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As filed with the Securities and Exchange Commission on August 23, 2000
Registration No. 333-41488
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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SUCCESSORIES, INC.
(Exact name of registrant as specified in its charter)
ILLINOIS 36-3760230
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
2520 DIEHL ROAD
AURORA, ILLINOIS 60504
(630) 820-7200
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
GARY J. ROVANSEK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
2520 DIEHL ROAD
AURORA, ILLINOIS 60504
(630) 820-7200
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent for Service)
Copies of communications to:
GUY E. SNYDER, ESQ.
STEVEN J. GRAY, ESQ.
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601
(312) 609-7500
Approximate date of commencement of proposed sale to the public: As
soon as practicable following the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. /_/
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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, check the following box. /_/
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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PROSPECTUS
1,500,000 SHARES (MINIMUM)
2,500,000 SHARES (MAXIMUM)
SUCCESSORIES, INC.
COMMON STOCK
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This is a rights offering of our common stock to our existing
stockholders. Proceeds from the offering will be used to repay a portion of
our outstanding loans and for working capital. If, as of August 4, 2000,
you held shares of our common or preferred stock, you have been granted
rights to purchase shares of our common stock in this offering. The shares
are being offered directly by us without the services of an underwriter or
selling agent.
You will receive one right for each share of common stock, or common
stock equivalent, that you own. Each right entitles you to purchase 0.3061
shares of common stock. We will issue only whole shares in the offering, so
you will need 3.2667 rights to purchase one share of common stock.
Stockholders who exercise rights will be given additional rights to purchase
unsubscribed shares on a pro rata basis. The purchase price per share of
common stock is $2.00. This price was arbitrarily determined by us and is not
based upon earnings or any history of operations.
The rights expire at 5:00 p.m., New York City time, on September 30,
2000 if not properly exercised before that date. We may extend the expiration
date upon notice to the exercise agent to a date not later than October 31,
2000.
Our common stock is traded on Nasdaq National Market under the
symbol "SCES." On August 18, 2000, the last reported sales price for our common
stock was $1.8125 per share. We do not intend to list the rights on Nasdaq or
any exchange.
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INVESTING IN THE COMMON STOCK INVOLVES SIGNIFICANT RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
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PER SHARE MINIMUM MAXIMUM
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Price to public and proceeds to Successories... $2.00 $3,000,000 $5,000,000
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
To purchase shares of common stock, you must complete a rights
exercise agreement and deliver it with full payment of the purchase price to
Illinois Stock Transfer Company, our rights agent, at 209 West Jackson Blvd.,
Suite 903, Chicago, Illinois 60606. The rights agent will hold the
subscription proceeds until we receive subscriptions for at least 1,500,000
shares. We plan to end the offering on September 30, 2000, unless we decide
to extend it. If we are unable to sell 1,500,000 shares of common stock, the
rights agent will return all subscription proceeds to investors without
interest, and we will pay all of the rights agent's expenses.
THE DATE OF THIS PROSPECTUS IS August 23, 2000
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TABLE OF CONTENTS
PAGE
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QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING ............................. 1
SUMMARY .................................................................... 4
RISK FACTORS................................................................. 7
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS .................................. 11
USE OF PROCEEDS............................................................. 12
DETERMINATION OF SUBSCRIPTION PRICE......................................... 12
CAPITALIZATION.............................................................. 13
DILUTION ................................................................... 14
THE RIGHTS OFFERING......................................................... 15
DESCRIPTION OF CAPITAL STOCK................................................ 24
LEGAL MATTERS............................................................... 26
EXPERTS ................................................................... 26
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AVAILABLE INFORMATION ON SUCCESSORIES
We filed a registration statement on Form S-3 to register with the
SEC the shares of our common stock to be offered hereby. This prospectus is a
part of that registration statement. As allowed by SEC rules, this prospectus
does not contain all of the information you can find in the registration
statement or the exhibits to the registration statement.
We file annual, quarterly and special reports and other information
with the Securities and Exchange Commission. You may read and copy any
document we file with the SEC at its public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. You may call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to you free of charge at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the SEC will
automatically update and supersede the information in this prospectus.
We incorporate by reference the documents listed below and, until
this offering has been completed, any future filings we will make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
1. Annual Report on Form 10-K for the year ended
January 29, 2000;
2. Quarterly Report on Form 10-Q for the three months ended
April 29, 2000;
3. Current Report on Form 8-K dated May 9, 2000; and
4. Proxy statement on Schedule 14A for the 2000 Annual Meeting of
Shareholders dated June 5, 2000.
You may request free copies of these filings by writing or
telephoning us at the following address:
Successories, Inc.
2520 Diehl Road
Aurora, Illinois 60504
Attn: John Carroll
(630) 820-7200
You should only rely on the information incorporated by reference or
provided in this prospectus. We have authorized no one to provide you
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date
on the front of the prospectus.
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QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
WHAT IS A RIGHT?
A right entitles you to purchase our common stock. You may purchase one share
of our common stock at $2.00 per share for every 3.2667 rights granted to you.
HOW MANY RIGHTS WILL I RECEIVE?
If, as of August 4, 2000, you held shares of our common or preferred
stock, you will receive one right for each share of common stock, or common
stock equivalent, that you own. Each right entitles you to purchase .3061
shares of common stock.
WHY DO I NEED 3.2667 RIGHTS TO PURCHASE ONE SHARE OF COMMON STOCK?
As of August 3, 2000 we had outstanding 8,166,670 shares of our common stock
or common stock equivalent. Because we have granted one right for each share,
we granted in the aggregate 8,166,670 rights. Because the maximum number of
shares we are offering is 2,500,000 shares, we have determined that each
right corresponds to 0.3061 shares in order for all stockholders to
participate in the offering. We will issue only whole shares in the offering,
so you will need 3.2667 rights to purchase one share of common stock.
CAN I BUY MORE SHARES OF COMMON STOCK THAN THE NUMBER OF RIGHTS THAT I
RECEIVE?
Yes. If any holders of our common stock or preferred stock do not exercise
their rights, they will be offered to stockholders exercising rights on a pro
rata basis.
WHY DID WE GRANT RIGHTS?
We have granted the rights in order to raise between $3,000,000 and
$5,000,000 in cash for Successories. Because a number of our stockholders
have expressed an interest in purchasing additional shares of common stock,
we have determined that a rights offering would be a low-cost method for
raising funds. No underwriting or sales commission will be paid with respect
to any shares purchased in the rights offering.
HOW WILL WE USE THE PROCEEDS FROM THIS OFFERING?
Assuming the minimum number of shares are subscribed for, we will use
approximately $3,000,000 of the net proceeds from this offering to pay down a
portion of our outstanding term loan and revolving credit loan and any
remaining funds for working capital. See "Use of Proceeds" on page 12.
WHAT FORMS AND PAYMENT ARE REQUIRED TO PURCHASE SHARES?
You received along with this prospectus a rights exercise agreement and
instructions on how to purchase shares. You must properly fill out, execute and
deliver the rights exercise agreement along with full payment to Illinois Stock
Transfer Company, the exercise agent, before the expiration date. You may also
use an alternate procedure called "Notice of Guaranteed Delivery," which allows
an extra three days to deliver the rights exercise agreement if full payment is
received before the expiration date and a securities broker or qualified
financial institution signs the form to guarantee that the rights exercise
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agreement will be timely delivered. See "The Rights Offering -- Special
Procedure under 'Notice of Guaranteed Delivery' Form" on page 18 for further
information regarding this procedure.
WHEN DO THE RIGHTS EXPIRE?
The rights expire at 5:00 p.m., New York City time, on September 30, 2000. We
may extend the expiration date upon notice to the exercise agent to a date
not later than October 31, 2000. You must return, and Illinois Stock
Transfer Company must actually receive, the required documents and payment
before that time.
DOES THE SUCCESSORIES BOARD OF DIRECTORS RECOMMEND EXERCISING THE RIGHTS?
Our Board of Directors makes no recommendation to you about whether you
should exercise any rights.
HOW WILL I BE AFFECTED IF I DO NOT EXERCISE ANY RIGHTS?
You are not required to exercise any rights or otherwise take any action in
response to this offering. If you do not exercise any rights, the number of
shares that you own will not change. Your percentage ownership of our
outstanding stock will decline when compared to the stockholders who
exercised their rights. For more information, please see "Dilution" on page
14.
WHAT IF A BROKER, BANK OR OTHER NOMINEE IS THE RECORD HOLDER OF MY COMMON
STOCK OR PREFERRED STOCK?
