<PAGE>
As Filed with the Securities and Exchange Commission on October 21, 1996
File No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
(INCLUDING A FORM S-3 PROSPECTUS)
_________________________
CHEROKEE INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 95-4182437
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) ID No.)
6835 Valjean Avenue
Van Nuys, California 91406
(Address of Principal Executive Offices)
1995 INCENTIVE STOCK OPTION PLAN
DIRECTOR WARRANTS
WILSTAR OPTIONS
DIRECTOR OPTIONS
(FULL TITLE OF THE PLANS)
CAROL GRATZKE, CHIEF FINANCIAL OFFICER
CHEROKEE INC.
6835 Valjean Avenue
Van Nuys, California 91406
(Name and Address of Agent for Service)
(Telephone Number, Including Area Code,
of Agent for Service): (818) 908-9868
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 line: [X]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share(1) Price Fee
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 3,070,409(2) (3) $15,657,859.25 $4,744.81(4)
$0.02 par value
- ----------------------------------------------------------------------------------
</TABLE>
(1) Solely for purposes of calculating the registration fee payable herewith.
(2) The amount of shares consists of (a) 600,000 shares issuable pursuant to
the registrant's 1995 Incentive Stock Option Plan, (b) 1,674,739 shares
received by an affiliate of the registrant, The Newstar Group d/b/a The
Wilstar Group ("Wilstar") upon the exercise of certain performance stock
options, (c) 675,670 shares issuable to Wilstar pursuant to stock options
granted under a Management Agreement entered into with the registrant (the
"Management Agreement"), (d) 40,000 shares issuable upon the exercise of
warrants granted to certain former and current directors of the Company
("Director Warrants"), (e) 10,000 shares issued to certain current
directors of the Company in connection with previous exercises of Director
Warrants and (f) 70,000 shares issuable upon the exercise of options
granted to the current directors of the Company (the "Director Options").
(3) The maximum offering price per share of the 600,000 shares issuable
pursuant to the registrant's 1995 Incentive Stock Option Plan is $5.75,
calculated pursuant to Rules 457(h) and 457(c) under the Securities Act of
1933, as amended (the "Act"). The maximum offering price per share of the
675,670 shares issuable pursuant to the Management Agreement is $3.00,
calculated pursuant to Rule 457(h) under the Act. The maximum offering
price per share of the 1,674,739 shares received by Wilstar upon the
exercise of certain additional stock options is $5.75, calculated pursuant
to Rule 457(c) under the Act. The maximum offering price per share of the
40,000 shares issuable pursuant to the outstanding Director Warrants is, in
the case of 20,000 of such shares, $2.43, and in the case of the other
20,000 of such shares, $3.00, calculated pursuant to Rule 457(h) under the
Act. The maximum offering price per share of the 70,000 shares issued
pursuant to the outstanding Director Options is $5.50, calculated pursuant
to Rule 457(h) under the Act. The maximum offering price per share of the
10,000 shares issued pursuant to previously exercised Director Warrants is
$5.75, calculated pursuant to Rule 457(c) under the Act.
(4) Calculated pursuant to Rules 457(h) and 457(c) under the Act.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in this Part I will be
sent or given to participants in the employee benefit plan as specified by Rule
428(b)(1) under the Securities Act of 1933, as amended (the "1933 Act")
((S)230.428(b)(1)). Pursuant to the instructions for Form S-8, such documents
need not be filed with the Commission either as part of the registration
statement or as prospectuses or prospectus supplements pursuant to Rule 424.
These documents and the documents incorporated by reference in this registration
statement pursuant to Item 3 of Part II of this registration statement, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the 1933 Act. See Rule 428(a)(1).
<PAGE>
October 21, 1996
P R O S P E C T U S
3,070,409 SHARES
CHEROKEE INC.
