PROSPECTUS
447,189 SHARES OF COMMON STOCK
THE LESLIE FAY COMPANY, INC.
1412 BROADWAY
NEW YORK, NEW YORK 10018
(212) 221-4000
The selling stockholders named in this prospectus are offering to sell
an aggregate of 447,189 shares of common stock. Leslie Fay will not receive any
of the proceeds from the offering.
The common stock is traded on The Nasdaq Stock Market's SmallCap Market
under the symbol LFAY.
--------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 2 OF
THIS PROSPECTUS.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
Prospectus dated November 17, 1999
<PAGE>
YOU SHOULD NOT RELY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY
THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF
THIS PROSPECTUS.
--------------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUMMARY........................................................1
RISK FACTORS..............................................................2
DIVIDEND POLICY...........................................................6
USE OF PROCEEDS...........................................................6
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION.............................7
DESCRIPTION OF CAPITAL STOCK..............................................9
SHARES ELIGIBLE FOR FUTURE SALE..........................................11
LEGAL MATTERS............................................................11
EXPERTS..................................................................11
ABOUT THIS PROSPECTUS....................................................12
WHERE YOU CAN FIND MORE INFORMATION......................................13
-----------------
<PAGE>
PROSPECTUS SUMMARY
This is only a summary and does not contain all of the information that
you should consider before investing in our common stock. You should read the
entire prospectus carefully, including the "Risk Factors" section and our
consolidated financial statements and the notes to those financial statements
included elsewhere in this prospectus. In general, the terms "we" or "Company"
refers to The Leslie Fay Company, Inc. (formerly The Leslie Fay Companies, Inc.)
and its subsidiaries.
THE COMPANY
We are engaged principally in designing and arranging for the
manufacture and sale of diversified lines of women's dresses and sportswear. Our
products focus on career, social occasion and evening clothing that cover a
broad retail price range and offer the consumer a wide selection of styles,
fabrics and colors suitable for different ages, sizes and fashion preferences.
We believe that we are among the major producers of moderate price dresses and
that we are considered one of the major resources to retailers of such products.
The Leslie Fay business has been in continuous operation as an apparel company
since 1947.
We reorganized on June 4, 1997 following a voluntary petition under
Chapter 11 of the Bankruptcy Code.
<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Common Stock offered by the Selling Stockholders............... 447,189 shares of common stock, par value $.01
per share
Number of Shares of Common Stock outstanding
before and after the offering............................. 5,053,138 shares of common stock
Trading Symbol................................................. LFAY
Risk Factors................................................... You should note that an investment in the
securities offered in this prospectus involves
a high degree of risk. See "Risk Factors".
</TABLE>
1
<PAGE>
RISK FACTORS
An investment in the common stock offered in this prospectus involves a
high degree of risk. Prospective investors should consider the specific risk
factors set forth below as well as the other information contained in this
prospectus.
IF WE DO NOT COMPLY WITH THE COVENANTS UNDER OUR CREDIT AGREEMENT, OUR
LENDER COULD REQUIRE THE SALE OR LIQUIDATION OF OUR ASSETS.
We are a party to a credit agreement with The CIT Group/Commercial
Services, Inc. that contains a number of restrictive covenants and events of
default, which limit our capital expenditures, incurrence of debt and sales of
assets. In addition, the credit agreement also requires us to achieve certain
financial ratios (including ratios of consolidated current assets to
consolidated current liabilities, consolidated EBITDA to consolidated interest
expense, minimum consolidated tangible net worth and minimum consolidated
working capital). CIT has a security interest in substantially all of our assets
as collateral for borrowings under the credit agreement. If we cannot achieve
the financial results necessary to maintain compliance with the covenants, CIT
could declare us in default and demand that our assets be sold or liquidated to
repay our outstanding debt to it.
WE DO NOT ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE.
