<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AUGUST 31, 1998
REGISTRATION NO. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------
NORSTAN, INC.
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
MINNESOTA 7385 41-0835746
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of incorporation or organization) Classification Code Number) identification number)
</TABLE>
9625 WEST 76TH STREET, SUITE 150
MINNEAPOLIS, MINNESOTA 55344
(612) 903-2000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
COPY TO:
MR. KENNETH S. MACKENZIE PHILIP J. TILTON, ESQ.
NORSTAN, INC. MASLON EDELMAN BORMAN & BRAND, LLP
605 NORTH HIGHWAY 169 3300 NORWEST CENTER
PLYMOUTH, MINNESOTA 55441 MINNEAPOLIS, MINNESOTA 55402-4140
(612) 513-4500 (612) 672-8200
APPROXIMATE DATE OF THE COMMENCEMENT OF PROPOSED DISTRIBUTION: From time to time
after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------- ------------------- -------------------------- -------------------------- ---------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE PRICE(1) REGISTRATION FEE
- ---------------------------- ------------------- -------------------------- -------------------------- ---------------------
- ---------------------------- ------------------- -------------------------- -------------------------- ---------------------
common stock, par value
<S> <C> <C> <C> <C>
$.10 per share 257,631$ 18.25 $4,701,765.75 $1,387.02
- ---------------------------- ------------------- -------------------------- -------------------------- ---------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 of the Securities Act based upon a $18.25 per share
average of high and low sales prices of the Registrant's common stock on the
Nasdaq National Market on August 26, 1998.
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> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
SUBJECT TO COMPLETION, DATED AUGUST 31, 1998
PROSPECTUS
NORSTAN, INC.
257,631 SHARES OF COMMON STOCK
-----------------------------------------
All of the shares of common stock of Norstan, Inc. (the "Company")
offered hereby were issued to the shareholders and holders of vested options to
purchase shares of common stock of Wordlink, Inc. (collectively, the "Selling
Shareholders") in connection with the Company's June 19, 1998 acquisition of
Wordlink, Inc. The Company will not receive any of the proceeds for the sale of
shares by the Selling Shareholders.
The Company's common stock (the "Common Stock") is listed on the Nasdaq
National Market under the symbol "NRRD." On August 28,1998, the last sale
price for the Common Stock as reported on the Nasdaq National Market was
$____.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DESCRIPTION OF CERTAIN
FACTORS WHICH SHOULD BE CONSIDERED BY INVESTORS BEFORE PURCHASING THE SECURITIES
OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is August 31, 1998.
ADDITIONAL INFORMATION
This Prospectus is part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") which the Company has filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act relating to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to herein are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
<PAGE> 3
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information statements
and other information as well as the Registration Statement and exhibits of
which this Prospectus is a part filed by the Company may be inspected and copied
at the public reference facilities of the Commission, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as at the following
Regional Offices: 7 World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street--Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Commission by mail at prescribed rates.
Requests should be directed to the Commission's Public Reference Section, Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549. Material
filed by the Company can also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street N.W., Washington, D.C.
20006. The Company is an electronic filer with the Commission pursuant to and
within the meaning of, Rules 101 and 901 of Regulation S-T. The Commission
maintains a site on the World Wide Web that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the Commission's site is:
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference and made a part hereof:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 1998;
(ii) the Company's Schedule 14A and Definitive Proxy Statement filed
with the Commission on August 24, 1998; and
(iii) the description of the Company's Common Stock included in its
Registration Statement on Form 8-A filed pursuant to Section 12 of the Exchange
Act (and all amendments thereto and reports filed for the purpose of updating
such description).
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of this
Prospectus and prior to the termination of the offering described herein, shall
be deemed to be incorporated by reference in this Prospectus from the respective
dates those documents are filed. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, on the written or oral request of such
person, a copy of any or all of the documents referred to above which have been,
or may be, incorporated in this Prospectus by reference, other than exhibits to
such documents. Request for such copies should be directed to Mr. John
Nardecchia, Norstan, Inc., 6900 Wedgwood Road, Suite 150, Maple Grove, Minnesota
55311, (612) 420-1186.
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<PAGE> 4
RISK FACTORS
Each prospective investor should carefully consider the following
factors, among others, prior to purchasing any of the securities offered hereby.
