As filed with the Securities and Exchange Commission on February 11, 1999.
Registration No. 333-44229
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 4 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TOPS APPLIANCE CITY, INC.
(exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
New Jersey 5731 22-3174554
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
45 Brunswick Avenue
Edison, New Jersey 08818
(732) 248-2850
(Address, including zip code, and telephone number,
including area code, of registrant's principal offices)
RICHARD JONES
Chief Executive Officer
Tops Appliance City, Inc.
45 Brunswick Avenue
Edison, New Jersey 08818
(732) 248-2850
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
W. RAYMOND FELTON, ESQ.
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP
Metro Corporate Campus One
Post Office Box 5600
Woodbridge, New Jersey 07095
(732) 549-5600
Approximate date of commencement of proposed
sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
If any of the securities being registered on this Form are to be offered
<PAGE>
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. xxx
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.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of each Class of to be Price per Offering Registration
Securities to be Registered Registered Share (1) Price Fee
- ----------------------------- ------------ ---------- ----------- ---------------
<S> <C> <C> <C> <C>
6 1/2% Convertible Subordinated
Debentures Due 2003........ $ 97,500* 100% $ 97,500 $2,329.32
Common Stock, no par value
per share (2).............. 55,715* - - -
Common Stock, no par value
per share (3).............. 2,067,148** $2.125 $4,392,689.50 $1,295.84
Common Stock, no par value
per share (4)............... 857,143* - - -
Common Stock, no par value
per share (5)............... 3,480,000* - - -
Common Stock, no par value
per share (6)............... 500,000** $2.125 $1,062,500.00 $ 313.44
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Such number represents the number of shares of Common Stock as are
initially issuable upon conversion of the 6 1/2% Convertible Subordinated
Debentures due 2003 registered hereby.
(3) Shares of Common Stock issued to Bay Harbour Management, L.C., or its
managed accounts, as a result of a private placement of common stock, and not
registered pursuant to the Securities Act of 1933.
(4) Shares of Common Stock issued to Robert D. Carl, III upon the
conversion by Mr. Carl of $1,500,000 principal amount of the registrant's 6 1/2%
Convertible Subordinated Debentures due 2003.
5) Shares of Common Stock issued to Bay Harbour Management, L.C., or its
managed accounts, upon the conversion by Bay Harbour Management, L.C., or its
managed accounts, of $6,090,000 principal amount of the registrant's 6 1/2%
Convertible Subordinated Debentures due 2003.
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<PAGE>
(6) Shares of Common Stock purchased by Bay Harbour Management, L.C., or
its managed accounts, from common stockholders of the Company in private
transactions, which shares of Common Stock are not registered pursuant to the
Securities Act of 1933.
* The registration fee with regard to such securities was paid on or about
January 14, 1998.
** The applicable registration fee with regard to such securities, being
$1,609.28 in total, was paid in part on or about November 12, 1998, and the
balance, being $122.48, was paid on or about January 26, 1999.
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.
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<PAGE>
TOPS APPLIANCE CITY, INC.
Cross Reference Sheet
Form S-3 Item No. and Caption Prospectus Caption
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus........................... Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus.................. Inside Front Cover;
Outside Back Cover Page
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges... Offering Summary;
The Company; the
Exchange; Risk Factors
4. Use of Proceeds...................... Use of Proceeds
5. Determination of Offering Price...... Not Applicable
6. Dilution............................. Not Applicable
7. Selling Security Holders............. Selling Shareholders
8. Plan of Distribution................. Outside Front Cover Page;
Plan of Distribution
9. Description of Securities
to be Registered..................... The Securities
10. Interest of Named Experts and Counsel Not Applicable
11. Material Changes..................... Not Applicable
12. Incorporation of Certain Information
by Reference......................... Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.......................... Not Applicable
4
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 1999
PROSPECTUS
TOPS APPLIANCE CITY, INC.
$97,500
6 1/2% Convertible Subordinated Debentures
due 2003
(Interest Payable February 28 and August 31)
6,960,006 Shares of Common Stock
This Prospectus relates to (a) $97,500 aggregate principal amount of the
Company's 6 1/2% Convertible Subordinated Debentures due 2003 (the
"Debentures"),(b) 55,715 shares of Common Stock, no par value, of the Company
(the "Issuable Shares"), issuable upon the exercise of the conversion right
provided by the Debentures (c) 4,337,143 shares of Common Stock, no par value,
of the Company (the "Converted Shares"), issued to Bay Harbour Management, L.C.,
or its managed accounts (collectively, "Bay Harbour"), and Robert D. Carl, III
("Carl"), respectively, (d) 500,000 shares of Common Stock, no par value, of the
Company (the "Third Party Shares"), purchased by Bay Harbour, and (e) 2,067,148
shares of Common Stock, no par value, of the Company (the "Private Placement
Shares"), purchased by Bay Harbour (the Issuable Shares, the Converted Shares,
the Third Party Shares and the Private Placement Shares are hereinafter referred
to collectively as the "Shares" and the Converted Shares, the Third Party Shares
and the Private Placement Shares are hereinafter referred to collectively as the
"Issued Shares").
