As filed with the Securities and Exchange Commission - May 20, 1998.
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INDUSTRIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
TEXAS 5080 76-0289495
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization Classification Code Number) Identification Number)
</TABLE>
7135 ARDMORE
HOUSTON, TEXAS 77054
(713) 747-1025
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
ROBERT E. CONE
INDUSTRIAL HOLDINGS, INC.
7135 ARDMORE
HOUSTON, TEXAS 77054
(713) 747-1025
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPY TO:
Robert G. Reedy
PORTER & HEDGES, L.L.P.
700 Louisiana, Suite 3500
Houston, Texas 77002
(713) 226-0600
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividends of
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 of 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. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER SHARE OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------ ----------------- ------------------ --------------------- ---------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 2,713,652 $14.50 $39,347,954.00 $11,607.65
- ------------------------------------------ ----------------- ------------------ --------------------- ---------------
Total 2,713,652 $14.50 $39,347,954.00 $11,607.65
========================================== ================= ================== ===================== ===============
</TABLE>
(2) Pursuant to Rule 457(c), the registration fee is calculated based on the
average of the high and low sale prices for the Common Stock, as reported
by the Nasdaq Stock Market's National Market on May 15, 1998, or $14.50
per share.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS RESPECTIVE 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>
PROSPECTUS
INDUSTRIAL HOLDINGS, INC.
2,713,652 Shares
The 2,713,652 shares (the "Shares") of common stock, par value $.01 per
share (the "Common Stock"), of Industrial Holdings, Inc. (the "Company") offered
hereby, are shares of Common Stock which are presently outstanding. This
Prospectus relates only to the resale of the Shares. See "The Offering,"
"Selling Shareholders" and "Plan of Distribution." The Company will not receive
any proceeds from the resale of the shares of Common Stock offered hereby.
The Company's Common Stock trades are quoted on the National Market tier
of the Nasdaq Stock Market ("Nasdaq") under the symbol "IHII." On May 15, 1998,
the last reported closing sale price of the Common Stock was $14.50 per share.
The Shares may be offered and sold from time to time by the selling
shareholders named herein through underwriters, dealers or agents or directly to
one or more purchasers in fixed-price offerings or negotiated transactions and
either at market prices prevailing at the time of sale or at prices related to
such market prices. The terms of the offering and sale of the Shares with
respect to which this Prospectus is being delivered, including any public
offering price, any discounts, commissions or concessions allowed, reallowed or
paid to underwriters, dealers or agents, the purchase price of the Shares, the
proceeds to the selling shareholders and any other material terms shall be as
set forth in the applicable Prospectus Supplement. See "Plan of Distribution"
for information regarding possible indemnification arrangements for
underwriters, dealers and agents.
SEE "RISK FACTORS" ON PAGES THREE THROUGH FIVE FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS.
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 ________, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (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 of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. Copies of such material may also be obtained from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates, or on the
Commission's site on the world wide web at www.sec.gov. Such materials may also
be inspected at the offices of Nasdaq, 1735 K Street, N.W. Washington, D.C.,
20006-1506, on which the Common Stock is listed.
The Company has filed with the Commission a Registration Statement on Form
S-3 (including any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
Shares offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to the Company and the Common Stock,
reference is made to the Registration Statement and the exhibits and schedules
thereto. Statements made in this Prospectus regarding the contents of any
contract or document filed as an exhibit to the Registration Statement are not
necessarily complete and, in each instance, reference is hereby made to the copy
of such contract or document so filed. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Prospectus:
(1) The Company's Registration Statement on Form S-1 that contains the
initial description of Common Stock;
(2) the Company's Annual Report on Form 10-K for the year ended December
31, 1997;
(3) the Company's Proxy Statement dated May 1, 1998 regarding its Annual
Stockholder's Meeting to be held on June 10, 1998;
(4) the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 1998;
(5) the Company's Current Report on Form 8-K dated January 19, 1998 and
as amended;
(6) the Company's Current Report on Form 8-K dated February 9, 1998 and
as amended;
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(7) the Company's Current Report on Form 8-K dated March 30, 1998;
(8) the Company's Current Report on Form 8-K dated March 31, 1998; and
(9) the Company's Current Report on Form 8-K dated April 3, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c) and
15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering covered hereby will be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document that
also is or is deemed to be incorporated by reference modifies or replaces such
statement.
