<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-----------
CHEROKEE INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4182437
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6835 VALJEAN AVENUE
VAN NUYS, CALIFORNIA 91406
(Address of Principal Executive Offices) (Zip Code)
-----------
1995 INCENTIVE STOCK OPTION PLAN
(Full title of the plan)
-----------
CAROL GRATZKE
CHIEF FINANCIAL OFFICER
CHEROKEE INC.
6835 VALJEAN AVENUE
VAN NUYS, CALIFORNIA 91406
(Name and address of agent for service)
(818) 908-9868
(Telephone number, including area code, of agent for service)
-----------
Copies to:
ROBERT M. O'SHEA, ESQ.
LATHAM & WATKINS
633 WEST FIFTH STREET, SUITE 4000
LOS ANGELES, CALIFORNIA 90071
(213) 485-1234
-----------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TO BE OFFERING PRICE OFFERING REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED (1) PER SHARE (2) PRICE FEE (2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.02 par value 300,000 $10.91 $3,273,000 $966.00
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) The number of shares to be registered consists of 300,000 additional shares
available for issuance under the Cherokee Inc. 1995 Incentive Stock Option
Plan as a result of an amendment to such plan. The 1995 Incentive Stock
Option Plan previously authorized the issuance of a maximum of 600,000
shares, which shares were subject to Form S-8 Registration Statement No.
333-15545.
(2) Estimated for purposes of computing the registration fee only. Pursuant to
Rules 457(h) and 457(c), the Proposed Maximum Aggregate Offering Price Per
Share and the Amount of Registration Fee are based upon the average of the
high and low prices for the Company's Common Stock in the over-the-counter
market, as reported on the NASDAQ Small Cap Market on June 17, 1998.
- --------------------------------------------------------------------------------
<PAGE>
PART I
This Registration Statement covers additional securities registered for
issuance under the Cherokee Inc. 1995 Incentive Stock Option Plan. The contents
of the prior Form S-8 Registration Statement of Cherokee Inc. relating to such
plan, No. 333-15545, is incorporated herein by reference; provided, however,
that the reoffer prospectus prepared in accordance with the requirements of Part
I of Form S-3 and filed with the prior Form S-8 Registration Statement is not
incorporated by reference herein.
PART II
Item 3. Incorporation of Documents by Reference.
The registrant, Cherokee Inc., a Delaware corporation (the "Company"),
hereby incorporates the following documents in this Registration Statement by
reference:
(1) The Company's Transition Report for the Transition Period from June 1,
1997 to January 31, 1998;
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended May 2, 1998; and
(3) The description of the Company's Common Stock contained in Item 11 to
the Company's Registration Statement on Form 10 filed pursuant to
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), dated April 24, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities covered hereby then remaining unsold are incorporated
by reference in this Registration Statement and are a part hereof from the date
of filing of such documents. 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 Registration Statement to the extent that a
statement contained herein, or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Registration
Statement.
Item 8. Exhibits.
4.1 Cherokee Inc. 1995 Incentive Stock Option Plan
4.2 First Amendment to Cherokee Inc. 1995 Incentive Stock Option Plan
4.3 Second Amendment to Cherokee Inc. 1995 Incentive Stock Option Plan
5.1 Opinion of Latham & Watkins as to the legality of the securities being
registered.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Latham & Watkins (included in Exhibit 5.1).
24.1 Power of Attorney (see page 3).
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 17th day of
June, 1998.
CHEROKEE INC.
By:/s/ Robert Margolis
-----------------------------------
Robert Margolis
Chairman and Chief Executive Officer
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 Commission, granting unto said attorneys-in-
fact and agents, each acting alone, 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, this Registration
Statement has been signed below by the following persons in the capacities and
the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Robert Margolis Director, Chairman and June 17, 1998
- ------------------- Chief Executive Officer
Robert Margolis
/s/ Carol Gratzke Chief Financial Officer June 17, 1998
- -----------------
Carol Gratzke
/s/ Timothy Ewing Director June 18, 1998
- -----------------
Timothy Ewing
/s/ Douglas Weitman Director June 18, 1998
- -------------------
Douglas Weitman
/s/ Jess Ravich Director June 17, 1998
- ---------------
Jess Ravich
/s/ Keith Hull Director June 17, 1998
- --------------
Keith Hull
3
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- --------- ------------------------------------------------------------------
4.1 Cherokee Inc. 1995 Incentive Stock Option Plan
4.2 First Amendment to Cherokee Inc. 1995 Incentive Stock Option Plan
4.3 Second Amendment to Cherokee Inc. 1995 Incentive Stock Option Plan
5.1 Opinion of Latham & Watkins as to the legality of the securities
being registered.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Latham & Watkins (included in Exhibit 5.1).
24.1 Power of Attorney (see page 3).
<PAGE>
EXHIBIT 4.1
CHEROKEE INC.
