<PAGE>
As filed with the Securities and Exchange Commission on July 10, 1995
Registration No. 33-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
FARAH INCORPORATED
(Exact name of registrant as specified in its charter)
TEXAS 74-1061146
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
FARAH INCORPORATED
8889 GATEWAY WEST
EL PASO, TEXAS 79925
(915) 593-4444
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
---------------
JAMES C. SWAIM
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FARAH INCORPORATED
8889 GATEWAY WEST
EL PASO, TEXAS 79925
(915) 593-4444
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
WITH A COPY TO:
DANIEL W. RABUN, ESQ.
BAKER & MCKENZIE
2001 ROSS AVENUE, SUITE 4500
DALLAS, TEXAS 75201
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
---------------
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
PROPOSED MAXIMUM
AMOUNT PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER SHARE PRICE FEE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 619,000 shares $6.50 (1) $4,023,500 (1) $1,388
===============================================================================================
(1) Estimated solely for the purpose of computing the amount of the registration fee in
accordance with Rule 457(c) on the basis of the average of the high and low sales prices
of the common stock on the New York Stock Exchange on July 3, 1995.
</TABLE>
---------------
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 THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===============================================================================
<PAGE>
PROSPECTUS
619,000 SHARES
FARAH INCORPORATED [LOGO]
COMMON STOCK
The 619,000 shares of Common Stock, no par value per share, offered hereby
are being offered for the account of certain shareholders of Farah
Incorporated (the "Company") named under the heading "Selling Shareholders"
pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement") dated as of April 28, 1994, between each of the Selling
Shareholders and the Company. This Prospectus has been prepared by the
Company pursuant to the Registration Rights Agreement. The Company will
receive none of the proceeds from the sale of any of the shares in this
offering, but has agreed to bear certain expenses of registration of the
Common Stock under the federal and state securities laws (currently estimated
to be $16,188), and of any offering and sale hereunder not including certain
expenses such as commissions and discounts of underwriters, dealers or
agents. See "Selling Shareholders," "Use of Proceeds" and "Plan of
Distribution."
The Common Stock of the Company is listed on the New York Stock Exchange
under the symbol "FRA." On July 7, 1995, the closing sale price of the
Common Stock was $6.875 per share.
The shares of Common Stock may be offered and sold from time to time by
each of the Selling Shareholders directly or through broker-dealers or
underwriters who may act solely as agents, or who may acquire shares of
Common Stock as principals. The distribution of the shares of Common Stock
may be effected in one or more transactions that may take place through the
New York Stock Exchange or any national securities exchange on which the
Common Stock is approved for listing in the future, including block trades or
ordinary broker's transactions, or through privately negotiated transactions,
or through an underwritten public offering, or through a combination of any
such methods of sale, at such prices as may be obtainable. Usual and
customary or specially negotiated brokerage fees or commissions may be paid
by each of the Selling Shareholders in connection with such sales. See "Plan
of Distribution."
To the extent required, the specific shares of Common Stock to be sold, the
names of each of the Selling Shareholders, purchase price, public offering
price, names of any agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offering will be set
forth in an accompanying Prospectus Supplement. The aggregate proceeds to
each of the Selling Shareholders from the Common Stock will be the purchase
price thereof less the aggregate agents' commissions and underwriters'
discounts, if any, and other expenses of distribution not borne by the
Company.
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED PRIOR
TO AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
---------------
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.
IT IS ANTICIPATED THAT EACH OF THE PERSONS NAMED HEREIN UNDER THE CAPTION
"SELLING SHAREHOLDERS" MAY OFFER AND SELL THE SECURITIES FROM TIME TO TIME IN
ORDINARY TRANSACTIONS TO OR THROUGH ONE OR MORE BROKERS OR DEALERS THROUGH
THE NEW YORK STOCK EXCHANGE OR ANY NATIONAL SECURITIES EXCHANGE ON WHICH THE
COMMON STOCK IS APPROVED FOR LISTING IN THE FUTURE OR IN PRIVATE TRANSACTIONS
AT SUCH PRICES AS MAY BE OBTAINABLE. ANY SUCH PERSON MAY BE DEEMED TO BE AN
"UNDERWRITER" AS THAT TERM IS DEFINED BY THE SECURITIES ACT OF 1933, AS
AMENDED. HOWEVER, THE COMPANY AND SUCH PERSONS DISCLAIM THAT ANY SUCH PERSON
IS AN UNDERWRITER.
---------------
THE DATE OF THIS PROSPECTUS IS JULY 10, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied, at prescribed rates, at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024, as
well as at the regional offices of the Commission at Seven World Trade
Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60601. Copies of such
material may also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Common Stock is listed on the New York Stock Exchange.
Reports, proxy statements and other information described above may also be
inspected and copied at the offices of the New York Stock Exchange at 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of that Registration
Statement, does not contain all the information set forth in that
Registration Statement and the exhibits relating thereto. For further
information with respect to the Company and the Common Stock, reference is
hereby made to such Registration Statement and exhibits. Statements
contained herein concerning the provisions of any documents are necessarily
summaries of those documents, and each statement is qualified in its entirety
by reference to the copy of the applicable document filed with the
Commission. The Registration Statement and any amendments thereto, including
exhibits filed as a part thereof, are available for inspection and copying as
set forth above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Available Information. . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference. . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 7
Certain Relationships Between the Company and Each of the Selling
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 8
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
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, ANY SELLING SHAREHOLDER OR ANY OTHER
PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO OR SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the
following documents which have been filed with the Commission pursuant to the
Exchange Act and made a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
November 4, 1994;
(b) The Company's Quarterly Report on Form 10-Q for the three months ended
February 3, 1995;
(c) The Company's Quarterly Report on Form 10-Q for the three months ended
May 5, 1995;
(d) The description of the Company's Common Stock as contained in the
Company's Registration Statement on Form 8-A, as amended, including all
amendments and reports filed for the purpose of updating such
description; and
(e) The Company's proxy statement filed with the Commission dated January
31, 1995.
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering shall be deemed to be incorporated by reference
into this Prospectus and to be made a part hereof from the date of filing of
such document. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will furnish without charge, upon written or oral request, to
each person, including any beneficial owner, to whom this Prospectus is
delivered, a copy of any or all of the documents incorporated by reference
herein other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to Farah Incorporated, 8889 Gateway West, El Paso, Texas
79925, telephone number (915) 593-4444, Attn: Corporate Secretary.
THE COMPANY
The Company, founded in 1920, is a leading manufacturer and marketer of
apparel for men and boys. The Company was incorporated in Texas in 1947 as
Farah Manufacturing Company, Inc. The name of the Company was changed to
Farah Incorporated in 1987.
