As filed with the Securities and Exchange Commission on April 21, 1997.
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-3
TO FORM SB-2
UNDER
THE SECURITIES ACT OF 1933
____________________
INTERSTATE NATIONAL DEALER SERVICES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 6411 11-3078398
(State or other (Primary standard industrial (I.R.S. Employer
jurisdiction of classification code number) Identification No.)
incorporation or
organization)
333 Earle Ovington Boulevard
Mitchel Field, New York 11553
(516) 228-8600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
____________________
Chester J. Luby
INTERSTATE NATIONAL DEALER SERVICES, INC.
333 Earle Ovington Boulevard
Mitchel Field, New York 11553
(516) 228-8600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
____________________
Copies To:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Kenneth L. Henderson, Esq.
Approximate date of commencement of proposed sale to public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. /_/
___________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. /_/ ___________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. /_/ ________
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>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 21, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
1,225,100 Shares
INTERSTATE NATIONAL DEALER SERVICES, INC.
Shares of Common Stock Issuable upon Exercise of Redeemable Common Stock
Purchase Warrants
_______________________________
This Prospectus relates to the registration of 1,225,100 shares of common
stock, par value $.01 per share (the "Common Stock"), of Interstate
National Dealer Services, Inc. (the "Company"), which are issuable upon
exercise of the outstanding Redeemable Common Stock Purchase Warrants (the
"Warrants"). The Warrants were issued by the Company as part of its public
offering on July 29, 1997 of 1,225,100 Units (each Unit consisting of one
Warrant and one share of Common Stock) and the sale of 133,000 shares of
Common Stock of a selling shareholder of the Company. All of the shares of
Common Stock issuable on exercise of the Warrants (the "Warrant Shares")
are being registered for their issuance to persons who exercise the
Warrants on or after the date hereof. The Company will receive gross
proceeds of $5.50 per Warrant Share issued upon exercise of the Warrants.
The Warrants are exercisable until 5:00 p.m., Eastern Standard Time, on
July 21, 1999 (unless earlier redeemed). As of the date of this
Prospectus, each Warrant will entitle the holder to purchase, at an
exercise price of $5.50 per share (subject to adjustment in certain
circumstances), one Warrant Share (the "Exercise Price"). The Company has
reserved 1,225,100 Warrant Shares for issuance upon exercise of the
Warrants, being the maximum number of shares that will be issuable upon
exercise of the Warrants. The Exercise Price is also subject to adjustment
upon the occurrence of certain events. See "Description of Securities --
Warrants."
The Common Stock and the Warrants are quoted on the National Market of The
National Association of Securities Dealers' Automated Quotation System
("Nasdaq") under the trading symbols "ISTN" and "ISTNW," respectively. On
April 16, 1997, the closing price of the Common Stock on Nasdaq was $6.75
per share.
For a discussion of certain matters which should be considered by
prospective investors, see "Risk Factors."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April __, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith is required to file 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 its offices at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional office of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials can be obtained by mail from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Additionally, the Commission
maintains a Web site containing reports, proxy and information statements
and other information regarding registrants that file electronically with
the Commission. The address for such Web site is http://www.sec.gov.
The Common Stock and Warrants are quoted on Nasdaq and reports, proxy
statements and other information concerning the Company may also be
inspected at Nasdaq.
The Company has filed with the Commission a Post-Effective Amendment
No. 1 on Form S-3 to its Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Warrant Shares offered hereby. This Prospectus, which constitutes a
part of the Registration statement, does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules
thereto, as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract
or other document which is filed as an exhibit to the Registration
Statement are not necessarily complete, and each statement is qualified in
its entirety by reference to the full text of such contract or document.
For further information with respect to the Company and the Warrant Shares
offered hereby, reference is made to the Registration Statement, including
the exhibits thereto and the financial statements, notes and schedules
filed as a part thereof, which may be inspected and copied at the public
reference facilities of the Commission referred to above.
The Company furnishes stockholders with annual reports containing
audited financial statements. The Company also furnishes its common
stockholders with proxy material for its annual meetings complying with the
proxy requirements of the Exchange Act.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents which have been filed by the Company with the
Commission are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-KSB for the year ended
October 31, 1996.
2. The Company's Proxy Statement for its Annual Meeting of
Stockholders on April 16, 1997.
3. The Company's Quarterly Report on Form 10-QSB for the quarter
ended January 31, 1997.
4. The Company's Current Report on Form 8-K dated December 23, 1996
and filed with the Commission on December 23, 1996.
5. The description of the Common Stock contained in the Company's
registration statement under Section 12 of the Exchange Act and all
amendments and reports filed for the purpose of updating that description.
6. All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since October 31, 1996.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior
to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in and to be a part of this Prospectus from the date of filing of
such reports and documents.
Any statement contained herein or in a document which is incorporated
by reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement in any
subsequently filed document that is also deemed to be incorporated by
reference herein modifies or supersedes such prior statement. Any
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented or delivered herewith. These documents are available upon
written or oral request from the Company, without charge, to each person to
whom a copy of this Prospectus has been delivered, including a copy of its
most recent Annual Report to Stockholders, other than exhibits to those
documents. Requests should be directed to Interstate National Dealer
Services, Inc., Attention: Chief Financial Officer, 333 Earle Ovington
Boulevard, Mitchel Field, New York 11553 (telephone (516) 228-8600).
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY
ANYONE TO ANY PERSON IN ANY STATE, TERRITORY OR POSSESSION OF THE UNITED
STATES IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED BY THE LAWS
THEREOF, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
THE FOLLOWING STATEMENT IS REQUIRED BY FLORIDA LAW: THE COMPANY AND
ITS AFFILIATES DO NOT DO BUSINESS WITH THE GOVERNMENT OF CUBA OR WITH ANY
PERSON OR AFFILIATE LOCATED IN CUBA.
THE COMPANY
The Company designs, markets and administers service contacts and
warranties for new and used motor vehicles and recreational vehicles and,
to a lesser extent, watercraft, motorcycles and other vehicles. A vehicle
service contract is an agreement between either the dealer or the
administrator and the vehicle purchaser under which the dealer or the
administrator agrees to replace or repair for a specific term designated
vehicle parts in the event of a mechanical breakdown. Vehicle service
contracts supplement, or are in lieu of, manufacturers' warranties and
provide a variety of extended coverage options (typically ranging from
three months to seven years and/or 3,000 miles to 150,000 miles) generally
offered for sale by dealers to vehicle purchasers in a manner similar to
other options. In some instances, service contracts are sold directly to
the vehicle owners by the Company or others.