TECHNOLOGICAL CHANGE AND NEW PRODUCTS; GROWTH STRATEGY BASED ON CONVERGENCE OF
TECHNOLOGIES
The markets for communications and information technology ("IT")
products and services are characterized by technological change and frequent new
product introductions. Accordingly, the Company believes that its future success
will depend on its ability to identify and incorporate in a timely manner new
products and enhancements to existing products and services that gain market
acceptance. Although Norstan does not manufacture any products, there can be no
assurance that the products and services that Norstan offers will not become
technologically obsolete, or that Norstan will be able to identify, market or
support new products successfully, that such new products will gain market
acceptance or that the Company will be able to respond effectively to
technological change.
A major element of Norstan's strategy is to leverage and expand its
customer base by offering a range of IT and communications systems products and
services utilizing converging technologies for voice, video and data
communications. The Company's ability to increase revenues in future periods
will depend to some extent on the success of its strategy to serve as customers'
single-source provider of integrated IT and communications systems products and
services. Norstan believes that as information and communications technologies
converge into a single technology, customers and potential customers will
increasingly seek a single-source provider of products and services based on
such technologies. However, many of the Company's existing and potential
customers currently purchase IT and communications products and services from
multiple vendors or on an unintegrated basis, and there can be no assurance that
customers will prefer to purchase such products and services from a single
source or, if they do, that they will choose the Company as that single source.
To the extent that customers prefer to purchase IT and communications products
and services from multiple vendors, on an unintegrated basis, or from a single
source other than the Company, the Company's strategy to increase revenues may
not be realized.
ATTRACTION AND RETENTION OF EMPLOYEES
A significant component of the Company's business consists of the
delivery of consulting services. Norstan's success depends in large part upon
its ability to attract, develop, motivate and retain highly skilled and educated
professionals possessing technical expertise and business generation skills.
Qualified consultants and other technical resources are in great demand and are
likely to remain a limited resource for the foreseeable future. There can be no
assurance that the Company will be able to attract and retain sufficient numbers
of qualified personnel in the future. The Company has increased the number of
its IT consultants primarily through the acquisition of consulting businesses.
Accordingly, the Company faces an additional risk that consultants obtained
through acquisitions will choose to leave the Company rather than assimilate
into the Company's business environment. There can be no assurance that Norstan
will be able to retain a substantial majority of these employees in the long
term. The loss of a significant number of IT consultants could adversely affect
the Company's ability to secure and complete engagements and could have a
material adverse effect on the Company's business, operating results and
financial condition.
RISK OF ACQUISITION STRATEGY; RISKS RELATED TO COMPLETED ACQUISITIONS
The Company's most recent strategic acquisitions consist of Wordlink,
Inc., Vadini, Inc. and Connect Computer Company. The Company is actively seeking
to acquire other businesses that will
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contribute to the depth and versatility of Norstan's IT consulting business. The
Company expects to continue acquiring businesses as an element of its growth
strategy. However, there can be no assurance that Norstan will be able to
identify suitable acquisition candidates or that, if identified, the Company
will be able to acquire such companies on suitable terms. Moreover, other
companies are competing for acquisition candidates, which could increase the
price of acquisition targets and decrease the number of attractive businesses
available for acquisition.
There can be no assurance that the anticipated economic, operation and
other benefits of any completed or future acquisitions will be achieved or that
Norstan will be able to successfully integrate acquired businesses in a timely
manner without substantial costs, delays, or other operational or financial
problems. The difficulties of such integration may initially be increased by the
necessity of integrating personnel with disparate business backgrounds and
cultures. In addition, acquisitions may involve the expenditure of significant
funds. Failure to effectively integrate the acquired companies may adversely
affect the Company's ability to secure certain engagements and otherwise grow
its business. Customer dissatisfaction or performance problems at a single
acquired company could have an adverse effect on the reputation of Norstan as a
whole, resulting in creased difficulty in marketing services or acquiring
companies in the future. In addition, there can be no assurance that the
acquired companies will operate profitably. Acquisitions also involve a number
of additional risks, including diversion of management attention, potential loss
of key customers or personnel, risks associated with unanticipated problems,
liabilities or contingencies, and risks of entering markets in which Norstan has
limited or no direct expertise. The occurrence of some or all of the events
described in these risks would have a material adverse effect on the Company's
business, operating results and financial condition.