<PAGE>
The Debentures and the Shares that are being registered hereby are to be
offered for the account of the Bay Harbour accounts, Carl, ABT Co., Incorporated
Retirement Plan, and Gordon Bennett all of whom are referred to collectively in
this Prospectus as the "Selling Shareholders."
The Debentures are convertible into Common Stock of the Company after
February 28, 1999 at a conversion price of $1.75 per share (equivalent to
571.42857 shares per $1,000 principal amount of Debentures). On February 10,
1999 the last reported sale price of the Common Stock of the Company on the
NASDAQ National Market System (where it trades under the symbol TOPS) was $1.625
per share.
The Debentures are redeemable at the option of the holder upon a Change in
Control (as defined in the Indenture), subject to certain conditions, at 101% of
the principal amount thereof plus accrued interest, and under certain other
circumstances. The Debentures are unsecured obligations of the Company and
subordinate in right of payment to all existing and future Senior Indebtedness
(as defined in the Indenture) of the Company. At February 10, 1999, the
aggregate amount of Senior Indebtedness of the Company was approximately
$48,501,000. The Debentures will rank pari passu with the 6 1/2% Convertible
Subordinated Debentures due 2003 issued on November 30, 1993 in respect of
payment of principal and interest.
The Debentures are traded in the Private Offering, Resales and
Trading through the Automated Linkages ("PORTAL") Market. The Company does not
intend to list the Debentures on any national securities exchange. It may be
unlikely that a secondary market in the Debentures themselves (as opposed to the
Shares) will develop.
See "Risk Factors" at page 11 for a discussion of certain factors
that should be considered in connection with an investment in the Debentures and
the Shares.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Debentures and the Shares are being registered to permit
secondary trading of the Debentures and the Issued Shares and, upon conversion,
the Issuable Shares, by the holders thereof from time to time after the date of
this Prospectus. The Company has agreed, among other things, to bear all expense
(other than underwriting discounts, selling commissions and fees and the
2
<PAGE>
expenses of counsel and other advisors to holders of the Debentures or the
Shares) in connection with the registration and sale of the Debentures and the
Shares covered by this Prospectus.
<PAGE>
The Company anticipates that holders of the Shares may sell all or a
portion of the Shares from time to time on the NASDAQ National Market System,
and may sell Debentures or Shares through a broker or brokers or in the
over-the-counter market at prices prevailing on such exchange or the
over-the-counter market, as appropriate, at the times of such sales. Holders of
Debentures or Shares may also make private sales directly or through such broker
or brokers. Brokers participating in such transactions will receive customary
brokerage commissions from sellers of Debentures or Shares. In effecting sales,
brokers or dealers engaged by holders of Debentures or Shares may arrange for
other brokers or dealers to participate. In connection with such sales, holders
of Debentures or Shares and brokers participating in such sales may be deemed to
be underwriters within the meaning of the Securities Act.
The date of this Prospectus is February 11, 1999
3
<PAGE>
No dealer, salesperson or other person is authorized in connection with
any offering made hereby to give any information or to make any representation
not contained in this Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the Debentures, the Issued Shares or the Issuable Shares
into which the Debentures may be converted, to any person in any jurisdiction in
which it is unlawful to make such an offer or solicitation to such person.
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 date subsequent to the date hereof.
AVAILABLE INFORMATION
Tops Appliance City, Inc. (the "Company") is subject to the
information 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 maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 500 West Madison Street, Chicago, Illinois
60601 and 7 World Trade Center, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission and the address for such site is http://www.sec.gov. The
Company's Common Stock is quoted on the NASDAQ National Market System, and such
reports, proxy statements and other information can also be inspected at the
offices of NASDAQ Operations, 1735 K Street, N.W., Washington, D.C.
The Company has filed with the Commission a registration statement on
Form S-3 (copies of which may be obtained from the Commission at its principal
office in Washington, D.C. upon payment of the charges prescribed by the
Commission, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. 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 hereby made
4
<PAGE>
to the Registration Statement and the exhibits thereto. Statements
contained in this Prospectus as to the contents of any contract or any other
documents are not necessarily complete and, in each such instance, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated by reference in this
Prospectus, except as otherwise superseded or modified herein:
(a) The Company's Annual Report on Form 10-K/A for the year ended December
30, 1997.
(b) The Company's Proxy Statement for its Annual Meeting of Stockholders
held on June 29, 1998.
(c) The Company's Quarterly Reports on Form 10-Q/A for the quarters ended
March 31, 1998, June 30, 1998 and September 29, 1998.
(d) The Company's Current Reports on Form 8-K dated February 9, 1988, April
8, 1998 and July 14, 1998.
(e) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form S-1 filed on June 3, 1992, as amended
(Registration No. 33-48326).
(f) The description of the Company's 6 1/2% Convertible Subordinated
Debentures due 2003 and the section entitled "ERISA Considerations" contained in
the Company's Registration Statement on Form S-3 filed on February 10, 1994, as
amended (Registration No. 33-75110).