Common Stock
($0.02 Par Value)
_______________________
This Prospectus relates to 3,070,409 shares (the "Shares") of the Common
Stock, par value $0.02 per share ("Common Stock"), of Cherokee Inc. (the
"Company"), which may be offered from time to time by certain officers,
directors and affiliates of the Company ("Selling Stockholders") as follows:
(a) 600,000 shares issuable upon the exercise of options granted pursuant to
the Company's 1995 Incentive Stock Option Plan (the "1995 Plan"), (b) 40,000
shares issuable upon the exercise of warrants granted to certain current and
former directors of the Company (the "Director Warrants"), (c) 10,000 shares
issued to certain current directors of the Company in connection with previous
exercises of Director Warrants, (d) 675,670 shares issuable upon the exercise of
options (the "Wilstar Options") granted to The Newstar Group d/b/a Wilstar
("Wilstar") in connection with that certain Management Agreement dated as of May
4, 1996, as amended (the "Management Agreement"), (e) 1,674,739 shares issued
to Wilstar upon the exercise of certain performance stock options granted to
Wilstar pursuant to the Management Agreement and (f) 70,000 shares issuable upon
the exercise of options granted to the current directors of the Company (the
"Director Options").
The Company will receive no part of the proceeds of sales of the Shares
except for any amounts received by the Company upon the exercise of up to
1,385,670 options or warrants, as follows: (a) with respect to the Wilstar
Options, 675,670 shares at $3.00 per share; (b) with respect to the 1995 Plan,
600,000 shares at various prices determined by the Company's Option Committee of
its Board of Directors; (c) with respect to the Director Warrants: (i) 20,000
shares at $2.43 per share; and (ii) 20,000 shares at $3.00 per share; and (d)
with respect to the Director Options, 70,000 shares at $5.50 per share
(collectively, the "Option Proceeds"). Currently, the Company intends to use
the Option Proceeds for working capital. All expenses incurred in connection
with this offering, which expenses are not expected to exceed $6,000, are being
borne by the Company.
The Company has been advised by the Selling Stockholders that they or their
successors may sell all or a portion of the shares offered hereby from time to
time in the over-the-counter market, in privately negotiated transactions, or
otherwise, including sales through or directly to a broker or brokers. Sales
will be at prices and terms then prevailing or at prices related to the then
current market prices or at negotiated prices. In connection with any sales,
any broker or dealer participating in such sales may be deemed to be an
underwriter within the meaning of the Securities Act of 1933, as amended (the
"1933 Act"). See "Plan of Distribution."
________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
_________________________________
FOR INFORMATION REGARDING CERTAIN RISKS RELATING TO THE COMPANY, SEE "RISK
FACTORS" ON PAGES 4 TO 5 HEREOF.
__________________________________
The Common Stock of Cherokee Inc. is traded on the NASDAQ Small Cap Issues
Market ("NASDAQ") (NASDAQ Symbol: CHKE). On October 16, 1996, the last sale
price of the Company's Common Stock on NASDAQ was $5.75 per share.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company under the 1933 Act
and the Securities Exchange Act of 1934, as amended (the "1934 Act") with the
Securities and Exchange Commission (the "Commission") are incorporated herein by
reference.
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
June 1, 1996;
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1996; and
(3) Item 11 to the Company's Registration Statement on Form 10, dated
April 24, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act, subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock under this Prospectus shall
be deemed to be incorporated by reference herein and to be a part thereof from
the date of filing of such documents, except as to any portion of any future
report or proxy statement which is not deemed to be filed under said provisions.
Any statement made in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that such statement is replaced or modified by a statement contained in a
subsequently dated document incorporated by reference or contained in this
Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of such person, a copy of any or all of the documents referred to above
which have been or may be incorporated in this Prospectus by reference, other
than exhibits to such documents. Written or oral requests for such copies
should be directed to Carol Gratzke, Chief Financial Officer, Cherokee Inc.,
6835 Valjean Avenue, Van Nuys, California 91406; telephone (818) 908-9868.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Act and in
accordance therewith files reports, proxy statements and other information with
the Commission. These reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024 , Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and the Commission's Regional Offices at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, Suite 1300, Federal Plaza, New York, New York 10048. Copies of
such materials can also be obtained from the Public Reference Section of the
Commission at Judicial Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement under the Securities Act of 1933, with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in
-2-
<PAGE>
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement, including the exhibits and
financial statements and schedules filed therewith or incorporated therein by
reference. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or incorporated herein by reference, each
statement being qualified in its entirety by such reference. The Registration
Statement, including the exhibits thereto, may be inspected without charge at
the Commission's principal office in Washington, D.C., and copies of any and all
parts thereof may be obtained from such office after payment of the fees
prescribed by the Commission.