1995 Incentive Stock Option Plan
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. Purpose.............................................................. 1
2. Definitions.......................................................... 1
2.1 Board.......................................................... 1
2.2 Code........................................................... 1
2.3 Common Stock................................................... 1
2.4 Company........................................................ 1
2.5 Disabled or Disability......................................... 1
2.6 Fair Market Value.............................................. 1
2.7 Incentive Stock Option......................................... 2
2.8 Non-Qualified Stock Option..................................... 2
2.9 Optionee....................................................... 2
2.10 Option Price................................................... 2
2.11 Plan........................................................... 2
2.12 Plan Administrator............................................. 2
2.13 Stock Option or Option......................................... 2
3. Stock Options Under the Plan......................................... 2
4. Administration....................................................... 2
4.1 Administration by Board........................................ 2
4.2 Administration by Stock Option Committee....................... 3
5. Eligibility.......................................................... 3
6. Shares Subject to Options............................................ 3
7. Terms and Conditions of Options...................................... 4
7.1 Number of Shares Subject to Option............................. 4
7.2 Option Price................................................... 4
7.3 Notice and Payment............................................. 4
7.4 Exercise of Option............................................. 5
7.5 Term of Option................................................. 5
7.6 No Transfer of Option.......................................... 6
7.7 Limit on Incentive Stock Options............................... 6
7.8 Restriction on Issuance of Shares.............................. 7
7.9 Investment Representation...................................... 7
7.10 Rights as a Shareholder or Employee............................ 7
7.11 No Fractional Shares........................................... 7
7.12 Exercisability in the Event of Death........................... 7
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
7.13 Capital Structure Adjustments............................ 7
7.14 Modification, Extension, and Renewal of Options.......... 8
7.15 Other Provisions......................................... 8
8. Termination or Amendment of the Plan........................... 8
8.1 Amendment to the Plan.................................... 8
8.2 Effect of Termination of Plan on Outstanding Options..... 8
8.3 Shareholder Approval for Amendment to the Plan........... 9
9. Indemnification................................................ 9
10. Withholding.................................................... 9
10.1 Irrevocable Election..................................... 10
10.2 Approval by Plan Administrator........................... 10
10.3 Timing of Election....................................... 10
11. General Provisions............................................. 10
11.1 Notices.................................................. 10
11.2 Remedies................................................. 10
11.3 Invalid Provisions....................................... 10
11.4 Applicable Law........................................... 10
11.5 Successors and Assigns................................... 11
12. Effective Date and Term of Plan................................ 11
</TABLE>
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<PAGE>
CHEROKEE INC.
1995 INCENTIVE STOCK OPTION PLAN
--------------------------------
1. Purpose. The purpose of this Cherokee Inc. (the "Company") 1995
-------
Incentive Stock Option Plan ("Plan") is to further the growth and development of
the Company by providing an incentive to officers and other key employees who
are in a position to contribute materially to the prosperity of the Company to
participate in the long-term growth of the Company by receiving the opportunity
to acquire shares of the Company's Common Stock and to provide for additional
compensation based on appreciation in the Company's shares. The Plan provides a
means to increase such persons' interests in the Company's welfare, to encourage
them to continue their services to the Company or its subsidiaries, and to
attract individuals of outstanding ability to enter the employment of the
Company or its subsidiaries.
2. Definitions. The following definitions are applicable to the Plan:
-----------
2.1 Board. The Board of Directors of the Company.
-----
2.2 Code. The Internal Revenue Code of 1986, as amended from time
----
to time.
2.3 Common Stock. The shares of the $.02 par value per share common
------------
stock of the Company.
2.4 Company. Cherokee Inc., a Delaware corporation.
-------
2.5 Disabled or Disability. An Optionee shall be deemed to be
----------------------
Disabled if he or she is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) consecutive months. The
determination of whether an individual is Disabled or has a Disability shall be
determined in accordance with Section 22(e)(3) of the Code under procedures
established by the Plan Administrator.
2.6 Fair Market Value. For purposes of the Plan, the "fair market
-----------------
value of any share of Common Stock of the Company at any date shall be
determined based on (a) if the Common Stock is listed on an established stock
exchange or exchanges or the NASDAQ National Market System, the closing price
per share on the last trading day immediately preceding such date on the
principal exchange on which it is traded or as reported by NASDAQ, or (b) if the
Common Stock is not then listed on an exchange, the closing price per share on
the last trading day immediately preceding such date reported by NASDAQ, or if
sales are not reported by NASDAQ, the average of the closing bid and asked
prices per share
<PAGE>
for the Common Stock in the over-the-counter market as quoted on NASDAQ on the
last trading day immediately preceding such date, or (c) if the Common Stock is
not then listed on an exchange, the NASDAQ National Market System or quoted on
NASDAQ, an amount determined in good faith by the Plan Administrator after
taking into consideration all factors which it deems appropriate, including,
without limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
2.7 Incentive Stock Option. Any Stock Option intended to be and
----------------------
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.8 Non-Qualified Stock Option. Any Stock Option that is not an
--------------------------
Incentive Stock Option.
2.9 Optionee. The recipient of a Stock Option.
--------
2.10 Option Price. The exercise or purchase price for an Stock
------------
Option awarded under the Plan.
2.11 Plan. The Cherokee Inc. 1995 Incentive Stock Option Plan, as
----
amended from time to time.