The Company offers a variety of vehicle service contract and warranty
programs through its nationwide sales force of approximately 100
independent sales agents consisting of both companies and individuals (the
"Agents"). The Company enters into a non-exclusive agreement with each
dealer, under which the Company obtains insurance coverage to cover such
dealer's liability for claims under its vehicle service contracts and
assists such dealer, and purchasers, with the making, processing and
adjustment of claims. The Company also administers service contracts and
claims for other service contract marketers ("Private Labels").
In April 1995, the Company formed an affiliated insurance company,
National Service Contract Insurance Company Risk Retention Group, Inc.
("NSC"). Prior to March 1996, substantially all of the insurance policies
arranged by the Company as administrator to its dealers had been
underwritten by The Travelers Indemnity Company ("Travelers") and National
Warranty Insurance, Risk Retention Group ("National Warranty"). Commencing
March 1996, the insurance policies arranged by the Company have been
underwritten by Travelers and NSC.
Each dealer pays a net rate for each service contract or warranty sold
by such dealer. This payment includes (i) an administrative fee for the
Company from which the Company pays any commission due the Agent, (ii)
insurance premiums and fees for the insurance underwriter, and (iii) a
claims reserve to be placed in an interest-bearing loss reserve account
maintained for the benefit of the contract purchaser. The net rate for
service contracts ranges from $75 to over $3,000 per contract with a
typical average net rate per contract of $360 for a new car, $400 for a
used car and $500 for a new or used recreational vehicle. Each dealer is
free to determine the price at which it will sell the service contract to
the purchaser. The amount a dealer charges for the service contract in
excess of the net rate is additional income to such dealer. The
administrative fee for the Company ranges from $30 to $212 (prior to the
payment to the Agent of any commission which generally ranges form $10 to
$100) per contract, which fee varies based on the type of service contract
sold by a dealer.
The various vehicle service contract programs offered by the Company
are designed to provide dealers with an additional source of revenue and to
increase dealers' ability to sell vehicles. For example, certain of the
Company's programs provide that dealers and other participants (such as
Agents) who reach certain sales volumes receive additional revenues if, and
to the extent, claims paid on their service contracts are less than the
claims reserves maintained for such contracts. Under certain
circumstances, the Company may also be entitled to unconsumed claims
reserves, including reserves attributable to dealers who have not achieved
specified sales volumes of service contracts.
The Company's business has historically focused on extended warranties
for new automobiles and, to a lesser extent, used cars. In the past two
fiscal years, however, the mix of the Company's business has changed such
that a higher percentage of sales are from warranties for used cars. In
addition, the Company has expanded into other markets, such as recreational
vehicles and watercraft, and has realized an increasing portion of revenues
from its recreational vehicle programs.
The Company markets its services and products, using its network of
independent Agents, primarily to dealers and, to a lesser extent, leasing
companies, finance companies and other service contract marketers. The
Company promotes is services and products to the Agents and, to some
extent, to dealers primarily through the participation of the Company at
trade shows and advertising in trade publications. The Company has also
obtained Agents and dealers through recommendations and referrals from
existing Agents and dealers and others, some of which receive a commission
from the Company upon the sale of its services and products. To assure a
high level of competence and awareness of its current administrative
services and products, the Company provides initial and on-going training
for its Agents and dealers.
The dealers participating in the Company's programs sell motor
vehicles and recreational vehicles manufactured by all of the major
manufacturers whose products are sold in North America. Most of the
Company's dealers sell products from more than one manufacturer.
Accordingly, the Company does not focus its sales and marketing efforts on
any one vehicle manufacturer or on any small group of manufacturers.
To improve its market penetration in these markets, as well as in the
new and used motor vehicle and recreational vehicle industries, the Company
(a) formed NSC to underwrite insurance policies arranged for by the Company
and (b) has increased its promotional and advertising efforts through
additional participation in trade shows, increased advertising in trade
publications and the recruitment of new Agents.
The Company enters into an independent agent agreement with each of
its Agents which is terminable at any time by the Company or the Agent upon
30 days' written notice or by the Company immediately for cause. The
agreement provides that, among other things, the Agents solicit dealers, on
a non-exclusive basis, for the Company within designated territories which
may include one or more states or portions thereof. Most Agents are
compensated on a flat rate commission basis. Agents may sell products and
services of other companies, including competitors of the Company and have
no obligation to sell the products and services offered by the Company. As
of October 31, 1996, the Company had approximately 100 "active" Agents
(that is, Agents who within the prior 12 months have sold the Company's
products and services).
In order to sell service contracts to vehicle owners who had not
purchased a service contract through their dealers at the time of the
vehicle purchase, the Company also makes sales through its own and a third
party's direct marketing facility. To facilitate such sales, the Company
offers a service contract financing program. Under the Company's financing
program, a purchaser of a service contract is given the option to pay for
such contract on a monthly basis over a period of time, without interest.
The Company believes its exposure from these financed contracts is minimal
because the service contract is terminated if the purchaser fails to make
monthly payments to the Company.
The Company was incorporated in Delaware in 1991 and commenced
operations in November 1991 with the purchase of certain assets and the
assumption of certain liabilities of INDS Group, Inc., a California
corporation which commenced operations in 1981 under the name Interstate
National Dealer Services Group, Inc.
The principal executive offices of the Company are located at 333
Earle Ovington Boulevard, Mitchel Field, New York and its telephone number
is (516) 228-8600.
<PAGE>
RISK FACTORS
In addition to other matters, prospective investors should carefully
consider the following risk factors before making an investment in the
Warrant Shares:
Seasonality
A sale of a service contract by the Company is dependent upon the sale
of the primary product (such as motor vehicles) covered by the service
contract. As a result, the Company's revenues are reduced in the winter
months when sales of new and used motor vehicles and recreational vehicles
are lower in some regions than during the other months of the year.
Government Regulation
The service contract programs developed and marketed by the Company
and its related operations are regulated by the statutes and regulations of
a number of states. Generally, some statutes require registration of
administrators and some statutes concern the scope of service contract
coverage and the content of the service contract or warranty document. In
the latter instances, these state statutes typically require that specific
provisions be included in the contract or warranty expressly stating the
purchaser's rights in the event of a claim, how the service contract may be
cancelled and identification of the insurance underwriter indemnifying the
dealers or administrators against loss for performance under the terms of
the contracts. The Company believes that it is in compliance in all
material respects with the applicable regulations governing vehicle service
contracts and warranties in the states in which it does business, and in
some cases relies on its insurance underwriters and their managing agents
to monitor such regulations and respond to any inquiries from state
authorities.
The issuance of insurance policies in respect of service contracts is
regulated under the insurance laws and regulations of the various states.
