As filed with the Securities and Exchange Commission on May 21, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------------
ETHAN ALLEN INTERIORS INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
06-1275288
(I.R.S. Employer Identification Number)
Ethan Allen Drive
Danbury, Connecticut 06813
(203) 743-8000
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Roxanne Khazarian, Esq.
General Counsel
Ethan Allen Drive
Danbury, Connecticut 06813
(203) 743-8000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------------
Copy to:
James B. Carlson, Esq.
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
(212) 506-2500
Approximate date of commencement of proposed sale to the public: From
time to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, please check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(B) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ______
If this Form is a post-effective amendment filed pursuant to Rule
462(C) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] ______
If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount maximum maximum Amount of
Title of each class of to be offering price aggregate offering registration
securities to be registered registered per share (1) price (1) fee
--------------------------- ---------- ------------- --------- ---
<S> <C> <C> <C> <C>
Common Stock par value $0.01 per share 73,112 shares $50.9375 $3,724,142.50 $1,128.53
(1) The offering price per share is estimated pursuant to Rule 457(B)
solely for purpose of calculating the registration fee and is based
upon the average of the high and low price of shares of Common Stock as
reported on the New York Stock Exchange on May 20, 1997 (which date is
within five business days prior to the date of the initial filing of
this Registration Statement.
</TABLE>
----------------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
=====================BEGINNING OF RED HERRING===================================
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
==========================END OF RED HERRING====================================
SUBJECT TO COMPLETION, DATED MAY 21, 1997
PROSPECTUS
73,112 Shares
Ethan Allen Interiors Inc.
Common Stock
par value $0.01 per share
-----------------
The 73,112 shares (the "Shares") of common stock, par value $0.01 (the
"Common Stock"), of Ethan Allen Interiors Inc. (the "Company") offered hereby
are being offered by the selling stockholders named herein (the "Selling
Stockholders") or by any charitable remainder trust(s) established by any of the
Selling Stockholders and to which such Selling Stockholders transferred all or a
portion of the Shares. The Selling Stockholders received the Shares in
connection with the liquidation of Carriage House Interiors of Colorado, Inc., a
Colorado corporation ("Carriage House"). The Company issued the Shares to
Carriage House in consideration for the acquisition (the "Acquisition"), by a
wholly-owned subsidiary of the Company, of the assets of Carriage House. See
"Selling Stockholders." The Shares are being sold for the account of the Selling
Stockholders, and the Company will not receive any proceeds from the sale of the
Shares.
The Shares may be sold from time to time by the Selling Stockholders.
Such sales may be made on the New York Stock Exchange ("NYSE") or other
exchanges (if the Common Stock is listed for trading thereon) or otherwise at
prices and at terms then prevailing, at prices related to the then current
market price or at negotiated prices. The Shares may be sold by any one or more
of the following methods: (i) a block trade in which the broker or dealer so
engaged will attempt to sell the securities as agent but may position and resell
a portion of the block as principal to facilitate the transactions, (ii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account, (iii) ordinary brokerage transactions and transactions in which
the broker solicits purchasers, and (iv) privately negotiated transactions.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), and any commissions received by such
broker-dealers, agents or underwriters and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
The Common Stock is traded on the NYSE under the trading symbol "ETH."
On May 20, 1997, the last reported sale price of the Common Stock on the NYSE
was $52.75 per share.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
MADE HEREBY. IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
-----------------
The date of this Prospectus is _____ __, 1997.
<PAGE>
TABLE OF CONTENTS
Page Page
---- ----
Available Information ........... 2 Description of Capital Stock.... 6
Incorporation by Reference ...... 3 Plan of Distribution............ 12
The Company ..................... 4 Legal Matters................... 13
Use of Proceeds ................ 4 Experts......................... 13
Selling Stockholders............. 5
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy material and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following
Regional Offices of the Commission: New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048 and Chicago Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained at prescribed rates from the Commission,
Public Reference Section, at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or from the Commission's worldwide web site at
http://www.sec.gov. Such reports, proxy material and other information
concerning the Company also may be inspected at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which one or
more of the Company's securities are traded.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") under the Securities Act, with respect to the Shares offered hereby.
This prospectus ("Prospectus"), which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are contained in exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission. The
Registration Statement may be inspected without charge by anyone at the office
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and copies of all or any part thereof may be obtained from the Commission
upon payment of the prescribed fees, or at the Commission's worldwide web site.
Statements made in this Prospectus as to the content of any contract, agreement
or other document referred to are not necessarily complete. With respect to each
such contract, agreement or other document filed or incorporated by reference as
an exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference.
2
<PAGE>
INCORPORATION BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 1-11806) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996, filed with the Commission on September
27, 1996;
(2) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, filed with the Commission on
November 14, 1996;
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996, filed with the Commission on February
13, 1997;
(4) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, filed with the Commission on May 15,
1997;
(5) The description of the Company's Common Stock under the
caption "Description of Registrant's Securities to be
Registered" included in the Company's Registration Statement
on Form 8-A, filed with the Commission on January 23, 1993;
and
(6) The description of the Company's Preferred Stock Purchase
Rights under the caption "Description of Registrant's
Securities to be Registered" included in the Company's
Registration Statement on Form 8-A, filed with the Commission
on July 3, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein will be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which is or is deemed to be incorporated by
reference herein modifies or supersedes any such statement. Any such statement
so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the request of such
person, a copy of any of the foregoing documents incorporated herein by
reference (other than the exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Investor Relations, Ethan Allen Interiors Inc., Ethan Allen Drive,
Danbury, Connecticut 06813 (telephone: (203) 743-8000).
3
<PAGE>
THE COMPANY
The Company, through its wholly-owned subsidiary, Ethan Allen Inc.
("Ethan Allen"), is a leading manufacturer and retailer of quality home
furnishings, offering a full range of furniture products and accessories. Ethan
Allen was founded in 1932 and has sold products since 1937 under the Ethan Allen
brand name.
The Company's operations are classified into two business segments:
wholesale and retail home furnishings. The wholesale home furnishings segment is
principally involved in the manufacture, sale and distribution of home
furnishing products to a network of independently-owned and Ethan Allen-owned
stores. The retail home furnishings segment sells home furnishing products
through a network of Ethan Allen-owned stores. These products consist of case
goods (wood furniture), upholstered products, and home accessories.
Ethan Allen manufactures and distributes three principal product lines:
(i) case goods (wood furnishings), consisting primarily of bedroom and dining
room furniture, wall units and tables, (ii) upholstered products, consisting
primarily of sofas, love seats, chairs, recliners and swivel rockers, and (iii)
home furnishing accessories, including carpeting and area rugs, lighting
products, clocks, wall decor, bedding ensembles, draperies and decorative
accessories.
Ethan Allen's products are sold by a network of 295 Ethan Allen
galleries, which exclusively sell Ethan Allen's products. Home Furniture Today
(a leading industry publication) published a survey of America's top 100
furniture retailers for 1995, which ranked Ethan Allen's gallery network as the
largest furniture retail network in the United States utilizing the gallery
retailing concept. As of March 31, 1997, Ethan Allen owned and operated 65 North
American galleries and independent dealers owned and operated 230 North American
galleries with 11 galleries located abroad. The Company closed 14 smaller
under-performing Japanese dealer-owned stores in 1996, and replaced them with
three much larger high volume dealer-owned stores in significant markets in and
around Tokyo. In the past six years, Ethan Allen has opened over 100 new stores,
many of them relocations. Sales to independent dealer-owned stores accounted for
approximately 65% of total net sales of the Company in fiscal 1996. As of June
30, 1996, the ten largest independent dealers owned a total of 19 galleries,
which accounted for approximately 22% of the total dollar amount of net orders
booked in fiscal 1996.
The Company is a Delaware corporation, incorporated in 1989. The
principal executive offices of the Company are located at Ethan Allen Drive,
Danbury, Connecticut 06813, and the Company's telephone number is (203)
743-8000.
USE OF PROCEEDS
The Company will not receive any of the proceeds of the sale of the
Shares offered hereby.
4
<PAGE>
SELLING STOCKHOLDERS
The Shares were transferred to the Selling Stockholders in connection
with the liquidation of Carriage House. All of the outstanding capital stock of
Carriage House was owned by Royce R. Baker and Kathryn M. Baker, co-trustees
U/D/T 2/12/87, known as the Royce Baker Family Trust (the "Royce Baker Family
Trust"). Certain of the Shares were subsequently transferred to Royce R. Baker
and Kathryn M. Baker, as community property, in anticipation of future transfers
to charitable remainder trusts. The Company issued the Shares to Carriage House
in consideration for the Acquisition. At the closing of the Acquisition, the
Company and Carriage House entered into a Registration Rights Agreement (the
"Registration Rights Agreement"). The Registration Rights Agreement requires the
Company to file with the Commission and use its best efforts to have declared
effective a registration statement that would permit the Selling Stockholders to
sell their Shares to the public.