2.12 Plan Administrator. The Board or the Stock Option Committee
------------------
designated pursuant to Section 4.2 hereof to administer, construe and interpret
the terms of the Plan.
2.13 Stock Option or Option. Any option to purchase shares of Common
----------------------
Stock granted pursuant to Section 7 hereof.
3. Stock Options Under the Plan. Two types of Stock Options (referred to
----------------------------
herein as "Options" without distinction between such two types) may be granted
under the Plan: Options intended to qualify as Incentive Stock Options under
Section 422 of the Code and Non-Qualified Stock Options not specifically
authorized or qualified for favorable income tax treatment by the Code.
4. Administration.
--------------
4.1 Administration by Board. Subject to Section 4.2 hereof, the Plan
-----------------------
Administrator shall be the Board of Directors of the Company (the "Board")
during such periods of time as all members of the Board are "outside directors"
as defined in Treas. Regs. (S)1.162-27(e)(3) ("outside directors"). Anything to
the contrary notwithstanding, the requirement that all members of the Board be
outside directors shall not apply for any period of time during which the
Company's Common Stock is not registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended. Subject to the provisions of the
Plan, the Plan Administrator shall have authority to construe and interpret the
Plan, to promulgate, amend, and rescind rules and regulations relating to its
administration, from time to time to select from among the eligible employees
(as determined pursuant to Section 5) of the
-2-
<PAGE>
Company and its subsidiaries those employees to whom Stock Options will be
granted, to determine the timing and manner of the grant of the Options, to
determine the exercise price, the number of shares covered by and all of the
terms of the Stock Options, to determine the duration and purpose of leaves of
absence which may be granted to Stock Option holders without constituting
termination of their employment for purposes of the Plan, and to make all of the
determinations necessary or advisable for administration of the Plan. The
interpretation and construction by the Plan Administrator of any provision of
the Plan, or of any agreement issued and executed under the Plan, shall be final
and binding upon all parties. No member of the Board shall be liable for any
action or determination undertaken or made in good faith with respect to the
Plan or any agreement executed pursuant to the Plan.
4.2 Administration by Stock Option Committee. The Board may, in its
----------------------------------------
sole discretion, delegate any or all of its duties as Plan Administrator and,
subject to the provisions of Section 4.1 of the Plan, at any time the Board
includes any person who is not an outside director, the Board shall delegate all
of its duties as Plan Administrator during such period of time, to a committee
(the "Stock Option Committee") of not fewer than two (2) members of the Board,
all of the members of which Stock Option Committee shall be persons who, in the
opinion of counsel to the Company, are outside directors and "non-employee
directors" within the meaning of Rule 16b-3(b)(3)(i) promulgated by the
Securities and Exchange Commission, as in effect on and after August 15, 1996.
Committee members shall be appointed by and serve at the pleasure of the Board.
From time to time, the Board may increase or decrease (to not less than two
members) the size of the Stock Option Committee, and add additional members to,
or remove members from, the Stock Option Committee. The Stock Option Committee
shall act pursuant to a majority vote, or the written consent of a majority of
its members, and minutes shall be kept of all of its meetings and copies thereof
shall be provided to the Board. Subject to the provisions of the Plan and the
directions of the Board, the Stock Option Committee may establish and follow
such rules and regulations for the conduct of its business as it may deem
advisable. No member of the Stock Option Committee shall be liable for any
action or determination undertaken or made in good faith with respect to the
Plan or any agreement executed pursuant to the Plan.
5. Eligibility. Any employee (including any officer who is an employee)
-----------
of the Company or Director of the Company (other than members of the Stock
Option Committee while serving on the Stock Option Committee) or any of its
subsidiaries shall be eligible to receive Options under the Plan; provided,
however, that no person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
parent or subsidiary corporations shall be eligible to receive an Incentive
Stock Option under the Plan unless at the time such Incentive Stock Option is
granted the Option Price (determined in the manner provided in Section 7.2
hereof) is at least 110% of the Fair Market Value of the shares subject to the
Option and such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted. An employee may receive more
than one Option under the Plan.
6. Shares Subject to Options. The stock available for issue upon the
-------------------------
exercise of Options granted under the Plan shall be shares of the Company's
authorized but
-3-
<PAGE>
unissued, or reacquired, Common Stock. The aggregate number of shares which may
be issued pursuant to exercise of Options granted under the Plan, as amended,
shall not exceed six hundred thousand (600,000) shares of Common Stock (subject
to adjustment as provided in Section 7.13 hereof), including shares previously
issued under the Plan. The maximum number of shares with respect to which
options may be granted to any individual in any one calendar year shall be
100,000 shares. In the event that any outstanding Option under the Plan for any
reason expires, or is terminated, the shares of Common Stock allocable to the
unexercised portion of the Option shall again be available for Options under the
Plan as if no Option had been granted with respect to such shares.
