<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 1, 2000
STROUDS, INC.
-----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-24904 95-4107241
(State or other jurisdiction of (Commission File (I.R.S. Employer
Incorporation) Number) Identification Number)
780 South Nogales Street, City of Industry, California 91748
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(626) 912-2866
---------------------------------------------------------
(Registrants' telephone number, including area code)
n/a
------------------------------------------------
(former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
On January 31, 2000, Strouds, Inc. (the "Company") entered into a First
Amendment to Rights Agreement (the "Amendment") between the Company and American
Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent"). The
Amendment, which amends the Rights Agreement dated as of November 17, 1995
between the Company and the Rights Agent (the "Rights Agreement"), increases the
beneficial ownership threshold that would trigger the Rights (as defined in the
Rights Agreement) from 15% to 20%. The foregoing description of the Amendment is
qualified in its entirety by reference to the Amendment and the Rights
Agreement. A copy of the Amendment is attached hereto as Exhibit 4.1 and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS: The following exhibits are filed as part of this Report:
4.1 First Amendment to Rights Agreement, dated as of January 31, 2000,
between Strouds, Inc. and American Stock Transfer & Trust Company.
99.1 Press release, dated January 31, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 31, 2000
STROUDS, INC.
By: /s/ ROBERT M. MENAR
----------------------------------
Robert M. Menar
Chief Operating Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
4.1 First Amendment to Rights Agreement, dated as of January 31, 2000,
between Strouds, Inc. and American Stock Transfer & Trust Company.
99.1 Press release, dated January 31, 2000.
<PAGE>
Exhibit 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIRST AMENDMENT
to
RIGHTS AGREEMENT
between
STROUDS, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
Dated as of January 31, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FIRST AMENDMENT TO RIGHTS AGREEMENT
FIRST AMENDMENT, dated as of January 31, 2000 ("First Amendment"), to
Rights Agreement dated as of November 17, 1995 (the "Rights Agreement"), between
Strouds, Inc., a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company, a New York banking corporation, as Rights Agent (the
"Rights Agent"). Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Rights Agreement.
WHEREAS, the Company and the Rights Agent previously entered into the
Rights Agreement; and
WHEREAS, pursuant to Section 26 of the Rights Agreement, the Company
and the Rights Agent may from time to time supplement or amend any provision of
the Rights Agreement in accordance with the terms of such Section 26.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
agreements set forth in this First Amendment, the parties hereby amend the
Rights Agreement as follows:
1. Section 1.1 of the Rights Agreement is hereby amended by deleting
the percentage "15%" in each of the first and third (including the proviso
thereto) sentences thereof and substituting the percentage "20%" therefor.
2. The second sentence of Section 1.11 of the Rights Agreement is
hereby amended by deleting the percentage "15%" and substituting the percentage
"20%" therefor.
3. The first sentence of Section 3.1 of the Rights Agreement is hereby
amended by deleting the percentage "15%" and substituting the percentage "20%"
therefor.
4. The second paragraph of Exhibit C to the Rights Agreement ("SUMMARY
OF RIGHTS TO PURCHASE PREFERRED SHARES") is hereby amended and restated in its
entirety as follows:
"Until the earlier to occur of (i) the 10th day after a public
announcement that a person or group of affiliated or associated persons (an
"ACQUIRING PERSON") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the Common Shares or (ii) the 10th
day after the commencement 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 20% or more of the Common
Shares (the earlier of (i) and (ii) being called the "DISTRIBUTION DATE,"
whether or not either such date occurs prior to the Record 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. Notwithstanding the foregoing, BT Capital Corporation ("BT
CAPITAL") shall not
<PAGE>
be an Acquiring Person unless and until BT Capital shall acquire beneficial
ownership of any Common Shares of the Company on or after November 17,
1995."
5. The seventh paragraph of Exhibit C to the Rights Agreement ("SUMMARY
OF RIGHTS TO PURCHASE PREFERRED SHARES") is hereby amended and restated in its
entirety as follows:
"In the event that a Person becomes an Acquiring Person (except
pursuant to certain cash offers for all outstanding Common Shares approved by
the Board) or if the Company were the surviving corporation in a merger with an
Acquiring Person or any affiliate or associate of an Acquiring Person and the
Common Shares were not changed or exchanged, each holder of a Right, other than
Rights that are or were acquired or beneficially owned by the 20% stockholder
(which Rights will thereafter be void), will thereafter have the right to
receive upon exercise that number of Common Shares having a market value of two
times the then current Purchase Price of the Right. With certain exceptions, in
the event that the Company were acquired in a merger or other business
combination transaction or more than 50% of its assets or earning power were
sold, proper provision shall be made so that each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the then current Purchase Price of the Right."