<TABLE>
<CAPTION>
Shares Owned Shares Owned
Prior to the Offering Upon Completion of the Offering
--------------------- -------------------------------
Selling Number of Percentage Shares Being Number of Percentage
Stockholder Shares of Class Offered Shares of Class
----------- --------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Royce Baker
Family Trust 36,612 * 36,612 0 *
Royce R. Baker and
Kathryn M. Baker, as
community property ** 36,500 * 36,500 0 *
* Does not exceed 1% of the total outstanding shares of Common Stock.
** Also includes any charitable remainder trusts established by Royce R.
Baker and Kathryn M. Baker.
</TABLE>
5
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of (a) 35,000,000
shares of Common Stock, par value $.01 per share, (b) 600,000 shares of Class B
Common Stock, par value $.01 per share ("Class B Common Stock"), (c) 1,055,000
shares of Preferred Stock, par value $.01 per share, of which 155,010 shares
have been designated as Series C Junior Participating Preferred Stock and the
remaining 899,990 shares may be designated by the Board of Directors of the
Company (the "Board of Directors") with such rights and preferences as they
determine (the "Preferred Stock"). On November 18, 1993, the Company redeemed
60,000 shares of Preferred Stock which were designated Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock. As of March 31, 1997
the Company had 14,403,804 outstanding shares of Common Stock, no outstanding
shares of Class B Common Stock and no outstanding shares of Preferred Stock. As
of March 31, 1997, there were 362 holders of record of Common Stock.
Common Stock
Voting Rights. Each holder of shares of Common Stock is entitled to one
vote per share on all matters to be voted on by stockholders.
Dividend Rights. The holders of Common Stock are entitled to dividends
and other distributions if, as and when declared by the Board of Directors out
of assets legally available therefor, subject to the rights of any holder of
Preferred Stock, restrictions set forth in the Company's senior indebtedness and
the restrictions, if any, imposed by other indebtedness outstanding from time to
time.
Other Rights. Upon the liquidation, dissolution or winding up of the
Company the holders of shares of Common Stock would be entitled to share pro
rata in the distribution of all of the Company's assets remaining available for
distribution after satisfaction of all its liabilities and the payment of the
liquidation preference of any outstanding Preferred Stock. The holders of Common
Stock have no preemptive or other subscription rights to purchase shares of
stock of the Company, nor are they entitled to the benefits of any sinking fund
provisions. Shares of Common Stock issued in connection with or outstanding
prior to this offering are not subject to any further call or assessment.
Listing; Transfer Agent and Registrar. The Common Stock is listed on
the New York Stock Exchange under the symbol "ETH." The transfer agent and
registrar for the Common Stock is Harris Trust Company of New York.
Class B Common Stock
The Class B Common Stock is identical to the Common Stock in all
respects except with respect to voting and conversion rights. The holders of
Class B Common Stock will have no rights to vote. Each record holder of Class B
Common Stock is entitled at its option to convert any or all of such shares into
the same number of shares of Common Stock provided that such conversion would
not result in such holder and its affiliate directly or indirectly owning,
controlling or having the power to vote a greater quantity of Common Stock than
such holder and its affiliates are permitted to own, control or have power to
vote under applicable laws and regulations. The Class B Common Stock is intended
to meet the needs of investors who may be subject to limitations under the Bank
Holding Company Act of 1956, as amended, on their ability to hold more than five
percent of the voting stock of the Company. The Class B Common Stock was
originally created to satisfy the bank regulatory requirements of Chemical Bank
(now Chase Manhattan Bank), an investor and the Company's current senior secured
lender. Any issuance of shares of Class B Common Stock upon conversion of Common
Stock would result in a decrease of an equal number of shares of Common Stock.
Accordingly, assuming no additional issuances of shares of Class B Common Stock
after the date on which the offering is completed (other than in exchange for
shares of Common Stock as described above), the issuance of shares of Class B
Common Stock would not increase the total number of shares of Common Stock
outstanding on such date. The Class B Common Stock is not listed on any
securities exchange nor quoted through the NASDAQ National Market System.
6
<PAGE>
Preferred Stock
The Board of Directors is authorized, without further shareholder
action, to divide any or all shares of the authorized Preferred Stock into
series and to fix and determine the designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereon, of any series so established, including voting powers,
dividend rights, liquidation preferences, redemption rights and conversion
privileges. Although the Company has no present intention to issue shares of
Preferred Stock, the issuance of shares of Preferred Stock or the issuance of
rights to purchase such shares may have the effect of delaying, deferring or
preventing a change in control of the Company or an unsolicited acquisition
proposal. Under certain circumstances, the issuance of Preferred Stock could
adversely affect the voting power of the holders of the Common Stock. The Board
of Directors does not at present intend to seek shareholder approval prior to
any issuance of currently authorized Preferred Stock, unless otherwise required
by law.
Preferred Stock Purchase Rights
On May 20, 1996, the Board of Directors declared a dividend of one
preferred stock purchase right ("Right") for each outstanding share of Common
Stock. The dividend was payable to stockholders of record at the close of
business on July 10, 1996 ("Record Date"). Each Right entitles the registered
holder to purchase from the Company one one-hundredth (1/100) of a share of the
Company's Series C Junior Participating Preferred Stock ("Series C Preferred
Stock") at a purchase price of $125. The terms and conditions of the Rights are
contained in a Rights Agreement, dated June 26, 1996, between the Company and
Harris Trust and Savings Bank, as Rights Agent.
Upon issuance, the Rights were not exercisable, certificates for the
Rights were not issued and the Rights currently automatically trade with the
Common Stock. Until the close of business on the Distribution Date, which will
occur on the earlier of (i) the tenth day following a public announcement that a
person or group of affiliated or associated persons, other than the Company, any
subsidiary of the Company or any employee benefit plan or employee stock plan of
the Company (each, an "Exempt Person"), has acquired, or has obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding Common Stock
(each, an "Acquiring Person") (the "Stock Acquisition Date") or (ii) the
fifteenth business day following the commencement of or public announcement of
the intent to commence a tender or exchange offer which, if consummated, would
result in the ownership of 15% or more of the outstanding Common Stock,
irrespective of whether any shares of Common Stock are acquired pursuant to such
offer (the earlier of such dates referenced in clause (i) or (ii) above being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate, together with a copy of a Summary of Rights. The
Rights Agreement excludes from the calculation of beneficial ownership of shares
of Common Stock of a Person, any shares which such Person has the right to vote
pursuant to a voting proxy provided by Management Letter Agreements and Dealer
Letter Agreements (as such terms are defined in the Rights Agreement). The
Rights Agreement provides that the Distribution Date may be extended by the
Board of Directors prior to the expiration of either of the time periods
referenced in clause (i) or (ii) above. It further provides that until the
Distribution Date (or earlier redemption or expiration of the Rights), the
Rights will be represented by and transferred with, and only with, the Common
Stock. Until the Distribution Date (or the earlier redemption or expiration of
the Rights), the new Common Stock certificates issued after July 10, 1996 will
contain a legend incorporating the Rights Agreement by reference and the
surrender for transfer of any of the Company's Common Stock certificates, with
or without the aforesaid legend or a copy of the summary of rights attached
thereto, will also constitute the simultaneous transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate Rights Certificates ("Rights
Certificates") will be mailed to holders of record of Common Stock at the close
of business on the Distribution Date, and, thereafter, the Rights Certificates
alone will evidence the Rights, and the Rights will be transferable separate and
apart from the Common Stock.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on May 31, 2006, unless redeemed or
exchanged earlier as described below.
If any Person (other than an Exempt Person) becomes the beneficial
owner of 15% or more of the then outstanding shares of Common Stock, each holder
of a Right, other than the Acquiring Person, will have the right to
7
<PAGE>
receive, upon payment of the Purchase Price, in lieu of Series C Preferred
Stock, a number of shares of Common Stock having a market value equal to twice
the Purchase Price. In lieu of issuing shares of Common Stock upon exercise of
Rights, the Company may, and to the extent that insufficient shares of Common
Stock are available for the exercise in full of the Rights, the Company shall,
issue cash, property or other securities of the Company, or any combination
thereof (which may be accompanied by a reduction in the Purchase Price) in
proportion determined by the Company, so that the aggregate value received is
equal to twice the Purchase Price. The Rights Agreement contains an exemption
for any issuance of Common Stock by the Company directly to any person (for
example, in a private placement or an acquisition by the Company in which Common
Stock is used as consideration), even if that person would become the beneficial
owner of 15% or more of the Common Stock, provided that such person does not
acquire any additional shares of Common Stock. Notwithstanding the foregoing,
after the acquisition of shares of Common Stock as described in this paragraph,
Rights that are (or, under certain circumstances, Rights that were) beneficially
owned by an Acquiring Person will be null and void.