-3-
<PAGE>
THE COMPANY
The Company's principal business is marketing and licensing of the
Company's proprietary brand names and other brands it may acquire in the future
to domestic and international licensees for a variety of apparel, footwear,
accessories and other products. As of June 1, 1996, the Company had 29
continuing license agreements with wholesalers and retailers. Wholesale
licensees manufacture and import various categories of apparel, footwear and
accessories, primarily under the Cherokee trademark, and sell the licensed
products to retailers. The Company's primary emphasis for the past year has
been retail direct licensing, in which the Company grants retailers a license,
usually on a nonexclusive basis, to use the Cherokee trademark on certain
categories of merchandise, including those products that the Company previously
manufactured prior to discontinuing such operations during 1995 and 1996. The
retailer is responsible for designing and manufacturing the licensed
merchandise. For a more detailed description of the Company's operations,
including a description of the development and evolution of the Company's
business through two Chapter 11 bankruptcy proceedings occurring prior to the
Company's discontinuation of its manufacturing operations, see the Company's
Annual Report on Form 10-K for the fiscal year ended June 1, 1996, which is
incorporated herein by reference.
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED HEREIN OR INCORPORATED
HEREIN BY REFERENCE, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY
IN EVALUATING AN INVESTMENT IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
Competition: Cherokee brand footwear, apparel, and accessories -- which are
manufactured and sold by wholesalers and retail licensees -- are subject to
extensive competition by numerous domestic and foreign companies. Such
competitors include Levi Strauss & Co., Liz Claiborne, Guess?, Esprit de Corp.,
VF Corp., Bernard Chaus, and private labels developed for retailers. Factors
which shape the competitive environment include quality of garment construction
and design, brand name, style and color selection, price and the manufacturer's
ability to respond quickly to the retailer on a national basis. in recognition
of the increasing trend towards consolidation of retailers and greater emphasis
by retailers on the manufacture of private label merchandise, the Company's
business plan principally focuses on creating strategic alliances with major
retailers for their sale of Cherokee products through the licensing of the
Cherokee trademark directly to retailers. Therefore, the success of the Company
is dependent on its licensees' ability to design, manufacture and sell Cherokee
brand products and to respond to ever changing consumer demands. Other
companies owning established trademarks could also enter into similar
arrangements with retailers.
Dependence on Single Licensee: Currently, 79% of the Company's licensing
revenues are generated from a single source, Target Stores ("Target"), a
division of Dayton Hudson, pursuant to certain exclusive and non-exclusive
licensing agreements (the "Target License Agreements"). Until and unless the
Company is able to significantly expand its revenues from other licensing
sources it will be dependent on revenues from the Target License Agreements for
most of its revenues. Although the Target License Agreements provide for
minimum annual royalty payments based upon aggregate sales of no less than
$575,000,000 during the term thereof which expires on January 31, 2001, if for
whatever reason, Target does not pay the minimum royalties under the Target
License Agreements or elects not to renew the Target License Agreements upon
their expiration, the Company's business and operations could be adversely
affected. There can be no guarantee that the Company could be able to replace
the Target royalty payments from other sources.
Dependence on Key Management: The overall business and marketing strategy
and current direction of the Company has been principally conceived and
implemented by Robert Margolis, its current Chairman and Chief Executive
Officer, Patricia Warren, its current President, and Carol Gratzke, its current
Chief Financial Officer. Although the Company believes that it has sufficiently
-4-
<PAGE>
implemented the business plan set in motion by each of these individuals and
that it could successfully continue to implement its business plans
notwithstanding the departure of any of such individuals, it cannot state with
certainty the degree of success, if any it would have if any of them were to
leave the Company.
___________________
The above risk factors should be considered carefully in addition to the
other information in this prospectus and information incorporated herein by
reference before purchasing the securities offered hereby. Except for the
historical information contained herein or incorporated herein by reference, the
discussion in this prospectus or incorporated by reference into this prospectus
contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the company's plans, objectives,
expectations and intentions. The cautionary statements made in this prospectus
and incorporated by reference herein should be read as being applicable to all
related forward-looking statements wherever they appear in or are incorporated
herein by reference into this prospectus. The Company's actual results could
differ materially from those discussed here or incorporated herein by reference.