7. Terms and Conditions of Options. Options granted under the Plan shall
-------------------------------
be evidenced by agreements (which need not be identical) in such form and
containing such provisions which are consistent with the Plan as the Plan
Administrator shall from time to time approve. Such agreements may incorporate
all or any of the terms hereof by reference and shall comply with and be subject
to the following terms and conditions:
7.1 Number of Shares Subject to Option. Each Option agreement shall
----------------------------------
specify the number of shares subject to the Option. No Option agreement may, in
combination with all other Options granted to the Optionee under the Plan in any
one calendar year, provide for cumulative grants in excess of 100,000 shares.
7.2 Option Price. The Option Price for the shares subject to any
------------
Option shall be determined by the Plan Administrator at the time of grant.
Anything to the contrary notwithstanding, the Option Price for the shares
subject to any Non-Qualified Stock Option may be less than fair market value,
but not less than par value per share and the Option Price for the shares
subject to any Incentive Stock Option shall not be less than 100% of the Fair
Market Value of the shares of Common Stock of the Company on the date the Stock
Option is granted. In the case of an Incentive Stock Option granted to an
employee who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any of its parent or subsidiary
corporations, the Option price shall not be less than 110% of the fair market
value per share of the Common Stock of the Company on the date the Option is
granted.
7.3 Notice and Payment. Any exercisable portion of a Stock Option may
------------------
be exercised only by:
(a) delivery of a written notice to the Company, prior to the
time when such Stock Option becomes unexercisable under Section 7.5 hereof,
stating the number of shares being purchased and complying with all applicable
rules established by the Plan Administrator;
(b) payment in full of the exercise price of such Option by, as
applicable, (i) cash or check for an amount equal to the aggregate Option
exercise price for the number of shares being purchased, (ii) in the discretion
of the Plan Administrator, upon such terms as the Plan Administrator shall
approve, a copy of instructions to a broker
-4-
<PAGE>
directing such broker to sell the number of shares of Common Stock for which
such Option is exercised, and to remit to the Company the aggregate exercise
price under such Option for such shares (a "cashless exercise"), or (iii) in the
discretion of the Plan Administrator, upon such terms as the Plan Administrator
shall approve, the Optionee's payment of all or a portion of the purchase price
for the number of shares being purchased by tendering shares of the Company's
Common Stock owned by the Optionee, duly endorsed for transfer to the Company,
with a Fair Market Value on the date of delivery equal to the aggregate purchase
price of the shares with respect to which such Stock Option or portion thereof
is thereby exercised (a "stock-for-stock exercise");
(c) payment of the amount of tax required to be withheld (if
any) by the Company or any parent or subsidiary corporation as a result of the
exercise of a Stock Option. At the discretion of the Plan Administrator, upon
such terms as the Plan Administrator shall approve, the Optionee may pay all or
a portion of the tax withholding by (i) cash or check payable to the Company,
(ii) cashless exercise, (iii) stock-for-stock exercise, or (iv) a combination of
one or more of the foregoing payment methods; and
(d) delivery of a written notice to the Company requesting that
the Company direct the transfer agent to issue to the Optionee (or to his
designee) a certificate for the number of shares of Common Stock for which the
Option was exercised or, in the case of a cashless exercise, for any such shares
that were not sold in the cashless exercise.
Notwithstanding the foregoing, the Company may extend and maintain, or arrange
for the extension and maintenance of, credit to any Optionee to finance the
Optionee's purchase of shares pursuant to exercise of any Stock Option, on such
terms as may be approved by the Plan Administrator, subject to applicable
regulations of the Federal Reserve Board and any other laws or regulations in
effect at the time such credit is extended. The Plan Administrator may, at any
time and in its discretion, authorize a cash payment which shall not exceed the
amount required to pay the full amount of any federal, state or local taxes
attributable to the exercise of any Option granted under the Plan.
7.4 Exercise of Option. No Option shall be exercisable during the
------------------
lifetime of an Optionee by any person other than the Optionee. Subject to the
foregoing, the Plan Administrator shall have the power to set the time or times
within which each Option shall be exercisable and to accelerate the time or
times of exercise. To the extent that an Optionee has the right to exercise an
Option and purchase shares pursuant thereto, the Option may be exercised from
time to time in the manner provided in Section 7.3 hereof. Options shall vest
and become exercisable at such times and in such installments (which may be
cumulative) as the Plan Administrator shall provide in the terms of each
individual Option agreement; provided, however, that the Plan Administrator may,
on such terms as the Plan Administrator determines to be appropriate, accelerate
the time at which any outstanding Option or installment thereof may be
exercised.
7.5 Term of Option. No Option shall be exercisable after the
--------------
expiration of the earliest of:
-5-
<PAGE>
(a) ten years after the date the Option is granted;
(b) the expiration date specified by the Plan Administrator in the
Option agreement at the time the Option is granted;
(c) three (3) months after the date the Optionee's employment or
service as a director (if such Optionee is not then an officer or employee of
the Company) with the Company and its subsidiaries terminates if such
termination is for any reason other than Disability or death. The Plan
Administrator, in its sole discretion, may extend such three (3) months period
for up to one (1) year following the date of termination. Any unvested Option
installments shall expire and become unexercisable after the date the Optionee
terminates service with the Company and its subsidiaries and shall not be
reinstated as a result of the Optionee subsequently entering the service of the
Company or any subsidiary as an employee or a director;
(d) one year after the date the Optionee's service as an employee and
a director with the Company and its subsidiaries terminates if such termination
is a result of death or Disability. Any unvested Option installments shall
expire and become unexercisable after the date of the Optionee's death or
Disability. For purposes of this Section 7.5(d), an Optionee shall be deemed to
be employed by the Company or any of its subsidiaries during any authorized
period of leave of absence from active employment; or
(e) in the case of an Incentive Stock Option granted to an employee
who owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any of its parent or subsidiary
corporations, the term set forth in (a), above, shall not be more than five
years after the date the Option is granted.