The Board of Directors may, at its option, at any time after a person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right; provided, however, the Board of Directors may not
effect such exchange after the time that any Person (other than an Exempt
Person) becomes the beneficial owner of 50% or more of the Common Stock then
outstanding.
Unless the Rights are redeemed earlier, if, after the Stock Acquisition
Date, the Company is acquired in a merger or other business combination (in
which any shares of the Common Stock are changed into or exchanged for other
securities or assets) or more than 50% of the assets or earnings power of the
Company and its subsidiaries (taken as a whole) are sold or transferred in one
or a series of related transactions, the Rights Agreement provides that proper
provision shall be made so that each holder of record of a Right will from and
after that time have the right to receive, upon payment of the Purchase Price,
that number of shares of common stock of the acquiring company which has a
market value at the time of such transaction equal to twice the Purchase Price.
At any time after the date of the Rights Agreement until the time that
a person becomes an Acquiring Person, the Board of Directors may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"), which may (at the option of the Company) be paid in cash, shares of
Common Stock or other consideration deemed appropriate by the Board of
Directors. Upon the effectiveness of any action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired, and under certain circumstances the Rights
beneficially owned by such a person or group may become void. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors because, if the Rights would become exercisable as a result
of such merger or business combination, the Board of Directors may, at its
option, at any time prior to the time that any Person becomes an Acquiring
Person, redeem all (but not less than all) of the then outstanding Rights at the
Redemption Price.
8
<PAGE>
Certain Provisions of Certificate of Incorporation and By-Laws
The Restated Certificate of Incorporation (the "Certificate") and
Amended and Restated By-Laws (the "By-Laws") of the Company and Section 203 of
the Delaware General Corporation Law (the "Delaware GCL") contain certain
provisions that may make the acquisition of control of the Company by means of a
tender offer, open market purchase, a proxy fight or otherwise more difficult.
These provisions are designed to encourage persons seeking to acquire control of
the Company to negotiate with the Board of Directors. The Company believes that,
as a general rule, the interests of its shareholders would be served best if any
change in control results from negotiations with its Board of Directors based
upon careful consideration of the proposed terms, such as price to be paid to
shareholders, the form of consideration to be paid and the anticipated tax
effects of the transaction.
However, these provisions could have the effect of discouraging a
prospective acquirer from making a tender offer or otherwise attempting to
obtain control of the Company. To the extent that these provisions discourage
takeover attempts, they could deprive shareholders of opportunities to realize
takeover premiums for their shares or could depress the market price for the
shares. Moreover, these provisions could discourage accumulation of large blocks
of the Company's stock, thus depriving shareholders of any advantages that large
accumulations of stock might provide. These provisions are based upon the
Company's belief that such protections are important to the stability of Ethan
Allen's business and its dealers' commitment to and investment in Ethan Allen
and their dealerships.
Business Combinations. Section 203 of the Delaware GCL prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
upon consummation of such transaction the interested stockholder owned 85% of
the voting stock of the corporation outstanding at the time the transaction
commenced or unless the business combination is, or the transaction in which
such person became an interested stockholder was, approved in a prescribed
manner. A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the stockholder. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or,
in the case of affiliates and associates of the issuer, did own within the last
three years) 15% or more of the corporation's voting stock.
Article Fifth of the Certificate requires the vote of at least
two-thirds of those outstanding voting shares which are held by disinterested
stockholders and the approval of certain disinterested directors who are also
"continuing directors," as well as satisfaction of other procedural
requirements, as preconditions to certain business combinations with a person
who is the beneficial owner of 5% or more of the Company's outstanding voting
stock. A person becomes an interested person when it has acquired (directly or
through affiliates or associates) beneficial ownership of 5% or more of the
outstanding voting shares of the Company. Article Fifth provides that the
proposed business combination can only be adopted and authorized by satisfying
each of the following three conditions: (1) the proposed business combination
shall be approved by a majority of disinterested directors who are also
"continuing directors," were directors prior to the time that the person became
an interested person and constituted a majority of the Board of Directors prior
to that time, (2) whether or not required by the Exchange Act, a proxy statement
conforming to the requirements of that act must be mailed to the stockholders of
the Company for the purpose of soliciting stockholder approval of the proposed
business combination and (3) the proposed business combination must be approved
by the affirmative vote of the holders of at least two-thirds of those
outstanding voting shares that are not beneficially owned by interested persons
or their affiliates or associates. Business combinations to which Article Fifth
would apply include, subject to certain exceptions, the following transactions
or series of related transactions when entered into by the Company with, or at
the direction of, an interested person: (i) any merger or consolidation of the
Company or any subsidiary, (ii) the sale, lease, exchange, mortgage or other
disposition of all or any substantial part of the assets of the Company or any
subsidiary, (iii) the issuance or transfer of any stock of the Company or any
subsidiary to an interested person except by reason of exercise, exchange or
conversion, pursuant to their terms, of securities beneficially owned by that
person prior to the time it became an interested person or a dividend,
distribution, exchange or conversion of securities which does not increase the
interested person's proportionate share of any class or series of stock of the
Company or any subsidiary, and (iv) any transaction resulting in an increase of
the interested person's proportionate share of any class or series of stock of
the Company or any subsidiary or any securities exercisable or exchangeable for
or convertible into stock of the Company or any subsidiary.
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By its terms, Article Fifth and the provisions relating to Section 203
cannot be amended unless the proposed amendment, in addition to receiving any
stockholder approval required under Delaware law, receives the affirmative vote
of the holders of at least two-thirds of those outstanding voting shares of the
Company which are held by disinterested stockholders.
Classified Board of Directors and Related Provisions. The Certificate
provides that the Board of Directors is divided into three classes of directors
serving staggered three-year terms. As a result, approximately one-third of the
Company's Board of Directors will be elected each year. The classified board
provision will prevent a party who acquires control of a majority of the
outstanding voting stock of the Company from obtaining control of the Board of
Directors until the second annual stockholders' meeting following the date the
acquirer obtains the controlling interest.
The Certificate provides that the number of directors will be up to
nine. The Certificate further provides that Directors may be removed only for
cause and by the affirmative vote of holders of a majority of all outstanding
voting stock entitled to vote. This provision, in conjunction with the
provisions of the Certificate authorizing the Board of Directors to fill vacant
directorships, will prevent stockholders from removing incumbent directors
without cause and filling the resulting vacancies with their own nominees.
No Stockholder Action by Written Consent; Special Meetings. The
Certificate provides that stockholder action can be taken only at an annual or
special meeting of stockholders and cannot be taken by written consent in lieu
of a meeting. The Certificate provides that, except as otherwise required by
law, special meetings of the stockholders can only be called by stockholders
holding at least 20% of the outstanding shares, a majority of the entire Board
of Directors, the Chairman of the Board of Directors or the President. Any call
for a special meeting must specify the matters to be acted upon at the meeting.
Other Constituencies Provision. The Certificate provides that, in
determining whether to take or refrain from taking any corporate action, the
Board of Directors may take into account long-term as well as short-term
interests of the Company and its stockholders, dealers, customers, employees,
and other constituencies of the Company, including the effect on communities in
which the Company does business.
Stockholder Proposals. The By-Laws provide that, if a stockholder
desires to submit a proposal at an annual or special stockholders' meeting or to
nominate persons for election as Directors, the stockholder must submit written
notice to the Company at least 60 days prior to the anniversary date of the
prior annual meeting or within 10 days after notice of a special meeting is sent
or given to stockholders by the Company. The notice must describe the proposal
or nomination and set forth the name and address of, and stock held of record
and beneficially by, the stockholder. Notices of stockholder proposals must set
forth the reasons for conducting such business and any material interest of the
stockholder in such business. Director nomination notices must set forth the
name and address of the nominee, arrangements between the stockholder and the
nominee and other information as would be required under Regulation 14A of the
Exchange Act. The presiding officer of the meeting may refuse to acknowledge a
proposal or nomination not made in compliance with the procedures contained in
the By-Laws.
The By-Laws also provide that, in order for stockholders to approve
precatory proposals requesting the Board of Directors to take certain actions, a
majority of the outstanding stock of the Company entitled to vote thereon (and
not of the stock present at the meeting) must be voted for the proposal. The
advance notice requirements regulating stockholder nominations and proposals may
have the effect of precluding a contest for the election of directors or the
introduction of a stockholder proposal if the requisite procedures are not
followed and may discourage or deter a third party from conducting a
solicitation of proxies to elect its own slate of directors or to introduce a
proposal. The requirement that precatory proposals receive approval of a
majority of the outstanding shares entitled to vote rather than a majority of
the shares present at a meeting will make it more difficult for stockholders to
obtain the vote required to approve such proposals. As a result, the By-Law
provision may discourage or deter a third party from conducting a solicitation
of proxies to request the Board of Directors to take certain actions.