Although the Company believes that its activities as a service contract
administrator are not directly proscribed by such regulations, the
Company's ability to perform its activities as a service contract
administrator is affected by such regulations. The Company does not
believe that as a result of performing such activities it can be
characterized as an insurance company or insurance agent under any state
insurance statute in the states in which it currently operates. In the
event that any state insurance statute requires the Company to comply
therewith or become an insurance agent, the Company will evaluate the cost
of such compliance to determine whether the Company will conduct business
in the state. NSC, the Company's insurance affiliate, is regulated by
federal statutes and must comply with certain state registration
requirements. The Company believes that NSC is in compliance in all
material respects with the various laws and regulations in the states in
which NSC does business.
In addition, it is possible that some states in which the Company now
conducts business may effect changes in the current laws which may regulate
the activities of the Company, including the imposition of new financial or
other requirements on the Company. In such event, the Company would have
to meet the regulatory requirements or cease to conduct business in such
state or states.
The Company does business in 48 states and believes it has complied in
all material respects with applicable regulations in all such states. Of
such 48 states, the Company is able to sell only certain products and
services in Connecticut, Wisconsin and Washington because of certain
insurance regulations in these states.
New Markets
The Company from time to time conducts research as to the feasibility
of entry into new markets for service contracts on non-vehicle products
(such as home warranties, electronics and appliances) and, depending upon
the results, may enter into some of such markets. While the Company
believes that its vehicle service contract administrative experience and
facilities can be adapted to administration of service contracts for such
new markets, management's experience is solely in the vehicle sales and
service industry and significant aspects of such potential new markets may
differ greatly. For example, the Company has no experience in risk
assessment, setting of appropriate loss reserves or pricing with respect to
service contracts in such markets. In addition, there may be significant
competition in any one or more markets from manufacturers of products or
established third-party administrators. Further, the Company would be
required to establish appropriate distribution networks to market, promote
and sell such new products and services, which could vary from market to
market. Accordingly, no assurance can be given that the Company will be
successful in entering into such potential new markets.
Dependence on Agents
The Company primarily sells its products and services to dealers
through its nationwide sales force of approximately 100 independent sales
agents consisting of both companies and individuals ("Agents"), who not
only market the Company's program to potential dealers but, once enrolled,
provide the dealers with on-site training and service. Agents are under no
obligation to market any of the Company's products and services, may offer
products and services of competitors and may terminate their relationship
with the Company at any time. One Private Label has accounted for
approximately 11% of all administrative fees received by the Company during
the fiscal year ended October 31, 1996. If such Private Label producer
terminates or significantly curtails its relationship with the Company, the
Company's revenues could be materially adversely affected. In addition,
while the nature of certain of the Company's programs provides incentives
for dealers to utilize the Company's programs, the Company's on-going
relationship with a dealer, and thus the derivation of additional revenues
from such dealer, is often dependent, to a certain extent, upon the ability
of an Agent to keep such dealer satisfied with the quality of the products
and services offered by the Company. Accordingly, the Company's growth and
revenues will, in part, be substantially dependent upon its relationships
with its Agents, and upon the ability of its Agents to successfully recruit
dealers and maintain their relationships with such dealers.
Dependence on Dealers
The Company derives revenues primarily if and to the extent that
dealers enter into vehicle service contracts or warranties with vehicle
purchasers. Furthermore, dealers are under no obligation to market vehicle
service contracts. Accordingly, the Company's revenues, and profitability,
are substantially dependent upon the ability and efforts of dealers to
successfully market such contracts. The successful marketing of service
contracts by dealers depends upon many factors beyond the Company's
control, including, among other things, economic factors affecting foreign
or domestic motor vehicle sales, the availability of insurance covering
claims under these contracts, the scope and terms of warranties offered by
manufacturers and the existence of competitive programs.
Direct Marketing Programs
The Company has developed and is expanding the marketing of its
service contract programs directly to consumers (rather than through agents
and dealers). The continued expansion of these direct marketing programs
cannot, however, be assured. The success of the Company's direct marketing
programs depends on factors including the availability of information
regarding purchasers of new and used motor vehicles, recreational vehicles
and other products, regulatory requirements and competition. To the extent
the Company cannot increase or continue at current levels its direct
marketing efforts, it will become more dependent on existing and new agents
and dealers.
Dependence on Sales of Primary Products
Sales of the Company's products and services are dependent upon the
sale of the primary products, that is, motor vehicles and recreational
vehicles. Thus any decrease in the sales of these products, whether due to
economic factors or otherwise, is likely to have an adverse impact upon the
Company's revenues and thus its profitability. In addition, if the Company
enters into any new markets for service contracts on non-vehicle products,
sales of the Company's service contracts will be dependent upon the sale of
the primary product in such markets, for example, homes, electronics and
appliances. Thus, any decrease in the sales of any primary products in any
such non-vehicle markets the Company may enter, is also likely to have an
adverse impact upon the Company's ability to sell its products and services
in such potential markets.
Dependence on Insurance Coverage
An integral part of the Company's service to dealers entails the
Company obtaining and maintaining in effect insurance policies issued by an
insurance company to cover producers' liability for claims under the
service contracts administered by the Company. Although the Company
believes there are a number of insurance companies which provide this type
of coverage, to date, substantially all policies have been obtained by the
Company for the dealers through Travelers and, until March 1996, National
Warranty. There is no assurance that the Company will be able to continue
to obtain required insurance coverage. Any underwriter can terminate its
relationship with the Company upon the occurrence of a variety of events,
including certain defaults by the Company or the insurance company's
termination of its relationship with its managing agent. The loss of
continued coverage would have a material adverse effect on the Company. In
addition, there is no assurance the Company would be able to obtain
replacement coverage from any other insurance carrier or risk retention
group. Further, the Company's profitability depends to a great extent on
the availability of insurance coverage at favorable rates. To the extent
the Company is not able to offset any increased cost resulting from an
increase in insurance rates, its operating results will be adversely
impacted. Moreover, if insurance rates are significantly increased the
Company may be required to arrange for insurance coverage from different
carriers, but there is no assurance that it will be able to arrange for
such alternative insurance coverage or that such alternative coverage will
not also be at higher rates than in the past.
The Company recently established NSC, an affiliated risk retention
group insurance company, which is providing insurance for an increasing
number of the Company's service contracts. NSC is a newly formed entity
without an established market presence. In order to market programs that
include insurance from NSC, it is necessary for NSC to obtain reinsurance
from an established carrier. There can be no assurance that this
reinsurance will continue to be available on satisfactory terms, or at all,
or that a replacement reinsurer with suitable ratings could be engaged by
NSC.
Claims for Repairs Substantially in Excess of Amounts Reserved
In many instances the Company is obligated to indemnify NSC or NSC's
reinsurance provider to the extent, if any, that claims under service
contracts administered by the Company exceed reserves set aside for such
purpose. Although the Company bases reserve amounts on historical
actuarial figures and although, historically, claims under service
contracts have not exceeded claims reserves, there can be no assurance that
such reserves will be sufficient to cover the costs of all claims brought
by consumers under service contracts at all times.