The Option agreement for any Option may provide for shorter periods in each of
the foregoing instances.
7.6 No Transfer of Option. No Option shall be transferable by an Optionee
---------------------
otherwise than by will or the laws of descent and distribution.
7.7 Limit on Incentive Stock Options. The aggregate fair market value
--------------------------------
(determined at the time the Option is granted) of the stock with respect to
which Incentive Stock Options are exercisable for the first time by an Optionee
during any calendar year (under all incentive stock option plans of the Company
and any of its parent and subsidiary corporations) shall not exceed $100,000.
To the extent that the aggregate Fair Market Value (determined at the time of
the Stock Option is granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an Optionee during any
calendar year (under all incentive stock option plans of the Company and any of
its parent and subsidiary corporations) exceeds $100,000, such Stock Options
shall be treated as Non-Qualified Stock Options. The determination of which
Stock Options shall be treated as Non-Qualified Stock Options shall be made by
taking Stock Options into account in the order in which they were granted.
-6-
<PAGE>
7.8 Restriction on Issuance of Shares. The issuance of Options and shares
---------------------------------
shall be subject to compliance with all of the applicable requirements of law
with respect to the issuance and sale of securities, including, without
limitation, any required qualification under the California Corporate Securities
Law of 1968, as amended.
7.9 Investment Representation. Any Optionee may be required, as a
-------------------------
condition of issuance of shares covered by his or her Option, to represent that
the shares to be acquired pursuant to exercise of the Option will be acquired
for investment and without a view to distribution thereof; and in such case, the
Company may place a legend on the certificate evidencing the shares reflecting
the fact that they were acquired for investment and cannot be sold or
transferred unless registered under the Securities Act of 1933, as amended, or
unless counsel for the Company is satisfied that the circumstances of the
proposed transfer do not require such registration.
7.10 Rights as a Shareholder or Employee. An Optionee or transferee of an
-----------------------------------
Option shall have no right as a shareholder of the Company with respect to any
shares covered by any Option until the date of the issuance of a share
certificate for such shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether cash, securities, or other property) or distributions
or other rights for which the record date is prior to the date such share
certificate is issued, except as provided in Section 7.13. Nothing in the Plan
or in any Option agreement shall confer upon any employee any right to continue
in the employ of the Company or any of its subsidiaries or interfere in any way
with any right of the company or any subsidiary to terminate the Optionee's
employment at any time.
7.11 No Fractional Shares. In no event shall the Company be required to
--------------------
issue fractional shares upon the exercise of an Option.
7.12 Exercisability in the Event of Death. In the event of the death of
------------------------------------
the Optionee, any Option or unexercised portion thereof granted to the Optionee,
to the extent exercisable by him or her on the date of death, may be exercised
by the Optionee's personal representatives, heirs or legatees subject to the
provisions of Section 7.5 hereof.
7.13 Capital Structure Adjustments. Except as otherwise provided herein,
-----------------------------
appropriate and proportionate adjustments shall be made in the number and class
of shares subject to the Plan, to the Option rights granted under the Plan, and
the Option Price of such Option rights, in the event of a stock dividend (but
only on Common Stock), stock split, reverse stock split, recapitalization,
reorganization, merger, consolidation, separation, or like change in the
corporate or capital structure of the Company. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments shall
be made by the Plan Administrator, the determination of which in that respect
shall be final, binding, and conclusive, provided that each Incentive Stock
Option granted pursuant to the Plan shall not be adjusted in a manner that
causes it to fail to continue to qualify as an Incentive Stock Option. In the
event of a liquidation, merger, reorganization, or consolidation of the Company
with any other corporation in which the Company is not the surviving corporation
or the Company becomes a wholly owned subsidiary of another corporation, each
Option granted under the
-7-
<PAGE>
Plan, to the extent not fully exercised, shall be deemed canceled unless the
surviving corporation in any such merger, reorganization or consolidation elects
to assume the Option or to grant a substitute option in place thereof; provided,
however, that notwithstanding the foregoing, if any Option granted under the
Plan would otherwise be cancelled in accordance with the foregoing, Optionee
shall have the right, exercisable during a ten-day period ending on the fifth
day immediately preceding such liquidation, merger, reorganization or
consolidation, to exercise the Option, to the extent not yet exercised, without
regard to any restrictions on exercisability, including but not limited to the
unvested portions of such Options. Notwithstanding the foregoing, in the event
that any transaction causing the termination of an Option pursuant to the
provisions of this Section 7.13 is not consummated: (a) any vested installment
that was exercised pursuant to this Section may, at the election of the
Optionee, be rescinded; and (b) any unvested installment that became exercisable
solely by reason of the provisions of this Section shall again become unvested
and unexercisable as of the termination of the transaction, subject to the
regular terms and provisions of the Option agreement.