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Dealer Shares
The Company sold 45,819 shares of Common Stock to Ethan Allen's dealers
and distributors, and 6,667 shares to other persons from October through
December 1989. Dealers and distributors who purchased shares of Common Stock
entered into Dealer Letter Agreements (the "Dealer Letter Agreements"), which
provide for transfer restrictions, rights of first refusal in favor of the
Company in respect of proposed share transfers by dealers, and an irrevocable
proxy appointing Mr. Kathwari to vote their shares. Each Dealer Letter Agreement
will expire on its tenth anniversary.
Management Shares and Warrants
The Company sold 40,385 shares of Common Stock to officers and
employees of the Company from November 1989 through December 1990 (of which
33,345 shares are currently outstanding), and management warrants (the
"Management Warrants") that were exercisable for 174,956 shares (of which
Management Warrants exercisable for 67,905 shares are currently outstanding).
The Management Warrants are exercisable at an exercise price of $3.675 per share
at any time and expire on December 31, 1999. The aggregate number of shares
issuable upon exercise of the Management Warrants is also subject to adjustment
for stock dividends, subdivisions, combinations and reclassification with
respect to the Common Stock. All shares sold to management and Management
Warrants, and any shares issued upon exercise of the Management Warrants, are
subject to the terms of a management securities agreement (the "Management
Letter Agreement") between each management investor and the Company. The
Management Letter Agreements restrict shares of Common Stock, Management
Warrants, Incentive Options and Earn-In Warrants (but not Earned Warrants) held
or acquired by the management investors by providing an irrevocable proxy
appointing Mr. Kathwari to vote their shares. As of March 31, 1997, all 67,905
outstanding Management Warrants were vested. Each Management Letter Agreement
will expire on its tenth anniversary.
Stock Option Plans
Management Option Plan. The Company has a Management Non-Qualified
Stock Option Plan (the "Management Option Plan") authorizing the issuance of
options (the "Incentive Options") to purchase up to 276,514 shares of Common
Stock (of which Incentive Options exercisable for 137,727 shares are currently
outstanding) to the Company's management at an exercise price of $16.50 per
share. As of March 31, 1997, all 137,727 outstanding Incentive Options were
vested. Incentive Options were granted under the Option Plan through March 23,
1993, and Incentive Options that were granted are exercisable through March 23,
2000.
1992 Stock Option Plan. The Company has adopted a Stock Option Plan
(the "1992 Stock Option Plan"). Under the 1992 Stock Option Plan, options and
stock appreciation rights are granted for the purpose of attracting and
motivating key employees and non-employee directors of the Company. The 1992
Stock Option Plan is administered by the Compensation Committee of the Board of
Directors. The 1992 Stock Option Plan provides for the grant of options to
purchase shares of Common Stock that are either "qualified," that is, those that
satisfy the requirements of Section 422 of the Code for incentive stock options,
or "nonqualified," that is, those that are not intended to satisfy the
requirements of Section 422 of the Code, as well as stock appreciation rights
(the "SARs") on such options. The Compensation Committee under the 1992 Stock
Option Plan recommends, subject to the approval of the disinterested members of
the Board of Directors, which individuals will be granted options and SARs, the
number of shares to be optioned and other terms and conditions applicable to the
grants. Under the terms of the 1992 Stock Option Plan, options will be at the
market price of the Common Stock at the time of grant. If an option holder
ceases to be an employee of the Company, the holder (or his estate) has three
months to exercise his vested options, unless his termination was by reason of
disability, in which case he has twelve months to exercise his vested options.
The maximum number of shares of Common Stock reserved for issuance under the
1992 Stock Option Plan is 1,180,199 shares. All of the shares reserved for
issuance under the 1992 Stock Option Plan have been registered on one or more
Registration Statements on Form S-8. As of March 31, 1997, options exercisable
for 602,650 shares have been granted under the 1992 Stock Option Plan (of which
options exercisable for 547,063 shares are currently outstanding). Options
granted under the 1992 Stock Option Plan become fully vested two years after the
date of grant for non-employee directors and four years after the date of grant
for key employees. As of March 31, 1997, 200,836 of the options were
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<PAGE>
vested. Each option granted is exercisable until the earlier of ten years from
the date of grant or, if a non-employee director, ninety days after such
director no longer serves the Company in that capacity for any reason.
Registration Rights
Certain investors are entitled to up to three demand registrations of
shares of their Common Stock. Demand registration rights may be exercised by
these investors and permitted transferees holding, and the demand registration
must include, at least 500,000 shares of Common Stock (including shares which
they would hold upon conversion of any other shares of stock or exercise of any
warrants). A demand registration may be deferred by the Company for 60 days if
the Board of Directors determines that it would have a material adverse effect
on the Company.
These investors and permitted transferees also have "piggyback"
registration rights, i.e., the right to include their shares of Common Stock in
any registered offering of equity securities by the Company. The Company must
give each such investor and permitted transferee notice of any such proposed
registration at least 390 days prior to the anticipated date for filing the
registration statement for such offering. Each such investor and permitted
transferee then has 20 days during which to request that the Company include in
such registration shares of stock or warrants of the same class or series as the
Company proposes to register. The investors holding these registration rights
have agreed to waive them in connection with this offering.
In addition, the Selling Stockholders have been granted certain
registration rights by the Company in connection with the Acquisition. See
"Selling Stockholders."
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders.
Such sales may be made on the NYSE or other exchanges (if the Common Stock is
listed for trading thereon) or otherwise at prices and at terms then prevailing,
at prices related to the then current market price or at negotiated prices. The
Shares may be sold by any one or more of the following methods: (i) a block
trade in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transactions, (ii) purchases by a broker or dealer
as principal and resale by such broker or dealer for its account, (iii) ordinary
brokerage transactions and transactions in which the broker solicits purchasers,
and (iv) privately negotiated transactions.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholder in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act, and
any commissions received by such broker-dealers, agents or underwriters and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Under the Exchange Act and the regulations thereunder, any person
engaged in a distribution of the Shares offered by this Prospectus may not
simultaneously engage in market making activities with respect to the Common
Stock during any applicable "cooling off" periods prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder including, without limitation, Rules 101,
102, 103 and 104, which provisions may limit the timing of purchases and sales
of Common Stock by the Selling Stockholders.
There can be no assurance that the Selling Stockholders will sell any
or all of the Shares hereby registered. To the extent required, the Company will
use its best efforts to file, during any period in which offers or sales are
being made, one or more supplements to this Prospectus to describe any material
information with respect to the plan of distribution not previously disclosed in
this Prospectus or any material change to such information in this Prospectus.
The registration effected hereby is being effected pursuant to certain
registration rights previously granted by the Company to the Selling
Stockholders at the time of the Acquisition. The Company has agreed to bear all
expenses
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(other than underwriting discounts and commissions of any underwriters, brokers,
sellers or agents retained by the Selling Stockholders) in connection with the
registration and sale of the Shares being offered by the Selling Stockholders.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by
Mayer, Brown & Platt, New York, New York.
EXPERTS
The annual consolidated financial statements of the Company as of June
30, 1996 and 1995 and for each of the years in the three-year period ended June
30, 1996 incorporated by reference in the Registration Statement, of which this
Prospectus forms a part, have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, for the periods and to the extent indicated in
their report thereon, and have been so incorporated in reliance upon the
authority of such firm as experts in accounting and auditing.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities registered hereby, all of
which will be paid by the Company:
SEC registration fee........................ $1,128.53
Legal fees.................................. 7,000.00
Accounting fees and expenses................ 2,250.00
Miscellaneous............................... 621.47
Total................... $11,000.00
==========
Item 15. Indemnification of Officers and Directors.
(a) The Delaware GCL (Section 145) gives Delaware corporations broad powers to
indemnify their present and former directors and officers and those of
affiliated corporations against expenses incurred in the defense of any lawsuit
to which they are made parties by reason of being or having been such directors
or officers, subject to specified conditions and exclusions, gives a director or
officer who successfully defends an action the right to be so indemnified, and
authorizes the Company to buy directors' and officers' liability insurance. Such
indemnification is not exclusive of any other rights to which those indemnified
may be entitled under any by-laws, agreement, vote of stockholders or otherwise.
(b) The Certificate requires, and Article VI of the By-Laws of the Company
provides for, indemnification of directors, officers, employees and agents to
the fullest extent permitted by law.
(c) In accordance with Section 102(b)(7) of the Delaware GCL, the Certificate
provides that directors shall not be personally liable for monetary damages for
breaches of their fiduciary duty as directors except for (1) breaches of their
duty of loyalty to the Company or its stockholders, (2) acts or omissions not in
good faith or which involve intentional misconduct or knowing violations of
laws, (3) under Section 174 of the Delaware GCL (unlawful payment of dividends)
or (4) transactions from which director derives an improper personal benefit.
(d) The Company has a $20,000,000 Directors' and Officers' insurance policy.