DEPENDENCE ON STRATEGIC ALLIANCES
Norstan has a series of agreements authorizing Norstan to act as a
distributor of communications equipment from a variety of manufacturers. Norstan
currently has distribution agreements with Siemens Business Communications
Systems, Inc. ("Siemens"), Aspect, PictureTel, VTEL, Lucnet Technologies
(formerly Octel), Iwatsu, Isoetec, Cisco Systems, Sprint, Latitude, Intervoice,
Applied Voice Technology and others. In addition, the Company and Siemens have
an agreement under which Norstan is an authorized agent for the refurbishment
and sale of previously owned Siemens equipment in the United States.
Periodically, these distribution agreements expire and new agreements must be
negotiated if the Company desires to continue distributing the applicable
manufacturer's products. Norstan is currently negotiating the renewal of its
agreement with Siemens with respect to the distribution of new products. There
can be no assurance that Siemens (or any other manufacturer with whom the
Company does business) will elect to continue its relationship with Norstan on
substantially the same terms and conditions as contained in the parties' prior
agreements. The Company believes that an interruption, or substantial
modification, of its distribution relationship with Siemens could have a
material adverse effect on its business, operating results and financial
condition. In addition, much of Norstan's success is derived from market
acceptance of each manufacturer's products. These products compete with those
offered by several other communications equipment manufacturers. Reduced market
acceptance for the products Norstan distributes, as a result of competition or
other factors, could adversely effect Norstan's business, operating results and
financial condition.
MANAGEMENT OF GROWTH
The Company opened four new branch locations and increased the number
of its consultants by 112 percent to 616 in fiscal year 1998. Norstan's ability
to manage the growth of its operations will require it to continue to improve
its operational, financial and other internal systems and to attract, develop,
motivate
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and retain its employees. The Company's rapid growth has presented and
will continue to present numerous challenges, such as the assimilation of
financial reporting systems and internal controls. If Norstan's management is
unable to manage growth or new employees are unable to achieve anticipated
performance or utilization levels, its business, operating results and financial
condition could be materially and adversely affected.
COMPETITION
The market for IT services includes a large number of competitors, is
subject to rapid change and is highly competitive. Primary competitors include
participants from a variety of market segments, including national accounting
firms, systems consulting and implementation firms, application software firms,
service groups of computer equipment companies, facilities management companies,
general management consulting firms and programming companies. Many of these
competitors have significantly greater financial, technical and marketing
resources and greater name recognition than the Company. In addition, the
Company competes with its customers' internal resources, particularly when these
resources represent a fixed cost to the customer. Such competition may impose
additional pricing pressures on the Company.
The communications industry is intensely competitive and rapidly
changing Norstan's primary competitors in this area include Lucent Technologies,
Nortel and the Regional Bell Operating Companies. Many of its competitors have
longer operating histories, greater financial and human resources, and greater
name recognition than Norstan. The passage of the Telecommunications Act of 1996
has fostered competition, by providing access to a number of entities that were
previously precluded from the industry. As a result of this legislation, the
pace of consolidation in this industry has accelerated. These changes in the
regulatory environment could potentially affect Norstan's ability to compete
successfully.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
The Company relies upon a combination of nondisclosure and other
contractual arrangements with certain key employees, and trade secret, copyright
and trademark laws to protect its proprietary rights and the proprietary rights
of third parties from whom the Company licenses intellectual property. Norstan
enters into confidentiality agreements with certain of its employees and limits
the distribution of proprietary information. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will be adequate to
prevent misappropriation of such rights or that the Company will be able to
detect unauthorized use and take appropriate steps to enforce its proprietary
rights.
VARIABILITY OF QUARTERLY OPERATING RESULTS; SEASONALITY
Variations in the Company's revenues and operating results occur from
quarter to quarter as a result of a number of factors, including customer
engagements commenced and completed during a quarter, the number of business
days in a quarter, employee hiring and utilization rates, the timing of
acquisitions, the ability of customers to terminate engagements without penalty,
the size and scope of assignments and general economic conditions. Because a
significant portion of the Company's expenses are relatively fixed, a variation
in the number of customer projects or the timing of the initiation or completion
of projects can cause significant fluctuations in operating results from quarter
to quarter. Furthermore, the Company has historically experienced a seasonable
fluctuation in its operating results, with a larger proportion of its revenues
and operating income occurring during the fourth quarter of the fiscal year.