(g) All documents subsequently filed by the Company pursuant to Section 13,
14, or 15(d) of the Exchange Act prior to the termination of the offering to
which this Prospectus relates shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents.
Any statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed documents which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part
5
<PAGE>
of this Prospectus. The Company will furnish without charge to each person
to whom this Prospectus is delivered, upon his written or oral request, a copy
of any or all of the documents referred to above which have been incorporated
into this Prospectus by reference (including the exhibits to such documents).
Requests for such copies should be directed to:
TOPS APPLIANCE CITY, INC.
45 Brunswick Avenue
Edison, New Jersey 08818
Attention: Richard Jones
Chief Executive Officer
(732) 248-2850
6
<PAGE>
OFFERING SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing, and the financial statements incorporated by reference,
elsewhere in this Prospectus.
THE COMPANY
Tops Appliance City, Inc. ("Tops" or the "Company") is a leading
retailer of home appliances and consumer electronics in New Jersey and New York,
serving a customer base within the Greater New York Metropolitan Area. The
Company operates 9 retail megastores, ranging in size from 43,000 to 120,000
square feet, in heavily populated areas in New Jersey and in New York. The
Company also operates a commercial division, selling to small independent
retailers, builders and landlords, corporate buying groups and clubs and others.
Tops' stores display a broad selection of high quality, nationally recognized
brand names in each of its product categories. The Company's primary products
include major appliances (such as refrigerators, washers and dryers),
televisions, VCRs, camcorders, air-conditioners, consumer electronics, audio
equipment, personal computers, small electronic appliances, vacuum cleaners,
seasonal goods, home fitness products, housewares, related accessories and
extended service plans.
THE 1997 EXCHANGE
Pursuant to a Debenture Exchange Agreement, dated as of August 20,
1997, between the Company and BEA Associates, a New York partnership ("BEA"), as
agent for certain holders of the Company's 6 1/2% Convertible Subordinated
Debentures due 2003 issued on November 30, 1993 (the "1993 Debentures"), the
Company issued $7,687,500 of new debentures (the "Debentures") for $15,375,000
of the 1993 Debentures. The Company has been advised that the parties to that
exchange, with the exception of ABT Co., Incorporated, Retirement Plan ("ABT")
and Gordon Bennett ("Bennett"), transferred all of the Debentures to Bay Harbour
and Carl and that BEA is no longer agent for any holder of any of the
Debentures. To the best knowledge of the Company, BEA was the discretionary
money manager for the holders of the 1993 Debentures who exchanged them for
Debentures pursuant to certain written advisory agreements between BEA and each
such holder and had the discretionary authority to transfer any or all of the
Debentures. Bay Harbour and Carl, pursuant to certain Conversion Agreements with
the Company, dated July 16, 1998 and May 8, 1998, respectively, converted
$7,590,000 principal amount of the Debentures into 4,337,143 shares of Common
Stock, being the Converted Shares, at a conversion price of $1.75 per share.
7
<PAGE>
DEBENTURE HOLDERS
The Debentures are being registered pursuant to the terms of the
Debenture Exchange Agreement dated as of August 20, 1997 between the Company and
BEA. The Debentures are held by ABT ($62,500) and Bennett ($35,000).
THE PRIVATE PLACEMENT
The Company issued 1,400,000 shares of Common Stock to Bay Harbour on
July 20, 1998 in exchange for $5,040,000 pursuant to the terms of a Share
Purchase Agreement (the "Share Agreement"), dated as of July 16, 1998, between
the Company and Bay Harbour, and the Company subsequently issued an additional
667,148 shares of Common Stock to Bay Harbour in connection with the private
placement as an adjustment because of the decrease in the price of the Company's
Common Stock following the closing of the private placement(the "Private
Placement"). The shares of Common Stock issued in connection with the Private
Placement were not registered pursuant to the Act, but the Company agreed to use
its best efforts to cause such shares of Common Stock to be registered pursuant
to the Act.
THIRD-PARTY TRANSACTIONS
In certain private transactions between Bay Harbour and certain
holders of Common Stock of the Company, Bay Harbour acquired 500,000 shares of
Common Stock of the Company for $3.00 per share, or $1,500,000 in the aggregate.
As a condition of Bay Harbour entering into the Conversion Agreement to convert
the Debentures held by Bay Harbour into Common Stock, the Company agreed to use
its best efforts to cause shares of Common Stock acquired by Bay Harbour in such
private transactions to be registered pursuant to the Act.
DEFINITIONS
Capitalized terms not defined herein have the respective meanings
assigned to such terms in the 1994 Registration Statement (as hereinafter
defined).
8
<PAGE>
THE OFFERING
The Debentures
Offering Shareholders.......... ABT Co., Incorporated Retirement Plan, and
Gordon Bennett
Securities Offered............. $97,500 principal amount of 6 1/2%
Convertible Subordinated Debentures due 2003
of the Company.
Interest Payment Dates......... 6 1/2% per annum payable semi-annually on
February 28 and August 31, commencing
February 28, 1998.
Conversion Rights.............. The Debentures are convertible into Issuable
Shares after February 28, 1999 at
a conversion price of $1.75 per share.