Since emerging from bankruptcy, we have not paid any dividends on our
common stock and do not anticipate doing so in the foreseeable future. Moreover,
our credit agreement with CIT limits the amount of dividends we may pay on our
common stock. There can be no assurance that we will pay out any return on the
investment in our common stock.
WE MAY REQUIRE ADDITIONAL FINANCING TO FUND OUR OPERATIONS.
We may require additional equity or debt financing for our future
operations. However, our credit agreement with CIT prohibits us from incurring
additional debt. There can be no assurance that we will be able to obtain
additional financing on terms acceptable to us or at all. The unavailability of
additional financing or our inability to amend our existing credit agreement to
permit additional financing could have a material adverse effect on us.
WE RELY ON OUR KEY VENDORS.
During the fiscal year ended January 2, 1999, we purchased
approximately 59% of our finished goods from two suppliers. Although we believe
that alternate sources of our finished goods are available, the abrupt loss of
any of these suppliers could have a material adverse effect on our business,
financial condition, results of operations and prospects.
WE RELY ON KEY RETAIL CUSTOMERS.
During the fiscal year ended January 2, 1999, approximately 41% of the
revenues of the Company resulted from two retailers. Approximately 30% of such
sales were to Dillards Department Stores, Inc. and approximately 11% to JC
Penney. No other customer accounted for more than 10% of our dress and
sportswear sales during fiscal 1998. A decision by either of these retailers to
decrease the
2
<PAGE>
amount of apparel purchased from us or to cease carrying our products could have
a material adverse affect on our business, financial condition, results of
operations and prospects.
WE RELY ON KEY EMPLOYEES.
Our success is largely dependent on the talents, efforts and experience
of the members of our senior management team. In June 1998 we entered into
employment agreements expiring on January 3, 2001 with each member of the senior
management team. We do not maintain a key person life insurance policy on the
lives of these key executives. The loss of these key executives could create a
loss of continuity in the management of the business and have a material adverse
effect on our business, financial condition, results of operations and
prospects.
OUR BUSINESS IS SEASONAL.
Our business is seasonal, with a significant proportion of sales and
operating income being generated in the first and third quarters of each year.
Our working capital requirements fluctuate during the year, increasing
substantially during the second and fourth quarters as a result of higher
planned seasonal inventory levels and higher receivables. If we fall
significantly short of our anticipated earnings in either the first or third
quarters, it will significantly decrease the working capital available to us in
the second and fourth quarters. Due to limitations on borrowing levels, a
decrease in working capital may adversely affect our purchasing abilities.
OUR CONTINUED SUCCESS DEPENDS ON OUR ABILITY TO GAUGE FASHION TRENDS.
We believe that our success depends in substantial part on our ability
to anticipate, gauge and respond to changing consumer demands and fashion trends
in a timely manner. There can be no assurance that we will be successful in this
regard. If we misjudge the market for our products, we may have a significant
amount of unsold finished goods inventory, which could have a material adverse
effect on our business, financial condition, results of operations and
prospects.
THE FASHION INDUSTRY IS HIGHLY COMPETITIVE.
The sectors of the apparel industry for which we design, manufacture
and market products are highly competitive. We compete with many other
manufacturers, including manufacturers of one or more apparel items. In
addition, department stores, including some of our major customers, have from
time to time varied the amount of goods manufactured specifically for them and
sold under their own labels. Many such stores have also changed their manner of
presentation of merchandise and in recent years have become increasingly
promotional. Some of our competitors are larger and have greater resources than
we do. Based upon our knowledge of the industry, we believe that we are a
leading producer of moderately priced dresses in the United States, among the
more significant producers of moderately priced sportswear and one of the major
resources of department store retailers of such products. Our business is
dependent on our ability to evaluate and respond to changing consumer demand and
tastes and to 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.
3
<PAGE>
WE ARE SUBJECT TO IMPORT RESTRICTIONS.