STOCK PRICE VOLATILITY
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The market price of the Common Stock may vary substantially due to a
variety of factors, including quarterly fluctuations in results of operations,
adverse circumstances affecting the introduction or market acceptance of new
products and services offered by the Company, announcements of new products and
services by competitors, changes in the IT and communications systems
environments, changes in earnings estimates by analysts, sales of Common Stock
by existing shareholders, loss of key personnel and other factors. The market
price of the Common Stock may also be affected by the Company's ability to meet
analysts' or other market expectations, and any failure or anticipated failure
to meet such expectations, even if minor, could have a material adverse effect
on the market price of the Common Stock. In addition, the stock market is
subject to extreme price and volume fluctuations. This volatility has had a
significant effect on the market prices of securities issued by many companies
for reasons unrelated to the operating performance of these companies. The
Company has issued shares of Common Stock as consideration tendered in
connection with its recent business acquisitions. A substantial decrease in the
market price of the Common Stock will greatly reduce its utility as a currency
to effect future acquisitions. Moreover, during the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such a company. Any such
litigation instigated against the Company could result in substantial costs and
a diversion of management's attention and resources, which could have a material
adverse effect on the Company's business, operating results and financial
condition.
YEAR 2000
What is commonly known as the "Year 2000 issue" arises because many
computer and communications hardware and software systems use only two digits to
represent the year. As a result, these systems and programs may not calculate
dates beyond 1999, which may create information errors or system failures.
The Company is taking steps to remediate the Year 2000 issues within its
internal systems and has held discussions with significant suppliers to ensure
that such parties are executing action plans designed to remediate Year 2000
issues involving systems or products that interface with the Company's systems
or may otherwise affect the Company's customers. There can be no assurance that
the Company's efforts or those of its suppliers or customers will satisfactorily
mitigate all Year 2000 issues faced by them. Inadequate resolution of these
issues may result in information or communications systems failures, which delay
or damage the Company's operations or, potentially, those of its customers,
creating an additional risk of third-party claims brought against the Company,
any of which could have a materially adverse effect on the Company's business,
operating results and financial condition.
CERTAIN ANTI-TAKEOVER EFFECTS
Norstan is subject to Minnesota statutes regulating business
combinations and restricting voting rights of certain persons acquiring shares
of Norstan (the "Minnesota Anti-Takeover Statues"). In addition, Norstan has
adopted a shareholder rights agreement (the "Shareholder Rights Agreement")
providing for the issuance to shareholders of rights to purchase additional
shares of Common Stock under certain circumstances. The Shareholder Rights
Agreement combined with the Minnesota Anti-Takeover Statutes may render more
difficult or tend to discourage a merger, tender offer or proxy contest, the
assumption of control by a holder of a large block of Norstan's securities, or
the removal of incumbent management.
RESTRICTIONS ON THE PAYMENT OF DIVIDENDS
Norstan has not recently declared or paid any cash dividends on its
common stock and does not intend to pay cash dividends in the foreseeable
future. Norstan currently expects to retain earnings to finance the expansion of
its business. In addition, Norstan's revolving long-term credit agreement
prohibits the payment of cash dividends without the prior written consent of the
lenders thereunder.
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FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
Included in this Prospectus and the documents incorporated by reference
herein are forward-looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments, new
products and services, Year 2000 compliance and similar matters. In order to
comply with the terms of the Private Securities Litigation Reform Act, the
Company notes that a variety of factors could cause the Company's actual results
and experience to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements. The risks
and uncertainties that may affect the operations, performance, developments and
results of the Company's business include the following: national and regional
economic conditions; pending and future legislation affecting the IT and
telecommunications industries; the Company's business in Canada and England;
stability of foreign governments; market acceptance of the Company's products
and services; the Company's continued ability to provide integrated
communications solutions for customers in a dynamic industry; and other
competitive factors. Because these and other factors could affect the Company's
operating results, past financial performance should not necessarily be
considered as a reliable indicator of future performance, and investors should
not use historical trends to anticipate future period results.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common
Stock by the Selling Shareholders.