Competition
The business of marketing administrative services and after market
products to producers, and specifically services related to motor vehicle
service contracts and warranties, is highly competitive and dominated by
the major automotive manufacturers and other independent third-party
administrators. The Company is unable to predict the extent, if any, to
which automobile manufacturers will provide more extensive warranty
protection on new vehicles or whether the revised warranty protection
offered by manufacturers may reduce a dealer's ability to market vehicle
service contracts on new vehicles such as those administered by the
Company. The major automotive companies and some of the other competitors
have significantly greater financial resources and operating resources than
those of the Company. As a result of the competition, the Company may be
unable to increase its fees by an amount necessary to cover any increases
in costs. New companies in the future may present the Company with
additional competition, the impact of which it is unable to assess at this
time.
Dependence on Key Personnel
The success of the Company is expected to be largely dependent on the
efforts of Chester J. Luby, the Chairman and Chief Executive Officer of the
Company, and Cindy H. Luby, its President and Chief Operating Officer. Mr.
Luby and Ms. Luby have extensive experience in service contracts and
administration. Mr. Luby owned and operated several automotive
dealerships, marketed credit life insurance and service contract programs
to dealerships and financial institutions and owned two credit life
reinsurance companies prior to forming the Company. Ms. Luby was the Vice
President and Chief Financial Officer of the Company since its inception in
1991 until her promotion to President and Chief Operating Officer in 1996.
The loss of Mr. Luby or Ms. Luby before a qualified replacement is obtained
could be detrimental to the Company. The Company has an employment
agreement with each of Mr. Luby and Ms. Luby each of which expires in 2003.
Possible Volatility of Stock Price
Factors such as new product developments, general trends in the
vehicle sales, service and finance industries as well as quarterly varia-
tions in the Company's results of operations and market conditions in
general may cause the market price of the Common Stock to fluctuate
significantly. The stock markets have experienced extreme price and volume
fluctuations during certain periods. These broad market fluctuations and
other factors may adversely affect the market price of the Company's
securities.
USE OF PROCEEDS
The Company will receive gross proceeds of $5.50 per Warrant Share
issued upon exercise of the Warrants, for an aggregate amount of up to
$6,738,050. The Company will use such proceeds for general corporate
purposes.
DESCRIPTION OF SECURITIES
The following description of the Company's securities does not purport
to be complete and is subject in all respects to applicable Delaware law
and to the provisions of the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") and Amended and Restated
By-Laws (the "By-Laws") and the Warrant Agreement (the "Warrant Agreement")
between the Company and Continental Stock Transfer & Trust Company (the
"Warrant Agent").
General
The Company's authorized capital stock consists of 10,000,000 shares
of Common Stock, par value $.01 per share, and 1,000,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock"). As of the
date of this Prospectus, there are 3,384,233 shares of Common Stock and no
shares of Preferred Stock outstanding.
Common Stock
Holders of shares of Common Stock are entitled to one vote per share
on all matters submitted to a vote of the Company's stockholders. Except
as may be required by applicable law, holders of Common Stock do not vote
separately as a class, but vote together with the holders of outstanding
shares of other classes of voting capital stock. There is no right to
cumulate votes for the election of directors. Stockholders holding a
majority of the voting power of the capital stock issued and outstanding
and entitled to vote, represented in person or by proxy, are necessary to
constitute a quorum at any meeting of the Company's stockholders, and
except as described below (see "Certain Certificate of Incorporation and
By-Law Provisions"), the vote by the holders of a majority of such
outstanding shares is required to effect certain fundamental corporate
changes such as liquidation, merger or amendment of the Certificate of
Incorporation.
Holders of shares of Common Stock are entitled to receive dividends,
if, as and when declared by the Board of Directors out of funds legally
available therefor, after payment of dividends required to be paid on
outstanding shares of Preferred Stock. Upon liquidation of the Company,
holders of shares of Common Stock are entitled to share ratably in all
assets of the Company remaining after payment of liabilities, subject to
the liquidation preference rights of any outstanding shares of Preferred
Stock. Holders of shares of Common Stock have no conversion, redemption or
preemptive rights. The rights of the holders of Common Stock are subject
to, and may be adversely affected by, the rights of the holders of
Preferred Stock. The outstanding shares of Common Stock are fully paid and
nonassessable.
Warrants
As of the date of this Prospectus, there are 1,225,100 Warrants
outstanding. Each Warrant represents the right to purchase one share of
Common Stock on or before 5:00 p.m., Eastern Standard Time, on July 21,
1999, at the initial exercise price of $5.50 per share. Since July 22,
1995, the Company has had the right to redeem each Warrant at a price of
$.01 per Warrant, upon 30 days' written notice to the warrantholders of
their right to exercise the Warrants within such 30-day period, if the
average of the closing prices of the Company's Common Stock for 20
consecutive trading days ending no more than 10 days before the date on
which such notice is given equals or exceeds $8.50 per share.
The exercise price of the Warrants and the number of shares subject to
the Warrants are subject to adjustment in certain events, including the
issuance of Common Stock as a dividend on shares of Common Stock;
subdivisions, combinations and reclassifications of the shares of the
Common Stock; the distribution to all holders of Common Stock of evidences
of indebtedness of the Company or assets (other than cash dividends); and
the issuance of additional shares of Common Stock for less than the then
current market price. Upon no less than 30 days' prior written notice to
the holders of Warrants, the Company may reduce the exercise price of the
Warrants. In addition, the Company may extend the term of the Warrants
upon written notice to the Warrant Agent no less than five days prior to
the expiration of the Warrants.
Holders of Warrants will also be entitled to notice if the Company (i)
grants holders of its Common Stock rights to purchase any shares of capital
stock or any other rights, (ii) authorizes a reclassification,
consolidation, merger or sale of substantially all of its assets, (iii)
authorizes the distribution to all holders of its Common Stock of evidences
of its indebtedness or assets or (iv) effects a liquidation, dissolution or
winding up of the Company.
The Company has reserved from its authorized but unissued shares a
sufficient number of Warrant Shares for issuance on exercise of the
Warrants. Exercise of each Warrant may be effected by delivery of the
Warrant, duly endorsed for exercise and accompanied by payment of the
exercise price, to the Warrant Agent. The Warrant Shares issuable on
exercise of the Warrants will be, when issued and paid for in the manner
contemplated by the Warrants, fully paid and nonassessable.