If you wish to exercise your rights and purchase our common stock, please
promptly contact the broker, bank or other company holding your common stock
or preferred stock. Your broker or other nominee record holder must exercise
the rights on your behalf for shares you wish to purchase or arrange for a
rights exercise agreement to be issued in your name so that you may directly
exercise the rights.
MAY I TRANSFER RIGHTS?
No. The rights are nontransferable.
WHAT IF MY RIGHTS RESULT IN FRACTIONAL SHARES?
You may not purchase fractional shares of our common stock. If your rights
result in the purchase of a fractional share, you must round down to and pay
for the nearest whole share.
MAY I CHANGE OR CANCEL MY EXERCISE OF RIGHTS AFTER I SEND IN THE REQUIRED
FORMS?
No. The exercise of rights is irrevocable.
ARE THERE CONDITIONS TO OUR ACCEPTANCE OF RIGHTS THAT ARE EXERCISED?
Yes. We will terminate this offering in its entirety if rights are not
exercised to purchase a minimum of 1,500,000 shares of common stock prior to
the expiration date. You should know that one of our principal stockholders,
the Jack Miller Family Limited Partnership #1, an entity controlled by Jack
Miller, our chairman, has indicated that it intends (although is not
obligated) to purchase any shares that are unsubscribed for in the offering,
up to the minimum amount of shares being offered. However, after Mr. Miller
and the Miller Family Partnership exercise their pro rata rights to purchase
shares in the first round of the offering, neither Mr. Miller nor the Miller
Family Partnership will be allowed to purchase any remaining unsubscribed
shares in an amount in excess of 19.99% of our common stock outstanding
before this offering.
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TO WHOM DO I DIRECT QUESTIONS?
If you have any questions or requests for assistance concerning how to
exercise your rights or if you need additional copies of the offering
documents, please call or write Illinois Stock Transfer Company at:
Illinois Stock Transfer Company
209 West Jackson, Suite 903
Chicago, Illinois 60606
Telephone: (312) 427-2953
(800) 757-5755
You will not pay any fees for your questions or requests. If you wish to call
us for additional copies of the offering documents, please call John Carroll
at (630) 820-7200.
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SUMMARY
THIS SUMMARY HIGHLIGHTS SOME OF THE INFORMATION PROVIDED ELSEWHERE
IN THIS PROSPECTUS. THE SUMMARY IS NOT COMPLETE AND MAY NOT PROVIDE ALL
INFORMATION YOU SHOULD CONSIDER BEFORE DECIDING WHETHER OR NOT TO EXERCISE
THE RIGHTS. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY. CERTAIN PORTIONS
OF THIS PROSPECTUS, SUCH AS "RISK FACTORS," ARE NOT SUMMARIZED BELOW. SEE
"RISK FACTORS" BEGINNING ON PAGE 7.
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Securities offered and purchase price..... We are offering for purchase a
minimum of 1,500,000 shares and a
maximum of 2,500,000 shares of our
common stock. The purchase price of
the common stock is $2.00 per share.
Stockholders receiving rights............. Only stockholders who hold shares of
our common or preferred stock on
the record date will receive rights.
Record date............................... August 4, 2000
Expiration date and time.................. The rights expire at 5:00 p.m., New
York City time, on September 30, 2000,
unless properly exercised before
that time. We may extend the
expiration date upon notice to the
exercise agent to a date not later
than October 31, 2000. If you do
not exercise your rights before the
expiration date, as it may be
extended, your rights will be void
and you will not be able to exercise
your rights in the future.
Rights.................................... Each right entitles you to purchase
0.3061 shares of common stock for
$2.00 per share. We will issue only
whole shares in the offering, so you
will need 3.2667 rights to purchase
one share of common stock.
Unsubscribed shares....................... Stockholders who exercise rights
will be given additional rights to
purchase unsubscribed shares on a
pro rata basis.
Use of proceeds........................... Assuming the minimum number of
shares are subscribed for, we will use
approximately $3,000,000 of the net
proceeds of this offering to pay down
a portion of our outstanding term loan
and revolving credit loan and any
remaining funds for working capital.
No board recommendation................... Our board of directors makes no
recommendation to you regarding the
exercise of rights under this
offering.
Nontransferability of rights.............. The rights are nontransferable. We
do not intend to list the rights on
Nasdaq or any exchange.
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No revocation............................. If you exercise any rights, you are
not allowed to revoke or change the
exercise or request a refund of
monies paid.
Conditions relating to the rights offering We will terminate this offering in
its entirety if rights are not
exercised to purchase a minimum of
1,500,000 shares of common stock
prior to the expiration date. One
of our principal stockholders,
the Jack Miller Family Limited
Partnership #1, an entity
controlled by Jack Miller, our
Chairman, has indicated that it intends
(although is not obligated) to purchase
any shares that are unsubscribed
for in the offering, up to the
minimum amount of shares being
offered. However, after Mr. Miller
and the Miller Family Partnership
exercise their pro rata rights to
purchase shares in the first round of
the offering, neither Mr. Miller nor
the Miller Family Partnership will be
allowed to purchase any remaining
unsubscribed shares in an amount
in excess of 19.99% of our common
stock outstanding before this offering.
Exercise agent............................ Illinois Stock Transfer Company.
Procedure for exercising rights........... To exercise rights, you must
complete the rights exercise
agreement and deliver it to Illinois
Stock Transfer Company with full
payment for the stock you elect to
purchase. Illinois Stock Transfer
Company must receive the proper
forms and payments on or before the
expiration date. You may deliver the
documents and payments by mail or
commercial courier. If you use
regular mail for this purpose, we
recommend using insured, registered
mail. You may use an alternative
"Guaranteed Delivery Procedure" if
you are unable to deliver the rights
exercise agreement before the
expiration date. There are, however,
certain requirements of this
procedure. Please see "The Rights
Offering -- Special Procedure under
'Notice of Guaranteed Delivery'
Form" on page 18 for further
information on this procedure.
Payment adjustments....................... If you send a payment that is
insufficient to purchase the number
of shares requested, or if the
number of shares requested is not
specified in the forms you return,
Illinois Stock Transfer Company will
apply the payment received to
exercise rights to the extent of the
payment. If your payment exceeds the
purchase price for the full exercise
of rights, Illinois Stock Transfer
Company will refund that excess as
soon as practicable. We will not pay
any interest on any payments
received in this offering.
Nominee accounts.......................... If you wish to purchase shares in
this offering and your common stock
or preferred stock is held by a
securities broker, bank, trust
company or other nominee, you should
promptly contact those record
holders and request that they
exercise rights on your behalf. You
may also contact the nominee and
request that the nominee send a
separate rights exercise agreement
to you.
If you are a record holder who
wishes an institution such as a
broker or bank to exercise your
rights for you, you should contact
that institution promptly to arrange
that method of exercise.
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You are responsible for the payment
of any fees that brokers or other
persons holding your common stock or
preferred stock may charge.
Exercise by foreign and certain other
stockholders.............................. Illinois Stock Transfer Company will
hold rights exercise agreements for
holders of our common stock or
preferred stock having addresses
outside the United States. In order
to exercise rights, these holders
must notify Illinois Stock Transfer
Company and timely follow the other
procedures discussed in this
prospectus on or before the
expiration date.
U.S. income tax consequences.............. For United States federal income tax
purposes, we believe that holders
of our common stock will not
recognize taxable income upon the
receipt or exercise of the
rights. However, holders of our
preferred stock may recognize
taxable income upon the receipt
(but not the exercise) of the
rights measured by the value of
the rights received on the date
of distribution. If you sell the
stock you acquire upon the
exercise of your rights, you will
recognize taxable income equal to
the excess of the amount realized
over your basis in the stock. You
should consult your own tax
advisor concerning the tax
consequences of this offering
under your own tax situation. For
further information on tax
consequences, please see "The
Rights Offering -- Certain
Federal Income Tax Consequences"
beginning on page 21.
Stock certificates........................ We will deliver stock certificates
representing shares of our common
stock to those who purchase shares
by exercising rights as soon as
practicable after the expiration
date.
Amendment, extension and
termination............................... We will hold open our rights
offering until the expiration date.
We may extend the expiration date.
We may amend, withdraw or terminate
our rights offering at our
discretion.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND THE
OTHER INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO PURCHASE COMMON STOCK
IN THIS OFFERING. OUR COMMON STOCK IS SUBJECT TO SIGNIFICANT INVESTMENT
RISKS. MANY FACTORS, INCLUDING THE RISKS DESCRIBED BELOW, COULD CAUSE OUR
OPERATING RESULTS TO BE DIFFERENT FROM OUR EXPECTATIONS AND PLANS.