The Company will provide, without charge and on oral or written request,
to each person to whom this Prospectus is delivered, a copy of any or all of the
documents incorporated by reference in this Prospectus other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into the information that this Prospectus incorporates. In addition, a copy of
the Company's most recent annual report to shareholders will be promptly
furnished, without charge and on oral or written request, to such persons. All
such requests should be directed to Industrial Holdings, Inc., 7135 Ardmore,
Houston, Texas 77054, Attention: Deborah Bonefas, telephone number (713)
747-1025.
RISK FACTORS
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE MATERIAL RISKS. IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE MAKING AN
INVESTMENT IN THE SHARES OF COMMON STOCK.
LIMITED CAPITAL; RISKS RELATED TO BUSINESS STRATEGY AND ACQUISITIONS. The
Company's ability to effect its business plan depends on its ability to raise
funds to consummate acquisitions and provide necessary working capital. The
Company's future growth through acquisitions will require substantial capital
expenditures. While the Company evaluates business opportunities on a regular
basis, there can be no assurance that the Company will be successful in
identifying any additional acquisitions or will have sufficient financial
resources with which to make additional acquisitions. In the event that the
Company is unable to obtain cash in order to effect additional acquisitions, the
Company may issue additional shares, and further dilution to shareholders may
result. As the Company effects acquisitions and expands its operations, it will
be subject to all of the risks inherent in an expanding business, including
integrating financial reporting, establishing satisfactory budgetary and other
financial controls, funding increased capital needs and overhead expenses,
obtaining management personnel required for expanded operations, and funding
cash flow shortages that may occur if anticipated sales and revenues are not
realized or are delayed, whether by general economic or market conditions.
3
<PAGE>
At March 31, 1998, the Company had cash of $6,834,789, working capital of
$16,655,961, long-term debt of $11,803,404, shareholders' equity of $49,769,466
and availability under its line of credit agreement of $4,957,075 under its
credit facilities with Comerica Bank - Texas. The Company anticipates that its
operating cash needs for fiscal 1998 can be met with cash generated from
operations, borrowings under its credit facilities with Comerica Bank-Texas and
private placements of equity and debt securities. Any future acquisition of
companies in connection with the Company's acquisition strategy will require
additional financing, which likely would include a combination of debt and
equity financing. There can be no assurance that the Company will be able to
obtain such financing on terms acceptable to it, if at all.
COMPETITION. The industries in which the Company and its subsidiaries
operate are highly competitive. Many of these competitors have greater financial
and other resources than the Company. Competitive factors for the Company's
subsidiaries include price sensitivity and customer service. The industries in
which the Company's subsidiaries operate are highly fragmented and dominated by
privately-owned businesses. Management's marketing strategy is to institute
centralized inventory controls, reduce personnel costs and achieve greater
buying power through expansion. Management believes that these strategies will
allow the Company and its subsidiaries to be more competitive. However, there
can be no assurance that the Company will be able to successfully compete
against presently known or future competitors.
FOREIGN SUPPLIERS. Certain of the Company's subsidiaries purchase products
from United States manufacturing companies operating abroad and from foreign
manufacturers. Accordingly, the Company is subject to the risks of doing
business abroad, including fluctuations in currency exchange rates, changes in
import duties or quotas, transportation costs, labor disputes and strikes. The
occurrence of any one or more of the foregoing events could materially adversely
affect the Company's product supply. All payables are settled in U.S. dollars.
GOVERNMENTAL REGULATION. The Company's business is affected by
governmental regulations relating to its industry segments in general, as well
as environmental and safety regulations that have specific application to the
Company's business. While the Company is not aware of any proposed or pending
legislation, there can be no assurance that future legislation will not have an
adverse effect on the Company's business or competitive position. The Company
believes that it disposes of environmentally sensitive materials in accordance
with present rules and regulations. In the event the Company is required to
adopt additional environmental measures, the cost may be substantial.