7.14 Modification, Extension, and Renewal of Options. Subject to the
-----------------------------------------------
terms and conditions and within the limitations of the Plan, the Plan
Administrator may modify, extend, or renew outstanding Options granted under the
Plan, and accept the surrender of outstanding Options (to the extent not
theretofore exercised). The Plan Administrator may modify any outstanding Option
to specify a lower Option Price. However, the Plan Administrator shall not,
without the consent of the Optionee, modify any outstanding Option to specify a
lower Option Price. However, the Plan Administrator shall not, without the
consent of the Optionee, modify any outstanding Incentive Stock Option in any
manner which would cause the Option not to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code. Notwithstanding the foregoing, no
modification of an Option shall, without the consent of the Optionee, alter or
impair any rights of the Optionee under the Option.
7.15 Other Provisions. Each Option may contain such other terms,
----------------
Provisions, and conditions not inconsistent with the Plan as may be determined
by the Plan Administrator.
8. Termination or Amendment of the Plan. The Board may at any time
------------------------------------
terminate or amend the Plan in accordance with the following provisions:
8.1 Amendment to the Plan. Except as provided in Section 8.3 hereof,
---------------------
the Board may amend this Plan from time to time in such respect as the Board may
deem advisable; provided, however, that no such amendment shall reduce the
rights of any Optionee with respect to any outstanding Option granted prior to
the adoption of such amendment, except as may be necessary, in the judgement of
counsel to the Company, to comply with any applicable law.
8.2 Effect of Termination of Plan on Outstanding Options. Except as
----------------------------------------------------
provided in Section 7.13 hereof, no termination of the Plan prior to the Plan
termination date designated in Section 12 shall reduce the rights of any
Optionee with respect to any outstanding Option granted prior to any adoption of
such amendment, except as may be
-8-
<PAGE>
necessary, in the judgment of counsel to the Company, to comply with any
applicable law. In no event will an Optionee's rights be considered reduced if
the Optionee receives a payment in cash or stock equal to the difference between
the Fair Market Value of the Common Stock that may be purchased by the exercise
of the vested and exercisable portion of such Option and the Option Price
applicable to such shares of Common Stock.
8.3. Shareholder Approval for Amendment to the Plan. Except
----------------------------------------------
by operation of the provisions of Section 7.13, there shall be no increase in
the total number of shares covered by the Plan, no change in the class of
persons eligible to receive Options granted under the Plan, and no extension of
the term of the Plan beyond ten (10) years from the date of adoption, unless
such amendments are approved by shareholders.
9. Indemnification. In addition to such other rights of
---------------
indemnification as they may have as members of the Board or the Stock Option
Committee, the Plan Administrator shall be indemnified by the Company against
reasonable expense, including attorney's fees, actually and necessarily incurred
in connection with the defense of any action, suit, or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any grant thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
action, suit, or proceeding, except in relation to matters as to which it shall
be adjudged in such action, suit, or proceeding that such member is liable for
negligence or misconduct in the performance of his duties, provided that within
60 days after institution of any such action, suit, or proceeding, the member
shall offer in writing to the Company the opportunity, at its own expense, to
handle and defense the same.
10. Withholding. Whenever the Company proposes or is required to
-----------
issue or transfer shares under the Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares of Common Stock. If a
participant surrenders shares acquired pursuant to the exercise of an Incentive
Stock Option in payment of the exercise price of an Option and such surrender
constitutes a disqualifying disposition for purposes of obtaining Incentive
Stock Option treatment under the Code, the Company shall have the right to
require the Optionee to remit to the Company an amount sufficient to satisfy any
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such shares. Whenever under the Plan,
payments are to be made in cash, such payments shall be net of an amount
sufficient to satisfy any federal, state and local withholding tax requirements.
A recipient may elect with respect to any Option which is paid in whole or in
part in shares of Common Stock, to surrender previously acquired shares of
Common Stock or authorize the Company to withhold shares (valued at Fair Market
Value on the date of surrender or withholding of the shares) in satisfaction of
all such withholding requirements (the "Share Surrender Withholding Election")
in accordance with the following:
-9-
<PAGE>
10.1 Irrevocable Election. Any Share Surrender Withholding Election
--------------------
shall be made by written notice to the Company and thereafter shall be
irrevocable by the Optionee.
10.2 Approval by Plan Administrator. Any Share Surrender Withholding
------------------------------
Election shall be subject to the consent or disapproval of the Plan
Administrator in accordance with rules established from time to time by the Plan
Administrator.
10.3 Timing of Election. Any Share Surrender Withholding Election
------------------
must be made prior to the date on which the recipient recognizes taxable income
with respect to the receipt of such shares (the "Tax Date").