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SELLING SHAREHOLDERS
The following table sets forth the number of shares of the Common Stock
owned by each Selling Shareholder as of the date hereof and after giving effect
to this offering. The Company will not receive any proceeds from the sale of the
Common Stock by the Selling Shareholders. Except where otherwise noted, each
person in the following table has, to the knowledge of the Company, sole voting
and investment power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
Shares Shares
Beneficially Owned(1) Shares to Beneficially Owned
Prior to the Offering be Sold After the Offering
----------------------- in the -----------------------
Name of Selling Shareholder Number Percentage Offering Number Percentage
- --------------------------- ------ ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
Nellrose Elliott-Graham....................... 134,362 1.3 60,463 73,899 *
Robert James Elliott.......................... 38,389 * 34,550 3,839 *
June Simpson Elliott.......................... 38,389 * 34,550 3,839 *
Susan Platz Shurilla.......................... 10,264 * 9,238 1,026 *
James Umenhofer............................... 16,505 * 14,855 1,650 *
Nancy Snyder.................................. 10,264 * 9,238 1,026 *
Brian Duling.................................. 10,648 * 9,583 1,065 *
Dennis Graham................................. 134,209 1.3 60,394 73,815 *
Stephen E. Rowe............................... 1,177 * 1,060 117 *
Steven Busse.................................. 8,987 * 8,088 899 *
Thomas Trone.................................. 6,562 * 5,906 656 *
Kent Richardson............................... 384 * 346 38 *
Mike Sprague.................................. 1,584 * 1,425 159 *
Jonathan Zelle................................ 1,623 * 1,461 162 *
Lori Bluhm.................................... 383 * 345 38 *
Michael Aleckson.............................. 34 * 31 3 *
Loren Bennett................................. 22 * 20 2 *
David Bishop.................................. 199 * 179 20 *
Robert Boice.................................. 637 * 573 64 *
Mark Burgess.................................. 22 * 20 2 *
Dean Cavey.................................... 1,024 * 922 102 *
Carol Chabot.................................. 45 * 40 5 *
Lora Chrusciel................................ 34 * 31 3 *
Michael Cornell............................... 1,280 * 1,152 128 *
Donald Dunlap................................. 147 * 132 15 *
Mark Fackler.................................. 113 * 102 11 *
Matt Guido.................................... 22 * 20 2 *
Tony Hausmann................................. 204 * 184 20 *
Pam Hoyne..................................... 28 * 25 3 *
Wendy Johnson................................. 57 * 51 6 *
Denise Kimura................................. 136 * 122 14 *
F. Lynn Mathenia.............................. 159 * 143 16 *
Ann McClellan................................. 614 * 553 61 *
Paige McCory.................................. 159 * 143 16 *
Philip Meadows................................ 34 * 31 3 *
Ellen Pahlke.................................. 170 * 153 17 *
Kenneth Perry................................. 147 * 132 15 *
</TABLE>
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<TABLE>
<CAPTION>
Shares Shares
Beneficially Owned(1) Shares to Beneficially Owned
Prior to the Offering be Sold After the Offering
----------------------- in the -----------------------
Name of Selling Shareholder Number Percentage Offering Number Percentage
- --------------------------- ------ ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
Craig Pessman................................... 569 * 512 57 *
Terry Stoltey................................... 159 * 143 16 *
David Swain..................................... 34 * 31 3 *
Teri Trone...................................... 341 * 307 34 *
Heidi Wense..................................... 159 * 143 16 *
Mark Wong....................................... 113 * 102 11 *
Deborah Ziegenhorn.............................. 147 * 132 15 *
--- ------- -------
420,539 4.0 257,631 162,908 1.5
======= ======= =======
</TABLE>
- -------------------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect
to securities. Shares of Common Stock subject to options, warrants and
convertible securities currently exercisable or convertible, or exercisable
or convertible within 60 days, are deemed outstanding, including for
purposes of computing the percentage ownership of the person holding such
option, warrant or convertible security, but not for purposes of computing
the percentage of any other holder.