Factors that could cause or contribute to such differences include those
discussed above, as well as those discussed elsewhere herein or incorporated
herein by reference.
SELLING STOCKHOLDERS
The following table shows for the Selling Stockholders, (i) the number of
shares and percentage of Common Stock of the Company beneficially owned by them
as of October 16, 1996, (ii) the number of shares covered by this Prospectus and
(iii) the percentage of ownership if all shares of Common Stock covered by this
Prospectus are sold.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Number of Shares Number of Shares Percent of
Selling Beneficially Percent of Covered by This Class After
Stockholder Owned(1) Class Prospectus(2) Offering
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Patricia Warren(3) 25,000 * 75,000 *
Carol Gratzke(4) 10,000 * 30,000 *
The Newstar Group 2,125,185(5) 26.2% 2,350,409 *
d/b/a The Wilstar
Group
Robert Margolis(6) 2,135,185(5) 26.3% 2,360,409 *
Herschel Elias(6) 15,000 * 15,000 *
Douglas Weitman(6) 15,000 * 15,000 *
Jess Ravich(6) 15,000 * 15,000 *
Keith Hull(6) 15,000 * 15,000 *
Avi Dan(6) 15,000 * 15,000 *
Jeffrey Schultz(6) 15,000 * 15,000 *
B. Chris Schwartz(7) 5,000 * 5,000 *
Peter Brown(7) 5,000 * 5,000 *
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Peter Handal(7) 5,000 * 5,000 *
David Sarns(7) 5,000 * 5,000 *
- -----------------------------------------------------------------------------------------------
</TABLE>
- ------------------
* None or less than 1%.
(1) Includes shares underlying options exercisable at October 16, 1996 or
within 60 days thereof.
(2) Includes shares underlying options whether or not exercisable.
(3) President of the Company.
(4) Chief Financial Officer of the Company.
(5) Robert Margolis, a director and the Chairman and Chief Executive Officer of
the Company, is the owner of over 50% of the outstanding common stock of
and a director and the Chief Executive Officer of Wilstar. As a result, he
is also a beneficial owner of these shares pursuant to the definition of
beneficial owner contained in Rule 13d-3 under the 1934 Act.
(6) Current member of the Company's Board of Directors.
(7) Former member of the Company's Board of Directors.
The address of each Selling Stockholder is c/o Cherokee Inc, 6835 Valjean
Avenue, Van Nuys, California 91406.
PLAN OF DISTRIBUTION
The shares may be sold by the Selling Stockholders or by pledgees, donees,
transferees or other successors-in-interest following exercise of the options or
warrants held by them. Such sales may be made in the over-the-counter market,
in privately negotiated transactions, or otherwise, at prices and at terms then
prevailing, at prices related to the then current market prices or at negotiated
prices. The shares may be sold by one or more of the following methods: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
in order to consummate the transaction; (b) a purchase by a broker or dealer as
principal, and the resale by such broker or dealer for its account pursuant to
this Prospectus, including resale to another broker or dealer; or (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers.
In effecting sales, brokers or dealers engaged by a Selling Stockholder may
arrange for other brokers or dealers to participate. Any such brokers or
dealers will receive commissions or discounts from a Selling Stockholder in
amounts to be negotiated immediately prior to the sale. Such brokers or dealers
and any other participating brokers or dealers may be deemed to be
'underwriters' within the meaning of the Securities Act of 1933, as amended.
Any gain realized by such a broker or dealer on the sale of shares which it
purchases as a principal may be deemed to be compensation to the broker or
dealer in addition to any commission paid to the broker by a Selling
Stockholder.
The shares covered by this Prospectus may be sold under Rule 144 under the
1933 Act ("Rule 144") instead of under this Prospectus. None of such shares
currently qualify for sale under Rule 144. The Company will not receive any
portion of the proceeds of the shares sold by the Selling Stockholders, but will
receive funds upon the exercise of the options and warrants, which funds, if
any, will be used for working capital. There is no assurance that the Selling
Stockholders will sell any or all of the shares of Common Stock available under
such options or warrants.
