00 for every $10.00 of Total Purchases
from $250,000 to $500,000
+ $1.00 for every $13.33 of Total Purchases
from $500,000 to $750,000
+ $1.00 for every $20.00 of Total Purchases
over $750,000
$87,500 and above $1.00 for every $8.00 of Total Purchases
from $1 to $250,000
+ $1.00 for every $10.00 of Total Purchases
from $250,000 to $500,000
+ $1.00 for every $13.33 of Total Purchases
from $500,000 to $750,000
+ $1.00 for every $20.00 of Total Purchases
from $750,000 to $1,000,000
+ $1.00 for every $40.00 of Total Purchases
over $1,000,000
</TABLE>
- --------------
(1) The minimum Desired Stock Ownership is $10,000. In each case "Total
Purchases" are measured as of the end of the immediately preceding
fiscal year.
6
<PAGE>
Example.
In March 1997, the Company calculates that as of December 31, 1996, a
Member-Dealer's Actual Stock Ownership was $32,000 and his Total Purchases
during 1996 were $300,000. The Member-Dealer's Desired Stock Ownership will
be $36,250 ($1.00 for each $8.00 of the first $250,000 of Total Purchases
[$31,250] plus $1.00 for each $10.00 of the next $50,000 of Total Purchases
[$5,000]). Because the Member-Dealer's Actual Stock Ownership is less than
his Desired Stock Ownership, the Company will collect Purchase Funds
throughout the period from April 1, 1997 to March 31, 1998 for the purchase
of additional Class B Common Stock and Preferred Stock.
Collection of Purchase Funds. Each Member-Dealer receives from the
Company a semi-monthly statement of the Total Purchases made by the
Member-Dealer during the covered billing period. Total Purchases include
purchases of inventory from the Company's warehouse ("Warehouse Purchases") and
purchases of inventory by the Member-Dealer directly from the manufacturer which
are billed through the Company. If the Company has determined that Purchase
Funds are to be collected from a Member-Dealer for a particular April 1 to March
31 period, then each statement sent to that Member-Dealer during that period
will contain an additional charge for Purchase Funds, in an amount equal to two
percent (2%) of the Warehouse Purchases invoiced on the statement.1 The Company
will continue to collect Purchase Funds throughout the April 1 to March 31
period, even though the Member-Dealer attains his Desired Stock Ownership during
the course of the period. On a monthly basis, the Company reviews the amount of
unexpended Purchase Funds then being held for each Member-Dealer. If a
Member-Dealer has unexpended Purchase Funds in an amount of at least $2,000, the
Company applies $2,000 to the purchase of 10 shares of Class B Common Stock and
10 shares of Preferred Stock at $100 per share.
Overinvested Member-Dealers. If at the end of any fiscal year a
Member-Dealer's Actual Stock Ownership exceeds his Desired Stock Ownership (an
"Overinvested Member-Dealer"), he will not be required to pay any Purchase Funds
during the following April 1 to March 31 period. An Overinvested Member-Dealer
may voluntarily continue to make additional purchases of Class B Common Stock
and Preferred Stock by paying Purchase Funds to the Company in amounts equal to
2% of Warehouse Purchases.
Repurchases from Overinvested Member-Dealers. Since 1991 the Company
has repurchased certain shares of Class B Common Stock and Preferred Stock from
Overinvested Member-Dealers whose Actual Stock Ownership exceeded their Desired
Stock Ownership by $4,000 or more. The amount eligible for repurchase from each
Overinvested Member-Dealer in each year has been equal to one-fourth of the
excess amount, equally divided between shares of Class B Common Stock and
Preferred Stock. The repurchases have been made at the full initial sale price
of $100 per share. In 1996, approximately 10% of the shares eligible for
repurchase from Overinvested Member-Dealers were submitted for repurchase, for
which the Company expended $16,825. The Company currently intends, but is not
required, to repurchase from Overinvested Member-Dealers their entire
overinvested amounts. The Company's ability to conduct such repurchases,
however, will depend upon the Company's future results of operations, liquidity,
capital needs and other financial factors. Accordingly, there can be no
assurance that repurchases will take place in the future, or if so, in what
amounts or over what time periods.