* Less than one percent.
To the extent required, the specific shares of Common Stock to be sold,
the names of the Selling Shareholders, other additional shares of Common Stock
beneficially owned by such Selling Shareholders, the public offering price of
the shares of Common Stock to be sold, the names of any agent, dealer or
underwriter employed by such Selling Shareholders in connection with such sale,
and any applicable commission or discount with respect to a particular offer
will be set forth in an accompanying Prospectus Supplement.
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PLAN OF DISTRIBUTION
All of the shares of Common Stock offered hereby were acquired by the
Selling Shareholders in connection with the merger of Wordlink, Inc. with and
into a wholly owned subsidiary of the Company on June 19, 1998. Shares of Common
Stock were issued to holders of Wordlink common stock and holders of vested
options to acquire shares of Wordlink common stock.
The Selling Shareholders and/or their pledgees, donees, transferees or
other successors in interest will sell the securities of the Company covered by
this Prospectus to the public on the over-the-counter market, or in negotiated
transactions, or otherwise, at prices and at terms then obtainable.
Broker-dealers either may act as agents for the Selling Shareholders and/or
their pledgees, donees, transferees or other successors in interest for such
commissions as may be agreed upon at the time, or may purchase any of the
securities covered thereby as principals and thereafter may sell such securities
from time to time in the over-the-counter market or in negotiated transactions,
or otherwise, at prices and on terms then obtainable.
LEGAL MATTERS
Certain legal matters in connection with the validity of the securities
offered hereby will be passed upon for the Company by Maslon Edelman Borman &
Brand, LLP, Minneapolis, Minnesota.
EXPERTS
The consolidated financial statements of Norstan, Inc. as of April 30,
1998 and for the three years then ended incorporated by reference in this
Prospectus and elsewhere in this Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein upon the authority of said
firm in giving said report.
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-----------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-----------------------------------
TABLE OF CONTENTS
Additional information 1
Incorporation of certain documents
by reference 2
Risk factors 3
Use of proceeds 7
Selling shareholders 8
Plan of distribution 10
Legal matters 10
Experts 10
NORSTAN, INC.
257,631
SHARES
OF
COMMON STOCK
---------------------
PROSPECTUS AUGUST 31, 1998
---------------------
11
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution
of the securities registered hereby, other than underwriting discounts and fees,
are set forth in the following table:
<TABLE>
<S> <C>
Securities and Exchange Commission
Registration Fee...................................... $ 1,387
Accounting Fees....................................... 2,000
Nasdaq Listing Fee.................................... 5,153
Legal Fees and Expenses............................... 10,000
Miscellaneous......................................... 1,460
--------
Total................................................. $ 20,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is governed by Minnesota Statutes Chapter 302A. Minnesota
Statutes Section 302A.521 provides that a corporation shall indemnify any person
made or threatened to be made a party to any proceeding by reason of the former
or present official capacity of such person against judgments, penalties, fines,
including, without limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorney's fees and disbursements, incurred by such person in
connection with the proceeding, if, with respect to the acts or omissions of
such person complained of in the proceeding, such person has not been
indemnified by another organization or employee benefit plan for the same
expenses with respect to the same acts or omissions; acted in good faith;
received no improper personal benefit and Section 302A.255, if applicable, has
been satisfied; in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interests of the corporation, or in the case of acts
or omissions by persons in their capacity for other organizations, reasonably
believed that the conduct was not opposed to the best interests of the
corporation. Subdivision 4 of Section 302A.521 of the Minnesota Statutes
provides that a company's articles of incorporation or bylaws may prohibit such
indemnification or place limits upon the same. The Company's articles and bylaws
do not include any such prohibition or limitation. As a result, the Company is
bound by the indemnification provisions set forth in Section 302A.521 of the
Minnesota Statutes.
As permitted by Section 302A.251 of the Minnesota Statutes, the
Articles of Incorporation of the Company provide that a director shall have no
personal liability to the Company and its shareholders for breach of his
fiduciary duty as a director, to the fullest extent permitted by law.