For the life of the Warrants, the holders thereof have the opportunity
to profit from a rise in the market value of the Company's Common Stock,
with a resulting dilution in the interest of all other stockholders. So
long as the Warrants are outstanding, the terms on which the Company could
obtain additional capital may be adversely affected. The holders of the
Warrants might be expected to exercise them at a time when the Company
would, in all likelihood, be able to obtain any needed capital by a new
offering of securities on terms more favorable than those provided for by
the Warrants.
Except as described above, the holders of the Warrants have no rights
as stockholders until they exercise their Warrants.
Preferred Stock
Under the Company's Certificate of Incorporation, the Board of
Directors has the power, without further action by the holders of Common
Stock, to designate and issue from time to time Preferred Stock in series
having such designations, powers, preferences, rights and limitations, and
on such terms and conditions as the Board of Directors may from time to
time determine. Such rights and preferences include those as to voting,
dividends, redemption, liquidation and conversion, any of which could be
dilutive of the interest of the holders of Common Stock. Any issuances of
Preferred Stock may have the effect of delaying or preventing a change in
control of the Company and may have an adverse effect on the rights of the
holders of Common Stock. As of the date of this Prospectus, there are no
outstanding shares of Preferred Stock and the Company has no present
intention of issuing any shares of Preferred Stock.
Certain Certificate of Incorporation and By-Law Provisions
The Certificate of Incorporation contains several provisions that may
make the acquisition or control of the Company by means of a tender offer,
open market purchases, proxy contest or otherwise more difficult. The
Company's By-Laws also contain provisions that could have an anti-takeover
effect.
Classified Board of Directors. The Certificate of Incorporation
provides for the Board of Directors to be divided into three classes of
directors serving staggered three-year terms. The Company believes that a
classified board of directors will help to assure the continuity and
stability of the board and the Company's business strategies and policies
as determined by the Board of Directors.
The classified board provision could have the effect of making the
removal of incumbent directors more time-consuming and difficult, therefore
discouraging a third party from making a tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt
might be beneficial to the Company and its stockholders. Thus, the
classified board provision could increase the likelihood that incumbent
directors will retain their positions.
Number of Directors; Removal; Filling Vacancies. The Certificate of
Incorporation provides that the number of directors will be fixed from time
to time by the Board of Directors.
Moreover, directors may be removed with or without cause only upon the
affirmative vote of holders of at least 66 2/3% of the voting power of the
then outstanding shares of any class or series of capital stock of the
Company entitled to vote generally in the election of directors (the
"Voting Stock"), voting as a class. This provision, when coupled with the
provisions of the Certificate of Incorporation authorizing the Board of
Directors to fill vacant directorships, will preclude stockholders from
removing incumbent directors without the affirmative vote of at least a
substantial majority of the Voting Stock and filling the vacancies created
by such removal with their own nominees.
Special Meetings. The Certificate of Incorporation and By-Laws
provide that special meetings of stockholders can be called pursuant to a
resolution adopted by a majority of the entire Board of Directors, by the
Chairman of the Company and by holders of at least 10% of the Voting Stock
entitled to cast not less than 10% of the votes at such meeting.
Advance Notice Provisions for Stockholder Proposals and Stockholder
Nominations of Directors. The By-Laws establish an advance notice
procedure with regard to the nomination, other than by or at the direction
of the Board of Directors or a committee thereof, of candidates for
election as directors (the "Nomination Procedure") and with regard to other
matters to be brought by stockholders before an annual meeting of
stockholders of the Company (the "Business Procedure").
Under the Business Procedure, a stockholder seeking to have any
business conducted at an annual meeting must give prior written notice, in
proper form, to the Secretary of the Company. The requirements as to the
form and timing of that notice are specified in the By-Laws. If the
Chairman or other officer presiding at a meeting determines that other
business was not properly brought before such meeting in accordance with
the Business Procedure, such business will not be conducted at such
meeting.
The Nomination Procedure requires that a stockholder give prior
written notice, in proper form, of a planned nomination for the Board of
Directors to the Secretary of the Company. The requirements as to the form
and timing of that notice are specified in the By-Laws. If the Chairman
determines that a person was not nominated in accordance with the
Nomination Procedure, such person will not be eligible for election as a
director.
Although the By-Laws do not give the Board of Directors any power to
approve or disapprove stockholder nominations for the election of directors
or of any other business desired by stockholders to be conducted at an
annual or any other meeting, the By-Laws (i) may have the effect of
precluding a nomination for the election of directors or precluding the
conduct of business at a particular annual meeting if the proper procedures
are not followed or (ii) may discourage or deter a third party from
conducting a solicitation of proxies to elect its own slate of directors or
otherwise attempting to obtain control of the Company, even if the conduct
of such solicitation or such attempt might be beneficial to the Company and
its stockholders. The Company's procedures with respect to all stockholder
proposals and the nomination of directors will be conducted in accordance
with Section 14 of the Exchange Act and the rules promulgated thereunder.
Preferred Stock. As described above, the Board of Directors will be
authorized to provide for the issuance of shares of Preferred Stock, in one
or more series, and to fix by resolution of the Board of Directors and to
the extent permitted by the Delaware General Corporation Law (the "Delaware
Law"), the terms and conditions of each such series. The Company believes
that the availability of the Preferred Stock issuable in series will
provide it with increased flexibility in structuring possible future
financings and acquisitions and in meeting other corporate needs which
might arise. Although the Board of Directors has no present intention of
doing so, it could issue a series of Preferred Stock that could, depending
on its terms, either impede or facilitate the completion of a merger,
tender offer or other takeover attempt.
Certain Amendments. The Certificate of Incorporation and By-Laws
contain provisions requiring the affirmative vote of the holders of at
least 66 2/3% of the Voting Stock to amend certain provisions of the
Certificate of Incorporation and By-Laws, including the provisions relating
to the election, quorum, term, classification of directors, the
indemnification of officers and directors and the calling of special
meetings.
Section 203 of the Delaware Law. Although the Certificate of
Incorporation and By-Laws contain provisions with the anti-takeover effects
described above, the Company has, in its Certificate of Incorporation,
expressly elected not to be governed by Section 203 of the Delaware Law,
which prohibits certain business combinations with certain stockholders for
a period of three years after they acquire 15% or more of the outstanding
voting stock of a corporation.
Shareholders Rights Plan
In September 1995, the Board of Directors of the Company adopted a
Shareholders Rights Plan to help protect the Company's stockholders against
certain coercive takeovers tactics commonly used by corporate raiders to
deprive stockholders of the long-term value of their investment through
transactions that do not treat all stockholders equally. Under the terms
of the Shareholders Rights Plan, the Board of Directors declared a dividend
of one common stock purchase right (a "Right") for each outstanding share
of Common Stock held by stockholders of record on November 10, 1995. Each
Right entitles the registered holder to purchase from the Company one share
of Common Stock at a price of $25.00 per share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement dated as of October 24, 1995 between the
Company and Continental Stock Transfer & Trust Company, as Rights Agent.