6. This First Amendment shall be effective as of the date hereof and,
except as expressly set forth herein, the Rights Agreement shall remain in full
force and effect and be otherwise unaffected hereby.
7. This First Amendment may be executed in any number of counterparts,
each of which, when executed, shall be deemed to be an original and all such
counterparts shall together constitute one and the same document.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date first written above.
STROUDS, INC.
By: /s/ ROBERT M. MENAR
-----------------------------------
Name: Robert M. Menar
Title: Chief of Operations
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /s/ HERBERT J. LEMMER
-----------------------------------
Name: Herbert J. Lemmer
Title: Vice President
3
<PAGE>
EXHIBIT 99.1
[STROUDS LETTERHEAD]
Contact: Robert M. Menar
Strouds, Inc.
Chief Operating Officer
(626) 912-2866
Jack Leone
Sitrick And Company
(310) 788-2850
http://www.linenexperts.com
http://www.strouds.com
ROBERT MENAR, STROUDS COO,
ELECTED TO BOARD OF DIRECTORS
BOARD AMENDS RIGHTS AGREEMENT;
AUTHORIZES SEED CAPITAL TO DEVELOP JOINT VENTURE
CITY OF INDUSTRY, CA -- JANUARY 31, 2000 -- STROUDS, INC. (NASDAQ: STRO)
today announced that Robert M. Menar, chief operating officer, has been
elected to its Board of Directors.
"Bob's knowledge and expertise of the retail business, gained on the
frontlines of this industry over the past 25 years, will make him a valuable
addition to the Board," said Charles Chinni, Strouds' Chairman and Chief
Executive Officer. "Since joining Strouds last August, Bob has been
instrumental in effecting numerous operational improvements at the company.
This appointment to the Board of Directors is both in recognition of those
contributions he has made as an officer of the company and of those we are
confident that he will be able to make as a Director."
Before joining Strouds, Mr. Menar was president, chief executive officer and
founder of R.M. Menar & Associates, Inc., a consulting firm specializing in
helping companies enhance their businesses through technology. His firm had
served as a consultant to Strouds since 1997. Prior to founding his
consultancy in 1995, Mr. Menar was corporate executive vice president of
Broadway Stores, Inc. (formerly Carter Hawley Hale Stores, Inc.).
In other Board action, on January 31, 2000 Strouds, Inc. entered into a First
Amendment to Rights Agreement between Strouds, Inc. and American Stock
Transfer & Trust Company, as Rights Agent. The Amendment, which amends the
Rights Agreement dated November 17,
<PAGE>
1995, increases the beneficial ownership threshold that would trigger the
Rights from 15% to 20%.
The Strouds Board also authorized the expenditure of seed capital to develop
a joint venture with Guidance Solutions, a leading online incubator and Web
development company in Marina del Rey, California, to create a new Internet
site to market Strouds' products.
Strouds, Inc., the Linen Experts-Registered Trademark-, is a specialty
retailer of bed, bath, tabletop and other home textile products in the United
States. At January 28, 2000, the Company operated 66 stores in five states.
The Company also markets it home products on the Internet at
http://www.linenexperts.com and http://www.strouds.com.
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS DISCUSSED
IN THIS NEWS RELEASE ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISK AND
UNCERTAINTIES, AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE COMPANY'S
PRESENT EXPECTATIONS. AMONG THE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED IN THE FORWARD- LOOKING
STATEMENTS ARE: CUSTOMER DEMAND AND TRENDS IN THE HOME TEXTILES INDUSTRY, THE
PERFORMANCE OF STORES IN THE NEW MARKETS, THE EFFECT OF ECONOMIC CONDITIONS,
THE IMPACT OF COMPETITIVE OPENINGS AND PRICING, SUPPLY CONSTRAINTS OR
DIFFICULTIES, AND OTHER RISKS DETAILED IN THE COMPANY'S SECURITIES AND
EXCHANGE COMMISSION FILINGS.