-6-
<PAGE>
The Selling Stockholders have advised the Company that during the time each
is engaged in distribution of Common Stock covered by this Prospectus, each will
comply with Rules 10b-5 and 10b-6 under the 1934 Act and pursuant thereto: (i)
will not engage in any stabilization activity in connection with the Company's
securities; (ii)will furnish each broker through which Common Stock covered by
this Prospectus may be offered the number of copies of this Prospectus which are
required by each broker; and (iii)will not bid for or purchase any securities of
the Company or attempt to induce any person to purchase any of the Company's
securities other than as permitted under the 1934 Act. The Selling Stockholder
may be "affiliated purchasers" of the Company as defined in Rule 10b-6 and have
been further advised that pursuant to Securities Exchange Act Release 34-23611
(September 11, 1986), they must coordinate their sales under this Prospectus
with each other and the Company for purposes of Rule 10b-6.
EXPERTS
The financial statements of Cherokee Inc. as of June 1, 1996 and June 3,
1995, and the related statements of operations, stockholders' equity (deficit)
and cash flows for the fiscal year ended June 1, 1996, the three months ended
June 3, 1995 and the nine months ended February 25, 1995 appearing in Cherokee
Inc.'s Annual Report (Form 10-K) for the year ended June 1, 1996, have been
audited by Coopers & Lybrand L.L.P., independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Cherokee Inc. for the year ended
May 28, 1994 appearing in Cherokee Inc.'s Annual Report (Form 10-K) for the year
ended June 1, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon (which contains an explanatory
paragraph with respect to Cherokee Inc.'s ability to continue as a going
concern) included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
-7-
<PAGE>
No dealer, salesman or other person is authorized to give any information or to
any representations not contained in prospectus in connection with the offer
made hereby, and if given or made, such information or representations must not
be upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation offer to buy the securities
offered hereby to any person in any state or other jurisdiction in which such
offer or solicitation would be unlawful. The delivery of this Prospectus at any
time does not imply that information contained herein is correct as of any time
subsequent to its date.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
DOCUMENTS INCORPORATED BY
REFERENCE.................. 2
AVAILABLE INFORMATION....... 2
THE COMPANY................. 4
RISK FACTORS................ 4
SELLING STOCKHOLDERS........ 5
PLAN OF DISTRIBUTION........ 6
EXPERTS..................... 7
================================================
</TABLE>
CHEROKEE INC.
COMMON STOCK
__________________________
PROSPECTUS
__________________________
October 21, 1996
===============================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the
Securities Act of 1933, as amended (the "1933 Act"), or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), with the Securities and Exchange
Commission are incorporated herein by reference.
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
June 1, 1996;
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1996; and
(3) Item 11 to the Company's Registration Statement on Form 10, dated
April 24, 1995.
In addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date hereof and prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities covered hereby
then remaining unsold shall be deemed to be incorporated by reference herein and
to be a part hereof from the date of filing of such documents. Any statement
made in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Registration Statement to the extent
that such statement is replaced or modified by a statement contained herein or
in a subsequently dated document incorporated by reference or contained in this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Common Stock is registered under Section 12 of the 1934 Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that the directors will
not be personally liable to the Company or to any stockholder for the breach of
a fiduciary responsibility, to the full extent that such limitation or
elimination of liability is permitted under Delaware law.
Pursuant to the authority granted under Section 145 of the Delaware General
Corporation Law, the Company's Bylaws provide that the Company will indemnify
its directors and officers to the full extent permitted under the Delaware law.
Pursuant to the Bylaws and Delaware law, the Company will indemnify each
director and officer against any liability and related expenses (including
attorneys' fees) incurred in connection with any proceeding in which he or she
may be involved by reason of serving in such capacity so long as the director or
officer acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Company of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful.
A director and officer is also entitled to indemnification against expenses
incurred in any action or suit by or in the right of the Company to procure a
judgment in its favor by reason of serving in such capacity if he or she acted
in good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Company, except that no such indemnification will be made
if the director or officer is judged to be liable to the Company, unless the
applicable court of law determines that despite the
II-1
<PAGE>
adjudication of liability the director or officer is fairly and reasonably
entitled to indemnification for such expenses.