Accordingly, each $1,000 principal amount
of Debentures is convertible into
571.42857 shares of the Company's common
stock, subject to adjustment, or an
aggregate of 55,715 shares, representing
approximately 0.4% of the Company's
outstanding Common Stock on a fully
diluted basis.
Redemption at the Option of
the Holder.................. If a Redemption Event occurs, subject to
certain conditions, each holder shall
have the right, at the holder's option, to
require the Company to purchase all or any
part of such holder's Debentures at 101%
of the principal amount thereof plus
accrued interest.
Change of Control............. Upon a Change of Control, the Company will be
required to make an offer to purchase the
aggregate principal amount of the Debentures
then outstanding at 101% of the principal
amount thereof, plus accrued interest to the
date of purchase.
9
<PAGE>
Subordination................. The Debentures are subordinate in right of
payment to all existing and future Senior
Indebtedness. The Debentures do not limit or
restrict the Company's ability to incur any
additional Indebtedness.
Use of Proceeds............... The Debentures and, upon conversion of the
Debentures, the Issuable Shares, are not
owned by the Company; accordingly, the
Company will receive none of the proceeds
from the sale thereof.
ERISA Considerations.......... The Debentures may be sold or transferred to
employee benefit plans only under certain
circumstances. See "ERISA Considerations" as
contained in the Company's Registration
Statement on Form S-3 filed on February 10,
1994, as amended, (Registration Statement No.
33-75110)(the "1994 Registration Statement").
In addition, transfers of the Debentures are
subject to certain restrictions.
The Common Stock
Offering Shareholders ............ Bay Harbour accounts and Carl
Securities Offered .............. 6,960,006 shares of Common Stock, no par
value, of the Company
Use of Proceeds .............. The Company did not receive any proceeds
from the conversion of Debentures
into the Converted Shares or of the
purchase by Bay Harbour of the Third Party
Shares. The Company does not own the
Issued Shares and will not receive any
proceeds from this sale. The Company
received $5,040,000 as a result of the
Private Placement and the issuance of the
Private
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<PAGE>
Placement Shares. The Company
used the net proceeds from the issuance of
the Private Placement Shares for working
capital and capital expenditures for new
stores.
NASDAQ National Market
System Symbol .............. TOPS
RISK FACTORS
In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Debentures or the Shares offered by this Prospectus.
Going Concern Status
In the Company's annual report (Form 10-K) for the year ended
December 31, 1996, the report of the Company's independent auditors, Ernst &
Young LLP, contained therein, contained an explanatory paragraph with respect to
the uncertainty of the Company's ability to continue as a going concern. The
Company reported operating losses for fiscal year 1997 and for the quarter ended
March 31, 1998, which were significantly less than the operating losses for
fiscal year 1996 and for the quarter ended April 1, 1997, respectively. The
Company reported operating income for the quarters ended June 30, 1998 and
September 29, 1998. The Company is taking steps to improve its operating
performance, however, no assurances can be given that such steps will be
effective. In the Company's annual report (Form 10-K/A) for the year ended
December 30, 1997, the report of the Company's independent accountants, Arthur
Andersen, LLP, contained therein, did not contain any statement concerning the
Company's ability to continue as a going concern.
Future Growth
The Company has experienced flat or declining comparable store sales
for the past five years. This sales performance was mostly attributable to the
continuing weak retail environment in the appliance and electronics industries
and increased competition. This competitive environment has put pressure on
gross margins as retailers focus on maintaining market share. In addition, the
recent demand for consumer electronics has decreased due to the lack of new
products brought to market. Research also indicates that high consumer debt
levels have also reduced consumer spending
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<PAGE>
on nonessential items. The fiscal
periods ending December 30, 1997 and December 31, 1996 were also severely
impacted by the unseasonably cooler weather in the northeast during the summer
months which affected sales of room air conditioners. Substantial price
deflation in video and home office products also contributed to the weak sales
performance. The Company believes that increases in comparable store sales are
dependent upon the effectiveness of the Company's merchandising and marketing
strategies and on the Company opening new stores. New store openings are
dependent on the Company's ability to identify and finance new locations on
acceptable terms and to hire appropriate store personnel. There can be no
assurances that the Company will be able to open or operate new stores on a
timely or profitable basis or that comparable store sales will increase in the
future.
Year 2000 Readiness
As has been widely reported, many computer systems process dates based on
two digits for the year of transaction and may be unable to process dates in the
year 2000 and beyond. There are many risks associated with the year 2000
compliance issue, including but not limited to the possible failure of our
systems and hardware with embedded applications. Any such failure could result
in (i) our inability to order goods, (ii) our inability to bill properly and
collect payments from our customers, (iii) errors or omissions in accounting and
financial data, and/or (iv) a temporary inability to process normal business
transactions, any of which could have a material adverse effect on our results
of operations and financial condition. In addition, many of the Company's
vendors and service providers are also faced with similar issues related to the
year 2000.