The Company is organized as three distinct operating divisions: Farah
U.S.A., Farah International and Value Slacks. Farah U.S.A. manufactures and
sells a variety of casual and dress apparel to retailers throughout the
United States. Farah International manufactures and sells apparel in several
countries in Europe, Australia and Asia. Farah International's primary
markets are the United Kingdom, Australia and New Zealand. Value Slacks
operates retail stores which sell apparel manufactured by the Company for
these stores, close-outs and seconds from Farah U.S.A., and a limited amount
of merchandise purchased from third parties. As of May 5, 1995, Value Slacks
had 33 retail stores, 28 in the United States and 5 in Puerto Rico.
The Company manufactures high quality, medium priced apparel for men and
boys. The Company's products include casual slacks, dress slacks and suit
separates (matching pants and sportcoats which may be mixed and matched to
accommodate retail customer size preferences), which are sold under the
labels Savane-Registered Trademark-, Farah Clothing Company-Registered
Trademark-, Farah-Registered Trademark- and John Henry-Registered
Trademark-. In addition, the Company manufactures and sells private label
products for certain customers.
The Company's apparel products are manufactured with an array of fabrics
that emphasize comfort, fit and performance. The Company is known for its
use of "performance fabrics" that maintain a fresh, neat
3
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appearance. The Company's product lines primarily use 100% cotton fiber and
blended fabrics (cotton/polyester or wool/polyester). Most of the Company's
Savane products are offered with PROCESS 2000-Registered Trademark-. PROCESS
2000 is the Company's trademark, first introduced by the Company in late
fiscal 1989, which is used to describe the wrinkle resistance features of the
Savane garments. PROCESS 2000 fabrics are soft, wrinkle and shrink resistant
and behave like "permanent press." The Company has also recently introduced
a new line of products under the label, Savane-Registered Trademark- Soft
Wash-TM-. Savane Soft Wash products are 100% cotton garments which utilize
PROCESS 2000 and have a softer feel than other cotton garments. The Company
also sells products under the Farah/Farah Clothing Company and John Henry
labels using wrinkle resistant technologies.
The Company's principal executive offices are located at 8889 Gateway
West, El Paso, Texas 79925, and its telephone number is 915/593-4444.
4
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RISK FACTORS
PRIOR TO MAKING AN INVESTMENT DECISION, PROSPECTIVE INVESTORS SHOULD
CONSIDER CAREFULLY ALL OF THE INFORMATION SET FORTH IN THIS PROSPECTUS AND,
IN PARTICULAR, SHOULD EVALUATE THE FOLLOWING RISK FACTORS.
HISTORY OF SIGNIFICANT LOSSES
The Company has incurred aggregate net losses of approximately $28,471,000
from fiscal 1987 through fiscal 1994 and most recently incurred a net loss of
$5,087,000 for the six months ended May 5, 1995. The Company's history of
net losses was due in large part to the loss of customers resulting from the
failure to deliver products in a timely manner. Historically, the failure to
deliver products resulted primarily from certain strategic decisions made by
the Company in the 1980s, including the transition of production from United
States factories to offshore factories and significantly increasing the size
and complexity of the Company's product line. The Company also lost
customers as a result of certain marketing decisions. More recently, losses
have resulted primarily from increased costs and the failure to deliver
products, attributable in part to manufacturing problems associated with the
startup of new manufacturing facilities in the United States, Mexico and
Costa Rica, lower profit margins on private label business and lower overall
levels of revenue. There can be no assurance that the Company will be
profitable in the future or that the Company will not experience problems in
delivering products in a timely manner.
COMPETITION
Competition in the men's and boy's sectors of the apparel industry is
extremely intense. The Company competes with many other apparel companies,
some of which are substantially larger and have greater financial and other
resources than the Company. The Company believes that in order to be
successful in its industry, it must be able to evaluate and respond to
changing consumer demand and tastes and remain competitive in the areas of
style, quality and price while operating within the significant domestic and
foreign production and delivery constraints of the industry. There can be no
assurance that the Company will be successful in this regard.
PRIVATE LABEL BUSINESS
The Company has recently begun to expand its private label business in the
United States. For the six months ended May 5, 1995, Farah U.S.A. had sales
of private label garments of $12,449,000, or 12% of consolidated net sales.
For fiscal 1994 Farah U.S.A. sales of private label garments were
$15,392,000, or 6% of consolidated net sales. Sales of private label
garments carry lower gross profit margins than Farah labeled products.
Accordingly, the results of the Company s operations could be adversely
affected as the private label business expands unless sufficient volumes of
production are achieved to absorb the fixed costs of the Company or
reductions are made in fixed costs to accommodate the lower gross profits
margins. There can be no assurance that such sales volumes or costs
reductions will be achieved.
DEPENDENCE ON KEY CUSTOMERS
The number of major apparel retailers has decreased in recent years, and
the retail apparel industry continues to undergo substantial consolidation.
The Company could lose a retailer as a customer in the event the retailer is
acquired in a consolidation and is required by the acquiring company to
change vendors. The Company's ten largest customers accounted for
approximately 56% and 54% of the Company's consolidated revenues during the
fiscal years 1993 and 1994, respectively. The loss of the business of one or
more of the Company's largest customers could have a material adverse effect
on the Company's results of operations. The Company has no long-term
commitments or contracts with any of its customers.
5
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CONSUMER TRENDS
The Company believes that its success depends, in part, on its ability to
anticipate, gauge and respond to changing consumer demands and fashion trends
in a timely manner. The Company attempts to minimize the risk of changing
consumer trends and product acceptance by producing basic, year-round core
products as opposed to more seasonal products. However, the Company's
operating results could be adversely affected if the Company misjudges the
market for a number of products or if consumers significantly shift their
preference for certain types of products.
FOREIGN OPERATIONS
Substantially all of the Company's products are manufactured outside of the
United States, either in its foreign manufacturing factories or through
arrangements with independent foreign contractors. In particular, the
Company has extensive manufacturing operations in Mexico which has recently
experienced some economic and political unrest. As a result, the Company's
operations may be adversely affected by political instability resulting in
the disruption of trade with foreign countries in which the Company's
factories or contractors are located, the imposition of additional
regulations relating to imports or duties, taxes and other charges on
imports, any significant fluctuation of the value of the dollar against
foreign currencies and restrictions on the transfer of funds. In addition,
the Company's import operations are subject to constraints imposed by
bilateral textile agreements between the United States and certain foreign
countries. These agreements impose quotas on the amount and type of goods
which can be imported into the United States from some of these countries.
QUARTERLY EARNINGS FLUCTUATIONS
As is the case with many companies in the apparel industry, the Company's
operating results are affected by the seasonal nature of the apparel
industry. Accordingly, the Company's operating results may fluctuate from
quarter to quarter.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price for shares of the Common Stock has varied significantly
and may be volatile depending on news announcements and changes in general
market conditions. In particular, news announcements regarding quarterly or
annual results of operations or competitive developments impacting the
Company may cause significant fluctuations in the market price of the Common
Stock.