During fiscal 1998, approximately 88% of our finished goods and
approximately 76% of raw materials directly purchased by us were produced in
foreign countries, including Taiwan, South Korea, the Peoples' Republic of China
(including Hong Kong), Guatemala and El Salvador. Political instability that
results in the disruption of trade, the imposition of additional regulations
relating to imports, the imposition of additional duties, taxes and other
charges on imports or restrictions on the transfer of funds may adversely affect
our operations. In addition, because of the location of our suppliers and
contractors, we may have difficulty ensuring quality control. The inability of a
supplier or contractor to fill orders for our products in a timely manner could
cause us to miss the delivery date requirements of our customers for those
items. This could result in the cancellation of orders, refusal to accept
deliveries or a reduction in sales prices.
Our import operations are subject to constraints imposed by bilateral
textile agreements between the United States and each of the foreign countries
named above. These agreements impose quotas on the amounts and types of
merchandise which may be imported into the United States from these countries.
These agreements also allow the United States to impose restraints at any time
on the importation of categories of merchandise that, under the terms of the
agreements, are not currently subject to specified limits. Our imported products
are also subject to United States customs duties which comprise a material
portion of the cost of the merchandise. A substantial increase in customs duties
could have an adverse effect on our operating results. The United States and the
countries in which our products are produced or sold may, from time to time,
impose new quotas, duties, tariffs or other restrictions, or adversely adjust
prevailing quota, duty or tariff levels, any of which could have a material
adverse effect on our business, financial condition, results of operations and
prospects.
WE MAY NOT BE ABLE TO USE OUR TAX-LOSS CARRY FORWARDS.
We have reported federal consolidated tax net operating loss
carryforwards that are available to offset future taxable income, if any,
through 2011. Use of the carryforwards, however, is subject to limitations,
including the annual limitation of approximately $1,500,000 imposed by Section
382 of the Internal Revenue Code. As of January 2, 1999, the remaining available
tax net operating loss carryforwards expiring through 2011, after taking into
account the limitations discussed above, was approximately $19.5 million. If we
fail to achieve sufficient profits, we will be unable to fully use the NOLs
available to us over the next 13 years and will lose the carryforward benefit.
WE ARE CONTROLLED BY AFFILIATES OF THREE CITIES RESEARCH, INC.
Based on information contained in an amendment to a Schedule 13D filed
with the SEC on August 30, 1999, we believe that Three Cities Fund II, L.P.
("Fund II") and Three Cities Offshore II C.V. ("TCR Offshore") have or share the
power to vote an aggregate of 3,512,664 shares (approximately 67% ) of our
common stock and have or share the power to dispose of an aggregate of 3,269,966
shares (approximately 65%) of our common stock. As a result, Fund II and TCR
Offshore will be able to determine the outcome any corporate action requiring
stockholder approval, other than provisions regarding certain business
combinations that are set forth in our charter. See "Description of Capital
Stock."
Furthermore, Fund II, TCR Offshore and John J. Pomerantz, our Chairman
of the Board and Chief Executive Officer, have agreed not to take any actions to
change the size or composition of our board of directors before our annual
meeting of stockholders in 2000, if at all. Fund II, TCR Offshore and Mr.
Pomerantz have also agreed, under certain circumstances, to vote for each
other's nominees for
4
<PAGE>
director for so long as Mr. Pomerantz has the right to designate at least one
member to our board of directors.
As a result of the foregoing voting arrangement among Mr. Pomerantz,
Fund II and TCR Offshore and as a result of the beneficial ownership of Fund II
and TCR Offshore in our common stock, Fund II and TCR Offshore will control
decisions with respect to:
. the direction and policies of our company, including the election and
removal of directors;
. future issuances of our common stock or other securities;
. our incurrence of debt;
. the payment of dividends, if any, on our common stock; and
. amendments to our certificate of incorporation and bylaws.
Any of these decisions could be made by Fund II and TCR Offshore for
their own advantage to the detriment of our other stockholders and our company.