RISKS RELATING TO OUR COMMON STOCK
INVESTORS IN THE COMMON STOCK WILL SUFFER IMMEDIATE DILUTION.
Stockholders who do not exercise their rights will own a smaller
percentage of our outstanding stock compared to stockholders who exercised
their rights.
You will suffer an immediate dilution in net tangible book value per
share of common stock. The pro forma net tangible book value available for
common stockholders at April 29, 2000, after giving effect to the common
stock distributed on July 31, 2000 as a dividend on the Series A preferred
stock and shares issued on July 25, 2000 pursuant to our Employee Stock
Purchase Plan, was approximately $13,952,000 or $1.99 per share of common
stock. Based upon an assumed public offering price of $2.00 per share, the
dilution per share to investors who purchase shares of common stock in the
offering would be $0.02 assuming the minimum number of shares are sold in the
offering and $0.02 assuming the maximum number of shares are sold in the
offering. See "Dilution" on page 14.
THE ARBITRARILY DETERMINED PURCHASE PRICE MAY BE HIGHER OR LOWER THAN THE
MARKET PRICE OF THE COMMON STOCK AFTER THE OFFERING.
The $2.00 per share purchase price was arbitrarily determined by us
and is not based upon earnings or any history of operations. We did not
retain an independent investment banking firm to assist in determining the
offering price. Future prices of our common stock may be affected positively
or negatively by our future revenues and earnings, changes in estimates by
analysts, our ability to meet analysts' estimates, speculation in the trade
or business press about us, and overall conditions affecting our industry,
general economic trends and the stock market. We cannot assure you that
trading prices of our common stock will not decline below $2.00 per share
during or after this offering.
THERE IS NO ASSURANCE THAT YOU CAN SELL YOUR SHARES.
The shares of our common stock issued in the offering have been
approved for inclusion on the Nasdaq National Market. Even though the shares
will be available for trading on the Nasdaq National Market, we do not know
how liquid the market may be or the price at which our stock may trade.
Therefore, shares of the common stock acquired in the offering may not be
readily marketable in the case of financial emergency or otherwise.
INVESTORS WILL HAVE A DELAY IN THEIR ABILITY TO RESELL SHARES.
If you exercise rights, you cannot resell the common stock you
purchase until you (or your broker or other nominee) have received a stock
certificate for that stock. Although we will attempt to issue the appropriate
certificates as soon as practicable after we complete this offering, there
may be some delay between the expiration date and the time we issue new stock
certificates.
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OUR PRINCIPAL STOCKHOLDERS HAVE SIGNIFICANT INFLUENCE ON OUR MANAGEMENT AND
OPERATIONS.
Our directors and officers beneficially own approximately 30% of
our outstanding shares of common stock and preferred stock. As a result, the
directors and officers will have significant influence on the management and
direction of the company.
RISKS RELATING TO OUR BUSINESS
WE HAVE INCURRED LOSSES.
We have incurred a net loss in all of the past three years, and have
an accumulated deficit of $13,563,000 as of January 29, 2000. While we do not
expect to incur operating losses in future years, our ability to achieve
profitability will depend on many factors, including our ability to develop,
manufacture, introduce and market commercially acceptable products while
controlling operating costs. There can be no assurance that we will achieve a
profitable level of operations in fiscal 2001 or, if profitability is
achieved, that it can be sustained.
WE COULD LOSE FRANCHISED RETAIL STORES; WE MAY HAVE TO PURCHASE FRANCHISED
RETAIL STORES.
We operate some of our retail stores under franchise. The continued
use of a franchise generally depends upon the continuation of the franchise
agreement related to that retail store with us. We have the right to inspect
franchised properties periodically to confirm adherence to operating
standards. Actions by us could cause a cancellation of a franchise license.
If a franchise is terminated for any reason, we may try to obtain a suitable
replacement franchise, or to operate the retail store independent of a
franchise. If we lose a franchise, we will lose the associated name
recognition and marketing support provided by the franchisee. This loss could
adversely affect the value of the retail store and our results of operations.
WE MAY BE UNABLE TO DIVEST OUR RETAIL STORES AND LIQUIDATE OUR GOLF CATALOG
BUSINESS.
On September 3, 1998, we announced that we would focus our future
growth on our core motivational products business and our two most profitable
distribution channels: direct marketing and franchised retail stores. As a
result we began plans to divest our golf catalog business, to reduce the
scope of our wholesale business, and to convert our company-owned retail
stores to franchise owner-operators. Our inability to fully execute on these
plans may adversely affect our financial condition and results of operations.
WE ARE SUBJECT TO THE RISK OF FLUCTUATING FOREIGN CURRENCY EXCHANGE.
We are subject to market risk associated with adverse changes in
foreign currency exchange rates. Our exposure to foreign currency exchange
rate risk relates primarily to our financial position and results of
operations in Canada and the United Kingdom. Our exposure to foreign currency
exchange rate risk is difficult to estimate due to factors such as balance
sheet accounts, and the existing economic uncertainty and future economic
conditions in the international marketplace.
WE ARE DEPENDENT UPON OUR MANAGEMENT TEAM.
The success of our business will largely depend upon the efforts and
abilities of our executive officers and certain other key employees. Our
Chairman Emeritus, President and Chief Executive Officer, Chief Financial
Officer, Senior Vice President and Creative Director are the only key
employees subject to written employment or severance agreements. We believe
that our future
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success is also dependent upon our ability to continue to attract and retain
qualified personnel in all areas of our business.
WE MAY INCUR DAMAGES FROM A LAWSUIT.
In May 1998, Wascher Corporation ("Wascher"), a franchisee, filed a
Demand for Arbitration dated May 26, 1998 with the American Arbitration
Association (Case No. 51-114-00227-98). Wascher alleges the following causes
of action against us: breach of contract, breach of good faith and fair
dealing, common law fraud, unfair competition, Robinson-Patman Act violation,
tortuous interference of contract and violation of the Wisconsin Fair
Dealership Act. In support thereof, Wascher alleges that we have not followed
our agreement with Wascher or observed reasonable commercial standards and
good business practices. Wascher alleges and seeks an award in an amount in
excess of $250,000 plus costs, disbursements and attorney's fees, an award of
both treble and punitive damages, and such other relief deemed just and
equitable.
The hearing dates for the Wascher matter were originally scheduled
in January 1999. The hearing has been postponed and we are involved in
settlement negotiations. If a settlement is not reached with Wascher, we
intend to vigorously defend ourself against the claims. Given the phase of
this proceeding, we have determined that a reasonable assessment with respect
to the financial impact, if any, cannot be made at this point.
GOVERNMENT REGULATION MAY ADVERSELY AFFECT OUR FRANCHISING EXPANSION AND
PROFITABILITY.
As a franchisor, we are subject to various federal and state
franchise laws and regulations. Although we believe we are currently in
compliance in all material respects with existing federal and state laws,
there is a trend toward increased government regulation of franchising.
Legislation has been introduced at the federal and state levels in the past
which, if passed, would expand pre-sale disclosure requirements, further
regulate substantive aspects of the franchise relationship and require us to
file our franchise offering circulars with additional government authorities.
Although no legislation is currently pending, legislation similar to that
proposed in the past could be introduced and if enacted, could adversely
affect us.
OUR CONTINUED GROWTH IS DEPENDENT UPON OUR ABILITY TO PROTECT OUR
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.
We rely on copyright and trademark laws to protect our proprietary
rights in the names, distinctive configurations and original art work and
authorship of our products and services. There can be no assurance that this
protection is adequate. Moreover, the laws of certain countries in which our
products are sold do not protect our products and intellectual property
rights to the same extent as do the laws of the United States.
RISKS RELATING TO AN INVESTMENT IN RETAIL OPERATIONS
WE HAVE A SEASONAL BUSINESS.
We generally experience peak sales in the fourth quarter of our
fiscal year (November through January) due to the holiday season. The effects
of seasonality are greater in our retail operations than other segments of
our business. Most operating expenses are incurred evenly throughout the
year, although some selling and administrative expenses are variable
depending on sales, and direct marketing catalog advertising expenses as a
percentage of sales are higher in the first calendar quarter. Our quarterly
operating results may also vary depending upon such factors as converting our
stores to
9
<PAGE>
franchise stores, catalog mailings, and the timing of new product
introductions and promotions. Our cash requirements generally reach a
seasonal peak in the second half of the year to finance increased inventory
levels needed to meet the third and fourth quarter sales demand.
WE FACE STRONG COMPETITION.
The industry supplying motivational, self-improvement and custom
awards is highly competitive and fragmented. We compete principally on the
basis of product exclusivity, selection, quality, name recognition and price
of our products. There can be no assurance that other companies with greater
resources than us will not enter the industry and compete directly against us.