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such
time as any Person becomes an Acquiring Person) following the commencement
of, or announcement of an intention to make, a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by
a person or group of 15% or more of such outstanding shares of Common Stock
(the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificate with a copy of the Summary of Rights to Purchase shares of
Common Stock attached thereto. The Rights are not exercisable until the
Distribution Date. The Rights will expire on November 10, 2005 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed by the Company, in each case, as described
below.
The Purchase Price payable, and the number of shares of Common Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of Common Stock, (ii) upon the grant to
holders of the shares of Common Stock of certain rights or warrants to
subscribe for or purchase shares of Common Stock at a price, or securities
convertible into shares of Common Stock with a conversion price, less than
the then current market price of the shares of Common Stock or (iii) upon
the distribution to holders of the shares of Common Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out
of earnings or retained earnings or dividends payable in shares of Common
Stock) or of subscription rights or warrants (other than those referred to
above).
In the event that, after the Distribution Date, the Company is
acquired in a merger or other business combination transaction or 50% or
more of its consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have the right
to receive, upon the exercise thereof at the then current exercise price of
the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times
the exercise price of the Right. In the event that any person becomes an
Acquiring Person, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person and its
Affiliates and Associates (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of shares of Common
Stock having a market value of two times the exercise price of the Right.
If the Company does not have sufficient shares of Common Stock to satisfy
such obligation to issue shares of Common Stock, or if the Board of
Directors so elects, the Company shall deliver upon payment of the exercise
price of a Right an amount of cash or securities equivalent in value to the
shares of Common Stock issuable upon exercise of a Right; provided that, if
the Company fails to meet such obligation within 30 days following the
later of (x) the first occurrence of an event triggering the right to
purchase shares of Common Stock and (y) the date on which the Company's
right to redeem the Rights expires, the Company must deliver, upon exercise
of a Right but without requiring payment of the exercise price then in
effect, shares of Common Stock (to the extent available) and cash equal in
value to the difference between the value of the shares of Common Stock
otherwise issuable upon the exercise of a Right and the exercise price then
in effect. The Board of Directors may extend the 30-day period described
above for up to an additional 60 days to permit the taking of action that
may be necessary to authorize sufficient additional shares of Common Stock
to permit the issuance of shares of Common Stock upon the exercise in full
of the Rights.
At any time after the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 15% or more of the
outstanding shares of Common Stock and prior to the acquisition by such
person or group of 50% or more of the outstanding shares of Common Stock,
the Board of Directors of the Company may exchange the Rights (other than
Rights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price. No fractional shares of Common Stock will be
issued and in lieu thereof, an adjustment in cash will be made based on the
market price of the shares of Common Stock on the last trading day prior to
the date of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of
the outstanding shares of Common Stock, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price"). The redemption of the Rights may be
made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, except that
from and after such time as any person becomes an Acquiring Person no such
amendment may adversely affect the interests of the holders of the Rights
(other than the Acquiring Person and its Affiliates and Associates).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
There is no separate public trading market for the Rights. Until the
Distribution Date, the Rights may be transferred with and only with shares
of Common Stock.
Limitations on Directors' and Officers' Liability
The Company's Certificate of Incorporation contains a provision which
eliminates the liability of a director to the Company and its stockholders
for certain breaches of his or her fiduciary duty of care as a director.
This provision does not, however, eliminate or limit the personal liability
of a director (i) for any breach of such director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or knowing violation of law, (iii)
under the Delaware statutory provision making directors personally liable,
under a negligence standard, for unlawful dividends or unlawful stock
repurchases or redemptions, or (iv) for any transaction from which the
director derived an improper personal benefit. This provision offers
persons who serve on the Board of Directors of the Company protection
against awards of monetary damages resulting from breaches of their duty of
care (except as indicated above), including grossly negligent business
decisions made in connection with takeover proposals for the Company. As a
result of this provision, the ability of the Company or a stockholder
thereof to successfully prosecute an action against a director for a breach
of his or her duty of care has been limited. However, the provision does
not affect the availability of equitable remedies such as an injunction or
rescission based upon a directors' breach of his or her duty of care.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
The Company's By-Laws provide mandatory indemnification rights to any
officer or director of the Company who, by reason of the fact that he or
she is an officer or director of the Company, is involved in a legal
proceeding of any nature. Such indemnification rights include
reimbursement for expenses incurred by such officer or director in advance
of the final disposition of such proceeding in accordance with the
applicable provisions of the Delaware law.
Transfer and Warrant Agent
Continental Stock Transfer & Trust Company is the transfer agent and
registrar for the Common Stock and is the transfer agent and registrar for
the Warrants under the terms of the Warrant Agreement. Its principal
executive offices are located at 2 Broadway, New York, New York 10004.
LEGAL MATTERS
Certain legal matters in connection with the sale of the Warrant
Shares offered hereby will be passed upon for the Company by Robinson
Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of the Americas, New
York, New York 10104.
EXPERTS
The consolidated financial statements of the Company 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 reports with respect thereto and have been
incorporated by reference herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said reports.
<PAGE>
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No dealer, salesman or other person has been authorized to give any
information or to make representations 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. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that the information herein is correct
as of any time subsequent to its date. This Prospectus does not constitute
an offer or solicitation by anyone in any jurisdiction in which such offer
or solicitation is not authorized or in which the person making such offer
of solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such offer or solicitation.
___________________________________
Page
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . .2
Documents Incorporated by
Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Description of Securities . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
===========================================================================
<PAGE>
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1,225,100 Shares
of
INTERSTATE NATIONAL DEALER SERVICES, INC.