11. General Provisions.
------------------
11.1 Notices. Any notice to be given to the Company pursuant to the
-------
provisions of this Plan shall be in writing and addressed to the Company in care
of its Chief Financial Officer at its principal office, and any notice to be
given to a director, officer or employee of the Company or any of its
subsidiaries to whom an Option is granted hereunder shall be in writing and
addressed to him or her at the address given beneath his or her signature on his
or her Option agreement, or at such other address as such employee, officer or
director or his or her transferee (upon the transfer of Common Stock) may
hereafter designate in writing to the Company. Any such notice shall be deemed
duly given when delivered in person or mailed by first-class mail (return
receipt requested), telex, telecopy or overnight courier to the other's address.
It shall be the obligation of each Optionee and each transferee holding Common
Stock purchased pursuant to the exercise of a Stock Option to provide the Plan
Administrator, c/o Vice President - Finance and Reporting of the Company, by
letter mailed as provided hereinabove, with written notice of his or her correct
mailing address.
11.2 Remedies. Should any dispute arise concerning the sale or other
--------
disposition of a Stock Option or shares of Common Stock issued or issuable upon
the exercise of an Option, or any breach by the Company of the terms of the Plan
or any Option agreement, an Optionee's sole and exclusive remedy shall be
damages.
11.3 Invalid Provisions. In the event that any provision of this Plan
------------------
is found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceablity shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid or unenforceable provision was not contained herein.
11.4 Applicable Law. This Plan shall be governed by and construed in
--------------
accordance with the laws of the State of California applicable to agreements
made and to be performed entirely within such state and without regard to the
conflict of law principles thereof.
-10-
<PAGE>
11.5 Successors and Assigns. This Plan shall be binding on and
----------------------
inure to the benefit of the Company and the officers, directors and employees of
the Company and any subsidiary, to whom an Option is granted hereunder, and
their heirs, executors, administrators, legatees, personal representatives,
assignees and transferees.
12. Effective Date and Term of Plan. This is an amendment and
-------------------------------
restatement of the Plan. This Plan was originally effective on July 25, 1995
and was approved by shareholders. This amendment and restatement is effective
as of October 9, 1996. Unless sooner terminated by the Board in its sole
discretion, the Plan will expire and no additional Options may be granted
hereunder on and after July 24, 2005.
IN WITNESS WHEREOF, the Company has caused this amended and restated Plan to be
executed by its duly authorized officer on this 14th day of October, 1996.
CHEROKEE INC.
By: /s/ Carol Gratzke, CFO
-----------------------
-11-
<PAGE>
EXHIBIT 4.2
FIRST AMENDMENT TO
CHEROKEE INC. 1995 INCENTIVE STOCK OPTION PLAN
THIS FIRST AMENDMENT TO CHEROKEE INC. 1995 INCENTIVE STOCK OPTION PLAN
is made and adopted by CHEROKEE INC., a Delaware corporation (the "Company").
Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Plan (as defined below).
WHEREAS, effective July 25, 1995, the Company adopted the Cherokee
Inc. 1995 Incentive Stock Option Plan (the "Plan") for the benefit of its
officers and other key employees;
WHEREAS, effective as of October 9, 1996, the Company amended and
restated the Plan;
WHEREAS, the Company desires to amend the Plan; and
WHEREAS, this First Amendment was duly adopted by a resolution of the
Board of Directors of the Company dated as of November 10, 1997.
NOW THEREFORE, in consideration of the foregoing, the Company hereby
amends the Plan as follows:
1. Section 7.4 of the Plan is hereby deleted in its entirety and
replaced by the following new Section 7.4:
"7.4 EXERCISE OF OPTION. No Incentive Stock Option shall be
------------------
exercisable during the lifetime of an Optionee by any person other than the
Optionee. No Non-Qualified Stock Option shall be exercisable during the
lifetime of an Optionee by any person other than the Optionee or an assignee of
such Optionee who has been approved by the Plan Administrator pursuant to
Section 7.6 hereof. Subject to the foregoing, the Plan Administrator shall have
the power to set the time or times within which each Option shall be exercisable
and to accelerate the time or times of exercise. To the extent that an Optionee
or assignee has the right to exercise an Option and purchase shares pursuant
thereto, the Option may be exercised from time to time in the manner provided in
Section 7.3 hereof. Options shall vest and become exercisable at such times and
in such installments (which may be cumulative) as the Plan Administrator shall
provide in the terms of each individual Option agreement; provided, however,
that the Plan Administrator may, on such terms as the Plan Administrator
determines to be appropriate, accelerate the time at which any outstanding
Option or installment thereof may be exercised."
2. Section 7.6 of the Plan is hereby deleted in its entirety and
replaced by the following new Section 7.6:
"7.6 NO TRANSFER OF OPTION. Subject to the following sentence of
---------------------
this Section 7.6, no Option shall be transferable by an Optionee otherwise than
by will or the laws of descent
<PAGE>
and distribution. Notwithstanding the foregoing, Non-Qualified Stock Options may
be assigned by the Optionee with the prior written consent of the Plan
Administrator, which consent may be granted or denied by the Plan Administrator
in its sole and absolute discretion."