This, in turn, may have an adverse effect on our business, financial condition,
results of operations and prospects.
FUTURE SALES OF OUR COMMON STOCK COULD ADVERSELY AFFECT THE MARKET FOR OUR
COMMON STOCK.
There are now and will be outstanding immediately following this
offering 5,053,138 shares of common stock. All of such shares, other than shares
owned by "affiliates," as that term is defined in Rule 144 under the Securities
Act, will be tradeable without restriction. We believe that 3,279,966 of our
shares are presently owned by "affiliates." Future sales of substantial amounts
of shares of common stock in the public market, or the perception that such
sales could occur, could adversely affect the price of the shares of common
stock in any market that may develop for the trading of such shares.
PROVISIONS OF DELAWARE LAW AND OUR CHARTER AND BYLAWS MAY MAKE A TAKEOVER MORE
DIFFICULT.
Provisions in our charter and bylaws, as amended and restated, and in
the Delaware corporate law may make it difficult and expensive for a third party
to pursue a tender offer or other takeover attempt that is opposed by our board
of directors. Stockholders who may desire to participate in such a transaction
may not have an opportunity to do so, and these antitakeover provisions could
substantially impair the ability of our stockholders to change the membership of
our board of directors. See "Description of Capital Stock -- Section 203 of the
Delaware General Corporation Law."
WE ARE SUBJECT TO RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE.
We are dependent on a number of automated systems to:
. communicate with our customers and suppliers;
. efficiently design, manufacture, import and distribute our products;
and
. plan and manage our overall business.
5
<PAGE>
We have identified numerous changes required in our systems (both
hardware and software) as well as sensitive operating equipment to make them
year 2000 compliant. Our customers and suppliers are also required to implement
projects to make their systems and communications year 2000 compliant. Failure
to complete their efforts in a timely way could disrupt our operations including
the ability to receive and ship our products as well as to invoice our
customers. There is no guarantee that these new systems (both ours and our
customers and suppliers) will be compliant under all the circumstances and
volume stresses that may actually be required by our operations on December 31,
1999.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock and do not
anticipate paying cash dividends in the foreseeable future. We currently intend
to retain earnings, if any, to finance our operations. In addition, our credit
agreement with The CIT Group/Commercial Services, Inc. limits the amount of
dividends we may pay.
USE OF PROCEEDS
The shares of common stock that are being offered hereby are being
registered for the account of the Selling Stockholders, and, accordingly, we
will not receive any of the proceeds from the sale of such shares.
6
<PAGE>
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
We have issued and outstanding an aggregate of 5,053,138 shares of
common stock. The selling stockholders hold 447,189 shares of common stock that
are being offered pursuant to this prospectus. The selling stockholders may sell
shares of common stock from time to time by themselves, their pledgees and/or
their donees, in transactions (which may include block transactions) on the
over-the-counter market, in negotiated transactions, through the writing of
options on the common stock or a combination of such methods of sale, at fixed
prices that may be changed, at market prices prevailing at the time of sale, or
at negotiated prices. The selling stockholders, their pledgees and/or their
donees, may sell common stock directly to purchasers or through broker-dealers
that may act as agents or principals. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders and/or the purchasers of shares of common stock. We will
bear all expenses in connection with the registration of the common stock. The
selling stockholders will pay any underwriting discounts or commissions relating
to the common stock sold by them pursuant to this prospectus.
The selling stockholders, their pledgees and/or their donees and any
broker-dealers that act in connection with the sale of the shares of the common
stock as principals may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commissions received by them and any
profit on the resale of the shares of the common stock as principals might be
deemed to be underwriting discounts and commissions under the Securities Act.
The selling stockholders, their pledgees and/or their donees may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the common stock against certain liabilities, including
liabilities arising under the Securities Act.