The Bylaws authorize the Company to advance funds to a director or officer
for costs and expenses (including attorneys' fees) incurred in a suit or
proceeding upon receipt of an undertaking by such directors or officer to repay
such amounts if it is ultimately determined that he or she is not entitle to be
indemnified.
The Company may enter into agreements with certain of the Company's
directors and executive officers, indemnifying them to the fullest extent
permitted by Delaware law. Stockholders may have more limited recourse against
such persons than would apply absent these provisions.
The Company may obtain insurance policies indemnifying the directors and
officers against certain civil liabilities, including liabilities under the
federal securities laws, which might be incurred by them in such capacity.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
The 1,674,739 shares of Common Stock were issued to Wilstar pursuant to the
exercise of performance stock options granted pursuant to a management agreement
entered into by Wilstar and the Company on May 4, 1995 (as amended on April 24,
1996, the "Management Agreement"). Under the Management Agreement, Wilstar
agreed to provide executive management services to the Company by providing the
services of Robert Margolis as Chief Executive Officer and, among other things,
received options to purchase 1,674,739 shares of Common Stock as compensation
for providing Mr. Margolis' services to the Company. In addition, Wilstar
currently owns unexercised options to purchase an additional 675,670 shares of
Common Stock, two thirds of such options being presently exercisable and the
remaining one third of the options to vest on May 3, 1997, subject to
acceleration upon the occurrence of certain events specified in the Management
Agreement. The shares subject to these additional options are simultaneously
being registered pursuant to this Registration Statement. The Company issued
the 1,674,739 shares identified herein to Wilstar, as well as the 10,000 shares
issued to certain current directors of the Company pursuant to previous
exercises of Director Warrants, in reliance upon the exemption from registration
provided by Section 4(2) of the 1933 Act.
ITEM 8. EXHIBITS
Exhibit
Number
------
5 Opinion of Jeffer, Mangels, Butler & Marmaro LLP
24.1 Consent of Coopers & Lybrand L.L.P.
24.2 Consent of Ernst & Young LLP
24.3 Consent of Jeffer, Mangels, Butler & Marmaro LLP (included in
Exhibit 5)
ITEM 9. UNDERTAKINGS
A. Rule 415 Offering.
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.
II-2
<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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; and
(iii) To include any manual 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 Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. Filings incorporating subsequent 1934 Act documents by reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Indemnification of Officers and Directors.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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 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 the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf of the undersigned, thereunto duly
authorized, in the City of Van Nuys, State of California on the 21st day of
October, 1996.
CHEROKEE INC.
By: /s/ Robert Margolis
____________________________________________
ROBERT MARGOLIS
Chairman and Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Robert
Margolis his or her true and lawful attorneys-in-fact and agents, each acting
alone, with full powers of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting along, full powers and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ------ -----
<S> <C> <C>
/s/ Robert Margolis
___________________ Director, Chairman and October 21, 1996
Robert Margolis Chief Executive Officer
/s/ Carol Gratzke
___________________ Chief Financial Officer October 21, 1996
Carol Gratzke
/s/ Herschel Elias
___________________ Director October 21, 1996
Herschel Elias
/s/ Jeffrey Schultz
___________________ Director October 21, 1996
Jeffrey Schultz
/s/ Douglas Weitman
___________________ Director October 21, 1996
Douglas Weitman
/s/ Jess Ravich
___________________ Director October 21, 1996
Jess Ravich
/s/ Keith Hull
___________________ Director October 21, 1996
Keith Hull
/s/ Avi Dan
___________________ Director October 21, 1996
Avi Dan
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequential
Exhibit Number Description Pages
- -------------- ----------- -----
<S> <C> <C>
5 Opinion of Jeffer,
Mangels, Butler &
Marmaro LLP
24.1 Consent of Coopers &
Lybrand L.L.P.
24.2 Consent of Ernst & Young
LLP
24.3 Consent of Jeffer,
Mangels, Butler &
Marmaro LLP
(included in Exhibit 5)
</TABLE>
II-6
<PAGE>
EXHIBIT 5
[LETTERHEAD OF JEFFER, MANGELS, BUTLER & MARMARO LLP]
October 21, 1996 57240-0001
Cherokee Inc.