RELIANCE ON KEY PERSONNEL
The Company believes that its continued success will depend to a
significant extent upon the abilities and continued effort of certain key
management employees. Each of these management employees is an integral part
of the management of the Company. The loss of the services of any of these
individuals could have a material adverse effect upon the Company. The
Company's continued success is also dependent upon its ability to attract and
retain other qualified employees.
NO DIVIDENDS
The Company has not paid any dividends on its Common Stock since 1986 and
does not plan to pay dividends on its Common Stock for the foreseeable
future. The Company's revolving credit agreement prohibits the payment of
dividends.
6
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USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of shares
of Common Stock by either of the Selling Shareholders. The costs and
expenses incurred in connection with the registration under the Securities
Act of the offering described herein are estimated to be $16,188 and will be
paid by the Company. Each Selling Shareholder will pay all brokerage fees
and commissions, if any, incurred in the sale of shares of Common Stock by
such party. See "Plan of Distribution."
SELLING SHAREHOLDERS
This Prospectus covers the offer and sale of a total of 619,000 shares of
Common Stock. Set forth below are the names of each Selling Shareholder, the
nature of any position, office or other material relationship that a Selling
Shareholder has had within the past 3 years with the Company or any of its
predecessors or affiliates, the number of shares of Common Stock owned by
each of the Selling Shareholders as of the date of this Prospectus, the
number of such shares that may be offered and sold by each such Selling
Shareholder hereunder, and (if 1% or more) the percentage of Common Stock to
be owned by each such Selling Shareholder upon completion of the offering if
all Common Stock offered by such Selling Shareholder is sold.
<TABLE>
<CAPTION>
OWNERSHIP OF
COMMON STOCK PERCENT OF
PRIOR TO OFFERING SHARES OFFERED FOR OWNERSHIP OF COMMON STOCK
------------------ SELLING SHAREHOLDER'S COMMON STOCK OUTSTANDING
SELLING SHAREHOLDERS(1)(2) NUMBER PERCENT(3) ACCOUNT AFTER OFFERING(4) AFTER OFFERING(3)(4)
- ------------------------- ------ --------- --------------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Georges Marciano Trust
Under Trust Dated
February 20, 1986(5) (the
"Georges Marciano Trust") 974,300 9.6% 371,400 602,900 6.0%
Paul Marciano Trust
Under Trust Dated
February 20, 1986(6) (the
"Paul Marciano Trust") 247,600 2.4% 247,600 0 0%
<FN>
_______________
(1) Each of the Selling Shareholders, among others, are parties to an
Amended and Restated Stock Purchase Agreement dated as of March 12,
1993 ("Stock Purchase Agreement"), with the Company pursuant to which they
were originally granted certain registration rights in shares of Common
Stock owned by them and offered hereby. In connection with the public
offering of certain shares of the Common Stock in April 1994 by the Company
and Marciano Investments, Inc., an affiliate of each of the Selling
Shareholders, Marciano Investments, Inc. sold 1,200,000 shares of Common
Stock. At the time of the public offering, each of the Selling Shareholders
entered into the Registration Rights Agreement with the Company which
modified the registration rights granted under the Stock Purchase
Agreement. The shares offered hereby are being registered pursuant to the
Registration Rights Agreement.
(2) The Georges Marciano Trust and the Paul Marciano Trust, as beneficial
owners of the Common Stock offered hereby, may be deemed to be a "group"
as that term is defined in Rule 13d-3 of the Exchange Act, although
nothing contained herein shall be deemed to be an admission by such
beneficial owners that a group exists and the Georges Marciano Trust and
Paul Marciano Trust both disclaim that any such group exists.
(3) Based on 10,127,291 shares of Common Stock being outstanding on May 31,
1995.
(4) Assumes all shares offered hereby are sold.
(5) Georges Marciano is the sole trustee of the Georges Marciano Trust
which owns 371,400 of the 619,000 shares offered hereby and therefore
may be deemed to be the beneficial owner of these shares. According to
Amendment No. 13 to Schedule 13D dated April 27, 1994, the Georges
Marciano Trust has sole voting and dispositive power with respect to
927,300 shares of Common Stock owned by it. Georges Marciano is deemed
to be the beneficial owner of the 927,300 shares of Common Stock deemed
to be beneficially owned by the Georges
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Marciano Trust and of 47,000 shares of Common Stock owned by various
trusts of which Mr. Marciano is the sole trustee.
(6) Paul Marciano is the sole trustee of the Paul Marciano Trust which owns
247,600 of the 619,000 shares of Common Stock offered hereby and
therefore may be deemed the beneficial owner of these shares.
</TABLE>
CERTAIN RELATIONSHIPS BETWEEN THE COMPANY
AND EACH OF THE SELLING SHAREHOLDERS
The terms of the Stock Purchase Agreement and a prior stock purchase
agreement require the Company to use its best efforts to appoint three
individuals designated collectively by the Georges Marciano Trust and the
Paul Marciano Trust to be elected to the Company's Board of Directors,
subject to removal upon the sale of certain shares of Common Stock by each of
the Selling Shareholders or Marciano Investments, Inc. No such persons were
designated. The Stock Purchase Agreement also required each of the Selling
Shareholders to vote their shares of Common Stock of the Company in favor of
the election of certain continuing directors. This requirement expired 18
months from the closing date of such stock purchase. The terms of the Stock
Purchase Agreement also provided that any transaction between each of the
Selling Shareholders or their affiliates and the Company be approved by a
majority of the continuing directors of the Company, so long as the Selling
Shareholders and their affiliates owned a specified number of shares. A prior
purchase agreement also prohibited Marciano Investments, Inc. from making or
proposing a tender offer or other specified significant transaction involving
the Company, or participating in a proxy contest for the Company, until
August 1993, without the Company's written consent. Until such time,
Marciano Investments, Inc. was also prevented from disposing of any shares of
Common Stock, except in a specified change of control transaction.
PLAN OF DISTRIBUTION
The Company will not receive any proceeds from the sale of Common Stock
owned by either of the Selling Shareholders. It is anticipated that each of
the Selling Shareholders will offer the securities described herein in the
manner set forth on the cover page of this Prospectus, from time to time,
directly or through broker-dealers or underwriters who may act solely as
agents or may acquire shares of Common Stock as principals, in all cases as
designated by each of the Selling Shareholders. Such underwriters or
broker-dealers acting either as principal or as agent, may receive
compensation in the form of usual and customary or specifically negotiated
underwriting discounts, concessions or commissions from each of the Selling
Shareholders and/or the purchasers of the securities offered hereby for whom
they may act as agent.
The net proceeds to each of the Selling Shareholders from the sale of
Common Stock so offered will be the purchase price of the Common Stock sold
less the aggregate agents' commissions and underwriters' discounts, if any,
and other expenses of issuance and distribution not borne by the Company.