7
<PAGE>
The following table sets forth certain information with respect to the
selling stockholders. Beneficial ownership of the common stock by such selling
stockholder after the offering will depend on the number of shares of common
stock sold by each selling stockholder.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS OF NUMBER OF SHARES PRIOR CLASS PRIOR MAXIMUM AMOUNT
SELLING STOCKHOLDER(S) (A) TO OFFERING TO OFFERING TO BE SOLD
- -------------------------- ----------------------- ------------ --------------
<S> <C> <C> <C>
Dickstein & Co., L.P................................ 395,098 7.8% 395,098
660 Madison Avenue 16th Floor
New York, New York 10021
Dickstein International Limited..................... 52,091 1.0% 52,091
129 Front Street
Hamilton, HM Bermuda
</TABLE>
- ------------------------
(a) Mark B. Dickstein is the sole shareholder, sole director and president
of Dickstein Partners Inc. ("DPI"). DPI is the general partner of
Dickstein Partners L.P., which is the sole general partner of Dickstein
& Co., L.P. ("Dickstein & Co."). DPI is the adviser for Dickstein
International Limited ("Dickstein International") and makes all
investment and voting decisions for that entity. Mr. Dickstein
disclaims beneficial ownership of the shares owned by Dickstein & Co.
and Dickstein International except to the extent of his actual economic
interest.
On May 12, 1999, we entered into an agreement (the "Company Agreement")
with Dickstein & Co., Dickstein International, Dickstein Focus Fund L.P.
("Dickstein Focus") and Mr. Dickstein (together with Dickstein & Co., Dickstein
International and Dickstein Focus, the "Dickstein Entities") that contains a
number of agreements between us and the Dickstein Entities, including: (1) that
we will maintain the effectiveness and currency of a shelf registration
statement for the resale by the Dickstein Entities of their remaining shares so
long as the Dickstein Entities own at least 5% of the outstanding shares of our
common stock or have a designee on our Board (Mark Kaufman, a member of our
Board, was designated by the Dickstein Entities); (2) that unvested stock
options and any restricted stock of our directors who represented the Dickstein
Entities and who resigned in connection with the transactions contemplated by
the Stock Purchase Agreement dated as of May 12, 1999 among the Dickstein
Entities, Fund II and TCR Offshore, or, in the case of a continuing Dickstein
nominee, who ceases in the future to be a director, will vest upon termination
of their office and, in the case of options, will remain exercisable for the
duration of the option term; (3) that, so long as the Dickstein Entities own at
least 5% of the outstanding shares of our common stock, they will be entitled to
nominate one director reasonably satisfactory to us to serve on our Board; (4)
that neither we nor the Dickstein Entities has any claims against the other; and
(5) that we will reimburse the Dickstein Entities for certain expenses. Before
we entered into the Company Agreement, the Dickstein Entities had designated two
members of our Board in addition to Mr. Kaufman, Mr. Dickstein and Chaim
Edelstein, both of whom resigned on May 12, 1999.
8
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and bylaws, copies of which have
been filed as exhibits to the registration statement. The following discussion
is qualified in its entirety by reference to such exhibits.
COMMON STOCK
We are authorized to issue up to 20,000,000 shares of common stock, par
value $.01 per share. Before this offering, there were issued and outstanding
5,053,138 shares of common stock. The number of issued and outstanding shares of
common stock will not change as a result of this offering.
PREFERRED STOCK
We are authorized to issue up to 500,000 shares of preferred stock, par
value $.01 per share. Our Board of Directors may issue preferred stock in one or
more series and may determine the terms of preferred stock at the time of
issuance, without further action by stockholders. Such terms may include voting
rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion and redemption rights
and sinking fund provisions.
No shares of preferred stock are outstanding and we have no present
plans to issue preferred stock. The issuance of any such preferred stock could
adversely affect the rights of the holders of common stock and, therefore,
reduce the value of the common stock. The ability of the Board of Directors to
issue preferred stock could discourage, delay or prevent a takeover of the
Company.