Control by Current Shareholders
As of the current date Leslie S. Turchin owns 2,217,859 shares of Common
Stock, constituting approximately 16.5% of the Company's outstanding Common
Stock, The Westinghouse Electric Corporation Master Trust owns 2,236,638 shares
of Common Stock, constituting approximately 16.6% of the Company's outstanding
Common Stock and Bay Harbour owns 6,305,000 shares of Common Stock, constituting
approximately 46.8% of the Company's outstanding Common Stock. The shareholdings
of the identified shareholders will not change as a result of the registration
of the Shares. As a result, these three shareholders are able to control the
election of the Company's Board of Directors and thereby direct the policies of
the Company. The Common Stock does not have cumulative voting rights.
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<PAGE>
Competition
The Company operates in a highly competitive marketplace. The Company
faces competition for customers from specialty and traditional department
stores, other retailers and, in some product lines, warehouse clubs. Some of
these competitors are units of large or regional chains that may have greater
financial and other resources than the Company. One such competitor is Circuit
City, a national retailer of consumer electronics, music and appliances, which
recently entered the Company's marketplace. The Company does not anticipate that
such entrance by Circuit City will have a negative material effect on the
Company. The Company does not believe that there are any major barriers to
competitors entering into the Company's marketplace. If any of the Company's
major competitors seek to gain or retain market share by reducing prices, the
Company may be required to reduce its prices and thereby reduce its gross
margins and profitability. In addition, if the Company expands outside its
traditional geographic region, its success will depend in part on its ability to
gain market share from established competitors. One of the Company's leading
competitors, Nobody Beats the Wiz, Inc. ("The Wiz"), filed for bankruptcy
protection under Chapter 11 of the United States Bankruptcy Code. Cablevision
subsequently purchased the business of The Wiz. The Company does not believe
that The Wiz bankruptcy filing or subsequent sale of its business have had, or
will have, a negative material effect on the Company.
Seasonality and General Economic Conditions
The Company's business is affected to a certain extent by a pattern
of seasonality. Historically, the Company's sales have been greater in the
fourth quarter, which includes the Christmas selling season, than in any other
quarter. The Company also generally experiences an increase in sales during May
through August due to air conditioner sales, and the timing and amount of the
increase are largely dependent upon weather conditions. The Company's sales are
also generally lowest in the first quarter. The Company experienced net losses
in fiscal years 1995 and 1996. Similar to other retail businesses, the Company's
operations may be affected adversely by unfavorable local, regional or national
economic developments which result in reduced consumer spending in the markets
served by its stores. If the Company's sales were to be substantially below
those normally experienced during the summer months or during the Christmas
selling season, the Company's operating results would be affected in an adverse
and disproportionate manner.
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<PAGE>
Extended Service Contracts
Approximately 4.5% to 5% of the Company's net sales and service
revenues in each of the past five years consist of revenues earned from the sale
of extended service plans. The Company's gross margins with respect to such
sales exceed the Company's gross margins from the sale of products. Unlike many
of its competitors, the Company sells these contracts on a non-recourse basis to
a third party administrator that is required to maintain insurance to guarantee
the performance under the Company's extended service contracts program. As a
result of their contribution to profitability, a reduction in the Company's
revenues from extended service contracts could have a disproportionate effect on
the Company's operating results.
Certain Anti-Takeover Effects
The Company's Certificate of Incorporation and By-Laws include
provisions that may be deemed to have anti-takeover effects and may delay, defer
or prevent a takeover attempt that shareholders might consider in their best
interests. These provisions include a classified Board of Directors consisting
of three classes as nearly equal in number as possible, Board of Directors'
authorization to issue up to 20,000,000 shares of preferred stock in one or more
series with such rights, obligations and preferences as the Board of Directors
may provide, a provision under which only the Board of Directors may call
meetings of shareholders, and certain advance notice procedures for nominating
candidates for election to the Board of Directors.
Absence of Public Market
There is no existing market for the Debentures and there can be no
assurance as to the liquidity of any markets that may develop for the
Debentures. Future trading prices of the Debentures will depend on many factors
including, among other things, prevailing interest rates, the Company's
operating results, the price of the Company's Common Stock and the market for
similar securities. The Debentures are traded in the PORTAL Market; however, the
Company does not intend to apply for listing of the Debentures on any securities
exchange.
Subordination
The Debentures are subordinate in right of payment to all Senior
Indebtedness of the Company. At February 10, 1999, the
15
<PAGE>
Company's outstanding Senior Indebtedness was approximately $48,501,000
million. By reason of such subordination of the Debentures, in the event of the
insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up
of the business of the Company or upon a default in payment with respect to any
indebtedness of the Company or an event of default with respect to such
indebtedness resulting in the acceleration thereof, the assets of the Company
will be available to pay the amounts due on the Debentures only after all Senior
Indebtedness of the Company has been paid in full.
Consolidated Ratio of Earnings to Fixed Charges
Year Ended December 30 or 31 Nine Months Ended
- ------------------------------------------- -----------------
1993 1994 1995 1996 1997 9/30/97 9/29/98
- ---- ---- ---- ---- ---- ------- -------
2.8 (1) (1) (1) (1) (2) (2)
(1) Earnings for the years ended December 27, 1994, December 26, 1995,
December 31, 1996 and December 30, 1997 were inadequate to cover fixed charges.