DEPENDENCE ON KEY PERSONNEL. The success of the Company is dependent on,
among other things, the services of Robert E. Cone, President and Chief
Executive Officer and Thomas C. Landreth, President - Fastener Manufacturing and
Sales Division. The Company has entered into employment agreements with Messrs.
Cone and Landreth. The loss of the services of any of these officers, for any
reason, may have a material adverse effect on the business and prospects of the
Company.
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VOTING CONTROL BY CERTAIN SHAREHOLDERS. Directors and officers of the
Company own or exercise voting control of approximately 18% of the Company's
outstanding shares and are therefore able to elect a majority of the Company's
Board of Directors and to control the business and affairs of the Company.
LACK OF CONTRACTUAL SUPPLY AGREEMENTS. The Company's subsidiaries purchase
products from various sources of supply. The Company does not maintain firm
contractual agreements with any of its suppliers with respect to the product
purchases. Instead, the Company purchases its products from suppliers on the
most favorable terms that can be negotiated. Since product purchases are
negotiated on a continuing basis, the Company's reserve stream may not be as
secure as if they were negotiated pursuant to a long-term contract. The
Company's inability to obtain sufficient product from its suppliers would have a
material adverse effect on its business and operations.
DIVIDENDS NOT LIKELY. The Company has never paid cash dividends on its
Common Stock and does not anticipate paying cash dividends for the foreseeable
future. It is anticipated that any earnings that may be generated from the
Company's operations will be used to finance the Company's growth. Certain of
the Company's outstanding debt instruments currently prohibit the Company from
paying dividends. See "Dividend Policy."
ANTI-TAKEOVER EFFECT. The provisions of the Amended and Restated Articles
of Incorporation ("Amended Articles") may be deemed to have an anti-takeover
effect or may delay, defer or prevent a tender offer or takeover attempt that a
shareholder might consider in such shareholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by a shareholder. Pursuant to the Amended Articles, the Board of Directors
may, by resolution, establish one or more series of preferred stock, having such
number of shares, designation, relative voting rights, dividend rates,
liquidation or other rights, preferences and limitations as may be fixed by the
Board of Directors without any further shareholder approval. Such rights,
preferences, privileges and limitations as may be established could have the
effect of impeding or discouraging the acquisition of control of the Company.
LIMITATION OF DIRECTOR LIABILITY. Texas law authorizes a Texas corporation
to eliminate or limit the personal liability of a director to the Company and
its shareholders for monetary damages for breach of certain fiduciary duties as
a director. The Company believes that such a provision is beneficial in
attracting and retaining qualified directors, and accordingly, its Amended
Articles include a provision eliminating a director's liability for monetary
damages for any breach of fiduciary duty as a director, except in certain
specified instances. The foregoing provision of the Amended Articles may reduce
the likelihood of derivative litigation against directors and may discourage or
deter shareholders or management from bringing a lawsuit against directors for
breaches of their fiduciary duties, even though such an action, if successful,
might otherwise have benefitted the Company and its shareholders.
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THE COMPANY
Industrial Holdings, Inc. (including its subsidiaries, the "Company") was
incorporated in August 1989. The Company's principal executive offices are
located at 7135 Ardmore, Houston, Texas 77054, and its telephone number is (713)
747-1025.
Industrial Holdings, Inc., operates three segments (i) the Fastener
Manufacturing and Sales Segment comprised of Landreth Engineering Company
("Landreth"), American Rivet Company, Inc. ("American"), Connecticut Rivet
("CRivet"), Ameritech and Philform which manufacture industrial metal fasteners
for sale primarily to manufacturers in the furniture, home appliance and
automotive industries, LSS-Lone Star-Houston, Inc. ("Lone Star"), WALKER BOLT
Manufacturing Co. ("WALKER") and GHX which manufacture industrial metal
fasteners and fabricate and distribute gaskets, hose, fittings and other
products primarily to the petrochemical and chemical refining and energy
industries; (ii) the Valve and Supplies Sales Segment which includes Pipeline
Valve Specialty, Inc. ("PVS"), Manifold Valve Services, Inc. ("MVS"), Rogers
Equipment ("Rogers") and Industrial Municipal Supply ("IMSCO") which
remanufacture and sell pipeline valves, high pressure valves and industrial
valves and distribute other products primarily to the petrochemical, chemical
and petroleum refining industries, the pipeline transportation and storage
industries and energy industries; and (iii) the Machine Sales and Service
Segment comprised of The Rex Group ("REX") which sells new and used machine
tools and provides machine moving services and international export crating
services.