Affiliated Member-Dealers
If one or more individuals who control an existing Member-Dealer open a new
store which will also be a Member-Dealer, the new Member-Dealer is required to
make an initial purchase of 10 shares of Preferred Stock rather than 10 shares
of Class A Common Stock. In all other respects, however, the Company will treat
the new Member-Dealer as an entirely separate entity for purposes of determining
required stock purchases. The Company will calculate a separate Desired Stock
Ownership for the new Member-Dealer and will maintain a separate account for
Purchase Funds paid by the new Member-Dealer.
- --------------
1 The Subscription Agreement entitles the Company to collect 2% of
Total Purchases as Purchase Funds. At present, however, the board of
directors has determined to collect 2% of Warehouse Purchases only.
7
<PAGE>
Manner of Offering
The securities offered hereby will be sold only in the states of Texas,
Louisiana, Mississippi, Alabama, Florida, Oklahoma and Arkansas, as well as in
Mexico and Central America, through employees of the Company who are licensed to
sell securities in those states or are exempt from licensing requirements. No
underwriter will be used in connection with this offering. No sales commissions
will be charged or paid by the Company and no discounts will be allowed.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized by its Articles of Incorporation to issue 20,000
shares of Class A Common Stock, par value $100 per share, 100,000 shares of
Class B Common Stock, par value $100 per share, and 100,000 shares of Preferred
Stock, par value $100 per share.
Class A Common Stock and Class B Common Stock
The holders of Class A Common Stock are entitled to one vote for each share
held of record on each matter submitted to a vote of shareholders. In accordance
with the bylaws of the Company, nine directors are to be elected for three-year
terms, and three of such directors are elected at each annual meeting of
shareholders. The tenth director of the Company, who serves as President of the
Company, is elected for a one-year term at each annual meeting of shareholders.
Holders of Class A Common Stock must be engaged in the retail sale of goods and
merchandise, and may not be issued or retain more than 10 shares of Class A
Common Stock at any time. The holders of Class B Common Stock are not entitled
to vote on matters submitted to a vote of shareholders except as specifically
provided by Texas law.
Shares of Class A and Class B Common Stock are neither redeemable nor
convertible, and the holders of Class A and Class B Common Stock have no
preemptive rights to purchase any securities of the Company. Subject to the
prior rights of holders of Preferred Stock, holders of Class A and Class B
Common Stock are entitled to receive such dividends as may be lawfully declared
by the Board of Directors and paid by the Company and, in the event of
liquidation, dissolution or winding up of the Company, are entitled to share
ratably in all assets remaining after payment of liabilities and a liquidation
preference of $100 per share payable to holders of the Preferred Stock. All
outstanding shares of Class A and Class B Common Stock of the Company are, and
the shares of Class A and Class B Common Stock to be outstanding upon completion
of this offering will be, validly issued, fully paid and nonassessable. As of
March 25, 1997, there were 833 holders of record of Class A Common Stock and 701
holders of record of Class B Common Stock.
Holders of Class A Common Stock may not sell those shares to a third party
without first offering to sell them back to the Company. There are no specific
restrictions on the transfer of the Company's Class B Common Stock; however, all
shares of Class A and Class B Common Stock are, to the best knowledge of the
Company, owned by Member-Dealers or former Member-Dealers of the Company.
Preferred Stock
The holders of Preferred Stock are entitled to cumulative dividends of not
less than 7% per year nor more than 20% per year of the par value ($100.00 per
share) of the shares of Preferred Stock, as fixed by the Board of Directors. The
Preferred Stock has a liquidation value of $100 per share. The holders of
Preferred Stock are not entitled to vote on matters submitted to a vote of
shareholders except as specifically provided by Texas law. The shares of
Preferred Stock are not convertible, but are subject to redemption (at the
option of the Company) by vote of the Company's Board of Directors, in exchange
for $100 per share and all accrued unpaid dividends. The Company has no
obligation to redeem the Preferred Stock or provide for a sinking fund for the
redemption of such shares.
There are no specific restrictions on the transfer of the Preferred Stock;
however, all shares of Preferred Stock are, to the best knowledge of the
Company, owned by Member-Dealers or former Member-Dealers of the Company or
affiliates of Member-Dealers. As of March 25, 1997, there were 752 holders of
record of Preferred Stock.