Additional earnings of $2.2 million, $3.2 million, $21.4 million and $7.1
million, respectively, would have been required to bring the ratio to 1.0 in the
respective periods
(2) Earnings for the nine-month periods ended September 29, 1998 and
September 30, 1997 were inadequate to cover fixed charges. Additional earnings
of $3.9 million and $8.3 million, respectively, would have been required to
bring the ratio to 1.0.
THE SECURITIES
The Debentures
The Company has incorporated the description of the 1993 Debentures
contained in the 1994 Registration Statement. The description contained therein
is accurate in all material respects except for the following:
1. The price at which the Debentures may be converted into Shares is
$1.75 per share. Any such conversion may not occur prior to February 28, 1999
unless agreed to by the Company in accordance with all applicable laws.
2. Upon conversion of Debentures into Shares, in the event that BEA
owns, beneficially or otherwise, in excess of 12.5% or 25%, respectively, of the
outstanding common stock of the Company, BEA shall have the right to designate
one or two directors of the Company, as the case may be.
3. The Debentures have not been issued under the Indenture (as such
term is defined in the 1994 Registration Statement). However, all terms of the
Indenture apply to the Debentures except that the trustee under the Indenture
has no authority, power or obligation with respect to the Debentures and no
registrar or paying agent exists with respect to the Debentures.
16
<PAGE>
4. The Debentures rank pari passu with the 1993 Debentures in
respect of the payment of principal and interest.
5. The Company has no right to effect an optional redemption of the
Debentures.
6. In the event that a third party offers to purchase all of the
common stock of the Company or the securities of the Company held by BEA,
beneficially or otherwise, at a price in excess of $1.75 per share and the
Company's board of directors rejects such an offer, BEA has the right to convert
any Debentures which it then holds, beneficially or otherwise, and sell all of
the common stock of the Company which it then holds, beneficially or otherwise,
to such third party; provided, however, that the Company has thirty (30) days
prior to the sale of any such common stock to such third party to purchase such
common stock from BEA upon the same terms and conditions as are offered to BEA.
The Common Stock
The Company has incorporated the description of the Common Stock
contained in the Company's Registration Statement on Form S-1 filed on June 3,
1992, as amended (Registration No. 33-48326).
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the
Debentures nor will it receive any proceeds from the conversion of the
Debentures into Issuable Shares. The Company also did not receive any proceeds
from the conversion of Debentures into the Converted Shares or of the purchase
by Bay Harbour of the Third Party Shares. The Company received $5,040,000 as a
result of the Private Placement and the issuance of the Private Placement
Shares. The Company used the net proceeds from the issuance of the Private
Placement Shares for working capital and capital expenditures for new stores.
17
<PAGE>
SELLING SHAREHOLDERS
The following sets forth certain information with respect to the Selling
Shareholders, none of whom has ever held any position or office with the Company
or has had any other material relationship with the Company, except that Douglas
P. Teitelbaum and Steven A. Van Dyke who are officers of Bay Harbour are
directors of the Company.
<TABLE>
<CAPTION>
Principal Amount of Principal Amount of Debentures to be Held
Debentures Before Debentures to be After Offering
Name Offering Offered
- --------------------------- --------------------- ------------------ ----------------------
<S> <C> <C> <C>
ABT Co., Incorporated
Retirement Plan $62,500 $62,500 0
Gordon Bennett $35,000 $35,000 0
</TABLE>
<TABLE>
<CAPTION>
Name of Selling Shareholder Shares Owned Before Shares to be Shares to be Owned After
Offering Offered Offering
- --------------------------- ------------------- ------------- ------------------------
<S> <C> <C> <C>
ABT Co., Incorporated
Retirement Plan* 35,715 35,715 0
Gordon Bennett 20,000 20,000 0
Bay Harbour Management, L.C.** 6,047,148 6,047,148 0
Robert D. Carl 857,143 857,143 0
</TABLE>
* ABT Co., Incorporated Retirement Plan is a retirement plan established
for current and former employees of ABT Building Products Corp., a corporation
which is publicly traded under the symbol ABTC on Nasdaq.
** Bay Harbour is controlled 85% by Douglas P. Teitelbaum and Steven A.
Van Dyke.
PLAN OF DISTRIBUTION
The Debentures and the Shares are being registered to permit public
secondary trading of the Debentures and the Shares by the holders thereof from
time to time after the date of this Prospectus. The Company has agreed, among
other things, to bear all expenses (other than underwriting discounts, selling
commissions and fees and the expenses of counsel and other advisors to holders
of the Debentures or the Shares) in connection with the registration and sale of
the Debentures and the Shares covered by this Prospectus.
<PAGE>
The Company anticipates that holders of Shares may sell all or a
portion of the Shares from time to time on the NASDAQ National
18
<PAGE>
Market System, and may sell Debentures or Shares through a broker or
brokers or in the over-the-counter market at prices prevailing on such exchange
or the over-the-counter market, as appropriate, at the times of such sales.