We compete with other franchisors for qualified franchisees. Many
competing franchisors have established business concepts and significantly
greater financial and other resources than we do. Franchisees are not
required to have experience in the retail industry or with the types of
products offered by us.
INCREASES IN POSTAGE AND SHIPPING EXPENSES COULD ADVERSELY AFFECT OPERATING
RESULTS.
Postage and shipping are significant expenses in the operation of
our mail order business. We ship our products to customers generally by
overnight delivery and surface services. We generally invoice the costs of
delivery and parcel shipments directly to customers as separate shipping and
handling charges. Legislation has been passed that increases postage and
shipping expenses by 6.4% beginning in 2001. This increase in shipping and
postal rates (paid by us for our catalog mailings) could have an adverse
effect on our operating results. Similarly, strikes or other service
interruptions by such shippers could adversely affect our ability to market
or deliver our products on a timely basis.
IMPOSITION OF STATE SALES TAX COLLECTION OBLIGATION COULD INCREASE OUR
EXPENSES AND ADVERSELY AFFECT THE COMPANY'S BUSINESS.
We presently collect sales tax or other similar tax only on sales of
products to residents of the states in which we operate retail locations.
Various states have sought to impose on direct marketers the burden of
collecting state sales tax on the sale of products shipped to that state's
residents. The United States Supreme Court has ruled that the various states,
absent congressional legislation, may not impose tax collection obligations
on an out-of-state mail order company whose only contacts with the taxing
state are the distribution of catalogs and other advertisement materials
through the mail and whose subsequent delivery of purchased goods is by U.S.
mail or interstate common carriers. Legislation has been introduced in the
United States Senate in the past which, if passed, would allow states to
impose state sales tax collection obligations on out-of-state mail order
companies, such as us, whose sales to residents of the taxing state exceed
certain levels. We believe if such legislation were passed our present sales
to residents of numerous states would be subject to sales tax. Although no
legislation is currently pending which would subject us to a sales tax
collection obligation, legislation similar to that proposed in the past could
be introduced and, if enacted, the imposition of a sales tax collection
obligation on us may result in additional administrative expenses to us and
price increases to the customer that could adversely affect us, our financial
condition and results of operation.
10
<PAGE>
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. The words
"believe," "expect," "anticipate," "intend," "estimate," and other
expressions that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking statements.
These statements include statements regarding our intent, belief or current
expectations. You are cautioned that any forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties that may cause our actual results to differ materially from the
results discussed in the forward-looking statements. In addition to those
factors discussed under "Risk Factors," other factors that could cause actual
results to differ materially from those indicated by the forward-looking
statements are:
- the impact of general economic conditions in the United
States;
- industry conditions, including competition;
- capital expenditure requirements;
- legislative or regulatory requirements; and
- access to capital markets.
Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, expected or projected. The forward-looking
statements reflect our current views with respect to future events and are
subject to these and other risks, uncertainties and assumptions relating to
our operations, results of operations, growth strategy and liquidity. All
subsequent written and oral forward-looking statements attributable to us or
individuals acting on our behalf are expressly qualified in their entirety by
this paragraph. You should specifically consider the various factors
identified in this prospectus and the documents incorporated by reference
herein which could cause actual results to differ.
11
<PAGE>
USE OF PROCEEDS
After the payment of expenses in connection with this offering,
which are estimated to be approximately $120,000, we will use the net
proceeds that we receive in this offering to pay down a portion of our term
loan and revolving credit loan and to have additional funds available for
general working capital purposes.
The Company's credit facility agreement with a commercial bank is
comprised of a $7.5 million term loan and a revolving credit loan. The
revolving credit loan provides for maximum borrowings of $9.0 million through
May 1, 2000 and for each succeeding July 1 through December 31. The maximum
borrowings at all other times is $6.0 million. Borrowings under the revolving
credit loan are limited to 85% of eligible receivables plus 57% of eligible
inventory, as defined, provided that from February through April eligible
inventory is limited to $5.0 million through the year 2000 and $3.0 million
in years thereafter. The limitation on borrowings allowed under the revolving
credit loan are further reduced by $1,500,000 through February 15, 2001. The
facility expires in June 2003, and borrowings under the facility are secured
by substantially all the assets of the Company. The interest rates on the
term loan and revolving credit loan borrowings generally fluctuate based on
the margin ratio, as defined, from a minimum of prime plus 0.50% to a maximum
of prime plus 3.00% on the term loan, and a minimum of prime to a maximum of
prime plus 3.00% on the revolving credit loan. The interest rate on the term
loan was 10.25% and the interest rate on the revolving credit loan was 9.75%
at April 29, 2000. As of April 29, 2000, available borrowings on the
revolving credit loan were $6,140,000.
DETERMINATION OF SUBSCRIPTION PRICE
The offering price was determined arbitrarily by us and is not based
upon earnings or any history of operations. The offering price should not be
construed as indicative of the present or anticipated future value of the
common stock. On August 18, 2000, the last reported sales price of our common
stock on Nasdaq was $1.8125 per share. We do not intend to list the rights on
Nasdaq or any exchange.
12
<PAGE>
CAPITALIZATION
The following table shows our indebtedness and capitalization as of
April 29, 2000, and as adjusted to reflect the distribution on July 31, 2000
of 64,054 shares of common stock as a dividend on the Series A preferred
stock and the issuance of 4,304 shares pursuant to our Employee Stock
Purchase Plan on July 25, 2000, plus the issuance and sale of 1,500,000
and 2,500,000 shares of common stock, respectively, offered hereby at a
purchase price of $2.00 per share and the application of the estimated net
proceeds as shown under "Use of Proceeds." This data should be read in
conjunction with the consolidated financial statements and notes thereto
incorporated by reference into this prospectus from our annual report on Form
10-K for the fiscal year ended January 29, 2000, and from our quarterly
report on Form 10-Q for the quarter ended April 29, 2000.
<TABLE>
<CAPTION>
APRIL 29, 2000
-------------------------------------------------------------
ACTUAL PRO FORMA MINIMUM MAXIMUM
-------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT................................................ $ 2,658,000 2,658,000 2,658,000 2,658,000
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $.01 par value;
1,000,000 authorized, 503,092 of Series A and
101,667 of Series B shares issued and outstanding......... 6,000 6,000 6,000 6,000
Common stock, par value $.01 per share;
20,000,000 shares authorized; 6,949,716 (actual) and
7,018,074 (pro forma) shares issued and outstanding....... 69,000 70,000 85,000 95,000
Common stock warrants........................................ 2,324,000 2,324,000 2,324,000 2,324,000
Notes receivable from stockholders........................... (165,000) (165,000) (165,000) (165,000)
Additional paid-in capital................................... 28,998,000 29,120,000 31,985,000 33,975,000
Accumulated deficit.......................................... (13,979,000) (13,979,000) (13,979,000) (13,979,000)
Accumulated other comprehensive loss......................... (63,000) (63,000) (63,000) (63,000)
----------- ----------- ----------- -----------
Total stockholders' equity................................ 17,190,000 17,313,000 20,193,000 22,193,000
----------- ----------- ----------- ------------
Total capitalization................................... $19,848,000 19,971,000 22,851,000 24,851,000
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
</TABLE>
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<PAGE>
DILUTION
Our pro forma net tangible book value available for common
stockholders as of April 29, 2000, after giving effect to the common stock
distributed on July 31, 2000 as a dividend on the Series A preferred stock
and shares issued on July 25, 2000 pursuant to our Employee Stock Purchase
Plan, was $13,952,000 or $1.99 per share of common stock. "Net tangible book
value" is defined as our total stockholders' equity less intangible assets.
"Net tangible book value per common share" is determined by dividing our net
tangible book value available for common stockholders by the number of
outstanding shares of common stock.
After giving effect to the sale of the minimum number of our shares
of common stock offered at a purchase price of $2.00 per share, the pro forma
net tangible book value available for common stockholders as of April 29,
2000 would have been $16,832,000 or $1.98 per share of common stock. This
represents an immediate decrease in net tangible book value of $0.01 per
share to the existing stockholders, and an immediate dilution of $0.02 per
share to investors who purchase shares of common stock in the offering.
"Dilution" is the difference between the offering price per share and the pro
forma net tangible book value per share as adjusted for the offering.
The following table illustrates this per share dilution as of April
29, 2000, which is determined by subtracting the net tangible book value per
share after the offering from the price paid by an investor that purchases
shares in the offering.