VOTING RIGHTS
Holders of common stock have one vote for each share held on all
matters submitted to a vote of stockholders. A majority of the outstanding
shares of common stock constitutes a quorum required for a meeting of, or action
by, stockholders. The shares of common stock do not have cumulative voting
rights in the election of directors. Thus, the holders of more than 50% of the
common stock have the power to elect all the directors, to the exclusion of the
remaining stockholders.
Our certificate of incorporation provides that a Business Combination
with an Interested Stockholder (as said terms are defined therein) must be
approved by the affirmative vote of the holders of at least 50% of the
outstanding voting stock including the affirmative vote of the holders of at
least 50% of the voting stock not owned by the Interested Stockholder or any
affiliate thereof. Such provisions do not apply if the Business Combination has
been approved by a majority of the "independent directors" or if the
consideration paid in the combination meets certain provisions as more
particularly set forth in our certificate of incorporation.
DIVIDEND AND OTHER RIGHTS
Subject to the prior rights of any series of preferred stock which may
from time to time be outstanding, holders of common stock are entitled to
receive dividends when, as, and if declared by the Board of Directors out of
funds legally available therefor and, upon the liquidation, dissolution or
winding up of the Company, are entitled to share ratably in all assets remaining
after payment of liabilities and payment of accrued dividends and liquidation
preferences on the preferred stock, if any.
9
<PAGE>
Our credit agreement with The CIT Group/Commercial Services, Inc., however,
limits the amount of dividends we may declare. Holders of common stock have no
preemptive rights and have no rights to convert their common stock into any
other securities. The old common stock was canceled on June 4, 1997. The
stockholders holding our old common stock did not retain any value for their
equity.
TRANSFER AGENT
The Transfer Agent and Registrar for our common stock is American Stock
Transfer & Trust Company.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law ("DGCL"). In general, this statute prohibits a publicly held
Delaware corporation from engaging, under certain circumstances, in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested stockholder
unless (1) prior to the date at which the stockholder became an interested
stockholder, the board of directors of such corporation approved either the
business combination or the transaction in which the person became an interested
stockholder; (2) the stockholder acquires more than 85% of the outstanding
voting stock of the corporation (excluding shares held by directors who are
officers or held in certain employee stock plans) upon consummation of the
transaction in which the stockholder became an interested stockholder; or (3)
the business combination is approved by the board of directors of such
corporation and by at least 66-2/3% of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder) at a meeting
of stockholders (and not by written consent) held on or after the date such
stockholder became an interested stockholder. An "interested stockholder" is a
person who, together with affiliates and associates, owns (or at any time within
the prior three years did own) 15% or more of the corporation's voting stock.
Section 203 defines a "business combination" to include, without limitation,
mergers, consolidations, stock sales and asset-based transactions and other
transactions resulting in a financial benefit to the interested stockholder.
LIMITATION ON DIRECTOR'S LIABILITY
In accordance with the DGCL, our certificate of incorporation provides
that our directors shall not be personally liable to us or our stockholders for
monetary damages for breach of duty as a director except (1) for any breach of
the director's duty of loyalty to us and our stockholders; (2) for acts or
omissions not in good faith or which involve intentional misconduct, or knowing
violation of law; (3) under Section 174 of the DGCL, which relates to unlawful
payments of dividends and unlawful stock repurchases and redemptions; or (4) for
any transaction from which the director derived an improper personal benefit.
This provision does not eliminate a director's fiduciary duties; it merely
eliminates the possibility of damage awards against a director personally which
may be occasioned by certain unintentional breaches (including situations that
may involve grossly negligent business decisions) by the director of those
duties. The provision has no effect on the availability of equitable remedies,
such as injunctive relief or rescission, which might be necessitated by a
director's breach of his or her fiduciary duties. However, equitable remedies
may not be available as a practical matter where transactions (such as merger
transactions) have already been consummated. The inclusion of this provision in
our certificate of incorporation may have the effect of reducing the likelihood
of derivative litigation against directors and may discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duty of care, even though such an action, if successful, might
otherwise have benefited us and our stockholders.