Each of the Selling Shareholders and any dealers or agents that participate
in the distribution of Common Stock may be deemed to be "underwriters" within
the meaning of the Securities Act. However, the Company and such persons
disclaim that any such person is an underwriter of the Common Stock.
At any time a particular offer of Common Stock is made, to the extent
required, the specific shares of Common Stock to be sold, the names of each
of the Selling Shareholders, purchase price, public offering price, the names
of any such agent, dealer or underwriter and any applicable commission or
discount with respect to a particular offering will be set forth in an
accompanying Prospectus Supplement. Such Prospectus Supplement may, if
necessary, be in the form of a post-effective amendment to the Registration
Statement of which this Prospectus is a part, and will be filed with the
Commission to reflect the disclosure of additional information with respect
to the distribution of such securities.
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Pursuant to the terms of the Registration Rights Agreement, each of the
Selling Shareholders have requested that the Company shall maintain a "shelf"
registration statement pursuant to Rule 415 under the Securities Act covering
the sale of the Registrable Securities (as defined in the Registration Rights
Agreement). Under the Registration Rights Agreement, the Company has agreed
to bear certain expenses of registration of the Common Stock under the
federal and state securities laws (currently estimated to be $16,188) and of
any offering and sale hereunder not including certain expenses such as
commissions or discounts of underwriters, dealers or agents attributable to
the sale of such Common Stock.
Pursuant to the Registration Rights Agreement, the Company has agreed to
indemnify each of the Selling Shareholders against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
the Selling Shareholders may be required to make in respect thereof.
To comply with the securities laws of certain jurisdictions, the
securities offered hereby will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities offered hereby may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied
with.
Each Seller Shareholder and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules
10b-2, 10b-6 and 10b-7, which provisions may limit the timing of purchases
and sales by each Selling Shareholder and any other such person.
Furthermore, under Rule 10b-6 under the Exchange Act, any person engaged in a
distribution of the Common Stock may not simultaneously engage in market
making activities with respect to such securities for a period of two
business days prior to the commencement of such distribution. All of the
foregoing may affect the marketability of the securities offered hereby.
LEGAL MATTERS
The legality of the issuance of the Common Stock offered hereby will be
passed upon for the Selling Shareholders by Baker & McKenzie.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended November 4, 1994 have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, which are included herein in reliance upon the
authority of that firm as experts in giving such reports.
9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The table below sets forth the estimated expenses expected to be paid by
the Company in connection with the issuance and distribution of the Common
Stock covered by this Registration Statement.
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . $ 1,388
Printing and Engraving Expenses. . . . . . . . . 300
Legal Fees and Expenses (other than Blue Sky). . 7,500
"Blue Sky" Fees and Expenses . . . . . . . . . . 1,000
Accounting Fees and Expenses . . . . . . . . . . 5,000
Miscellaneous. . . . . . . . . . . . . . . . . . 1,000
-------
Total. . . . . . . . . . . . . . . . . . . . . $16,188
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The bylaws of the Company provide that directors and officers may be
indemnified to the maximum extent permitted by the Texas Business Corporation
Act (the "TBCA"). The TBCA permits, and in some cases requires, corporations
to indemnify officers, directors, agents and employees who are or have been a
party to or are threatened to be made a party to litigation against
judgments, penalties (including excise and similar taxes), fines, settlements
and reasonable expenses under certain circumstances.
The Company has adopted provisions in its Articles of Incorporation that
limit the liability of its directors to the fullest extent permitted by the
corporation laws of the State of Texas. Under the Company's Articles of
Incorporation, and as permitted by the corporation laws of the State of
Texas, a director is not liable to the Company or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director of the Company. Such limitation of liability does not affect a
director's liability for a breach of a director's duty of loyalty to the
Company, an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law, a transaction from which a
director received an improper benefit, whether or not the benefit resulted
from an action taken within the scope of the director's office, an act or
omission for which the liability of a director is expressly provided by
statute, or an act related to an unlawful stock repurchase or dividend
payment. Such limitation of liability also does not affect the availability
of equitable remedies such as injunctive relief or rescission.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to officers, directors, or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
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 has entered into indemnification agreements with each of its
directors and executive officers and with one of its officers who is not an
executive officer. Each of these agreements, among other things,
contractually obligates the Company to, under certain circumstances,
indemnify the officer or director against certain expenses and liabilities
arising out of legal proceedings which may be brought against such officer or
director by reason of his status or service as a director or officer.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
*5.1 Opinion of Baker & McKenzie.
10.1 Amended and Restated Stock Purchase Agreement dated as of March 12, 1993
(amending and restating the stock purchase agreement dated February 23,
1993) between the Company, the Georges Marciano Trust and the Paul
Marciano Trust (incorporated by reference from Exhibit 10.128 to Form
10-Q as of May 7, 1993).
*10.2 Registration Rights Agreement dated as of April 28, 1994 among the
Company, the Georges Marciano Trust and the Paul Marciano Trust.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Baker & McKenzie (included in Exhibit 5.1).
*24 Power of Attorney (see signature pages of Registration Statement).
<FN>
________________________
* Filed herewith.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% 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 by the Registrant pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(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) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) 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.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report, to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule14c-3 under the Securities Exchange Act of
1934; and where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
(c) 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 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.
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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of El Paso, State of Texas, on July 10, 1995.
FARAH INCORPORATED
By: /s/ Richard C. Allender
---------------------------------------
RICHARD C. ALLENDER
Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby authorizes and appoints Richard C. Allender and James C. Swaim,
and each of them, either one of whom may act without joinder of the others,
as his attorney-in-fact to sign on his behalf individually and in the
capacity stated below all amendments and post-effective amendments to this
Registration Statement as that attorney-in-fact may deem necessary or
appropriate.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Richard C. Allender
- --------------------------------- Chairman of the Board, President July 10, 1995
RICHARD C. ALLENDER and Chief Executive Officer
(Principal Executive Officer)
/s/ James C. Swaim Executive Vice President, Chief July 10, 1995
- --------------------------------- Financial Officer, Corporate
JAMES C. SWAIM Secretary, Treasurer and Director
(Principal Financial Officer)
/s/ Russell G. Gibson Vice President-Financial Planning July 10, 1995
- --------------------------------- and Reporting of Farah USA, Inc.