<TABLE>
<S> <C> <C>
Offering price per share (1)..................................................... $2.00
Net tangible book value per share as of April 29, 2000........................... $1.99
Increase (Decrease) in net tangible book value per share attributable to
payments by investors participating in the offering (2)........................ (0.01)
-----
Pro forma net tangible book value per share after offering....................... 1.98
-----
Dilution of net tangible book value per share to investors participating in
the offering................................................................... $0.02
=====
</TABLE>
__________________________
(1) Before deducting the estimated offering expenses.
(2) After deducting the estimated offering expenses.
14
<PAGE>
THE RIGHTS OFFERING
TERMS OF THE RIGHTS OFFERING
The terms of the rights offering are as follows:
- Only holders of record of our common and preferred stock at
the close of business on the record date may exercise
rights. You are a record holder only if your name is
registered as a common or preferred stockholder as of the
record date. You have received this prospectus and the
accompanying documents because as of the record date your
name was registered on our books and records as a holder of
our common stock or preferred stock.
- The record date is August 4, 2000.
- We are conducting this rights offering of a minimum of
1,500,000 shares and a maximum of 2,500,000 shares of our
common stock. If, as of August 4, 2000, you held shares of
our common or preferred stock, we have granted you rights to
purchase shares of our common stock for a price of $2.00 per
share.
- If your common stock or preferred stock is held in a
brokerage, bank or other custodial or nominee account, you
should promptly send the rights exercise agreement to your
broker or other person holding your stock to exercise your
rights. Your broker or other person holding your stock is the
record holder and will have to act on your behalf for you to
exercise your rights. We have asked the brokers and other
nominee holders of our common stock and preferred stock to
contact you to obtain your rights exercise agreement
concerning the rights you are entitled to exercise.
- We will not pay interest on funds you deliver to exercise your
rights, regardless of whether the funds are used to purchase
common stock or are returned for any reason.
- We will not issue fractional shares. We will eliminate
fractional shares in allocating our common stock under this
offering. If your exercise of your rights would result in the
issuance of a fractional share of our common stock, you must
round down to purchase the nearest whole share or any lesser
number of whole shares.
Illinois Stock Transfer Company is acting as the exercise agent for
this offering under an agreement with us.
All rights exercise agreements, payments of the purchase price,
nominee holder certifications, and notices of guaranteed delivery must be
delivered to Illinois Stock Transfer Company as follows:
209 West Jackson, Suite 903
Chicago, Illinois 60606
(800) 757-5755
(312) 427-2953
Illinois Stock Transfer Company's facsimile number (for eligible
institutions only) is (312) 427-2879. The telephone number for confirmation
of receipt of facsimiles only is (312) 427-2953.
15
<PAGE>
We will pay the fees and expenses of Illinois Stock Transfer
Company. We have also agreed to indemnify Illinois Stock Transfer Company
against certain liabilities in connection with this offering.
THE RIGHTS
You will receive one right for each share of common stock, or common
stock equivalent, that you own. A separate certificate evidencing the rights
will not be delivered to you.
As of August 3, 2000 we had outstanding 8,166,670 shares of our
common stock or common stock equivalent. Because we have granted one right
for each share, we granted in the aggregate 8,166,670 rights. Because the
maximum number of shares we are offering is 2,500,000 shares, we have
determined that each right corresponds to 0.3061 shares in order for all
stockholders to participate in the offering. We will issue only whole shares
in the offering, so you will need 3.2667 rights to purchase one share of
common stock.
Stockholders who exercise rights will be given additional rights to
purchase unsubscribed shares on a pro rata basis.
We have sent you a rights exercise agreement along with this
prospectus and related instructions to exercise your rights. To exercise your
rights, you must fill out and sign the rights exercise agreement and timely
deliver it along with full payment for the common stock you wish to purchase
to Illinois Stock Transfer Company.
A depository bank, trust company or securities broker or dealer that
is a record holder for more than one beneficial owner of common stock or
preferred stock may divide or consolidate rights exercise agreements to
represent shares or units held on the record date by their beneficial owners
upon properly notifying Illinois Stock Transfer Company.
PURCHASE PRICE
The purchase price for the common stock in the offering is $2.00 per
share, payable in cash.
WHEN THE RIGHTS OFFERING EXPIRES
The rights expire at 5:00 p.m., New York City time, on September 30,
2000 unless properly exercised before that time. We may extend the expiration
date upon notice to the exercise agent to a date not later than October 31,
2000. After the expiration date, no one can exercise rights.
To exercise rights in a timely manner, Illinois Stock Transfer
Company must actually receive before the expiration date your properly
executed and completed rights exercise agreement (or a form of "Notice of
Guaranteed Delivery," see "The Rights Offering -- Special Procedure under
'Notice of Guaranteed Delivery' Form" on page 18), together with full payment
for all shares you wish to purchase.
HOW TO EXERCISE YOUR RIGHTS
You should read carefully the rights exercise agreement and other
forms and related instructions that accompany this prospectus. You should
call promptly Illinois Stock Transfer Company with any questions you may have
regarding how to exercise your rights.
16
<PAGE>
You may exercise your rights by delivering to Illinois Stock
Transfer Company at the address specified in this prospectus and in the
instructions accompanying this prospectus before the expiration time:
- the properly completed and executed rights exercise agreement
that evidence your rights, and
- payment of the purchase price in full for each share of common
stock you wish to purchase.
Please do not send the rights exercise agreement or related forms to
us. Please send the properly completed and executed rights exercise agreement
with full payment to Illinois Stock Transfer Company.
HOW YOU SHOULD PAY WHEN YOU EXERCISE YOUR RIGHTS
To timely exercise your rights, Illinois Stock Transfer Company
actually must receive the purchase price before the expiration time in the
form of:
- a certified or cashier's check or bank draft drawn upon a U.S.
bank, or a U.S. postal money order, payable to Illinois Stock
Transfer Company;
- a personal check that must have cleared payment;
- a wire transfer of funds to the account maintained by Illinois
Stock Transfer Company for this offering at:
Old Kent Bank -- Grand Rapids
ABA# 0724-0005-2
Further Credit Old Kent Bank -- IL
BNF Illinois Stock Transfer Company
for Successories, Inc. Exercise Option
Acct.# 5200053919
Funds paid by uncertified personal check may take at least five
business days to clear. Thus, if you pay the purchase price by means of an
uncertified personal check, you should make payment sufficiently in advance
of the expiration date to ensure that your check actually clears and Illinois
Stock Transfer Company receives your payment before that time. We are not
responsible for any delay in payment by you. We recommend that you consider
payment by means of a certified or cashier's check, money order or wire
transfer of funds.
WE WILL NOT ISSUE FRACTIONAL SHARES OF COMMON STOCK
You may not purchase fractional shares of our common stock. If your
rights would allow you to purchase a fractional share, you may exercise them
only by rounding down to and paying for the nearest whole share, or paying
for any lesser number of whole shares.
We will accept any subscription that inadvertently indicates a
purchase of a fractional share by rounding downward to the nearest whole
share. We will refund without interest the payment for that fractional share
as soon as practicable.
CONDITIONS RELATING TO THE RIGHTS OFFERING
We will terminate this offering in its entirety if rights are not
exercised to purchase a minimum of 1,500,000 shares of common stock prior to
the expiration date. You should know that one of our principal stockholders,
the Jack Miller Family Limited Partnership #1, an entity controlled by Jack
Miller, our chairman, has indicated that it intends (although is not
obligated) to purchase any shares that are unsubscribed for in the offering,
up to the minimum amount of shares being offered. However, after Mr. Miller
and the Miller Family Partnership exercise their pro rata rights to purchase
shares in the first round of the offering, neither Mr. Miller nor the Miller
Family Partnership will be allowed to purchase any remaining unsubscribed
shares in an amount in excess of 19.99% of our common stock outstanding
before this offering.
17
<PAGE>
SPECIAL PROCEDURE UNDER "NOTICE OF GUARANTEED DELIVERY" FORM
If you wish to exercise your rights but are not sure whether
Illinois Stock Transfer Company will actually receive your executed rights
exercise agreement before the expiration time, as an alternative, you may
exercise your rights by causing all of the following to occur within the time
frame noted:
1) Illinois Stock Transfer Company must receive full payment for
all shares you desire to purchase before the expiration time.
2) Illinois Stock Transfer Company must receive a properly
executed "Notice of Guaranteed Delivery" substantially in the
form we distributed to you along with this prospectus before
the expiration time.
3) Both you and one of the following must execute the "Notice of
Guaranteed Delivery": a member firm of a registered national
securities exchange, a NASD member, a commercial bank or trust
company having an office or correspondent in the United
States, or other eligible guarantor institution qualified
under a guarantee program acceptable to Illinois Stock
Transfer Company. The cosigning institution must guarantee in
the notice of guaranteed delivery that the rights exercise
agreement will be delivered to Illinois Stock Transfer
Agreement within three NYSE trading days after the date of the
notice. You must also provide in the notice other relevant
details concerning your exercise of rights.