Holders of Debentures or Shares may also make private sales directly or through
such broker or brokers. Brokers participating in such transactions will receive
customary brokerage commissions from sellers of Debentures or Shares. In
effecting sales, brokers or dealers engaged by holders of Debentures or Shares
may arrange for other brokers or dealers to participate. In connection with such
sales, holders of Debentures or Shares and brokers participating in such sales
may be deemed to be underwriters within the meaning of the Securities Act. The
Company does not intend to list the Debentures on any national securities
exchange. It may be unlikely that a secondary market in the Debentures
themselves (as opposed to the Shares) will develop.
LEGAL MATTERS
The legality of the Debentures and the Shares offered by this
Prospectus has been passed upon by Greenbaum, Rowe, Smith, Ravin, Davis & Himmel
LLP, Woodbridge, New Jersey.
EXPERTS
The consolidated financial statements of Tops Appliance City, Inc.
appearing in the Company's annual report (Form 10-K/A) for the year ended
December 30, 1997, have been audited by Arthur Andersen LLP, independent
auditors, as set forth in their report therein, included therein and
incorporated herein by reference, and the consolidated financial statements of
Tops Appliance City, Inc. at December 31, 1996, and for each of the 2 years in
the period then ended, appearing in the Company's annual report (Form 10-K/A)
for the year ended December 30, 1997, were audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph with respect to the uncertainty of the Company's ability
to continue as a going concern), included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
19
<PAGE>
No dealer, salesperson or other person
has been 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.
This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy by
anyone in any jurisdiction in which such offer
or solicitation is not authorized, or in which
the person making such offer or solicitation is
not qualified to do so, or to any person to whom it
is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances,
create an implication that there has not been any
change in the affairs of the Company since the date
hereof.
TABLE OF CONTENTS
Page
Available Information 4
Incorporation of
Certain Documents
by Reference ....... 5
Offering Summary .... 7
The Company ......... 7
The Offering ........ 9
Risk Factors ........ 11
Use of Proceeds ..... 17
Plan of Distribution 18
Legal Matters ....... 19
Experts ............. 19
TOPS APPLIANCE
CITY, INC.
$97,500 6 1/2% Convertible
Subordinated Debentures
due 2003
6,960,006 Shares of
Common Stock
PROSPECTUS
February 11, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The registrant estimates expenses in connection with the offering
described in this Registration Statement will be as follows:
Item Amount
Securities and Exchange Commission Registration Fee $ 3,816.12
Printing and Engraving Expenses 0.00
Accountants' Fees and Expenses 25,000.00
Legal Fees and Expenses 50,000.00
Miscellaneous 170.68
Total $ 78,986.80
===========
Item 15. Indemnification of Directors and Officers.
The description set forth under the caption "Indemnification of
Directors and Officers" in the Company's Form S-1 Registration Statement No.
33-48326 is incorporated herein by reference.
Item 16. Exhibits.
Exhibit Number Description of Document
4 Specimen of stock certificate for shares of Common
Stock; Incorporated by reference from Form S-1 filed
June 3, 1992, Registration No. 33-48326.
4.2 Specimen of Certificate for Debentures - incorporated
by reference from Exhibit 10.34 of Form 10-K for year
ended December 30, 1997.
5 Form of Opinion of Greenbaum, Rowe, Smith, Ravin,
Davis & Himmel LLP - page II-10.
10.34 Debenture Exchange Agreement dated August 20,
1997 between the Registrant and BEA Associates
incorporated by reference from Exhibit 10.34 of
Form 10-K/A for year ended December 30, 1997.
II-1
<PAGE>
10.36 Conversion Agreement dated May 8, 1998 between the
Registrant and Robert D. Carl, incorporated by
reference from, Exhibit 10.36 of Amendment No. 3
to For, S-3 filed on or about January 26, 1999.
10.37 Conversion Agreement dated July 16, 1998 between
the Registrant and Bay Harbour Management, L.C.
incorporated by reference fro, Exhibit 10.37 of
Amendment No. 3 to For, S-3 filed on or about
January 26, 1999.
10.38 Share Purchase Agreement dated July 16, 1998 between
the Registrant and Bay Harbour Management, L.C.
incorporated by reference from Exhibit 10.38 of
Amendment No. 3 to For, S-3 filed on or about
January 26, 1999.
23.1 Consent of Arthur Andersen LLP - Page II-7
23.2 Consent of Ernst & Young LLP - Page II-8
23.3 Consent of Greenbaum, Rowe, Smith, Ravin, Davis &
Himmel LLP (included in Exhibit 5)
Item 17. Undertakings.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
<PAGE>
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
II-2
<PAGE>
such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, 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;
provided however that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the Registration Statement is on Form S-3 or Form S-8 and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference 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.
(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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable ground to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Edison, State of New Jersey, on the 11th day of
February, 1999.
TOPS APPLIANCE CITY, INC.