8
<PAGE>
SUMMARY OF DEALER CONTRACT
The following is a summary of certain terms and conditions of the Dealer
Contract which each independent dealer must enter into prior to becoming a
Member-Dealer. All such information is qualified by reference to the forms of
Dealer Contract delivered to each investor prior to or contemporaneously with
the delivery of this Prospectus.
Under each Dealer Contract, the Company agrees to sell merchandise and
furnish services to the Member-Dealer at its laid in price (purchase price as
adjusted for freight costs), plus a mark-up to be set by the Company. The
merchandise sold by the Company to the Member-Dealers is f.o.b. the Company's
warehouse. The Dealer Contract provides that merchandise will be delivered by
the Company's trucks or common carrier, with charges to be set by the Company.
The Company also agrees in each Dealer Contract to permit the Member-Dealer the
use of the trade name "Handy Hardware Store" and to furnish to the Member-Dealer
signs, a general catalog and other materials for the Member-Dealer's operation
as a Handy Hardware Store.
Each Dealer Contract contains the agreement of the Member-Dealer to purchase
shares of the Company's securities in the manner set forth in a Stock
Subscription Agreement to be entered into between the Company and the
Member-Dealer. The Member-Dealer further agrees to pay an initial service charge
(currently set at $200) to defray in part the costs of establishing the new
account. In addition, the Member-Dealer agrees to maintain in confidence all
materials disclosed by the Company and, upon termination of the agreement, to
return all materials furnished by the Company. Member-Dealers also agree to pay
all invoices when due and to participate actively as a Company Member-Dealer.
Nothing in the Dealer Contract, however, is to be construed as placing a minimum
purchase requirement on the Member-Dealer in order to remain a Member-Dealer.
The Dealer Contract is cancelable by either party upon 60 days notice to the
other party.
LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby are
being passed upon for the Company by Jenkens & Gilchrist, A Professional
Corporation, Houston, Texas.
EXPERTS
The financial statements of the Company and its subsidiaries included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, have
been examined by Clyde D. Thomas & Company, independent public accountants, as
stated in their opinion incorporated herein by reference. The financial
statements referred to above are incorporated herein by reference in reliance
upon such report and upon the authority of that firm as experts in accounting
and auditing.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, which was delivered to the shareholders of the
Company as the Annual Report to Shareholders pursuant to Rule 14a-3
promulgated under the Exchange Act;
(2) the Company's most recent Quarterly Report on Form 10-Q, from the date
filed; and
(3) all other reports filed by the Company with the Commission pursuant to
Sections 13(a) or 15(d) of the Exchange Act since the end of the fiscal
year covered by the Annual Report referred to in (1) above.
This Prospectus is accompanied by copies of document (1) listed above.
Any statement contained in a previously filed document incorporated by
reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
accompanying Prospectus supplement, or in any other subsequently filed document
which also is or is deemed to be incorporated by reference, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
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PART II
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses payable by the Company in connection with the
issuance and distribution of the securities to be registered and offered hereby
are as follows:
SEC registration fee $ 1,430
Printing expense 570
Legal fees and expenses 10,500
Blue sky fees and expenses 7,500
Accounting fees and expenses 2,000
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TOTAL $ 22,000
========
Item 15. Indemnification of Directors and Officers.
Article 2.02-1 of the Texas Business Corporation Act provides that a
corporation may indemnify its officers, directors, employees and agents for
expenses and costs incurred in certain proceedings arising out of actions taken
in their official capacity only if such persons were acting in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation, except in relation to matters in which they have been found
liable (i) to the corporation, or (ii) on the basis that personal benefit was
improperly received regardless of whether or not the benefit resulted from
action taken in their official capacity. In the case of any criminal proceeding,
such persons must also have had no reasonable cause to believe such conduct was
unlawful. Article 2.02-1 further provides that a corporation shall indemnify its
officers and directors against reasonable expenses incurred in connection with
proceedings arising out of actions taken in their official capacity in which
such persons have been wholly successful, on the merits or otherwise, in the
defense of such actions.
Item 16. Exhibits.
The following is a list of exhibits filed as part of this Registration
Statement.
Exhibit
Number
4.1 Specimen copy of certificate representing Class A
Common Stock. (Filed as Exhibit 4.1 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1983, and incorporated herein by
reference.)