4) Illinois Stock Transfer Company must receive your properly
completed and executed rights exercise agreement with any
required signature guarantee within three NYSE trading days
after the date of the related notice of guaranteed delivery.
You may deliver a notice of guaranteed delivery to Illinois Stock
Transfer Company in the same manner as the rights exercise agreement at the
address set forth on page 19 or by facsimile transmission (telecopier no.
(312) 427-2879). To confirm facsimile deliveries, please call (312) 427-2953.
You may obtain additional copies of the form of notice of guaranteed
delivery upon request from Illinois Stock Transfer, whose address and
telephone number is set forth on page 19.
WHAT HAPPENS IF YOU PROVIDE INCOMPLETE FORMS OR MAKE AN INSUFFICIENT OR
EXCESS PAYMENT
If you do not indicate the number of rights being exercised, or do
not forward sufficient payment for the number of rights that you indicate are
being exercised, then we are entitled to accept the subscription forms and
payment for the maximum number of rights that may be exercised based on the
actual payment delivered.
We will return any payment not applied to the purchase of shares
under these procedures to those who made these payments as soon as
practicable by mail.
WHAT HAPPENS IF YOU EXERCISE LESS THAN ALL OF YOUR RIGHTS
If you subscribe for fewer than all of the shares represented by
your rights, your remaining rights are nontransferable and can be issued to
our other common and preferred stockholders. You may not sell your remaining
rights.
18
<PAGE>
INSTRUCTIONS TO NOMINEE HOLDERS
If you are a broker, trustee or depository for securities or other
nominee holder of common stock or preferred stock for beneficial owners of
the common stock or preferred stock, we request you contact the beneficial
owners as soon as possible to obtain instructions and related certifications
concerning their rights. We have included along with this prospectus a
suggested form of letter of instructions from nominee holders to beneficial
owners. Our request is discussed further in that form.
If instructed by beneficial owners, nominee holders should complete
appropriate rights exercise agreements on behalf of those owners and submit
the agreement on a timely basis to Illinois Stock Transfer Company with the
proper payment. Nominee holders bear the risk of loss on delivery of rights
exercise agreements and payments. Nominee holders bear all risk of the method
of delivery to Illinois Stock Transfer Company of rights exercise agreement
and payments of the purchase price.
If you send rights exercise agreements and payments by mail, we urge
you to send these by registered mail, properly insured, with return receipt
requested, and to allow a sufficient number of days to ensure delivery to
Illinois Stock Transfer Company and clearance of payment before the
expiration time.
Because uncertified personal checks may take at least five business
days to clear, we strongly urge you to pay, or arrange for payment, by means
of certified or cashier's check, money order or wire transfer of funds.
WE RESOLVE ALL PROCEDURAL AND OTHER QUESTIONS
We will resolve all questions concerning the timeliness, validity,
form and eligibility of any exercise of rights. Our resolution will be final
and binding. We may in our sole discretion waive any defect or irregularity,
or permit a defect or irregularity to be corrected within such time as we may
determine, or reject the purported exercise of any right because of any
defect or irregularity.
We will not consider rights exercise agreements as received or
accepted until we have waived or you have cured all irregularities within the
time period we determine in our sole discretion. Neither we nor Illinois
Stock Transfer Company have any duty to notify you of any defect or
irregularity in your submission of rights exercise agreements or any other
required documents. Neither we nor Illinois Stock Transfer Company will incur
any liability for failure to notify you of any defect or irregularity. We
reserve the right to reject your exercise of rights if it does not comply
with the terms of this offering, is not in proper form, or if the exercise
would be unlawful. For more information regarding our right to reject your
exercise because it would be unlawful, please see "The Rights Offering -- We
may reject your exercise for regulatory issues" on page 20.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE CONCERNING EXERCISING YOUR RIGHTS
If you have any questions or requests for assistance concerning the
method of exercising your rights, or if you need additional copies of this
prospectus, forms of instructions or the notice of guaranteed delivery,
please contact Illinois Stock Transfer Company at 209 West Jackson, Suite
903, Chicago, Illinois 60606 (telephone: (312) 427-2953 or (800) 757-5755).
You will not pay any fees for your questions or requests for assistance or
documents. You may contact us at 2520 Diehl Road, Attn: John Carroll, Aurora,
Illinois 60504 (telephone: (630) 820-7200) for additional copies, free of
charge, of this prospectus, forms of instructions or the notice of guaranteed
delivery.
19
<PAGE>
YOU CANNOT REVOKE YOUR EXERCISE OF RIGHTS
Once you have exercised your rights, you may not revoke or change
your exercise.
PROCEDURES FOR NOMINEES WHO ARE DTC PARTICIPANTS
We anticipate that you may transfer or exercise your rights through
the facilities of the Depository Trust Company, generally known as "DTC."
FOREIGN AND UNKNOWN ADDRESSES
We are not mailing rights exercise agreements to participants whose
addresses are outside the United States or who have an APO or FPO address. In
those cases, Illinois Stock Transfer Company will hold the rights exercise
agreements for these foreign participants. To exercise their rights, these
foreign participants must notify Illinois Stock Transfer Company prior to
11:00 a.m., New York City time, on September 15, 2000. At that time, if a
foreign participant has not given any other instructions, Illinois Stock
Transfer Company will terminate the participant's rights so the rights may be
issued to other common and preferred stockholders.
WE MAY REJECT YOUR EXERCISE FOR REGULATORY ISSUES
We may refuse your exercise of rights if you would, in our opinion,
be required to obtain prior clearance or approval from any state, federal or
foreign regulatory authorities for your exercise of rights or ownership of
additional shares if, at the expiration date, this clearance or approval had
not been obtained. We are not undertaking to pay for any expenses incurred in
seeking that clearance or approval.
We are not offering or selling, or soliciting any purchase of,
rights or underlying shares in any state or other jurisdiction in which such
offer or sale is not permitted. We reserve the right to delay the
commencement of this offering in certain states or other jurisdictions if
necessary to comply with local laws. However, we may elect not to offer
rights to residents of any state or other jurisdiction whose laws would
require a change in this offering in order to carry it out in that state or
jurisdiction.
WE WILL NOT MAKE ADJUSTMENTS TO OUTSTANDING STOCK OPTIONS AND PREFERRED STOCK
We will not, as a result of this offering, adjust the option price
of any option reserved for issuance under our stock option plan for employees
and other eligible participants. We will not adjust the conversion price of
the Series A and B preferred stock as we have received a waiver from the
stockholders of the preferred stock for the adjustment.
AMENDMENT, EXTENSION AND WITHDRAWAL
We may amend, withdraw or terminate this offering at any time at our
discretion. We may extend the expiration date.
ISSUANCE OF STOCK CERTIFICATES
Separate certificates evidencing the rights will not be issued. We
will issue stock certificates for common stock purchased in this offering as
soon as practicable after the expiration date. Illinois Stock Transfer
Company will deliver subscription payments to us only after the offering is
completed and we have issued stock certificates to those who exercised rights.
20
<PAGE>
Until Illinois Stock Transfer Company receives proper notice from us
to issue stock certificates to stockholders, Illinois Stock Transfer Company
has no obligation to issue such stock certificates. Thereafter, Illinois
Stock Transfer Company will prepare for issuance such stock certificates as
promptly as practicable.
If you exercise rights, you will have no rights as a stockholder of
those shares you purchased until we issue you stock certificates representing
the shares you purchased. Unless otherwise instructed in your rights exercise
agreement, we will register shares purchased by your exercise of rights in
the name of the person exercising the rights.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL. This section discusses certain federal income tax
consequences of this offering to beneficial owners of our common stock and
preferred stock upon distribution of the rights. This discussion is based on
the Internal Revenue Code of 1986, as amended, the Treasury regulations
promulgated thereunder, judicial authority, and current administrative
rulings and practice, all of which are subject to change prospectively or
retroactively.
This discussion is limited to U.S. taxpayers who hold our common
stock and preferred stock and who hold the rights and any shares acquired
upon the exercise of rights as capital assets (generally, property held for
investment). This discussion does not include any tax consequences under
state, local and foreign law. Financial institutions, broker-dealers, nominee
holders of our stock, life insurance companies, tax-exempt organizations and
possibly other types of taxpayers may be subject to special provisions of the
tax law or subject to other tax considerations not discussed below.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING YOUR TAX
SITUATION OR SPECIAL TAX CONSIDERATIONS THAT MAY APPLY TO YOU, INCLUDING
FOREIGN, STATE AND LOCAL LAWS THAT MAY APPLY.