RUSSELL G. GIBSON (Principal Accounting Officer)
/s/ Clark L. Bullock Director July 10, 1995
- ---------------------------------
CLARK L. BULLOCK
/s/ Christopher L. Carameros Director July 10, 1995
- ---------------------------------
CHRISTOPHER L. CARAMEROS
/s/ Sylvan Landau Director July 10, 1995
- ---------------------------------
SYLVAN LANDAU
II-4
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Michael R. Mitchell Director July 10, 1995
- ---------------------------------
MICHAEL R. MITCHELL
/s/ Edward J. Monahan Director July 10, 1995
- ---------------------------------
EDWARD J. MONAHAN
/s/ Timothy B. Page Director July 10, 1995
- ---------------------------------
TIMOTHY B. PAGE
/s/ Charles J. Smith Director July 10, 1995
- ---------------------------------
CHARLES J. SMITH
/s/ Thomas G. Wyman Director July 10, 1995
- ---------------------------------
THOMAS G. WYMAN
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<S> <C> <C>
5.1 Opinion of Baker & McKenzie. 17
10.2 Registration Rights Agreement dated as of April 28, 1994
among the Company, the Georges Marciano Trust, and the
Paul Marciano Trust. 19
23.1 Consent of Arthur Andersen LLP. 34
</TABLE>
<PAGE>
EXHIBIT 5.1
<PAGE>
July 10, 1995
Farah Incorporated
8889 Gateway West
El Paso, Texas 79925
Re: Registration of Common Stock of Farah Incorporated
Gentlemen:
On July 10, 1995, Farah Incorporated, a Texas corporation (the "Company"),
filed with the Securities and Exchange Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"). Such Registration Statement relates to the registration
by the Company of an aggregate of 619,000 shares of its common stock, no par
value (the "Shares"). We have acted as counsel to the Company in connection
with the preparation and filing of the Registration Statement.
In connection therewith, we have examined and relied upon the original or
copies, certified to our satisfaction, of (i) the Articles of Incorporation
and the Bylaws of the Company; (ii) copies of resolutions of the Board of
Directors of the Company authorizing the issuance of the Shares to be sold by
the Company and related matters; (iii) the Registration Statement and all
exhibits thereto; and (iv) such other documents and instruments as we have
deemed necessary for the expression of opinions herein contained. In making
the foregoing examinations, we have assumed the genuineness of all signatures
and the authenticity of all documents submitted to us as originals, and the
conformity to original documents of all documents submitted to us as
certified or photostatic copies. As to various questions of fact material to
this opinion, we have relied, to the extent we deem reasonably appropriate,
upon representations or certificates of officers or directors of the Company
and upon documents, records and instruments furnished to us by the Company,
without independent check or verification of their accuracy.
Based upon the foregoing examination, we are of the opinion that the Shares
to be registered by the Company as described in the Registration Statement
have been duly and validly authorized for issuance or sale and the Shares, as
issued by the Company, are validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required by Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
BAKER & McKENZIE
<PAGE>
EXHIBIT 10.2
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of April
28, 1994, is made by and among Farah Incorporated, a Texas corporation (the
"Company"), the Georges Marciano Trust, a California corporation (the "GM
Trust"), and the Paul Marciano Trust, a California corporation (the "PM
Trust," and, together with the GM Trust, the "Trusts').
WHEREAS, the Company, the Trusts, Marciano Investments, Inc. ("Marciano
Investments") and others are party to the Amended and Restated Stock Purchase
Agreement dated as of March 12, 1993 (the "Purchase Agreement").
WHEREAS, pursuant to the Purchase Agreement, the Trusts were granted
certain registration rights as set forth in Annex A to the Purchase Agreement
("Annex A").
WHEREAS, in connection with the public offering of certain shares of the
Company's common stock, $4.00 par value per share (the "Common Stock"), by
the Company and Marciano Investments, the Company and Trusts agreed to amend
certain provisions of Annex A.
NOW, THEREFORE, in consideration of the aforementioned premises and the
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
ADVICE: See Section 5 hereof.
BUSINESS DAY: Any day except Saturday, Sunday and any day which shall be
a legal holiday or a day on which banking institutions are authorized or
required by law or other government actions to close.
DEMAND NOTICE: See Section 2(a) hereof.
DEMAND REGISTRATION: See Section 2(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
INDEMNIFIED PARTY: See Section 7(c) hereof.
INDEMNIFYING PARTY: See Section 7(c) hereof.
LOSSES: See Section 7(a) hereof.
PIGGYBACK NOTICE: See Section 3(a) hereof.
PIGGYBACK REGISTRATION: See Section 3(a) hereof.
PROCEEDING: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the knowledge of the Company, threatened.
1
<PAGE>
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference in such Prospectus.
REGISTRABLE SECURITIES: The 371,400 shares of Common Stock purchased by
the GM Trust from the Company pursuant to the Purchase Agreement and the
247,500 shares of Common Stock purchased by the PM Trust pursuant to the
Purchase Agreement (collectively, the "Shares"), upon the original issuances
thereof, and at all times subsequent thereto, until in the case of any such
Share, (i) it has been effectively registered under the Securities Act and
disposed of in accordance with the Registration Statement covering it or (ii)
it is saleable by the holder thereof pursuant to Rule 144(k) (or any similar
provisions then in force).
REGISTRATION STATEMENT: Any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
RULE 144: Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules and
regulations promulgated by the SEC thereunder.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
2. DEMAND REGISTRATION
(a) REQUESTS FOR REGISTRATION. At any time, each of the GM Trust and
the PM Trust shall have the right by written notice delivered to the Company
(the "Demand Notice") to require the Company to register (a "Demand
Registration"), under and in accordance with the provisions of the Securities
Act, the number of Registrable Securities requested to be so registered. The
number of Demand Registrations made by each of the GM Trust and the PM Trust
pursuant to this Section 2(a) shall not exceed one, unless a Demand
Registration does not become effective or is not maintained effective for the
period required pursuant to Section 2(b) hereof, in which case the party that
made such Demand Registration shall be entitled to additional Demand
Registrations in lieu thereof until a Demand Registration is declared and
maintained effective for such period.
(b) FILING AND EFFECTIVENESS. The Company shall (i) file each Demand
Registration within the later of (A) 60 days from the date on which holders
of Registrable Securities give the Demand Notice with respect to such Demand
Registration, (B) 90 days from the effectiveness date of the last Demand
Registration, if any, effected prior to such Demand Notice and (C) the first
date upon which the Company, using its best efforts, is able to comply with
the provisions of Article 3 of Regulation S-X under the Securities Act, and
(ii) use its reasonable efforts to cause the same to be declared effective by
the SEC within 60 days of the date on which the Company is required to file
such Demand Registration.
If any Demand Registration is requested to be a "shelf" registration by
the party that made such Demand Registration, the Company shall keep the
Registration Statement filed in respect thereof effective for
2
<PAGE>
a period of up to 36 months from the date on which the SEC declares such
Registration Statement effective (subject to extension pursuant to Section
4(a) and the last paragraph of Section 5 hereof) or such shorter period that
will terminate when all Registrable Securities covered by such Registration
Statement have been sold pursuant to such Registration Statement. All
requests made pursuant to this Section 2 shall specify the number of
Registrable Securities to be registered and shall also specify the intended
methods of disposition thereof.