II-1
<PAGE> 14
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION
5 Opinion of Maslon Edelman Borman & Brand, LLP
23(1) Consent of Arthur Andersen LLP
23(2) Consent of Maslon Edelman Borman & Brand, LLP (included in Exhibit 5)
24 Power of Attorney (included on Page II-3)
- ----------------
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (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
Securities Act of 1933, 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; and
(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.
II-2
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Minneapolis, State of
Minnesota, on August 26, 1998.
NORSTAN, INC.
Registrant
By: /s/ David R. Richard
-------------------------------------
Name: David R. Richard
Title: President and Chief Executive Officer
By: /s/ Kenneth S. MacKenzie
-------------------------------------
Name: Kenneth S. MacKenzie
Title: Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints David R. Richard and Kenneth S. MacKenzie,
each or either of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same
with all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or 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 attorneys-in-fact and agents or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 26th day of August, 1998 by
the following persons in the capacities indicated:
SIGNATURE TITLE
/s/ Paul Baszucki
- ---------------------------------
Paul Baszucki Chairman of the Board and Director
/s/ Richard Cohen
- ----------------------------------
Richard Cohen Vice Chairman of the Board and Director
II-3
<PAGE> 16
/s/ David R. Richard
- --------------------------
David R. Richard President, Chief Executive Officer and Director
/s/ Constance M. Levi
- --------------------------
Constance M. Levi Director
- --------------------------
Gerald D. Pint Director
/s/ Dr. Jagdish N. Sheth
- --------------------------
Dr. Jagdish N. Sheth Director
/s/ Herbert F. Trader
- --------------------------
Herbert F. Trader Director
II-4
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF DOCUMENT PAGE NO.
<S> <C>
5 Opinion of Maslon Edelman Borman & Brand, LLP.
23(1) Consent of Arthur Andersen LLP.
23(2) Consent of Maslon Edelman Borman & Brand, LLP (included in Exhibit 5).
24 Power of Attorney (included on Page II-3).
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5
August 28, 1998
Norstan, Inc.
605 North Highway 169
Twelfth Floor
Plymouth, MN 55441
RE: REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We have acted as counsel to Norstan, Inc., a Minnesota corporation (the
"Company") in connection with the preparation of a registration statement on
Form S-3 (the "Registration Statement") to be filed by the Company with the
Securities and Exchange Commission on August 31, 1998 relating to the
registration under the Securities Act of 1933, as amended (the "1933 Act", of
257,631 shares of the Company's common stock, $.10 par value (the "Shares").
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the 1933 Act.
In connection with the rendering of this opinion, we have examined and
are familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement; (ii) the Articles of
Incorporation and the Bylaws of the Company, as amended, each as currently in
effect; (iii) certain resolutions adopted by the Board of Directors of the
Company relating to the issuance of the Shares, the preparation and filing of
the Registration Statement and certain related matters; (iv) certain agreements,
certificates of public officials, certificates of other officers or
representatives of the Company or others; and (v) such other documents,
certificates and records as we deemed necessary or appropriate as a basis for
the opinions expressed herein.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such copies. As to any facts material to the
opinions expressed herein which we have not independently established or
verified, we have relied upon statements and representations of officers and
other representatives of the Company and others.
We are attorneys licensed to practice in the State of Minnesota. The
opinions set forth herein are expressly limited to the laws of the State of
Minnesota and we do not purport to be experts on, or express any opinion herein
concerning any laws other than the laws of the State of Minnesota. We express
no opinion concerning, and we assume no responsibility as to laws or judicial
decisions related to, or orders, consents, or other authorizations or approvals
as may be requested by, any federal law, including any federal securities law,
or any state securities or blue sky laws.
Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, it is our opinion that:
1. The Company is a corporation in good standing under the laws of the
State of Minnesota.
2. The Shares have been duly authorized and are validly issued, fully
paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to our name under the
caption "Legal Matters" in the prospectus filed as part of the Registration
Statement.
This opinion is furnished to you in connection with the filing of the
Registration Statement and, except as provided in the immediately preceding
paragraph, is not to be used, circulated, quoted for any other purpose or
otherwise referred to or relied upon by any other person without the express
written permission of this firm.
Very truly yours,
/s/ MASLON EDELMAN BORMAN & BRAND, LLP
<PAGE> 1
EXHIBIT 23(1)
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Minneapolis, Minnesota
August 31, 1998