STRATEGY
The Company's business strategy is to:
o Identify and pursue acquisitions within the business segments in
which the Company currently operates as well as in related markets;
o Continue to diversify each segment's customer bases and geographical
markets; and
o Expand into international markets and increase export sales.
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Since its inception, the Company has expanded its business through
acquisition. The Company's acquisitions since its formation are listed below:
YEAR
NAME LOCATION ACQUIRED DESCRIPTION
---- -------- -------- -----------
IMSCO Baytown, Texas 1989 pipe, valves and fittings
distribution
PVS Houston, Texas 1992 valve remanufacturing
Landreth Houston, Texas 1992 rivet manufacturing
REX Houston, Texas 1993 machine tool distribution
CRivet Waterbury, Connecticut 1995 rivet manufacturing
American Chicago, Illinois 1996 rivet manufacturing
Lone Star Houston, Texas 1997 fastener manufacturing
MVS Jennings, Louisiana 1997 valve remanufacturing
Rogers Houston, Texas 1997 blowout preventer repair
WALKER Houston, Texas 1997 fastener manufacturing
Philform Jackson, Michigan 1998 fastening systems manufacturing
Ameritech Houston, Texas 1998 fastener manufacturing
GHX Houston, Texas 1998 fabrication and distribution of
industrial gaskets and hose
Moores Lafayette, Louisiana 1998 pump repair and distribution
The Company has financed these acquisitions with cash provided by operations,
borrowings under its credit agreements and public and private financings. The
Company anticipates that future acquisitions, if any, will be similarly
financed.
RECENT DEVELOPMENTS
In January 1998, the Company completed an offer (the "Offer") to the
holders of its issued and outstanding Class B Warrants to exchange each Class B
Warrant and $10.00 cash for one share of the Company's Common Stock, one Class C
Warrant and one Class D Warrant. The holders of 1,101,689 Class B Warrants
tendered their Class B Warrants and purchased 1,101,689 shares of Common Stock
and were issued 1,101,689 Class C Warrants and 1,101,689 Class D Warrants. The
Company received net proceeds of $10,910,000 after deducting approximately
$100,000 of expenses incurred in connection with the Offer.
In February 1998, the Company acquired all the capital stock of Philform,
Inc. ("Philform") and certain leased operating assets for 419,773 shares of the
Company's common stock valued at $4,520,000. Simultaneously, Philform
contributed the Equipment and its activities to OF Acquisition L.P., a limited
partnership (the "Partnership"), in exchange for a 49% limited partnership
interest. Philform manufactures and sells forming and fastening systems
primarily to
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the automotive industry. Its 1997 revenues were $13.4 million. After the
acquisition, the business and operations previously conducted by Philform will
be conducted by the Partnership.
In March 1998, the Company acquired all of the outstanding capital stock
of WHIR Acquisition, Inc., doing business as Ameritech Fastener Manufacturing,
Inc. ("Ameritech"), upon merger of a wholly owned subsidiary of the Company with
and into Ameritech, with Ameritech being the surviving corporation (the
"Ameritech Merger"). As a result, Ameritech became a wholly owned subsidiary of
the Company. Ameritech, located in Houston, Texas, manufactures fasteners for
sale to the aerospace, automotive, petroleum and petrochemical industries.
Ameritech's 1997 revenues were $1.7 million.
In March 1998, the Company acquired all of the outstanding common stock of
GHX, Incorporated ("GHX"), upon merger of a wholly owned subsidiary of the
Company with and into GHX, with GHX being the surviving corporation (the "GHX
Merger"). As a result, GHX became a wholly owned subsidiary of the Company. GHX,
located in Houston, Texas, fabricates and distributes industrial gaskets and
molded rubber products and distributes industrial packing, hose, fittings and
high temperature textiles to customers in the petrochemical industries.