(e) The Company has entered into indemnification agreements with each of its
directors providing that the Company will indemnify the directors against
certain liabilities (including settlements) and expenses actually and reasonable
incurred by them in connection with any threatened or pending legal action,
proceeding or investigation (other than actions brought by or in the right of
the Company) to which any of them is, or is threatened to be, made a party by
reason for their status as a directors, officers or agent of the Company,
provided that such director 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
and, with respect to any criminal proceedings, had no reason cause to believe
his or her conduct was unlawful. With respect to any action brought by or in the
right of the Company, directors may also be indemnified, to the extent not
prohibited by applicable laws or as determined by a court of competent
jurisdiction, against expenses actually and reasonably incurred by them in
connection with such action if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interest of the Company.
The Agreements also required indemnification of directors for all reasonable
expenses incurred in connection with the successful defense of any covered
action or claim and provide for partial indemnification in the case of any
partially successful defense.
II - 1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
See Exhibit Index included herewith which is incorporated herein by
reference.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act 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;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement;
provided, however, that paragraphs (a)(i) and (a)(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.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth or described in Item 15 of this
Registration Statement, 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 Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II - 2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Danbury and State of Connecticut on the 21st day of
May 1997.
ETHAN ALLEN INTERIORS INC.
By /s/ M. Farooq Kathwari
M. Farooq Kathwari
Chairman and Chief Executive Officer
II - 3
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints M. Farooq Kathwari and Edward P. Schade and each of them, the true and
lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, 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, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their 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, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the 21st day of May 1997.
Signature Title
/s/ M. Farooq Kathwari Chairman, Chief Executive
M. Farooq Kathwari Officer and Director
/s/ Clinton A. Clark Director
Clinton A. Clark
/s/ Steven A. Galef Director
Steven A. Galef
/s/ Kristin Gamble Director
Kristin Gamble
/s/ Horace G. McDonell Director
Horace G. McDonell
/s/ Edward H. Meyer Director
Edward H. Meyer
/s/ William W. Sprague Director
William W. Sprague
/s/ Edward P. Schade Vice President and Chief
Edward P. Schade Financial Officer
/s/ Gerardo Burdo Chief Accounting Officer
Gerardo Burdo
II - 4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
2 Purchase and Sale Agreement, dated March 28, 1997,
between the Company and Carriage House Interiors of
Colorado, Inc.*
4.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3(c) to the
Company's Registration Statement on Form S-1, File
No. 33-57216)
4.2 Amended and Restated By-laws of the Company
(incorporated by reference to Exhibit 3(d) to
the Company's Registration Statement on Form
S-1, File No. 33-57216)
4.3 Rights Agreement, dated as of June 26, 1996, among
the Company and Harris Trust and Savings Bank
(incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K, dated July 3,
1996)
4.4 Registration Rights Agreement, dated March 28, 1997,
between the Company and Carriage House Interiors of
Colorado, Inc.
5 Opinion of Mayer, Brown & Platt
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Mayer, Brown & Platt (included in the
opinion filed as Exhibit 5 hereto)
24 Powers of Attorney (included on the signature page of
the Registration Statement)
- -------------------
* The schedules and exhibits to this agreement have not been
filed pursuant to Item 601(b)(2) of Regulation S-K. Such
schedules and exhibits will be filed supplementally upon the
request of the Commission.
II - 5
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EXHIBIT 2
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT, made and entered into effective immediately
after the close of business on the 28th day of March, 1997, between ETHAN ALLEN
INC., a Delaware corporation, with offices at Ethan Allen Drive, Danbury,
Connecticut 06811 (hereinafter referred to as "Buyer"), and CARRIAGE HOUSE
INTERIORS OF COLORADO, INC. with offices located at, 7341 Clairemont Mesa
Boulevard, San Diego, California 92111 (hereinafter referred to as "Seller").
WITNESSETH
WHEREAS, Seller presently operates four (4) "Ethan Allen Home
Interiors" retail operations located at (see inserts for addresses) and a
warehouse (the "Warehouse") located (see insert for address) which are currently
owned by Seller (hereinafter the "Stores");
WHEREAS, the Seller desires to sell and Buyer desires to buy
those of Seller's assets, located at the Stores (hereinafter the "Store
Premises") and inventory for the Stores, including but not limited to, the
inventory, prepaid expenses, security deposits, equipment, supplies, leasehold
improvements, and customer mailing lists;
WHEREAS, Buyer proposes to assume certain of Seller's
liability for the Store, limited to customer deposits and the obligation to
fulfill customer orders for products upon which customer deposits were given
(hereinafter the "Liabilities");
WHEREAS, Seller proposes and Buyer is willing to purchase the
Westminster, Colorado Store Premises (the "Westminster Store") from the owner of
the Store Premises;
NOW, THEREFORE, in consideration of the promises and mutual
covenants and agreements hereinafter set forth, the parties hereby covenant and
agree as follows:
1. PURCHASE AND SALE
A. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as defined below), Seller will
sell, transfer, deliver and assign to Buyer for the purchase
price set forth below, all right, title and interest in and to
the assets ("Assets") described in paragraphs (a) through (d)
below, free and clear of any liens, claims or encumbrances.
The Assets shall include the following:
<PAGE>
(a) fixed assets, including leasehold improvements and
equipment and supplies, located at the Store Premises
and security deposits and prepaid expenses for the
Stores, which are all listed in Schedule A;
(b) Ethan Allen merchandise which at the time of Closing
is in inventory, or on display in the Stores;
(c) customer mailing lists of the Stores; and
(d) all business records, warranties for fixed assets, or
any documents or records which pertain or are
required to better enjoy the Assets being purchased
hereunder.
B. The parties agree that risk of loss for the Assets and the
Store Premises to be purchased or leased hereunder shall
remain with Seller up until the time and date of the Closing
and shall pass to Buyer with the passage of title at Closing.
2. ASSUMPTION OF LIABILITIES
A. As of the date and time of the Closing, Buyer agrees to assume
Seller's liability for customer deposits and the obligation
(excluding those which arise out of Seller's negligent acts,
omissions, misdeeds, including the making of false and
misleading statements or those which in any way relate to the
extension by Seller of consumer credit) to fulfill undelivered
backlog (hereinafter "Undelivered Backlog"). Undelivered
Backlog shall consist of the obligation to fulfill consumer
orders for Ethan Allen product which were placed with the
Stores.
B. Other than the liability for customer deposits and undelivered
backlog set forth above in paragraph 2 (A), Buyer will not
assume, undertake, accept or discharge any obligations or
liabilities of the Seller of any nature or kind whether actual
or contingent which arose prior to the Closing Date (as
defined below). Seller shall remain liable for and shall
indemnify and hold Buyer harmless from any such cause, action,
or claim for any such matter as and in accordance with
Seller's indemnification as hereinafter provided in paragraph
10 and as specified. In the event of any such action Seller
will use reasonable efforts to have Buyer dismissed as a
party.
3. CLOSING
The closing of the sale of Assets contemplated herein shall
take place after the close of business on or before March 28,
1997 or such other date as the parties may agree (the "Closing
Date"). The Seller shall be responsible for
2
<PAGE>
all operations of the Stores and warehouse, up to the time and
date of the Closing Date. On the Closing Date, the parties
shall close in relation to the liabilities for Undelivered
Backlog and transfer of the Assets, all of which shall be
transferred to Buyer as provided for herein. Closing shall
take place via facsimile with execution of originals to follow
or by such other arrangement as the parties may agree.
4. DELIVERIES AT CLOSING
A. At the Closing, Buyer shall deliver the following:
(a) The Net Purchase Price, (as determined and defined in
Paragraph 5 below, which will be paid as follows:
(i) $3,326,600.78 to be paid with 73,112 shares of the
common stock of Ethan Allen Interiors, Inc. with Share
Certificates representing such common stock to be
delivered within 10 days of closing; and
(ii) $2.1 million in cash to be paid for the
Westminster store.
(b) executed copies of the Assignments of Leases for the
Store Premises and Warehouse as set forth in Exhibit
A and of the Real Estate Purchase and Sale Agreement
as set forth in Exhibit B for the Westminster Store;
(c) an executed copy of the Registration Rights Agreement
as set forth on Exhibit C; and
B. At the Closing, Seller shall deliver the following:
(a) a Bill of Sale, in the form annexed as Exhibit D,
transferring title to the Assets, duly executed by
Seller;
(b) the Mailing and Customer Lists for the Stores as set
forth on Schedule E hereto;
(c) an assignment of any assignable warranties for Assets
being transferred hereunder;
(d) executed copies of the Assignments of Leases for the
Store Premises and Warehouse, as set forth in Exhibit
A and of the Real Estate Purchase as Sale Agreement
as set forth in Exhibit B for the
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Westminster Store, including all landlord consents
and approvals required in connection therewith;
(e) an executed copy of the Registration Rights Agreement
as set forth on Exhibit C;
(f) Schedules B, C and D hereto; and
(g) as of the date of Closing, an updated listing
deleting product which has been sold on the Inventory
Lists and an updated list of the Undelivered Backlog
and customer deposits, deleting product orders and
deposits which have been delivered and adding new
orders and deposits which have been taken prior to
the date and time of Closing.