Common Stock
________________
PROSPECTUS
________________
April __, 1997
===========================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law permits the
indemnification of directors, officers, employees and agents of Delaware
corporations in terms sufficiently broad to include indemnification under
certain circumstance for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. The Certificate of
Incorporation of the Company provides that the Company shall indemnify its
directors and officers to the fullest extent permitted by the Delaware
General Corporation Law. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers,
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
Item 16. Exhibits
1.1 Form of Underwriting Agreement.(1)
2.1 Certificate of Merger of INDS Holdings, Inc. ("Holdings") into the
Company.(1)
3.1 Restated Certificate of Incorporation of the Company.(1)
3.2 Bylaws of the Company, as amended.(1)
3.3 Amended and Restated Certificate of Incorporation of the
Company.(1)
3.4 Amended and Restated Bylaws of the Company.(1)
4.1 Form of Common Stock Certificate.(1)
4.2 Form of Warrant Agreement and Form of Warrant Certificates.(1)
4.3 Form of Underwriters' Unit Purchase Option Agreement and Form of
Unit Purchase Option Certificate.(1)
4.4 Rights Agreement dated as of October 24, 1995 between the Company
and Continental Stock Transfer & Trust Company, which includes as
exhibits the Form of Right Certificate as Exhibit A and the Summary
of Rights to Purchase Common Stock as Exhibit B.(2)
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman as to
legality of securities being registered.(1)
10.1 Employment Agreement between the Company and Louis F. Dente
("Dente"), dated September 5, 1991.(1)
10.2 Employment Agreement between the Company and Chester J. Luby, dated
as of December 1, 1993.(1)
10.3 Employment Agreement between the Company and Cindy H. Luby, dated
as of December 1, 1993.(1)
10.4 Employment Agreement between the Company and Lawrence J. Altman,
dated as of December 1, 1993.(1)
10.5 Amended and Restated 1993 Stock Option Plan.(1)
10.6 Lease, dated May 8, 1992, between The Towers, as lessor, and the
Company, as lessee.(1)
10.7 Commercial Lease and Deposit Receipt, dated June 10, 1992, between
H & H Management, as landlord, and the Company, as tenant.(1)
10.8 License Agreement, dated September 25, 1991, between INDS Group,
Inc. ("Seller"), as licensor, and the Company, as licensee.(1)
10.9 Promissory Note, dated October 25, 1991, executed by the Company in
favor of Target Insurance Ltd. ("Target") in the principal amount
of $200,000.(1)
10.10 Restated Contingent Claim Reserve and Administration Escrow
Contract, dated August 7, 1991, among Seller (as predecessor-in-
interest to the Company), The Travelers Indemnity Company
("Travelers"), Brokerage Professionals, Inc. ("BPI") and The
Massachusetts Company, Inc. (the "Escrow Agent").(1)
10.11 Replacement Administrator Agreement, dated October 1, 1991, among
Seller (as predecessor-in-interest to the Company), Travelers, BPI
and Automotive Professionals, Inc. ("API").(1)
10.12 INDS/BPI-Program Agreement, dated October 1, 1991, among Seller (as
predecessor-in-interest to the Company), Travelers and BPI.(1)
10.13 Escrow Account Agreement for Automobile Vehicle Service Contract
Primary Loss Reserve Funds, dated August 22, 1991, among Seller (as
predecessor-in-interest to the Company), BPI and the Escrow
Agent.(1)
10.14 Assumption of Contracts, Rights and Actions, dated November 1,
1991, among the Company, Seller and Travelers.(1)
10.15 Assumption of Contracts, Rights and Actions, dated November 1,
1991, among the Company, Seller and BPI.(1)
10.16 Assumption of Contracts, Rights and Actions, dated November 1,
1991, among the Company, Seller and the Escrow Agent.(1)
10.17 Assumption of Contracts, Rights and Actions, dated November 1,
1991, among the Company, Seller and API.(1)
10.18 Letter Agreement, dated August 8, 1991, with National Warranty Risk
Retention Group.(1)
10.19 Form of Independent Agent Agreement.(1)
10.20 Form of Administrator Agreement.(1)
10.21 Form of Dealer Administrator Agreement.(1)
10.22 Promissory Note, dated October 22, 1991, executed by Holdings (as
predecessor-in-interest to the Company) in favor of Target, in the
principal amount of $100,000. (1)
10.23 Consulting Agreement dated December 1, 1992 between the Company and
MRN Capital Company.(1)
10.24 Promissory Note, dated November 12, 1993, executed by the Company
in favor of Target, in the principal amount of $60,000.(1)
10.25 Services Agreement, dated as of January 1, 1993, between the
Company and Target Agency, Inc.(1)
10.26 Pre-Incorporation Agreement dated September 25, 1991, among Chester
J. Luby, Louis F. Dente and Alan Pallie.(1)
10.27 Agreement of Purchase and Sale dated September 25, 1991 between the
Seller and the Company.(1)
10.28 Form of Service Contract Financing Program Agreement.(1)
10.29 Amendment to Amended and Restated 1993 Stock Option Plan.(1)
10.30 Waiver dated June 27, 1994 from the Company, Chester J. Luby and
Joan S. Luby to the Consultant.(1)
10.31 Form of Financial Advisory and Investment Banking Agreement between
the Representative and the Company.(1)
10.32 Lease dated December 2, 1994 between The Omni Partners, a Limited
Partnership, as lessor, and the Company, as lessee.(3)
10.33 Amendment to Employment Agreement between the Company and Chester
J. Luby, dated as of May 1, 1996.(4)
10.34 Amendment to Employment Agreement between the Company and Cindy H
Luby, dated as of November 1, 1995.(4)
10.35 Amendment to Employment Agreement between the Company and Cindy H.
Luby, dated as of May 1, 1996.(4)
10.34 Amendment to Employment Agreement between the Company and Lawrence
J. Altman, dated as of May 1, 1996.(4)
10.36 The Company's 1996 Incentive Plan.(5)
21.1 List of Subsidiaries.(4)
23.1 Consent of Robinson Silverman Pearce Aronsohn & Berman (included as
part of Exhibit 5.1).
23.2 Independent Auditor's Consent of Arthur Andersen LLP (included
herewith as page II-6).
24.1 Power of Attorney.(1)
_______________________
(1) Previously filed.
(2) Incorporated by reference to Registration Statement on Form 8-A
dated October 26, 1995.
(3) Incorporated by reference to Annual Report on Form 10-KSB for the
fiscal year ended October 31, 1994.
(4) Incorporated by reference to Annual Report on Form 10-KSB for the
fiscal year ended October 31, 1996.
(5) Incorporated by reference to Registration Statement on Form S-8,
File No. 333-09571.
Item 17. Undertakings
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) 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 with or furnished to the
Commission by the registrant pursuant to Section 13 or 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.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
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 the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Mitchel Field, State of New
York, on April 21, 1997.
INTERSTATE NATIONAL DEALER SERVICES, INC.