In April 1998, the Company acquired all of the outstanding capital stock
of Moores Pump and Supply, Inc. ("Moores"), upon merger of a wholly owned
subsidiary of the Company with and into Moores, with Moores being the surviving
corporation (the "Moores Merger"). As a result, Moores became a wholly owned
subsidiary of the Company. Moores, located in Lafayette, Louisiana, is a
supplier and servicer of pumps and packers to the energy industry, as well as
provides fabrication, repair and machine shop services to its customers.
The Company has entered into a preliminary agreement to purchase Belleli
Energy srl, an Italian company which manufactures high pressure vessels and heat
exchangers for the petrochemical industry worldwide. The agreement is subject to
significant conditions. Given these conditions, there can be no assurance that
the acquisition will be consummated. If and when it is consummated, the
acquisition is expected to be financed through an increase in the Company's
existing credit facilities and seller financing.
THE OFFERING
The 2,713,652 shares offered hereby are presently outstanding shares of
Common Stock which were issued in connection with the following acquisitions:
ACQUISITION SHARES
----------- ------
Philform 419,773
GHX 693,879
Moores 1,600,000
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares that
may be resold from time to time by the selling shareholders.
SELLING SHAREHOLDERS
The selling shareholders listed below (the "Selling Shareholders") may
resell, from time to time, all or a portion of the Shares offered hereby. The
following table sets forth the beneficial ownership of the Company's securities
by each of the Selling Shareholders:
SHARES SHARES SHARES PERCENTAGE
NAME OF SELLING OWNED PRIOR OFFERED OWNED AFTER OWNED
SHAREHOLDER TO OFFERING HEREBY THE OFFERING AFTER OFFERING
- ---------------- ----------- ------ ------------ --------------
Ivan Ahuero(1) 219,124 219,124 0(5) *
Dan Ahuero(1) 219,124 219,124 0(5) *
Ben Andrews(1) 206,941 206,941 0(5) *
Alan P. Bernard(2) 732,387 732,387 0(5) *
Donald P. Carlin(2) 732,387 732,387 0(5) *
Bob Gardner(1) 24,345 24,345 0(5) *
Joseph Guillory(2) 67,613 67,613 0(5) *
Phil Miller(3) 128,541 128,541 0(5) *
Michael Powell(3) 34,151 34,151 0(5) *
Philip W. Shaltz(3) 128,540 128,540 0(5) *
Michael Shirkey(3) 128,541 128,541 0(5) *
Christine A. Smith(4) 101,916 24,345 77,571 *
Stephen J. Smith(2) 67,916 67,916 0(5) *
- -----------------
* Less than 1%
(1) These Shares were issued in connection with the GHX Merger.
(2) These Shares were issued in connection with the Moores Merger.
(3) These Shares were issued in connection with the acquisition of the capital
stock of Philform and certain leased operating equipment.
(4) Of these Shares, 24,345 were issued in connection with the GHX Merger and
6,250 shares that may be acquired upon the exercise of currently exercisable
stock options.
(5) After the sale of the shares contemplated by this offering and assuming that
the Sellers own no other shares, of which the Company has no knowledge, the
percent of class owned after the offering is 0%.
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PLAN OF DISTRIBUTION
The Selling Shareholders may offer the Shares subject to this Prospectus
for resale from time to time in one or more offerings through underwriters,
dealers or agents or directly to one or more purchasers in fixed-price offerings
or in negotiated transactions and at either current market prices or at prices
related to such market price. Resales by the purchasers of such shares may be
made in the same manner.
The Selling Shareholders have represented to the Company that they have no
current arrangements with any broker-dealer and that they will comply with
Regulation M under the Exchange Act. If underwriters are used in any offering of
the Shares, such underwriters will be named in the applicable Prospectus
Supplement. Only underwriters named in a Prospectus Supplement will be deemed to
be underwriters in connection with the Shares. Firms not so named will have no
direct or indirect participation in the underwriting of the Shares, although
such a firm may participate in the distribution of such shares under
circumstances entitling it to a dealer's commission. Unless otherwise set forth
in the Prospectus Supplement relating to such offering, any underwriting
agreement pertaining to any offering of the Shares will (i) entitle the
underwriters to indemnification by the Company and the Selling Shareholders
against certain civil liabilities under the Securities Act, (ii) provide that
the obligations of the underwriters will be subject to certain conditions
precedent, and (iii) provide that the underwriters will be obligated to purchase
the Shares so offered if any such shares are purchased. If underwriters are used
in any offering of Shares, the names of such underwriters, the anticipated date
of delivery and other material terms of the transaction will be set forth in the
Prospectus Supplement relating to such offering.