5. PURCHASE PRICE
The net purchase price (hereinafter "Net Purchase Price") to be paid for the
Assets and the Undelivered Backlog being transferred hereunder, shall be
calculated by adding the amounts determined under succeeding paragraphs A, B, C
and D and subtracting therefrom the customer deposits (that portion of the
purchase price plus applicable taxes which consumers have paid as a deposit)
which Seller has received for orders included in the Undelivered Backlog as such
Undelivered Backlog list has been adjusted as of the Closing Date.
A. The valuation of fixed assets, which Buyer has agreed to buy
and upon which Buyer and Seller have agreed upon a value, as
set forth in Schedule A, for a total value of $300,000.
B. The valuation of Inventory List as contained in Schedule B as
adjusted for any listed items which are sold after the
preparation of the Schedule B prior to the date and time of
Closing and the following valuation:
For current floor samples, warehouse inventory and product on
order at the Closing Date, the value of each item shall be the
current price at which Seller invoices its dealers. Chair
seats attached to frames shall be included but shall be valued
at $10.00 each. Discontinued, but otherwise in good condition,
bedding shall be valued at current dealer cost less 30%.
Discontinued, but otherwise usable, salable case goods shall
be valued at current dealer cost less 30%. Case goods,
upholstery, and accessories which are damaged but otherwise
usable and salable shall be valued mutually agreed upon value
as determined by Buyer and Seller. Upholstery with
discontinued frames or fabrics but otherwise usable and
salable, shall be valued at current cost less 30%. Bed
coverings (dust ruffles, bed spreads, coverlets, pillow shams,
canopy treatments and the like) that are
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usable, salable and in perfect condition shall be valued at
original cost to Seller less 50%. Accessories (ceramic, glass,
brass, plants, pictures) shall be valued at regular retail
price less 50%. An inventory list with total valuation shall
be prepared by Seller as Schedule B.
C. An amount of 30% off of dealer cost for all non-Ethan Allen
brand products which Buyer shall choose to acquire.
D. An amount equal to 20% of the total (purchase price excluding
applicable sales taxes) for the Undelivered Backlog adjusted
for deliveries made prior to the time of Closing.
E. The valuation of the Assets listed on Schedule D.
The Net Purchase Price shall be paid for as set forth in paragraph 4 (A)
hereinabove.
6. TAXES
A. Any sales, transfer, documentary, recording or excise taxes or
costs applicable to the transfer of any Assets or possession
of the Store Premises from Seller to Buyer shall be paid by
Buyer whenever due or assessed, and Buyer shall provide Seller
a Tax Exemption Certificate in connection with the sale of the
inventory. Buyer shall also prepare and file whatever returns
as may be required in connection with any of the foregoing
taxes. Seller shall make payment of all personal property,
real property, ad valorem, franchise, and similar taxes which
are due and owing on the Stores and Assets up until the date
and time of Closing.
B. Seller shall be responsible for and shall pay all taxes
payable with respect to the sales made at the Store and shall
be entitled to any refunds for all taxable periods ending
before the Closing Date and shall be responsible for filing
the necessary tax returns with respect to all such periods.
Buyer shall be responsible for and pay all taxes on sales made
at the Store including and following the Closing Date.
C. If after the Closing Date Buyer pays any taxes for which
Seller is liable under this Agreement, or Seller pays any
taxes for which Buyer is liable under this Agreement,
appropriate reimbursement shall be made promptly upon demand
therefor. The portion of any refund, rebate or reimbursement
received by any party hereto to which the other party hereto
is entitled shall be paid over promptly to the other party
which is entitled thereto.
D. Each party hereto shall provide the other party, without cost
and expense, with such assistance as reasonably may be
requested by such party in
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connection with the preparation of any tax return, any audit
or other examination by any taxing authority, or any judicial
or administrative proceedings related to liability for taxes
relating to the Store operated at the Premises; and each party
shall retain at their respective places of business all
relevant records for a reasonable period of time (but not less
than the greater of ten years after the later of the Closing
Date or the applicable statute of limitations in the
jurisdiction in which such taxes are paid, including all
extensions), and provide the other party with any records or
information which may be relevant to any such tax return,
audit or examination, proceedings or determination.
E. (i) Seller agrees to indemnify, defend and hold Buyer harmless
from and against all unpaid taxes for which Seller is
responsible under the terms of this Agreement; and (ii) Buyer
agrees to indemnify, defend and hold Seller harmless from and
against all unpaid taxes for which Buyer is responsible under
the terms of this Agreement, as further provided in paragraphs
9 and 10 hereafter.
7. BROKERS AND FINDERS
Each of the parties hereby represents and warrants to the other that it has not
employed or dealt with any broker or finder in connection with this Agreement or
the transactions contemplated hereby, and agrees to indemnify the other and hold
it harmless from any and all liabilities (including, without limitation,
reasonable attorneys' fees and disbursements paid or incurred in connection with
any such liabilities) for any brokerage commissions or finders' fees in
connection with this Agreement or the transactions contemplated hereby, insofar
as such liabilities shall be based on the arrangements or agreements made by or
on its behalf.
8. SELLER'S OBLIGATIONS
A. Seller agrees to enter into Assignments of Leases and the Real
Estate Purchase and Sale Agreement with Buyer in accordance as
set forth as Exhibit A and Exhibit B annexed hereto, including
obtaining all landlord consents and approvals required in
connection therewith.
B. Seller agrees to enter into the Registration Rights Agreement
as set forth on Exhibit C annexed hereto.
C. Seller agrees to execute and deliver a Bill of Sale, in the
form annexed as Exhibit D.
D. Seller shall have paid any and all commissions which were due
in accordance with Seller's customary and usual practices to
designers on sales
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which are part of the Undelivered Backlog as well as on all
sales made prior to the Closing Date. Seller agrees to
promptly resolve with designers any dispute which arises out
of the payment of commissions on such sales.
E. To the extent that the approval, consent or permission of any
governmental entity of the State of Colorado is necessary for
the consummation of the transactions contemplated herein,
Seller shall advise Buyer to secure said approvals or
consents. Additionally, if notice is required to be given to
any governmental authority or entity of the State of Colorado
with respect to the consummation of the transaction
contemplated herein, Seller shall advise Buyer to give such
notice.
F. Seller shall afford Buyer, at reasonable times and on
reasonable notice, the opportunity to make such inspections of
Seller's books, records, properties, and assets pertaining to
the Assets and liabilities being transferred and assumed
hereunder, as shall be reasonably necessary.
9. SELLER'S INDEMNIFICATION
Seller hereby agrees to defend, indemnify and hold Buyer, its parents
and affiliates and their officers, directors, employees and agents
harmless from and against all claims, demands, losses, costs, expenses,
damages, liabilities, judgments (including but not limited to penalties
and interest), suits, causes of action and expenses, including but not
limited to reasonable attorneys' fees and cost of investigation arising
from (i) the inaccuracy or breach of any warranty and representation
made by Seller in this Agreement or (ii) any breach by Seller of, or
failure by Seller to perform or fulfill, its covenants and agreements
set forth in this Agreement or which arise out of operations of Seller,
including but not limited to, any which arise out of Seller's
obligations as set forth in paragraphs 6 and 8 hereof, or from business
or operation conducted at the Store prior to the time of Closing or the
Closing Date, regardless of when such claims are made. The foregoing
shall not apply to liabilities which Buyer expressly assumes hereunder.
Buyer shall give prompt notice to Seller of any of the foregoing.
Seller will defend any such action through counsel reasonably
satisfactory to Buyer.
10. BUYER'S INDEMNIFICATION
Buyer hereby agrees to defend, indemnify and hold Seller, its parents,
affiliates, and their officers, directors, employees, and agents
harmless from and against all claims, demands, losses, costs, expenses,
damages, liabilities, judgments (including but not limited to penalties
and interest), suits, causes of action and expenses, including but not
limited to reasonable attorneys' fees and cost of investigation arising
from (i) the inaccuracy or breach of any warranty and representation
made by Buyer in this Agreement or (ii) any breach by Buyer of, or
failure by Buyer to
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perform or fulfill, its covenants and agreements set forth in this
Agreement, including but not limited to those created under paragraph 7
or (iii) the, business and operations of the Store operated by Buyer
from and after the time of Closing on the Closing Date. Seller shall
give prompt notice to Buyer of any of the foregoing, and Buyer will
defend any such action through counsel reasonably satisfactory to
Seller.
11. SELLER'S REPRESENTATIONS
Seller hereby makes the following representations and warranties:
A. Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado.