4.2 Specimen copy of certificate representing Class B
Common Stock. (Filed as Exhibit 4.2 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1983, and incorporated herein by
reference.)
4.3 Specimen copy of certificate representing Preferred
Stock. (Filed as Exhibit 4.3 to the Company's Annual
Report on Form 10-K for the year ended December 31,
1983, and incorporated herein by reference.)
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4.4 Form of Subscription to Shares of Handy Hardware
Wholesale, Inc. for Class A Common Stock, Class B
Common Stock and Preferred Stock. (Filed as Exhibit
4.4 to this Registration Statement as originally
filed on May 5, 1994, and incorporated herein by
reference.)
(1) 5.1 Opinion of Jenkens & Gilchrist, A Professional
Corporation.
(2) 10.1 Employment Agreement as amended, between Handy
Hardware Wholesale, Inc. and James D. Tipton. (Filed
as Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1983, and
incorporated herein by reference.)
(2) 10.2 Second Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated July 19, 1985. (Filed as
Exhibit 10.2 to the Company's Annual Report on Form
10-K for the year ended December 31, 1985, and
incorporated herein by reference.)
(2) 10.3 Third Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated December 16, 1988. (Filed as
Exhibit 10.3 to the Company's Annual Report on Form
10-K for the year ended December 31, 1988, and
incorporated herein by reference.)
(2) 10.4 Fourth Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated September 20, 1991. (Filed as
Exhibit 10.4 to the Company's Annual Report on Form
10-K for the year ended December 31, 1991, and
incorporated herein by reference.)
(2) 10.5 Fifth Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated September 7, 1993. (Filed as
Exhibit 10.8 to the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and
incorporated herein by reference.)
10.6 Split-Dollar Agreement dated November 13, 1991
between the Company and James D. Tipton. (Filed as
Exhibit 10.5 to the Company's Annual Report on Form
10-K for the year ended December 31, 1991, and
incorporated herein by reference.)
10.7 Form of Dealer Contract (Alabama, Arkansas, Florida,
Louisiana, Oklahoma and Texas). (Filed as Exhibit
10.7 to this Registration Statement as originally
filed on May 5, 1994, and incorporated herein by
reference.)
10.8 Form of Dealer Contract (Mississippi). (Filed as
Exhibit 10.8 to this Registration Statement as
originally filed on May 5, 1994, and incorporated
herein by reference.)
10.9 Amendment and Restatement of Credit Agreement dated
April 30, 1996, between Texas Commerce Bank, N.A.,
and Handy Hardware Wholesale, Inc. (Filed as Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996, and
incorporated herein by reference.)
(2) 10.11 Sixth Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated November 14, 1995. (Filed as
Exhibit 10.11 to the Company's Annual Report on Form
10-K for the year ended December 31, 1995, and
incorporated herein by reference.)
(2) 10.12 Seventh Amendment to the Employment Agreement, as
amended between Handy Hardware Wholesale, Inc. and
James D. Tipton dated September 30, 1996. (Filed as
Exhibit 10.12 to the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and
incorporated herein by reference)
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11.1 Statement re computation of per share earnings (Filed
as Exhibit 11.1 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, and
incorporated herein by reference.)
12.1 Statements re computation of ratios (omitted because
sufficiently described in this Registration Statement
under "Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividend Requirements" in the
Prospectus).
13.1 Annual Report to Security Holders (incorporated by
reference from the Registrant's Annual Report on Form
10-K for the year ended December 31, 1996 as
previously filed with the Commission).
(1) 23.1 Consent of Clyde D. Thomas & Company.
(1) 23.2 Consent of Jenkens & Gilchrist, A Professional
Corporation (contained in their opinion filed as
Exhibit 5.1 hereto).
- --------------
(1) Filed herewith.
(2) Management Contract
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1993, as amended (the "1933 Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the 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 the Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the 1933 Act,
each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act") (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the 1934 Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) To deliver or cause to be delivered with the Prospectus, to each
person to whom the Prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the Prospectus and
furnished
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pursuant to and meeting the requirement of Rule 14a-3 or Rule 14c-3 under the
1934 Act; and, where interim financial information required to be present by
Article 3 of Regulation S-X are not set forth in the Prospectus, to deliver or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report on Form 10-Q that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Handy Hardware Wholesale, Inc., certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-2
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized in the City of Houston, State of
Texas on April 7, 1997.