3. Section 7.13 of the Plan is hereby amended by adding the phrase
"extraordinary cash dividend," immediately after the phrase "(but only on Common
Stock)," in the first sentence of such Section.
4. This First Amendment shall be and is hereby incorporated in and
forms a part of the Plan.
5. This First Amendment shall be effective as of November 27, 1997.
6. Except as set forth herein, the Plan shall remain in full force
and effect.
* * *
IN WITNESS WHEREOF, the Company has caused this amendment to the Plan
to be executed by its duly authorized officer as of November 10, 1997.
CHEROKEE INC.
By: Carol Gratzke
-------------
Its: Chief Financial Officer and Secretary
2
<PAGE>
EXHIBIT 4.3
SECOND AMENDMENT TO
CHEROKEE INC. 1995 INCENTIVE STOCK OPTION PLAN
THIS SECOND AMENDMENT TO CHEROKEE INC. 1995 INCENTIVE STOCK OPTION
PLAN, dated as of June 8, 1998, is made and adopted by CHEROKEE INC., a Delaware
corporation (the "Company"). Capitalized terms used but not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Plan (as
defined below).
WHEREAS, effective July 25, 1995, the Company adopted the Cherokee
Inc. 1995 Incentive Stock Option Plan (the "Plan") for the benefit of its
officers and other key employees;
WHEREAS, effective as of October 9, 1996, the Company amended and
restated the Plan, and effective as of November 27, 1997, the Company further
amended the Plan;
WHEREAS, the Company desires to amend the Plan so as to expand the
class of persons eligible to receive Options thereunder and to increase the
number of shares reserved for issuance thereunder; and
WHEREAS, this Second Amendment was duly adopted by a resolution of the
Board of Directors of the Company dated as of May 1, 1998, subject to approval
thereof by the Company's shareholders.
NOW THEREFORE, in consideration of the foregoing, the Company hereby
amends the Plan as follows:
1. Section 4.2 of the Plan is hereby amended by adding the following
sentence after the first sentence of such Section:
"Notwithstanding the foregoing, with respect to Options granted to
members of the Stock Option Committee, the Plan Administrator shall be
the Board."
2. Section 5 of the Plan is hereby amended by deleting the
parenthetical phrase "(other than members of the Stock Option Committee while
serving on the Stock Option Committee)" from the first sentence of such Section.
3. Section 6 of the Plan is hereby amended by deleting the second
sentence of such Section in its entirety and replacing it with the following
sentence:
"The aggregate number of shares which may be issued pursuant to
exercise of Options granted under the Plan, as amended, shall not
exceed 900,000 shares of
<PAGE>
Common Stock (subject to adjustment as provided in Section 7.13
hereof), including shares previously issued under the Plan."
4. This Second Amendment shall be and is hereby incorporated in and
forms a part of the Plan.
5. This Second Amendment shall be effective as of June 8, 1998,
subject to approval thereof by the Company's shareholders.
6. Except as set forth herein, the Plan shall remain in full force
and effect.
* * *
IN WITNESS WHEREOF, the Company has caused this amendment to the Plan
to be executed by its duly authorized officer as of May 1, 1998.
CHEROKEE INC.
By: Carol Gratzke
-----------------------------------------
Title: Chief Financial Officer and Secretary
I hereby certify that the foregoing amendment to the Plan was duly
approved by the shareholders of Cherokee Inc. on June 8, 1998.
Executed on this 8th day of June, 1998.
By: Carol Gratzke
-----------------------------------------
Title: Chief Financial Officer and Secretary
2
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF LATHAM & WATKINS]
JUNE 22, 1998
Cherokee Inc.
6835 Valjean Avenue
Van Nuys, California 91406
Re: Registration Statement on Form S-8
300,000 shares of Common Stock, par value $.02 per share
--------------------------------------------------------
Ladies and 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 "Securities
Act"), of an additional 300,000 shares of Common Stock, par value $.02 per share
(the "Shares"), to be offered and sold by the Company under the 1995 Incentive
Stock Option Plan. 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. Additionally, we have examined such questions of law and fact as
we have considered necessary and appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies. We
are opining herein as to the effect on the subject transactions only as to the
law of the State of Delaware, and we express no opinion as to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction or any
matters of municipal law or the laws of any local agencies within such state.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized, and upon issuance of the Shares under the terms of the 1995
Incentive Stock Option Plan and delivery and payment therefor of legal
consideration at least equal to the aggregate par value of the Shares issued,
such Shares will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Respectfully submitted
/s/ LATHAM & WATKINS
--------------------
LATHAM & WATKINS
<PAGE>
EXHIBIT 23.1
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 April 6, 1998 on our audits of
the consolidated financial statements and financial statement schedule of
Cherokee Inc. as of January 31, 1998, May 31, 1997 and June 1, 1996 and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the eight months ended January 31, 1998, the years ended May
31, 1997 and 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
Transition Report on Form 10-K. We also consent to the reference to our firm
under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
------------------------------
Coopers & Lybrand L.L.P.
Los Angeles, California
June 23, 1998