DISTRIBUTION OF RIGHTS TO HOLDERS OF THE COMMON STOCK AND PREFERRED
STOCK. If you hold common stock, you should not be required to recognize
taxable income upon the receipt of the rights. However, if you hold preferred
stock, the receipt of the rights may result in the recognition of taxable
income measured by the fair market value of the rights on the date of
distribution, as described more fully below.
In general, a distribution by a corporation to its stockholders of
rights to acquire stock in the distributing corporation is not taxable. An
exception to this general rule applies in the case of a distribution with
respect to preferred stock, unless it relates to an increase in the
conversion ratio to take into account a stock dividend or split of the stock
into which the preferred stock is convertible.
We intend to treat the distribution of rights to holders of the
common stock as a nontaxable distribution. However, we intend to treat the
distribution of rights to holders of the preferred stock as a taxable
distribution in the amount equal to the fair market value of the rights on
the date of distribution. In the case of a taxable distribution, a person
receiving rights would recognize a dividend, taxable as ordinary income, to
the extent of our current and accumulated earnings and profits. To the extent
the taxable distribution exceeds our current and accumulated earnings and
profits, such excess would be treated first as a nontaxable recovery of
adjusted basis in your stock and then as gain from the sale or exchange of
your stock. We intend to take the position that the stock rights at the time
of distribution should have no or possibly a nominal value, and accordingly,
holders of preferred stock should recognize no or possibly a nominal amount
of taxable income upon the receipt of the rights.
21
<PAGE>
TAX BASIS AND HOLDING PERIOD OF RIGHTS DISTRIBUTED TO THE HOLDERS OF
THE COMMON STOCK AND PREFERRED STOCK. The tax basis of rights distributed to
a holder of the common stock should be zero, unless either (i) the fair
market value of the rights, on the date of distribution, is 15% or more of
the fair market value (on the date of distribution) of the common stock held
as of that time or (ii) the holder elects, with his or her federal income
tax return for this year, to allocate the tax basis of the common stock to
the rights. In such case, the tax basis in the common stock should be
allocated between the stock and the rights in proportion to the fair market
value of each as of the date of the rights distribution. The holding period
of the rights should include the holding period for the common stock.
The tax basis of rights distributed to a holder of preferred stock
should equal the fair market value of the rights as of the date of the
distribution, and the holding period in the rights should begin on the day
following the date of the distribution.
YOU ARE URGED TO CONSULT WITH YOUR PERSONAL TAX ADVISOR REGARDING
THE PROPER TREATMENT OF THE RECEIPT OF, YOUR TAX BASIS IN AND YOUR HOLDING
PERIOD WITH RESPECT TO THE RIGHTS YOU RECEIVE.
EXERCISE OF THE RIGHTS; BASIS AND HOLDING PERIOD OF THE COMMON
STOCK. You should not recognize any gain or loss upon your exercise of
rights. Your basis in the common stock acquired through your exercise of
rights should be equal to the sum of the purchase price for the common stock
acquired by exercise of the rights and your basis in the rights (if any).
The holding period for this common stock should begin on the date you
exercise the rights.
EXPIRATION OF RIGHTS. If the rights we are distributing to you
expire unexercised, a holder of the common stock will not recognize any gain
or loss, the stock rights will be treated as having no basis, and no
adjustment will be made to the basis of your common stock. A holder of the
preferred stock whose rights expire unexercised, will recognize a loss, but
only to the extent of the tax basis, if any, in the rights. Any loss
recognized on the expiration of the rights should be a capital loss if the
preferred stock is held as a capital asset.
SALE OF SHARES. If you, as a holder of the common stock or preferred
stock, exercise rights and acquire shares of our common stock, you generally
should recognize gain or loss upon the sale of these shares in an amount
equal to the difference between the amount realized and your basis in the
shares. Such gain or loss generally will be a capital gain or loss so long as
you held the shares as a capital asset at the time of the sale. Gain or loss
from an asset held more than one year will generally be taxable as long-term
capital gain or loss.
DIVIDENDS ON SHARES OF COMMON STOCK. If we make distributions on the
common stock, you should recognize taxable ordinary dividend income to the
extent of our current and accumulated earnings
22
<PAGE>
and profits that are allocable to your shares of common stock in the amount
of cash and the fair market value of any other property received by you.
These dividends may be eligible for the dividends received deduction allowed
to corporations under the federal tax code provided you meet the requirements
described therein. The amount of the distribution in excess of our current
and accumulated earnings and profits should reduce your tax basis in your
shares of common stock until your basis is reduced to zero, and any excess
should be treated as a capital gain. For more information regarding dividends
on our common stock, please see "Description of the Capital Stock -- Common
Stock".
INFORMATION REPORTING AND BACKUP WITHHOLDING. Under the backup
withholding rules of the Code, you may be subject to 31% backup withholding
with respect to payments made, if any, with respect to your shares. You will
not be subject to backup withholding if you:
- Are a corporation or fall within certain other exempt
categories and, when required, demonstrate that fact; or
- Provide a correct taxpayer identification number and certify
under penalty of perjury that your taxpayer identification
number is correct and that you are not subject to backup
withholding because you previously failed to report all
dividends and interest income.
Any amount withheld under these rules will be credited against your
federal income tax liability. We may require you to establish your exemption
from backup withholding or make other arrangements with respect to the
payment of backup withholding.
THIS SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. YOU SHOULD
CONSULT YOUR OWN TAX ADVISORS REGARDING THE CONSEQUENCES OF THE RIGHTS
OFFERING TO YOUR PARTICULAR TAX SITUATION, INCLUDING STATE AND LOCAL INCOME
AND OTHER TAX LAWS.
23
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The total number of shares that we are authorized to issue is 21
million, consisting of 20 million shares of common stock, par value $0.01 per
share, and 1 million shares of preferred stock, par value $0.01 per share. We
currently have two series of preferred stock, series A and series B. The
following are brief summaries of certain provisions relating to our capital
stock.
SERIES A AND B CONVERTIBLE PREFERRED STOCK
DIVIDENDS. Dividends on the series A and B preferred stock accrue
and are payable quarterly in either cash or common stock, at our discretion
or at the discretion of a majority of the holders of preferred stock, at the
rate of 8% per annum, commencing on the date of issuance. Accrued and unpaid
dividends shall be paid on (1) April 30, July 31, October 31, and January 31
of each year commencing on July 31, 2000 for series A preferred stock and
October 31, 2000 for series B preferred stock, to the holders of record as
they appear on the books and records 10 days preceding each payment date, and
(2) the date certificates representing common stock are required to be
delivered following any conversion of series A and series B preferred stock.
OPTIONAL CONVERSION INTO COMMON STOCK. Holders of the series A and B
preferred stock have the right to convert their shares, in whole or in part,
into common stock. Each preferred share of series A and series B may be
converted, at any time at the option of the holder into a certain number of
shares of common stock as is determined by dividing the stated value of
series A and series B preferred stock by the applicable conversion price. The
conversion price initially shall mean, with respect to the series A preferred
stock, an amount equal to $2.425 per share and, with respect to the series B
preferred stock, an amount equal to $2.3625 per share; provided that each
such initial conversion price shall be subject to adjustment if any of the
following events happen:
- the issuance of common stock as a dividend, distribution or
subdivision on our common stock;
- a combination, merger, consolidation, reorganization or
reclassification of our common stock; and
- the issuance of our common stock for a price per share less
than the preferential payment of $2.425 per share with respect
to series A preferred stock, and $2.3625 per share, with
respect to series B preferred stock, subject to adjustments.
AUTOMATIC CONVERSION INTO COMMON STOCK. Each share of series A and B
preferred stock shall automatically be converted into shares of common stock
if the closing sales price of the common stock equals or exceeds $10.00 per
share for thirty (30) consecutive trading days commencing on or after May 29,
2000, with respect to the series A preferred stock, and on or after October
18, 2000, with respect to the series B preferred stock.
VOTING RIGHTS. Except for voting rights provided by law, the holders
of series A and B preferred stock shall have the same voting rights as
holders of common stock. The holder of each share of series A and B preferred
stock shall be entitled to the number of votes the holder would receive if
the preferred stock was converted to common stock on the record date.
BOARD REPRESENTATION. The holders of series A and B preferred stock
shall have the voting right to nominate and elect three (3) people to the
board of directors.
24
<PAGE>
REGISTRATION RIGHTS. At any time commencing one year after the date
of issuance of the series A and B preferred stock, the holders of a majority
of the series A and B preferred stock may require us to file a registration
statement covering the conversion of such preferred stock to common stock.