HANDY HARDWARE WHOLESALE, INC.
/s/ James D. Tipton
--------------------------------------
James D. Tipton
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
constitutes and appoints James D. Tipton his true and lawful attorney-in-fact
and agent with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this Registration Statement, and to file the same, with all exhibits thereto,
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or his substitute may lawfully do or cause
to be done by virtue hereof.
Signature Title Date
- ----------------------------- -------------------------- ---------------
President, Chief Executive April 7, 1997
/s/ James D. Tipton Officer and Director
- -----------------------------
James D. Tipton
Chief Financial and April 4, 1997
/s/ Tina S. Kirbie Accounting Officer
- -----------------------------
Tina S. Kirbie
/s/ Weldon D. Bailey Director April 14, 1997
- -----------------------------
Weldon D. Bailey
/s/ Norman J. Bering, II Director April 7, 1997
- -----------------------------
Norman J. Bering, II
/s/ Susie Bracht-Black Director April 7, 1997
- -----------------------------
Susie Bracht-Black
/s/ Virgil H. Cox Director April 11, 1997
- -----------------------------
Virgil H. Cox
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/s/ Samuel J. Dyson Director April 7, 1997
- -----------------------------
Samuel J. Dyson
/s/ Robert L. Eilers Director April 7, 1997
- -----------------------------
Robert L. Eilers
/s/ Phil M. Grothues Director April 7, 1997
- -----------------------------
Phil M. Grothues
/s/ Larry Ward Director April 7, 1997
- -----------------------------
Larry Ward
/s/ Leroy Wellborn Director April 7, 1997
- -----------------------------
Leroy Wellborn
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Exhibit 5.1
Opinion of
Jenkens & Gilchrist, A Professional Corporation
<PAGE>
Jenkens & Gilchrist
A Professional Corporation
1100 Louisiana, Suite 1800
Houston, Texas 77002
(713) 951-3341
April 16, 1997
Handy Hardware Wholesale, Inc.
8300 Tewantin Drive
Houston, Texas 77061
Re: Opinion as to legality of certain securities of Handy Hardware
Wholesale, Inc.
Gentlemen:
We have acted as counsel to Handy Hardware Wholesale, Inc., a Texas
corporation (the "Company"), in connection with the filing under the Securities
Act of 1933, as amended, of a Registration Statement on Form S-2 (the
"Registration Statement") covering 2,200 shares of Class A Common Stock, 20,000
shares of Class B Common Stock, and 25,000 shares of Preferred Stock
(collectively, the "Shares"). The terms and conditions of the offering of the
Shares are described in the Prospectus contained in the Registration Statement.
We have examined (i) the Registration Statement, (ii) the Articles of
Incorporation of the Company, as amended, and the bylaws and corporate
proceedings of the Company, and (iii) such other records, documents, opinions
and instruments as in our judgment are necessary or appropriate to enable us to
render this opinion. We have made such legal and factual determinations as we
have deemed relevant.
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares are
duly authorized, and when issued to and paid for by the purchasers thereof, will
be validly issued, fully paid and non-assessable securities of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to reference being made to our firm in the Prospectus
contained therein. We also consent to the filing of this opinion with state
securities officials in connection with the registration of the Shares under
applicable state securities laws.
Very truly yours,
JENKENS & GILCHRIST,
a Professional Corporation
By: /s/ Donald W. Brodsky
------------------------
Donald W. Brodsky
Authorized Signatory
DWB/at
<PAGE>
EXHIBIT 12.1
STATEMENT RE COMPUTATION OF RATIOS
Omitted because sufficiently described in the Prospectus under "Ratio
of Earnings to Combined Fixed Charges and Preferred Stock Dividend
Requirements".
<PAGE>
Exhibit 23.1
Consent of Clyde D. Thomas & Company
<PAGE>
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference herein of our report
included in Handy Hardware Wholesale, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1996, and the reference to our firm under the heading
"Experts" in the Prospectus.
/s/ Clyde D. Thomas & Company
-------------------------------
CLYDE D. THOMAS & COMPANY
Certified Public Accountants
February 28, 1997
<PAGE>