(c) NO PIGGYBACK ON DEMAND REGISTRATIONS. Neither the Company nor any
of its respective securityholders (other than holders of Registrable
Securities in such capacity pursuant to Section 3 hereof) may include
securities of the Company in any Demand Registration, and the Company shall
not enter into any agreement providing any such right to any of its
securityholders.
(d) PRIORITY ON DEMAND REGISTRATION. If any of the Registrable
Securities registered pursuant to a Demand Registration are to be sold in one
or more firm commitment underwritten offerings, and the managing underwriter
determines in good faith that the total number of securities proposed to be
sold in such offering is such as to materially and adversely affect the
success of such offering, then there shall be included in such firm
commitment underwritten offering the maximum number of Registrable Securities
that in the opinion of such managing underwriter can be sold in such Demand
Registration.
(e) POSTPONEMENT OF DEMAND REGISTRATION. The Company shall be entitled
to postpone, for a reasonable period of time not in excess of 60 days, the
filing of a Registration Statement if the Company determines, in the good
faith exercise of its reasonable business judgment, that such registration
and offering could materially interfere with bona fide financing plans of the
Company or would require disclosure of information, the premature disclosure
of which could materially adversely affect the Company. If the Company
postpones the filing of a Registration Statement, it shall promptly notify
the holders of Registrable Securities in writing when the events or
circumstances permitting such postponement have ended.
3. PIGGYBACK REGISTRATION
(a) RIGHT TO PIGGYBACK. If at any time the Company proposes to file a
registration statement under the Securities Act with respect to an offering
of any class of equity securities (except on Form S-4, Form S-8 or any
successor form thereto), whether or not for its own account (including,
without limitation, pursuant to Section 3 hereof), then the Company shall
give written notice of such proposed filing to holders of Registrable
Securities at least thirty days before the anticipated filing date (the
"Piggyback Notice"). The Piggyback Notice shall offer such holders the
opportunity to register such amount of Registrable Securities as each such
holder may request (a "Piggyback Registration"). Subject to Section 3(b)
hereof, the Company shall include in each such Piggyback Registration all
Registrable Securities requested to be included in the registration for such
offering. The holders of Registrable Securities shall be permitted to
withdraw all or part of the Registrable Securities from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. The Company shall use its best
efforts to cause the managing underwriters of a proposed underwritten
offering of equity securities to permit holders of Registrable Securities
requested to be included in the registration for such offering to include all
such Registrable Securities on the same terms and conditions as any similar
equity securities, if any, of the Company included therein. Notwithstanding
the foregoing, if the managing underwriters of such underwritten offering
determine in good faith that the total number of securities that such holders
and the Company propose to include in such offering is such as to materially
and adversely affect the success of such offering, then (x) if such Piggyback
Registration is a primary registration on behalf of the Company, the
securities to be offered for the account of holders of Registrable Securities
shall be reduced or limited PRO RATA in proportion to the respective dollar
amounts of securities owned to the extent necessary to reduce the total
number of securities to be included in such offering to the amount
recommended by such managing underwriters, and (y) if such Piggyback
Registration is an underwritten secondary registration on behalf of holders
of equity securities of the Company, the Company shall include in such
registration the number of securities included in such registration pursuant
to this Section that,
3
<PAGE>
in the opinion of such managing underwriter, can be sold (allocated PRO RATA
on the basis of the aggregate dollar amount of securities owned).
4. HOLD-BACK AGREEMENTS
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES.
Each holder of Registrable Securities whose Registrable Securities are
covered by a Registration Statement filed pursuant to Section 2 or 3 hereof
agrees, if requested (pursuant to a timely written notice) by the managing
underwriters in an underwritten offering, not to effect any public sale or
distribution of any of the Company s securities, including a sale pursuant to
Rule 144 (except as part of such underwritten offering), during the period
beginning 10 days prior to, and ending 90 days after, the closing date of
each underwritten offering made pursuant to such Registration Statement. If
a request is made pursuant to this Section 4(a) and securities offered for
the account of holders of Registrable Securities are reduced pursuant to
Section 2(d) hereof, then the time period during which a Demand Registration
is required to remain continuously effective pursuant to Section 2(b) shall
be extended by 100 days.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The Company
agrees (i) without the written consent of the managing underwriters in an
underwritten offering of Registrable Securities covered by a Registration
Statement filed pursuant to Section 2 hereof, not to effect any public or
private sale or distribution of its equity securities, including a sale
pursuant to Regulation D under the Securities Act, during the period
beginning 10 days prior to, and ending 90 days after, the closing date of
each underwritten offering made pursuant to such Registration Statement
(except on Form S-8 or any successor form to such Form); (PROVIDED, HOWEVER,
that such period shall be extended by the number of days from and including
the date of the giving of any notice pursuant to Section 5(c) hereof to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) hereof), and (ii) to cause
each holder of its equity securities purchased from the Company at any time
on or after the date of this Agreement (other than equity securities
purchased in a registered public offering or pursuant to the exercise of
employee or director stock options) to agree not to effect any public sale or
distribution of any such equity securities during such periods, including a
sale pursuant to Rule 144.
Notwithstanding the foregoing, in the case of a Demand Registration, the
Company shall not effect any registration of its equity securities (except on
Form S-4, Form S-8, or any successor forms to such Form), or effect any
public or private sale or distribution of any of its equity securities,
including a sale pursuant to Regulation D under the Securities Act, whether
on its own behalf or at the request of any holder or holders of such equity
securities (other than pursuant to and in accordance with Section 2 hereof),
from the date of a request to register Registrable Securities pursuant to and
in accordance with Section 2 hereof until the earlier of (i) 90 days after
the date on which all securities covered by such Demand Registration have
been sold or (ii) 120 days after the effective date of such Demand
Registration, unless the Company shall have first notified in writing the
holders of Registrable Securities covered by such Registration Statement of
its intention to do so, and the holders of a majority of the Registrable
Securities or the managing underwriter, if any, shall have consented thereto
in writing.
5. REGISTRATION PROCEDURES
In connection with the Company's registration obligations pursuant to
Sections 2 and 3 hereof, the Company shall effect such registrations to
permit the sale of such Registrable Securities in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company shall as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on a Form available for the sale of the Registrable
Securities by the holders thereof in accordance with the intended method
4
<PAGE>
or methods of distribution thereof, and cause each such Registration
Statement to become effective and remain effective as provided herein;
PROVIDED, HOWEVER, that before filing a Registration Statement or Prospectus
or any amendments or supplements thereto (including documents that would be
incorporated or deemed to be incorporated therein by reference), the Company
shall furnish to the holders of Registrable Securities covered by such
Registration Statement, their counsel and the managing underwriters, if any,
copies of all such documents proposed to be filed, which documents will be
subject to the review of such holders and such underwriters, if any, and the
Company shall not file any such Registration Statement or Prospectus or any
amendments or supplements thereto (including such documents that, upon
filing, would be incorporated or deemed to be incorporated by reference
therein) to which the holders of a majority of the Registrable Securities
covered by such Registration Statement or the managing underwriters, if any,
shall reasonably object, in writing, on a timely basis.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable time period;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof
set forth in such Registration Statement as so amended or in such Prospectus
as so supplemented.