ABILITY TO RECEIVE PREFERENTIAL CASH PAYMENT OR CONVERT UPON
LIQUIDATION. Upon the occurrence of any liquidation, dissolution or winding
up, either voluntary or involuntary, the holders of the preferred stock will
be entitled to receive preferential payments in the amount of $2.425 per
share, with respect to series A preferred stock, and $15.00 per share, with
respect to series B preferred stock in exchange for their shares of preferred
stock. In addition, the holders of the preferred stock would receive an
amount equal to all accrued but unpaid dividends. After full preferential
payment to the holders of the preferred stock, the holders of the common
stock shall be entitled to receive pro rata the remaining assets. If the full
preferential payment cannot be made, then all of the assets legally available
for distribution will be distributed pro rata among the holders of the
preferred stock.
A liquidation is deemed to occur if any of the following events
occur:
- a reorganization or merger; provided, however, that we are not
the continuing entity;
- a sale of all or substantially all of the assets; and
- a change in the majority of the board of directors that was
not approved by a majority of the directors.
PREEMPTIVE RIGHTS. Holders of our series A and B preferred stock
have preemptive rights to purchase additional shares of our common stock,
convertible securities or other capital stock for sale at a price equal to
the offering price of such shares.
COMMON STOCK
We have the authority to issue up to 20,000,000 shares of our common
stock, par value $0.01 per share. As of August 3, 2000, 7,018,074 shares of
our common stock were outstanding. The following discussion summarizes the
important terms of our common stock.
Each share of common stock is entitled to one vote on each matter
submitted to a vote at any meeting of stockholders and the holders of shares
of common stock vote together as one class on all matters submitted to a vote
of stockholders or, if any holders of shares of preferred stock are entitled
to vote together with the holders of common stock on any matter, as a single
class with the holders of preferred stock on the matter.
Subject to the rights of holders of preferred stock, holders of
common stock are entitled to receive dividends and other distributions in
cash, stock or property as determined by our board of directors from time to
time.
Upon our voluntary or involuntary liquidation, dissolution,
distribution of assets or other winding up, after distribution in full of
preferential amounts to be distributed to the holders of preferred stock or
any other class or series of stock having a preference as to liquidating
distributions over the common stock, the holders of the common stock will be
entitled to share equally and ratably in all of our remaining assets
available for distribution to stockholders.
Unless approved by our board of directors in an agreement, holders
of our common stock do not have preemptive rights to purchase (1) additional
shares of our capital stock, (2) warrants, rights or
25
<PAGE>
options to purchase additional shares of our capital stock, or (3) any
obligations convertible into such stock, warrants, rights or options.
LEGAL MATTERS
Certain legal matters in connection with this offering will be
passed upon for us by Vedder, Price, Kaufman & Kammholz, Chicago, Illinois.
EXPERTS
The financial statements and schedule incorporated by reference in
this prospectus and elsewhere in this registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their report with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in accounting and auditing in
giving said report.
26
<PAGE>
RIGHTS OFFERING OF
1,500,000 SHARES (MINIMUM)
2,500,000 SHARES (MAXIMUM)
SUCCESSORIES, INC.
COMMON STOCK
-------------------------------------------
PROSPECTUS
-------------------------------------------
August 23, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth expenses in connection with the
issuance and distribution of the securities being registered. All amounts
shown are estimated, except the SEC registration fee:
<TABLE>
<S> <C>
SEC registration fee...................................... $ 1,320
Nasdaq filing fee......................................... --
Exercise Agent fees and expenses.......................... 2,500
Legal fees and expenses (including blue
sky fees and expenses).................................. 75,000
Accounting fees........................................... 30,000
Printing and mailing expenses............................. 11,000
Miscellaneous............................................. 180
--------
Total............................................ $120,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 8.75 of the Illinois Business Corporation Act of 1983 (the
"Illinois BCA") empowers a corporation, subject to certain limitations, to
indemnify its directors and officers against expenses (including attorneys'
fees, judgments, fines and certain settlements) actually and reasonably
incurred by them in connection with any suit or proceeding to which they are
a party so long as they acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to a criminal action or proceeding, so long as they had no
reasonable cause to believe their conduct to have been unlawful.
Section 2.10 of the Illinois BCA empowers a corporation, subject to
certain limitations, to eliminate or limit the personal liability of a
director to the corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director, provided that the provision does not
eliminate or limit the liability of a director for any breach of the
director's duty of loyalty to the corporation or its shareholders, for acts
or omissions not in good faith or involve intentional misconduct or a knowing
violation of law, under Section 8.65 of the Illinois BCA or for any
transaction from which the director derived an improper personal benefit.
The Registrant's Amended and Restated Articles of Incorporation and
By-laws provide that the Registrant shall indemnify its directors and such of
its officers, employees and agents, to the fullest extent permitted by the
Illinois BCA. The Registrant's By-laws provide that the directors shall not
be personally liable to the corporation or its shareholders, for monetary
damages for breach of fiduciary duty as a director, except for liability for
any breach of the director's duty of loyalty to the corporation or its
shareholders, for acts or omissions not in good faith or involve intentional
misconduct or a knowing violation of law, under Section 8.65 of the Illinois
BCA or for any transaction from which the director derived an improper
personal benefit.
II-1
<PAGE>
The Company has entered into Indemnification Agreements with each of
its directors (the "Indemnification Agreements"). Under the Indemnification
Agreements, the Company has agreed to indemnify and hold each of the
directors of the Company harmless against any and all expenses (including
attorneys' fees and disbursements), judgments, fines, amounts paid in
settlement and any other liabilities incurred by reason of the fact that the
director was or is a director, officer, employee or agent of the Company to
the fullest extent permitted by the Illinois BCA. Under the Indemnification
Agreements, the Company will also advance to directors expenses incurred by
the directors in (i) defending any suit or other proceeding to which the
director is, or is threatened to be made, a party by reason of such
director's being (or having been) a director, officer, employee or agent of
the Company, and (ii) prosecuting any suit or other proceeding to enforce
such director's rights under the Indemnification Agreement, subject to
certain conditions set forth in the Indemnification Agreements. The rights
granted to Directors by the Company under the Indemnification Agreements
shall continue to be valid, binding and enforceable both before and after a
director has ceased to be a director, officer, employee or agent of the
Company.
Item 16. Exhibits.
A list of the exhibits included as part of this Registration
Statement is set forth in the Exhibit Index that immediately precedes such
exhibits and is incorporated herein by this reference.
Item 17. Undertakings.
(a) We hereby undertake:
(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 material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the registration statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each 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.
(b) 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 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.
(h) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the provisions described under Item 15 above,
or otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by us of expenses incurred or paid by a director, officer or
controlling person of us in the
II-2
<PAGE>
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by us is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(i) We hereby undertake that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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
Amendment No. 1 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Aurora, State of
Illinois, on August 23, 2000.
SUCCESSORIES, INC.
By: /s/ Gary Rovansek
-----------------------------
Gary Rovansek
President, Chief Executive Officer
and Director
S-1
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Jack Miller* Chairman of the Board August 23, 2000
---------------------------------------
Jack Miller
/s/ Gary Rovansek President, Chief Executive Officer August 23, 2000
--------------------------------------- and Director
Gary Rovansek
/s/ John C. Carroll Senior Vice President and Chief August 23, 2000
--------------------------------------- Financial Officer
John C. Carroll
/s/ Arnold M. Anderson* Director August 23, 2000
---------------------------------------
Arnold M. Anderson
/s/ Howard I. Bernstein* Director August 23, 2000
---------------------------------------
Howard I. Bernstein
/s/ Lawrence A.Hodges* Director August 23, 2000
---------------------------------------
Lawrence A. Hodges
/s/ R. Scott Morrison, Jr.* Director August 23, 2000
---------------------------------------
R. Scott Morrison, Jr.
/s/ Leslie Nathanson Juris* Director August 23, 2000
---------------------------------------
Leslie Nathanson Juris
*Signed pursuant to power
of attorney.
By: /s/ Gary Rovansek
------------------------------------
Gary Rovansek
</TABLE>
S-2
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Form of Rights Exercise Agreement
5.1 Opinion of Vedder, Price, Kaufman & Kammholz
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Vedder, Price, Kaufman & Kammholz (included in
Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
99.1 Form of Letter to Stockholders
99.2 Form of Letter from Brokers or other Nominees to Beneficial
Owners of Common Stock
99.3 Form of Letter to Dealers and Other Nominees
99.4 Form of Notice of Guaranteed Delivery
-----------------
*Filed herewith.