The Company has been advised that the distribution of the Shares by the
Selling Shareholders, or by pledgees, transferees or other
successors-in-interest of the Selling Shareholders, may be effected from time to
time in one or more transactions (which may involve block transactions) on
Nasdaq (if the Common Stock continues to be listed on Nasdaq) or in the
over-the-counter market, in negotiated transactions or in a combination of such
methods of sale, at fixed prices, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares directly to purchasers or to or through broker-dealers acting as
principals or agents. Such broker-dealers may receive compensation in the form
of underwriting discounts, concessions or commissions from the Selling
Shareholders or the purchasers of the Shares from whom broker-dealers may act as
agent or to whom they may sell as principal or both (which compensation, as to a
particular broker-dealer, may be less than or in excess of customary
commissions). In addition, the Shares covered by this Prospectus that
subsequently qualify for sale pursuant to Rule 144 under the Securities Act may
be sold under Rule 144 rather than pursuant to this Prospectus.
The Selling Shareholders and any broker-dealers or agents who participate
in a sale of the Shares may be deemed to be underwriters within the meaning of
such term under the Securities Act, and any commissions received by them, as
well as any proceeds from any sales as principal by them, may be deemed to be
underwriting discounts and commissions under the Securities Act. Such
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broker-dealers or agents may, under agreements with the Selling Shareholders, be
entitled to indemnification by the Company and the Selling Shareholders against
certain civil liabilities under the Securities Act. Certain purchasers to whom
the Selling Shareholders may sell shares in negotiated transactions may be
deemed to be underwriters with respect to any resale by them of shares so
acquired.
Underwriters, dealers and agents may engage in transactions with or
perform services for the Company in the ordinary course of business.
LEGAL MATTERS
The legality of the securities offered hereby will be passed on for the
Company by Porter & Hedges, L.L.P., Houston, Texas.
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================================================================================
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES IN WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
--------------------
TABLE OF CONTENTS
PAGE
----
Available Information......... 2
Incorporation of Certain
Documents by Reference...... 2
Risk Factors.................. 3
The Company................... 5
Recent Developments........... 7
The Offering.................. 7
Use of Proceeds............... 8
Selling Shareholders.......... 9
Plan of Distribution.......... 11
Legal Matters................. 12
Industrial Holdings, Inc.
2,713,652 Shares of
Common Stock
---------------------
P R O S P E C T U S
---------------------
-----------------
May __, 1998
================================================================================
II-1
<PAGE>
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses payable in connection with the issuance and distribution of the
securities to be registered, other than underwriting discounts and commissions,
are estimated as follows:
Securities and Exchange Commission filing fee............... $11,608
Printing expenses........................................... 400*
Legal fees and expenses..................................... 2,000*
Accounting fees and expenses................................ 2,000*
Miscellaneous............................................... 992*
---------
TOTAL................................................. $ 17,000
=========
--------------------------
* Estimated
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02 of the Texas Business Corporation Act (the "TBCA") provides
that a Texas corporation shall have the power to indemnify directors, officers,
employees and agents and to purchase and maintain liability insurance for those
persons. Article 2.02-1 of the TBCA empowers the Company to indemnify any
director or officer for expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred in the defense
of any action, suit or proceeding in which such director or officer is a party
by reason of his position. In no event however, shall a director or officer be
entitled to indemnification in any action, suit, or proceeding in which such
director shall have been found not to have acted in good faith and in the
reasonable belief that his conduct as such director was in the Company's best
interests; and, in the case of an officer of the Company, that such officer did
not act in good faith and in the reasonable belief that his conduct was at least
not opposed to the Company's best interests; and in the case of any criminal
proceeding, such director or officer had no reasonable cause to believe his
conduct was unlawful. Moreover, no director shall be indemnified for any
obligations arising from any action, suit, or proceeding in which (i) such
director is found liable on the basis that personal profit was improperly
received by him, whether or not the action resulted from an action taken in his
official capacity, or (ii) such director is found liable to the Company.