(c) Notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such
Person), confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if at any time any of the representations
and warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated by paragraph 5(m) below cease to be true
and correct in any material respect, (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (vi) of the happening of any event that makes any statement made in
such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, not misleading, and that
in the case of the Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vii) of the
Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) Use its reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of
any suspension of the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, at the earliest
possible moment.
(e) If requested by the managing underwriters, if any, or the holders
of a majority of the Registrable Securities being sold in connection with an
underwritten offering, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters, if
any, and such holder agree should be included therein, as may be required by
applicable law, (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as practicable after the
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Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment, and (iii) supplement or
make amendments to such Registration Statement; PROVIDED, HOWEVER, that the
Company shall not be required to take any actions in this Section 5(e) that
are not, in the opinion of counsel for the Company, in compliance with
applicable law.
(f) Furnish to each selling holder of Registrable Securities and each
managing underwriter, if any, without charge, at least one conformed copy of
the Registration Statement or Statements and each post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all
exhibits to the extent requested by such selling holder (including those
previously furnished or incorporated by reference) at the earliest
practicable time under the circumstances before the filing of such documents
with the SEC.
(g) Deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each selling holder of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the selling holders of
Registrable Securities, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption
from such registration or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any seller or underwriter reasonably requests in
writing; keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or subject
the Company to any tax in any such jurisdiction where it is not then so
subject.
(i) Cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and enable such
Registrable Securities to be in such denominations and registered in such
names as the managing underwriters, if any, or holders may request at least
two Business Days prior to any sale of Registrable Securities.
(j) Use its reasonable efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities within the United States,
except as may be required solely as a consequence of the nature of such
selling holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities.
(k) Upon the occurrence of any event contemplated by paragraph 5(c)(vi)
or 5(c)(vii) above, prepare a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material
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fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(l) Use its best efforts to cause all Registrable Securities covered by
such Registration Statement to be (i) listed on each securities exchange, if
any, on which equity securities issued by the Company are then listed or (ii)
authorized to be quoted on the NASDAQ or the National Market System of NASDAQ
if the securities so qualify.
(m) Enter into such agreements (including an underwriting agreement in
form, scope and substance as is customary in underwritten offerings) and take
all such other actions in connection therewith (including those requested by
the managing underwriters, if any, or the holders of a majority of the
Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities, and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations
and warranties to the holders of such Registrable Securities and the
underwriters, if any, with respect to the business of the Company and its
subsidiaries, and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and counsel to
the holders of Registrable Securities being sold), addressed to each selling
holder of Registrable Securities and each of the underwriters, if any,
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested
by such counsel and underwriters; (iii) obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company for which financial statements and financial data is, or is
required to be, included in the Registration Statement), addressed to each
selling holder of Registrable Securities and each of the underwriters, if
any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to holders of a majority of Registrable Securities covered by such
Registration Statement and the managing underwriters) with respect to all
parties to be indemnified pursuant to said Section; and (v) deliver such
documents and certificates as may be reasonably requested by the holders of a
majority of the Registrable Securities being sold and the managing
underwriters, if any, to evidence the continued validity of the
representations and warranties made pursuant to clause 5(m)(i) above and to
evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
(n) Make available for inspection by a representative of the holders of
Registrable Securities being sold, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney or accountant
retained by such selling holders or underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company
and its subsidiaries to supply all information in each case reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such Registration Statement; PROVIDED, HOWEVER, that any
information that is designated by the Company in writing as confidential at
the time of delivery of such information shall be kept confidential by such
Persons unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities, (ii) disclosure of such information, in the opinion of counsel
to such Person, is required by law, (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure to
safeguard by such Person or (iv) such information becomes available to such
Person from a source other than the Company and such source is not to the
best knowledge of such Person bound by a confidentiality agreement.
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(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act), no later than 45
days after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to underwriters
in a firm commitment or reasonable efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month periods.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such Registrable Securities as the Company may,
from time to time, reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 5(c)(ii),
5(c)(iii), 5(c)(v), 5(c)(vi) or 5(c)(vii) hereof, such holder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or Prospectus until such holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof, or until it is advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated or deemed to
be incorporated by reference in such Prospectus. If the Company shall give
any such notice, the time periods mentioned in Section 2 hereof shall be
extended by the number of days during such periods from and including the
date of the giving of such notice to and including the date when each seller
of Registrable Securities covered by such Registration Statement shall have
received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof or (y) the Advice.
6. REGISTRATION EXPENSES
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company whether or not
any of the Registration Statements is filed or becomes effective. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (B) of
compliance with securities or Blue Sky laws (including, without limitation,
fees and disbursements of counsel for the underwriters or selling holders in
connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the managing underwriters, if any, or
holders of a majority of the Registrable Securities being sold may
designate), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities in a form eligible for
deposit with The Depository Trust Company and of printing prospectuses if the
printing of prospectuses is requested by the managing underwriters, if any,
or by the holders of a majority of the Registrable Securities included in any
Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(m)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (vi) underwriters' fees and expenses (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of the
Registrable Securities), (vii) Securities Act liability insurance, if the
Company so desires such insurance, and (viii) fees and expenses of all other
Persons retained by the Company. In addition, the Company shall pay its
internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit, the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities
exchange on which similar securities issued by the Company are then listed.
Fees and disbursements of counsel for any holder of Registrable Securities
shall be borne by such holder.