By:/s/ Thomas L. Zambelli
-----------------------------
Thomas L. Zambelli
Chief Financial Officer and
Principal Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
- ------------------------ ---------------------------------- ----------------
*Robert G. Gross Director February 11 , 1999
- ------------------------
Robert G. Gross
/s/Thomas L. Zambelli Executive Vice February 11, 1999
- ------------------------ President, Secretary,
Thomas L. Zambelli Director, and Chief
Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
*Anthony L. Formica Director February 11, 1999
- ------------------------
Anthony L. Formica
*John H. Hollands Director February 11, 1999
- ------------------------
John H. Hollands
*Richard Jones President, CEO and February 11, 1999
- ---------------------- Director (Principal
Richard Jones Executive Officer)
*Douglas P. Teitelbaum Director February 11, 1999
- ------------------------
Douglas P. Teitelbaum
<PAGE>
*Steven A. Van Dyke Director February 11, 1999
- ----------------------
Steven A. Van Dyke
*Walter A. Jones Director February 11, 1999
- ----------------------
Walter A. Jones
*By:/s/ Thomas L. Zambelli Attorney-in-Fact February 11, 1998
- ---------------------------
Thomas L. Zambelli
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description of Document Page
-------------- ----------------------- ----
<S> <C> <C>
5 Form of Opinion of Greenbaum,
Rowe, Smith, Ravin Davis & Himmel LLP II-10
23.1 Consent of Arthur Andersen LLP II-8
23.2 Consent of Ernst & Young, LLP II-9
23.3 Consent of Greenbaum, Rowe, Smith,
Ravin, Davis & Himmel LLP (included in II-10
Exhibit 5
24 Power-of-Attorney II-7
</TABLE>
II-6
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 18, 1998, included in Tops Appliance City, Inc.'s Form 10-K/A for the
year ended December 30, 1997 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Roseland, New Jersey
February 11, 1999
II-8
<PAGE>
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement on Form S-3 and related Prospectus
of Tops Appliance City, Inc. for the registration of $97,500 aggregate principal
amount of the Company's 6-1/2% Convertible Subordinated Debentures and 6,960,006
shares of its Common Stock and to the incorporation by reference therein of our
report dated April 15, 1997 with respect to the consolidated financial
statements and schedule of Tops Appliance City, Inc. included in its Annual
Report (Form 10-K/A) for the year ended December 30, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young, LLP
MetroPark, New Jersey
February 11, 1999
II-9
<PAGE>
___________, 1999
Page 1
II-1
EXHIBIT 5
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP
Metro Corporate Campus One
P.O. Box 5600
Woodbridge, NJ 07095-0988
________, 1999
Tops Appliance City, Inc.
45 Brunswick Avenue
Edison, New Jersey 08818
Re: Tops Appliance City, Inc.
Gentlemen:
We have acted as counsel to Tops Appliance City, Inc., a New Jersey
corporation (the "Company"), in connection with the filing by the Company of a
Registration Statement (the "Registration Statement")on Form S-3 (Registration
No. 333-44229), covering the registration of $97,500 6 1/2% Convertible
Subordinated Debentures due 2003 (the "Debentures") and 6,960,006 shares of
common stock, no par value per share, (the "Common Stock")(the Debentures and
the Common Stock are collectively the "Securities"). We have been asked to issue
an opinion as to whether the Securities being registered will, when sold be, or
are, legally issued, fully paid, non-assessable, and binding obligations of the
Company. Capitalized terms contained herein and not defined herein shall have
the meaning assigned to such term as contained in the Registration Statement.
As counsel to the Company, we have examined the Certificate of
Incorporation and By-Laws, as amended to date, and other corporate records of
the Company and have made such other investigations as we have deemed necessary
in connection with the opinion hereinafter set forth. We have relied, to the
extent we deem such reliance proper, upon certain factual representations of
officers and directors of the Company given in certificates, in answer to our
written inquiries and otherwise, and, although we have not independently
verified all of the facts contained therein, nothing has come to our attention
that would cause us to believe that any of the statements contained therein are
II-10
<PAGE>
untrue or misleading.
___________, 1999
Page 1
In making the aforesaid examinations, we have assumed the genuineness
of all signatures and the conformity to original documents of all copies
furnished to us. We have assumed that the corporate records of the Company
furnished to us constitute all of the existing corporate records of the Company
and include all corporate proceedings taken by it.
Based solely upon and subject to the foregoing, we are of the opinion
that:
(1) The Debentures being registered by the Company are legally issued,
fully paid, non-assessable, and binding obligations of the Company.
(2) The shares of Common Stock issuable upon conversion of the
Debentures have been duly authorized and reserved for issuance upon
conversion, and when issued upon conversion in accordance with the terms of
the Debentures, will have been validly issued and will be fully paid and
non-assessable, and the issuance of such shares by the Company is not
subject to any preemptive or similar rights.
(3) The Issued Stock has been validly issued and is fully paid and
non-assessable, and the issuance of the Issued Stock by the Company is not
subject to any preemptive or similar rights.
We hereby consent to the filing of this opinion as an Exhibit to the
aforesaid Registration Statement and to the reference to our firm under the
caption "Legal Matters" in the Prospectus.
Very truly yours,
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP
II-11