By: /s/ Chester J. Luby
---------------------------------------
Chester J. Luby, Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post Effective Amendment No. 1 on Form S-3 to the
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Name Title Date
/s/ Chester J. Luby Chairman, Chief Executive April 21, 1997
- --------------------------- Officer and Director
(Chester J. Luby) (Principal Executive Officer)
/s/ Cindy H. Luby President, Chief Operating April 21, 1997
- --------------------------- Officer and Director
(Cindy H. Luby) (Principal Financial
Officer)
/s/ Zvi D. Sprung Chief Financial Officer April 21, 1997
- --------------------------- (Principal Accounting
(Zvi D. Sprung) Officer)
/s/ Robert E. Schulman Director April 21, 1997
- ---------------------------
(Robert E. Schulman)
/s/ William Brown Director April 21, 1997
- ---------------------------
(William Brown)
/s/ Donald Kirsch Director April 21, 1997
- ---------------------------
(Donald Kirsch)
<PAGE>
EXHIBIT INDEX
1.1 Form of Underwriting Agreement.(1)
2.1 Certificate of Merger of INDS Holdings, Inc. ("Holdings") into the
Company.(1)
3.1 Restated Certificate of Incorporation of the Company.(1)
3.2 Bylaws of the Company, as amended.(1)
3.3 Amended and Restated Certificate of Incorporation of the Company.(1)
3.4 Amended and Restated Bylaws of the Company.(1)
4.1 Form of Common Stock Certificate.(1)
4.2 Form of Warrant Agreement and Form of Warrant Certificates.(1)
4.3 Form of Underwriters' Unit Purchase Option Agreement and Form of
Unit Purchase Option Certificate.(1)
4.4 Rights Agreement dated as of October 24, 1995 between the Company
and Continental Stock Transfer & Trust Company, which includes as
exhibits the Form of Right Certificate as Exhibit A and the Summary
of Rights to Purchase Common Stock as Exhibit B.(2)
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman as to
legality of securities being registered.(1)
10.1 Employment Agreement between the Company and Louis F. Dente
("Dente"), dated September 5, 1991.(1)
10.2 Employment Agreement between the Company and Chester J. Luby, dated
as of December 1, 1993.(1)
10.3 Employment Agreement between the Company and Cindy H. Luby, dated as
of December 1, 1993.(1)
10.4 Employment Agreement between the Company and Lawrence J. Altman,
dated as of December 1, 1993.(1)
10.5 Amended and Restated 1993 Stock Option Plan.(1)
10.6 Lease, dated May 8, 1992, between The Towers, as lessor, and the
Company, as lessee.(1)
10.7 Commercial Lease and Deposit Receipt, dated June 10, 1992, between H
& H Management, as landlord, and the Company, as tenant.(1)
10.8 License Agreement, dated September 25, 1991, between INDS Group,
Inc. ("Seller"), as licensor, and the Company, as licensee.(1)
10.9 Promissory Note, dated October 25, 1991, executed by the Company in
favor of Target Insurance Ltd. ("Target") in the principal amount of
$200,000.(1)
10.10 Restated Contingent Claim Reserve and Administration Escrow
Contract, dated August 7, 1991, among Seller (as predecessor-in-
interest to the Company), The Travelers Indemnity Company
("Travelers"), Brokerage Professionals, Inc. ("BPI") and The
Massachusetts Company, Inc. (the "Escrow Agent").(1)
10.11 Replacement Administrator Agreement, dated October 1, 1991, among
Seller (as predecessor-in-interest to the Company), Travelers, BPI
and Automotive Professionals, Inc. ("API").(1)
10.12 INDS/BPI-Program Agreement, dated October 1, 1991, among Seller (as
predecessor-in-interest to the Company), Travelers and BPI.(1)
10.13 Escrow Account Agreement for Automobile Vehicle Service Contract
Primary Loss Reserve Funds, dated August 22, 1991, among Seller (as
predecessor-in-interest to the Company), BPI and the Escrow
Agent.(1)
10.14 Assumption of Contracts, Rights and Actions, dated November 1, 1991,
among the Company, Seller and Travelers.(1)
10.15 Assumption of Contracts, Rights and Actions, dated November 1, 1991,
among the Company, Seller and BPI.(1)
10.16 Assumption of Contracts, Rights and Actions, dated November 1, 1991,
among the Company, Seller and the Escrow Agent.(1)
10.17 Assumption of Contracts, Rights and Actions, dated November 1, 1991,
among the Company, Seller and API.(1)
10.18 Letter Agreement, dated August 8, 1991, with National Warranty Risk
Retention Group.(1)
10.19 Form of Independent Agent Agreement.(1)
10.20 Form of Administrator Agreement.(1)
10.21 Form of Dealer Administrator Agreement.(1)
10.22 Promissory Note, dated October 22, 1991, executed by Holdings (as
predecessor-in-interest to the Company) in favor of Target, in the
principal amount of $100,000. (1)
10.23 Consulting Agreement dated December 1, 1992 between the Company and
MRN Capital Company.(1)
10.24 Promissory Note, dated November 12, 1993, executed by the Company in
favor of Target, in the principal amount of $60,000.(1)
10.25 Services Agreement, dated as of January 1, 1993, between the Company
and Target Agency, Inc.(1)
10.26 Pre-Incorporation Agreement dated September 25, 1991, among Chester
J. Luby, Louis F. Dente and Alan Pallie.(1)
10.27 Agreement of Purchase and Sale dated September 25, 1991 between the
Seller and the Company.(1)
10.28 Form of Service Contract Financing Program Agreement.(1)
10.29 Amendment to Amended and Restated 1993 Stock Option Plan.(1)
10.30 Waiver dated June 27, 1994 from the Company, Chester J. Luby and
Joan S. Luby to the Consultant.(1)
10.31 Form of Financial Advisory and Investment Banking Agreement between
the Representative and the Company.(1)
10.32 Lease dated December 2, 1994 between The Omni Partners, a Limited
Partnership, as lessor, and the Company, as lessee.(3)
10.33 Amendment to Employment Agreement between the Company and Chester J.
Luby, dated as of May 1, 1996.(4)
10.34 Amendment to Employment Agreement between the Company and Cindy H
Luby, dated as of November 1, 1995.(4)
10.35 Amendment to Employment Agreement between the Company and Cindy H.
Luby, dated as of May 1, 1996.(4)
10.34 Amendment to Employment Agreement between the Company and Lawrence
J. Altman, dated as of May 1, 1996.(4)
10.36 The Company's 1996 Incentive Plan.(5)
21.1 List of Subsidiaries.(4)
23.1 Consent of Robinson Silverman Pearce Aronsohn & Berman (included as
part of Exhibit 5.1).
23.2 Independent Auditor's Consent of Arthur Andersen LLP (included
herewith as page II-6).
24.1 Power of Attorney.(1)
_______________________
(1) Previously filed.
(2) Incorporated by reference to Registration Statement on Form 8-A
dated October 26, 1995.
(3) Incorporated by reference to Annual Report on Form 10-KSB for the
fiscal year ended October 31, 1994.
(4) Incorporated by reference to Annual Report on Form 10-KSB for the
fiscal year ended October 31, 1996.
(5) Incorporated by reference to Registration Statement on Form S-8,
File No. 333-09571.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Post-Effective Amendment No. 1 on Form
S-3 of our report dated January 8, 1997 incorporated by reference in the
Interstate National Dealer Services, Inc. Form 10-KSB for the year ended
October 31, 1996 and to all references to our Firm in this Form S-3
Registration Statement.
ARTHUR ANDERSEN LLP
Melville, New York
April 17, 1997