10
<PAGE>
INDEMNIFICATION
Our certificate of incorporation provides that we shall indemnify our
officers, directors, employees and agents to the fullest extent permitted by the
DGCL. Section 145 of the DGCL provides that we may indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than a "derivative" action by or in our right) by reason
of the fact that such person is or was our director, officer, employee or agent,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to our best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe was unlawful. A similar standard
of care is applicable in the case of derivative actions, except that no
indemnification shall be made where the person is adjudged to be liable to us,
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action was brought determines that such
person is fairly and reasonably entitled to such indemnity and such expenses.
SHARES ELIGIBLE FOR FUTURE SALE
There are now and will be outstanding immediately following this
offering 5,053,138 shares of common stock. All of such shares, other than shares
owned by "affiliates," as that term is defined in Rule 144 under the Securities
Act, will be tradeable without restriction. We believe that 3,279,966 of our
shares are presently owned by "affiliates." Future sales of substantial amounts
of shares of common stock in the public market, or the perception that such
sales could occur, could adversely affect the price of the shares of common
stock in the trading market for such shares.
Our shares currently trade on The Nasdaq Stock Market's SmallCap
Market. Following this offering, we cannot predict the effect, if any, that
sales of common stock or the availability of such shares for sale will have on
the market price prevailing from time to time.
LEGAL MATTERS
The validity of the shares of common stock being offered in this
prospectus will be passed upon for the Company by Parker Chapin Flattau &
Klimpl, LLP, New York, New York.
EXPERTS
The financial statements of the Company for the fifty-two weeks ended
January 2, 1999, the thirty-one weeks ended January 3, 1998, the twenty-two
weeks ended June 4, 1997, and the fiscal year ended December 28, 1996
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference in this prospectus in
reliance upon the authority of said firm as experts in giving said report.
11
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus does not contain all of the information included in the
registration statement of which this prospectus is a part. We have omitted parts
of the registration statement as permitted by the rules and regulations of the
SEC. For further information, we refer you to the registration statement on Form
S-3, including its exhibits. Statements contained in this prospectus about the
provisions or contents of any agreement or other document are not necessarily
complete. If SEC rules and regulations require that any agreement or document be
filed as an exhibit to the registration statement, you should refer to that
agreement or document for a complete description of these matters. You should
not assume that the information in this prospectus or any prospectus supplement
is accurate as of any date other than the date on the front of each document.
You should read this prospectus together with the additional
information described below under the heading "Where You Can Find More
Information."
12
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy materials that we have
filed with the SEC, including the registration statement, at the following SEC
public reference rooms:
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
Our common stock is quoted on The Nasdaq Stock Market's SmallCap Market
under the symbol "LFAY," and our SEC filings can also be read at the following
Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
Our SEC filings are also available to the public on the SEC's Web Site
at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below:
. Our Annual Report on Form 10-K for our fiscal year ended January
2, 1999, filed with the SEC on April 2, 1999;
. Our Quarterly Report on Form 10-Q for the quarterly period ended
April 3, 1999, filed with the SEC on May 18, 1999;
. Our Quarterly Report on Form 10-Q for the quarterly period ended
July 3, 1999, filed with the SEC on August 17, 1999 and amended
on August 24, 1999;
. Our Quarterly Report on Form 10-Q for the quarterly period ended
October 2, 1999, filed with the SEC on November 16, 1999; and
. Our Current Report on Form 8-K, filed with the SEC on May 21,
1999.
13
<PAGE>
- -------------------------------------------------------------------------------
THE LESLIE FAY COMPANY, INC.
447,189
Shares
Common Stock
($.01 par value)
PROSPECTUS
November 17, 1999
- -------------------------------------------------------------------------------