The Company's Amended and Restated Bylaws ("Bylaws") provide that the
Company shall indemnify each director or former director and each officer or
former officer of the Company and each person who is or who may have served at
its request as a director or officer of another corporation in which it owned
shares of stock or of which it is a creditor, or as a partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another
partnership, joint venture, sole proprietorship, trust, employee benefit plan,
or other enterprise against judgments, settlements, penalties and reasonable
expenses (including court costs and attorneys' fees) incurred by him in
connection with any claim made against him or any action, suit, or proceeding in
which he is or is
II-1
<PAGE>
threatened to be made a named defendant or respondent by reason of his being or
having been such director or officer.
The Company shall indemnify such director or officer to the greatest
extent permitted by law for reasonable expenses incurred in connection with any
action, suit, or proceeding in which such director or officer has been wholly
successful in the defense of the proceeding, on the merits or otherwise, except
that if such action, suit, or proceeding was brought by or on behalf of the
Company, indemnification shall be limited to reasonable expenses actually
incurred by such director or officer with respect to such proceeding; provided,
however, that such indemnity shall be conditioned on the prior determination by
a majority of the Board of Directors or a committee thereof who are not named
defendants or respondents in such action, suit, or proceeding, or special legal
counsel appointed thereby, or, solely in the event the Board of Directors is not
able to act and unable to select special legal counsel, by vote of those
shareholders who are not also directors named as defendant or respondent in such
action, suit, or proceeding, that such director or officer has acted in good
faith and in the reasonable belief as to the best interests of the Company.
If any pending, threatened, or completed proceeding is settled, amounts
paid as indemnification of the settlement shall not exceed costs, fees and
expenses that would have been reasonably incurred if the action, suit or
proceeding had been litigated to a conclusion. The determination by the Board of
Directors, or by independent counsel, and the payment of amounts by the Company
on the basis thereof, shall not prevent a shareholder from challenging such
indemnification by appropriate legal proceedings. Neither shall a determination
by the Board of Directors, a committee thereof, or special legal counsel
appointed thereby, that indemnification is not permissible, prevent a director
or officer from challenging such determination by appropriate legal proceedings.
Reasonable expenses of a director or officer who was, is, or is threatened to be
made a named defendant or respondent in any proceeding shall be paid in advance
before any final disposition following appropriate written request to the
Company.
The Company may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of the Company as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, against any liability asserted against him in such a capacity or
arising out of his status as such a person, whether or not the Company would
have the power to indemnify him against that liability.
The foregoing rights and indemnification shall be construed in accordance
with the laws of the State of Texas presently in force and as hereinafter
amended. In all events, the Company's Bylaws shall be deemed to grant the
Company's directors and officers the maximum protection consistent with law and
shall be deemed amended from time to time to reflect any changes in such law.
The foregoing shall not be exclusive of any private contractual right of
indemnification, nor shall it limit the same; provided, however, such
contractual agreement shall not be inconsistent with the TBCA presently in force
or hereafter enacted.
II-2
<PAGE>
The Company's Articles of Incorporation, as amended, contain provisions
eliminating or limiting the liability of a director for an act or omission in
his capacity as director; however, those provisions do not eliminate or limit
the liability of a director for: (i) a breach of a director's duty of loyalty to
the Company or its shareholders; (ii) an act or omission not in good faith or
that involves intentional misconduct or a knowing violation of the law; (iii) a
transaction from which a director received an improper benefit, whether or not
the benefit resulted from an action taken within the scope of the director's
office; (iv) an act or omission from which the liability of a director is
expressly provided for by statute; or (v) an act related to an unlawful stock
repurchase or payment of a dividend.