6835 Valjean Avenue
Van Nuys, California 91406
Re: Cherokee Inc. -
Registration Statement on Form S-8
----------------------------------
Gentlemen:
At your request, we have examined the Registration Statement on
Form S-8 (the "Registration Statement"), that Cherokee Inc. (the
"Company") intends to file with the Securities and Exchange Commission in
connection with the registration under the Securities Act of 1933, as
amended (the "Act"), of (a) 600,000 shares issuable upon the exercise of
options granted pursuant to the Company's 1995 Incentive Stock Option
Plan (the "1995 Plan"), (b) 40,000 shares issuable upon the exercise of
warrants granted to certain current and former directors of the Company
(the "Director Warrants"), (c) 10,000 shares issued to certain current
directors of the Company in connection with previous exercises of
Director Warrants, (d) 675,670 shares issuable upon the exercise of
options (the "Wilstar Options") granted to The Newstar Group d/b/a
Wilstar ("Wilstar") in connection with that certain Management Agreement
dated as of May 4, 1996, as amended (the "Management Agreement"), (e)
1,674,739 shares issued to Wilstar upon the exercise of certain
performance stock options (the "Performance Options") granted to Wilstar
pursuant to the Management Agreement and (f) 70,000 shares issuable upon
the exercise of options granted to the current directors of the Company
(the "Director Options")(collectively, all of the shares issued or to be
issued pursuant to the 1995 Plan, the Director Warrants, the Wilstar
Options, the Performance Options and the Director Options hereinafter
being referred to as the "Shares"). We are familiar with the actions
taken and proposed to be taken by you in connection with the
authorization and proposed issuance and sale of the Shares.
<PAGE>
[LETTERHEAD OF JEFFER, MANGELS, BUTLER & MARMARO LLP]
Cherokee Inc.
October 21, 1996
Page 2
It is our opinion that when the Registration Statement has
become effective under the Act subject to said actions being duly taken
and completed by you as now contemplated in the 1995 Plan, the Director
Warrants, the Wilstar Options, the Performance Options and the Director
Options, respectively, prior to the issuance of the Shares under the 1995
Plan, the Director Warrants, the Wilstar Options, the Performance Options
and the Director Options, respectively, and subject to the appropriate
qualification of the Shares by the appropriate authorities of the various
states in which the Shares will be sold, the Shares that are outstanding
are, and the Shares to be issued will, upon the issuance, sale and
payment thereof in the manner referred to in the 1995 Plan, the Director
Warrants, the Wilstar Options, the Performance Options and the Director
Options, respectively, be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the filing of this opinion in
connection with such filings of applications by the Company as may be
necessary to register, qualify or establish eligibility for an exemption
from registration or qualification of the Shares under the blue sky laws
of any state or other jurisdiction. In giving this consent, we do not
admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Commission promulgated thereunder.
Respectfully submitted,
/s/ Jeffer, Mangels, Butler & Marmaro LLP
JEFFER, MANGELS, BUTLER & MARMARO LLP
<PAGE>
EXHIBIT 24.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Cherokee Inc. on Form S-8 of our report dated August 9, 1996, on our audits of
the consolidated financial statements and financial statement schedule of
Cherokee Inc. as of June 1, 1996 and June 3, 1995 and the related statements of
operations, stockholders' equity and cash flows for the year ended June 1, 1996,
the three months ended June 3, 1995 and the nine months ended February 25, 1995
which report is included in Cherokee Inc.'s Annual Report on Form 10-K. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers and Lybrand L.L.P.
Los Angeles, California Coopers and Lybrand L.L.P.
October 18, 1996
<PAGE>
EXHIBIT 24.2
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) pertaining to the 1995 Incentive Stock Option
Plan, Director Warrants and Wilstar Options of Cherokee Inc. and to the
incorporation by reference therein of our report dated August 25, 1994, with
respect to the consolidated financial statements and schedules of Cherokee Inc.
included in its Annual Report (Form 10-K) for the year ended June 1, 1996, filed
with the Securities and Exchange Commission.
/s/ Ernst and Young LLP
Los Angeles, California
October 18, 1996