B. All necessary corporate action has been taken by Seller to
authorize the execution, delivery and performance of this
Agreement.
C. Seller is, and will be, on the applicable Closing Date, the
legal and equitable owner of all of the Assets to be
transferred hereunder with merchantable title thereto; that
all said Assets are and will be at the date of the applicable
Closing, free and clear of any and all mortgages, liens and
encumbrances.
D. Seller will pay in full in the ordinary course all liabilities
it incurred relative to operation of the Store located at the
Store Premises prior to the Closing Date, which liabilities
will be paid as they come due.
E. With respect to the shares of Common Stock acquired by the
Seller, Seller hereby represents and warrants that:
(a) Seller understands and acknowledges that the shares of
Common Stock have not been and will not be registered under
the Securities Act of 1933, as amended (the "Securities Act"),
in reliance upon the exemption provided in Section 4(2) of the
Securities Act or any such other available exemption, and have
not and will not be registered or qualified under the
securities or "Blue Sky" laws of any jurisdiction, and may not
be resold or otherwise transferred unless so registered or
qualified or unless an exemption from such requirements is
available.
(b) Seller has reviewed such materials and information with
respect to the Buyer as Seller deems necessary in order to
make a decision to purchase the Common Stock, and acknowledges
that the Buyer has not made any representation with respect to
the Buyer or the offering or sale of any Common Stock, other
than as contained in this Agreement and the Registration
Rights Agreement. Seller has reviewed this Agreement, has
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been afforded the opportunity to make inquiry of the Buyer and
has received all information concerning the Common Stock, the
Buyer and any other matter relevant to Seller's decision to
purchase the Common Stock that Seller has requested.
(c) Seller is an "accredited investor" within the meaning of
Rule 501 of the Securities Act. Seller has such knowledge and
experience in financial and business matters as to be capable
of evaluating the merits and risks of an investment in the
Common Stock and is able to bear the economic risk of an
investment in the Common Stock.
(d) Seller is acquiring the Common Stock for Seller's own
account, for investment purposes only and not with a view to
resale or distribution.
(e) Seller understands that it is the expressed intent of
Buyer that the shares of Common Stock be issued only in a
transaction not involving any public offering within the
meaning of the Securities Act and that the Common Stock will
bear legends substantially as set forth in the Registration
Rights Agreement and will be subject to certain limitations on
transfer and exchange contained therein.
(f) Seller acknowledges that the shares of Common Stock
acquired hereunder are restricted securities within the
meaning of Rule 144 under the Securities Act and must be held
indefinitely unless subsequently registered under the
Securities Act and applicable state securities laws or unless
an exemption from such registration is available. Seller is
aware of the provisions of Rule 144 which permit the limited
resale of securities purchased in a private placement subject
to the satisfaction of certain conditions including, without
limitation, the existence of a public market for the
securities, the availability of certain current public
information about the Company, the resale occurring not less
than one year after a party has purchased and paid for any
security to be sold, the sale being effected through a
"broker's transaction" or a transaction directly with a
"market maker" as provided by Rule 144(f), and the number of
securities being sold during any three-month period not
exceeding specified limitations. Seller agrees that Seller
will not sell any of the Common Stock without complying with
the terms of the Registration Rights Agreement.
(g) The execution, delivery and performance of this Agreement
and the purchase of the Common Stock are within Seller's
powers and have been duly and validly authorized by all
requisite corporate actions.
(h) Seller acknowledges that Buyer will rely upon the truth
and accuracy of the foregoing acknowledgments, representations
and agreements and
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agrees that, if any of the acknowledgments, representations or
warranties deemed to have been made in connection with the
purchase of the Common Stock are no longer accurate, it shall
promptly notify Buyer.
(i) Seller irrevocably authorizes Buyer to produce this letter
or a copy hereof to any interested party in any administrative
or legal proceeding or official inquiry with respect to the
matters covered hereby.
F. Except as otherwise noted, all representations and warranties
of Seller set forth in this Agreement shall be true and
complete as of the date when made and as of the Closing Date
as though such representations and warranties were made as of
the Closing Date. No representation or warranty made by Seller
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements made,
in light of the circumstances under which they were made, not
misleading.
12. BUYER'S REPRESENTATIONS
Buyer hereby makes the following representations and warranties:
A. Buyer is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware; a
corporation authorized to own or lease its properties and to
conduct its business in the manner and in the places where
such properties are owned or leased or such business is
conducted by it.
B. All necessary action has been taken by Buyer to authorize the
execution, delivery and performance of this Agreement, and
this Agreement is a valid and binding obligation of Buyer, in
accordance with its terms.
C. No consents, approvals or authorizations, other than those
already duly obtained, are necessary to permit Buyer to enter
into this Agreement and consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby do not, and will not, violate, conflict
with, or constitute a breach of, or default under, the
Articles of Incorporation and the By-Laws of Buyer or any
instrument, agreement, contract, commitment, statute or
regulation, or judicial or administrative order, award,
judgment or decree to which Buyer is a party or to which Buyer
or its assets are bound or subject, and do not, and will not,
result in the creation or imposition of any adverse claim or
interest, or any lien, encumbrance, charge, equity or
restriction of any nature whatever, upon or affecting Buyer or
its assets.
D. All representations and warranties of Buyer set forth in this
Agreement shall be true and complete as of the date when made
and as of the Closing Date as though such representations were
made as of the Closing Date. No representation or warranty
made by Buyer contains any untrue statement of
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a material fact or omits to state a material fact necessary to
make such statements made, in light of the circumstances under
which they were made not misleading.
13. CONDITIONS PRECEDENT
The obligations of Buyer and Seller to consummate this Agreement and the
transactions contemplated hereby are subject to the fulfillment prior to or at
the Closing Date of the following conditions precedent:
A. All of the duties and covenants to be performed by Seller and
Buyer, respectively, at or prior to the Closing Date shall
have been duly and timely performed.
B. There shall not have been received by either party hereto any
notice of the commencement of any legal or administrative
proceeding questioning the validity of this Agreement or
seeking to enjoin, prohibit or delay or otherwise necessarily
having the effect of preventing, the consummation of the
transactions contemplated by this Agreement.
C. Seller and Buyer agree to enter into Assignments of Leases for
the Store Premises and the Warehouse as set forth in Exhibit
A, with all required consents from such landlords, and the
Real Estate Purchase and Sale Agreement as set forth in
Exhibit B.
D. Receipt by Seller of the notice referenced in Paragraph 3 of
this Agreement from Buyer that it shall proceed with the
acquisition of the Assets.
E. The execution and delivery of the Registration Rights
Agreement as set forth in Exhibit C.
14. TERMINATION
A. At any time prior to the Closing Date, this Agreement may be
terminated (i) by mutual consent of Buyer and Seller, or (ii)
by either Buyer or Seller if there has been a material
misrepresentation, breach of warranty or breach of covenant,
by the other party in its representations, warranties and
covenants set forth herein, provided the non-breaching party
notifies the breaching party of the breach and the breaching
party fails to cure such breach within the applicable cure
period, as specified in the Notice of Breach. If the Agreement
shall be terminated, as provided in the preceding sentence,
all obligations of either Buyer or Seller, as the case may be,
to proceed as provided in this Agreement shall terminate
without liability of the non- breaching party to the other
solely by reason of such termination.
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B. The right of either Buyer or Seller to terminate this
Agreement as provided in A(ii) above is not an exclusive
remedy, but is in addition to and may be exercised in addition
to and in combination with all other rights and remedies
available to Buyer and Seller under law or equity in the event
of breach or default of this Agreement.
C. If, substantially all the Assets to be purchased hereunder are
damaged or destroyed by fire or other casualty prior to the
Closing, and if the Premises shall, prior to Closing be
damaged or destroyed by fire or other casualty to such an
extent that it cannot be operated, Seller shall have the
option, to be exercised within ten (10) days after notice to
Buyer of such event, either to: (a) terminate this Agreement,
and both parties shall be relieved of all further obligations
hereunder, or (b) to delay the Closing until the Premises is
reasonably restored to the condition prior to the event. If
the damage from fire or other casualty shall be less than the
extent provided above, then the Closing shall be postponed
until such time as the Premises is reasonably restored to the
condition existing prior to the event, and Closing shall take
place subsequent to the completion of such rebuilding or
repair.
15. EXPENSES
A. Except as indicated otherwise herein, Buyer and Seller shall
bear their own fees and expenses regarding the completion of
the transaction as contemplated herein.
B. In the event either Buyer or Seller institutes suit or is
required to defend an action instituted by the other, based
upon or arising out of this Agreement or the transactions
hereby contemplated or the relationship hereby created, the
prevailing party in such lawsuit shall be entitled to
reasonable attorney's fees and costs as may be fixed by a
court of proper jurisdiction.