II-3
<PAGE>
ITEM 15. EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER IDENTIFICATION OF EXHIBIT PAGE
------ ------------------------- ----
5* -- OPINION OF PORTER & HEDGES, L.L.P. EX-1
24.1* -- CONSENT OF DELOITTE & TOUCHE LLP EX-2
24.2* -- CONSENT OF PRICE WATERHOUSE LLP EX-3
24.3* -- CONSENT OF KUHL & SCHULTZ, P.C. EX-4
24.4 -- CONSENT OF PORTER & HEDGES, L.L.P.
(INCLUDED IN ITS OPINION FILED AS EXHIBIT 5
HERETO).
- ----------
*FILED HEREWITH.
ITEM 16. 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 (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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(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; 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-4
<PAGE>
(b) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) the undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) 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.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT ON FORM S-3 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON MAY 20, 1998.
INDUSTRIAL HOLDINGS, INC.
BY: /s/ CHRISTINE A. SMITH
Christine A. Smith,
Vice President and
Chief Financial Officer
We, the undersigned directors and officers of the Company do hereby
constitute and appoint Robert E. Cone and Christine A. Smith, and each of them
singly, our true and lawful attorney and agent, to do any and all acts and
things in our name and on our behalf in our capacities as directors and
officers, and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorney and agent may deem necessary or
advisable to enable said corporation to comply with the Securities Act of 1933,
as amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of this Registration
Statement, including specifically, without limitation, power and authority to
sign for us or any of us, in our names in the capacities indicated below, any
and all amendments hereto; and we do hereby ratify and confirm all that said
attorneys and agents or any of them, shall do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this to its
Registration Statement on Form S-3 has been signed by the following persons in
the capacities indicated on May 20, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ROBERT E. CONE Director, Chairman of the Board of Directors, President
Robert E. Cone and Chief Executive Officer (Principal Executive Officer)
/s/CHRISTINE A. SMITH Vice President and Chief Financial Officer (Principal
Christine A. Smith Accounting Officer and Principal Financial Officer)
/s/BARBARA S. SHULER Director, Secretary
Barbara S. Shuler
/s/CHARLES J. ANDERSON Director
Charles J. Anderson
/s/JAMES H. BROCK, JR. Director
James H. Brock, Jr.
/s/JAMES W. KENNY Director
James W. Kenney
/s/ JOHN P. MADDEN Director
John P. Madden
/s/JOHN L. THOMPSON
John Thompson Director
II-6
</TABLE>
EXHIBIT 5.1
May 19, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: INDUSTRIAL HOLDINGS, INC. - S-3 REGISTRATION STATEMENT COVERING 2,713,652
SHARES (THE "REGISTRATION STATEMENT")
Gentlemen:
We have acted as counsel to Industrial Holdings, Inc., a Texas corporation
(the "Company"), in connection with the Registration Statement under the
Securities Act of 1933, as amended, whereby resales of 2,713,652 shares ( the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock") are registered. In such capacity we have examined the articles of
incorporation, bylaws and corporate proceedings of the Company, and based upon
such examination and having regard for applicable legal principles, it is our
opinion that the Shares are validly issued, fully paid and nonassessable shares
of outstanding Common Stock.
We consent to the use of this opinion as an exhibit to the Registration
Statement and in the reference to our firm under the heading "Legal Matters" in
the Prospectus included as part of the Registration Statement.
Very truly yours,
PORTER & HEDGES, L.L.P.
Ex-1
EXHIBIT 24.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Industrial Holdings, Inc. on Form S-3 of our report dated March 18, 1998,
appearing in the Annual Report on Form 10-K of Industrial Holdings, Inc. for the
year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Houston, Texas
May 19, 1998
Ex-2
EXHIBIT 24.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 5, 1997, appearing on page F-3 of Industrial Holdings, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1997.
PRICE WATERHOUSE LLP
Houston, Texas
May 19, 1998
Ex-3
EXHIBIT 24.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our report dated February 11, 1998, with respect to the financial
statements of Philform, Inc. as of December 31, 1997 and 1996 and for each of
the years then ended which report appears in Form 8-K of Industrial Holdings,
Inc. dated March 31, 1998.
Kuhl & Schultz, P.C.
Jackson, Michigan
May 19, 1998
Ex-4