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7. INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, without
limitation as to time, indemnify and hold harmless each holder of Registrable
Securities, the officers, directors, agents and employees of each of them,
each Person who controls each such holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling person, to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
reasonable attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or based upon any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, Prospectus or
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or
alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
the same are based primarily upon information furnished in writing to the
Company by such holder expressly for use therein; PROVIDED, HOWEVER, that the
Company shall not be liable to the extent that (A) any such Losses arise out
of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any preliminary prospectus if (i) such
holder failed to send or deliver a copy of the Prospectus with or prior to
the delivery of written confirmation of the sale by such holder of a
Registrable Security to the person asserting such Losses who purchased such
Registrable Security that is the subject thereof and (ii) the Prospectus
would have adequately corrected such untrue statement or alleged untrue
statement or such omission or alleged omission or (B) any such Losses arise
out of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission is adequately
corrected in an amendment or supplement to the Prospectus and if, having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, the holder of Registrable
Securities thereafter fails to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of a Registrable
Security to the person asserting such Losses who purchased such Registrable
Security that is the subject thereof from such holder.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In connection
with any Registration Statement in which a holder of Registrable Securities
is participating, such holder of Registrable Securities shall furnish to the
Company in writing such information as the Company reasonably requests for
use in connection with any Registration Statement or Prospectus and agrees to
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling persons, to the
fullest extent lawful, from and against all Losses arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, Prospectus, or form of prospectus, or arising out
of or based upon any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue or
alleged untrue statement or omission or alleged omission is contained in any
information so furnished in writing by such holder to the Company expressly
for use in such Registration Statement or Prospectus and that such
information was reasonably relied upon by the Company in preparation of such
Registration Statement, Prospectus or form of prospectus. In no event shall
the liability of any selling holder of Registrable Securities hereunder be
greater in amount than the dollar amount of the proceeds received by such
holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the party
from which such indemnity is sought (the "Indemnifying Party") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all reasonable fees and expenses incurred in
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<PAGE>
connection with the defense thereof. All such fees and expenses (including
any reasonable fees and expenses incurred in connection with investigating or
preparing to defend such Proceeding) shall be paid to the Indemnified Party
as they are incurred, within 5 Business Days after receipt of written demand
for payment from such Indemnified Party, regardless of whether it is
ultimately determined that such Indemnified Party is not entitled to
indemnification hereunder; PROVIDED, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses
to the extent it is finally judicially determined that such Indemnified Party
is not entitled to indemnification hereunder. Any such Indemnified Party
shall have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such Indemnified Party unless (a) the Indemnifying
Party has agreed to pay such fees and expenses; or (b) the Indemnifying Party
shall have failed to promptly assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to the Indemnified Party; or (c) in
the reasonable judgment of any such Indemnified Party a conflict of interest
may exist between such Indemnified Party and any other of such Indemnified
Parties with respect to such Proceeding (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof, it being
understood, however, that the Indemnifying Party shall not, in connection
with any one such Proceeding or separate but substantially similar or related
Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (together with appropriate local counsel)
at any time for all such Indemnified Parties). The Indemnifying Party shall
not be liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending proceeding in respect
of which any Indemnified Party is a party and is entitled to indemnity
hereunder, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such proceeding.
(d) CONTRIBUTION. If the indemnification provided for in this Section 7
is unavailable to an Indemnified Party under Section 7(a) or 7(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any Losses or is insufficient to hold such indemnified Party harmless, then
each applicable Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed
to include, subject to the limitations set forth in Section 7(c), any legal
or other fees or expenses reasonably incurred by such party in connection
with any investigation or Proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by PRO RATA
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 7(d), an
Indemnifying Party that is a selling holder of Registrable Securities shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities sold by such Indemnifying
Party and distributed to the public were offered to the public exceeds the
amount of any damages that such Indemnifying Party has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
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8. RULE 144 AND RULE 144A
The Company shall file the reports required to be filed by it under the
Securities Act and the Exchange Act in a timely manner and, if at any time
the Company is not required to file such reports, it will, upon the request
of any holder of Registrable Securities, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 and
Rule 144A under the Securities Act. The Company further covenants that it
will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule
144 and Rule 144A under the Securities Act, as such Rules may be amended from
time to time, or (b) any similar rule or regulation hereafter adopted by the
SEC. Upon the request of any holder of Registrable Securities, the Company
shall deliver to such holder a written statement as to whether it has
complied with such requirements. Notwithstanding the foregoing, nothing in
this Section 8 shall be deemed to require the Company to register any of its
securities under any section of the Exchange Act.
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Securities covered by any Demand Registration
are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will manage the offering will
be selected by the holders of a majority of such Registrable Securities
included in such offering. If any Piggyback Registration is an underwritten
offering, the Company shall have the right to select the investment banker or
investment bankers and managers to administer the offering.
10. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Company of any of its
obligations under this Agreement, each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Other than Annex A, the Company has
not, as of the date hereof, nor shall the Company, on or after the date of
this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. Other
than Annex A, the Company has not previously entered into any agreement
granting any registration rights with respect to its equity securities to any
Person other than this Agreement. Without limiting the generality of the
foregoing, without the written consent of (i) the holders of a majority of
the then outstanding Registrable Securities and (ii) each of the GM Trust and
the PM Trust, if such trust then holds Registrable Securities, the Company
shall not grant to any Person the right to request the Company to register
any equity securities of the Company under the Securities Act unless the
rights so granted are subject to the prior rights of the holders of
Registrable Securities set forth in, and are not otherwise in conflict or
inconsistent with the provisions of, this Agreement.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, without the written consent of holders of at least
of majority of the then outstanding Registrable Securities.
(d) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery,
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by cable, telegram or telex, or by mail (registered or certified mail,
postage prepaid return receipt requested) to the respective parties as
follows:
If to the Georges Marciano Trust, to:
Georges Marciano Trust
9756 Wilshire Boulevard
Beverly Hills, California 90212
Attention: Georges Marciano
With a copy to:
Donahue, Mesereau & Wells
1900 Avenue of the Stars
Los Angeles, California 90067
Attention: Michael D. Donahue, Esq.
If to the Paul Marciano Trust, to:
Paul Marciano Trust
1444 South Alameda Street
Los Angeles, California 90021
Attention: Paul Marciano
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Jerome L. Coben, Esq.
If to the Company, to:
Farah Incorporated
8889 Gateway West
El Paso, Texas
Attention: Richard C. Allender
With a copy to:
Baker & McKenzie
4500 Trammel Crow Center
2001 Ross Avenue Dallas, Texas 75201
Attention: Daniel W. Rabun, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall only be effective upon receipt. With respect to holders of Registrable
Securities who are not a party to this Agreement, all notices and other
communications provided for herein shall be given to the address of such
holder as it appears in the stock register of the Company.
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(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties and
shall inure to the benefit of each holder of any Registrable Securities. The
Company may not assign their rights or obligations hereunder without the
prior written consent of each holder of any Registrable Security.
(f) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW
YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK
OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. HE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT
IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE COMPANY AT ITS ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A
REGISTRABLE SECURITY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
(g) SEVERABILITY. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof or thereof is
validly asserted as a defense, the prevailing party, as determined by the
court, shall be entitled to recover reasonable attorneys' fees in addition to
any other available remedy.
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11. TERMINATION OF ANNEX A
The parties hereto agree that Annex A is hereby terminated and of no
further force and effect as between the Companies and the Trusts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date first above written.
FARAH INCORPORATED
By: /s/ Richard C. Allender
-----------------------------------------
Name:
Title:
GEORGES MARCIANO TRUST
By: /s/ Georges Marciano
-----------------------------------------
Georges Marciano
Trustee
PAUL MARCIANO TRUST
By: /s/ Paul Marciano
-----------------------------------------
Paul Marciano
Trustee
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EXHIBIT 23.1
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Farah Incorporated:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated December 16,
1994, incorporated by reference in Farah Incorporated's Form 10-K for the
year ended November 4, 1994, and to all references to our firm included in
this registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas
July 10, 1995