16. EMPLOYEES AND TAXES
Seller shall have sole responsibility for all salaries, taxes, commissions and
benefits accruing to its employees, including but not limited to federal
withholding payments, state withholding payments, social security taxes, state
unemployment taxes, payments pursuant to employee benefit plans, insurance of
any kind and vacation pay and for all other employee matters at the Store up to
the close of business on the Closing Date except all such taxes related to sales
written on the Closing Date. Seller represents and warrants that it is and will
as of the close of business just prior to the Closing Date be current on all the
foregoing payments, taxes, and commissions. From that time forward, as and to
the extent that Buyer shall hire and employ persons who were formerly employed
at the Store by Seller, benefits, taxes, and other employee matters pertaining
to such persons shall be the
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responsibility of Buyer. Nothing herein shall be deemed to require that Buyer
hire any of Seller's employees.
17. CONSTRUCTION
This Agreement shall be governed and construed in accordance with the laws of
the State of Connecticut applicable to agreements made in such state between
residents thereof and to be wholly performed therein.
18. BULK TRANSFER
Buyer and Seller hereby acknowledge that the provisions of any bulk transfer
law, pursuant to the Uniform Commercial Code or otherwise, will not be complied
with; and Seller agrees to indemnify and hold Buyer harmless for any and all
damages, expenses and reasonable attorney's fees incurred as a result of such
non-compliance. Seller represents and warrants that as of the Closing Date there
will be no unpaid creditors who can make a claim against Seller other than those
not yet due and payable, and those Seller represents and warrants will be paid
in full by Seller within the payment terms thereof.
19. CONFIDENTIALITY
Each party shall hold the information received from the other party in
connection with the transactions contemplated by this Agreement which are
identified by the disclosing party as confidential and proprietary in confidence
and not disclose such to third parties except to the extent that such
information may be made available to the accountants, bankers, attorneys and
other persons who of necessity and as advisors to the parties have a need to
know such information, provided that such persons are bound to an obligation of
confidentiality. If this Agreement is terminated for any reason, each party
will, to the extent requested by the disclosing party, promptly return to the
disclosing party all written material received from such party, including
photocopies thereof, and it will not disclose to third parties or otherwise use
any such confidential and proprietary information, provided that the foregoing
obligations shall not apply to the extent that such information was (i) at that
time of the disclosure in the public domain or which subsequently falls into the
public domain, provided it did not fall into the public domain as a result of
acts by the receiving party or those acting on its behalf, (ii) was received
from a third party before or after the time of disclosure by disclosing party
or, (iii) is required to be disclosed by subpoena, court order, administrative
order, or applicable law, or is required to be disclosed in order to comply with
obligations imposed on the receiving party by law; or (iv) is required to be
disclosed in connection with the enforcement of the rights of the receiving
party against the disclosing party.
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20. WAIVER
Seller and Buyer shall have the right to waive in writing any requirement or
undertaking of the other party contained herein. Any waiver of a breach of any
term or condition of this Agreement shall not operate as a waiver of any other
breach of such term or condition or of any other term or condition, nor shall
any failure to enforce any provision hereof operate as a waiver of such
provisions or of any other provision hereof.
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNITIES
Except with respect to the representations and warranties contained in Paragraph
11(E), which shall survive for a period of two (2) years, the representations
and warranties made by Buyer and Seller shall survive for a period of six (6)
months following the Closing Date and shall not be affected by an investigation,
examination or review which may be made by either Buyer or Seller or by any
disclosure which may be made outside this Agreement. The obligations of
indemnification set forth herein shall survive for the Closing Date.
22. COMPLETE AGREEMENT
All terms, covenants and conditions of this Agreement are as set forth herein,
except as may be specifically otherwise provided herein, and there are no
warranties, agreements or understandings, express or implied, except such as are
expressly set forth herein. This Agreement together with the Exhibits and
Schedules hereto form the entire agreement between the parties with respect to
the subject matter set forth herein and therein and supersedes all prior
agreements, understandings or warranties made by either party.
23. AMENDMENT
This Agreement may not be altered, amended or modified in any respect, except by
written instrument executed by and between the parties hereto.
24. NOTICES
Any and all notices, requests, consents and other communications required
hereunder shall be in writing, sent by facsimile, registered or certified mail,
return receipt requested, addressed as follows, or at such other address as one
party may designate to the other from time to time in writing,
TO THE BUYER:
Ethan Allen Inc.
Ethan Allen Drive
Danbury, Connecticut 06811
Attention: Mr. M. Farooq Kathwari, President
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with copy to:
Ethan Allen Inc.
Ethan Allen Drive
Danbury, Connecticut 06811
Attention: Roxanne Khazarian, General Counsel
TO THE SELLER:
Carriage House Interiors of Colorado, Inc.
7341 Clairemont Mesa Boulevard
San Diego, California 92111
Attention: Royce R. Baker, President
25. POST CLOSING ADJUSTMENTS
On or before ninety (90) days after the Closing Date, the Buyer and
Seller shall perform a final reconciliation of the transferred assets
and liabilities. If there are changes required in any of the foregoing
from the numbers and amounts set at the Closing, including but not
limited to amounts paid for orders which comprise the Undelivered
Backlog and which are canceled following Closing, as established from
books and records which have been reviewed by the parties and upon
which the parties are in agreement, then if an adjustment is required
in favor of the Buyer, there shall be adjusting credit issued by the
Seller to Buyer; and if an adjustment is required in favor of Seller,
there shall be payment issued by Buyer to Seller.
26. COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parry.
27. FURTHER ASSURANCES
From time to time, at the Buyers request, whether at or after the Closing and
without further consideration, the Seller at its expense will execute and
deliver such further instruments of conveyance and transfer and take such other
action as the Buyer reasonably may require more effectively to convey and
transfer to the Buyer any of the Assets, and will assist the Buyer in the
collection or reduction to possession of such property.
28. FIXED ASSETS AND EQUIPMENT WARRANTY DISCLAIMER
ALL FIXED ASSETS AND EQUIPMENT, IF ANY, TRANSFERRED HEREUNDER ARE
SOLD "AS IS, WHERE IS". SELLER MAKES NO REPRESENTATIONS OR
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WARRANTIES, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO ANY PERSONAL PROPERTY
TRANSFERRED HEREUNDER OR AS TO FITNESS FOR A PARTICULAR PURPOSE OR AS TO
MERCHANTABILITY, SUITABILITY, OR AS TO ANY OTHER MATTERS. SELLER HEREBY
DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, INCLUDING BUT NOT LIMITED
TO, ANY EXPRESS OR IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR
MERCHANTABILITY, OR WARRANTIES THAT MAY ARISE BY OPERATION OF LAW.
29. SELLER'S DISCLAIMER
SELLER HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY AS TO (1) THE
VALUE OF THE ASSETS BEING TRANSFERRED HEREBY, (2) THE MARKET SERVICED BY OR FAIR
RENTAL VALUE OF, THE STORE SUBJECT TO THE LEASE APPENDED HERETO AS EXHIBIT A,
(3) THE REVENUES OR PROFITS GENERATED, OR TO BE GENERATED, BY ANY BUSINESS USING
THE ASSETS TRANSFERRED PURSUANT HERETO OR UTILIZING THE STORE SUBJECT TO THE
LEASE APPENDED HERETO AS EXHIBIT A, OR (4) ANY OTHER MATTER RELATING TO THIS
TRANSACTION NOT OTHERWISE EXPRESSLY SET FORTH IN PARAGRAPH 11 HEREINABOVE.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
ATTEST: CARRIAGE HOUSE INTERIORS OF
COLORADO, INC.
/s/ Robert A. Prahl By: /s/ Royce R. Baker
Name: Royce R. Baker
Title: President
Date: March 28, 1997
ATTEST: ETHAN ALLEN INC.
/s/ Roxanne Khazarian By: /s/ M. Farooq Kathwari
Name: M. Farooq Kathwari
Title: President
Date: March 28, 1997
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SCHEDULES
Schedule A -- Fixed Assets
Schedule B -- Inventory
Schedule C -- Undelivered Backlog
Customer Deposits
Schedule D -- Security Deposits
Prepaid Expenses
Schedule E -- Customer Mailing List
EXHIBITS
Exhibit A -- Assignment of Leases
Exhibit B -- Real Estate Purchase Agreement
Exhibit C -- Registration Rights Agreement
Exhibit D -- Bill of Sale
<PAGE>
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
March 28, 1997, between Ethan Allen Interiors Inc., a Delaware corporation (the
"Company") and Carriage House Interiors of Colorado, Inc., a Colorado
corporation (the "Initial Holder").
W I T N E S S E T H
WHEREAS, the Company and the Initial Holder have entered into a
Purchase and Sale Agreement, dated as of even date herewith (the "Purchase
Agreement");
WHEREAS, as a condition to the closing of the Purchase Agreement, the
Company agreed to grant to the Initial Holder registration rights with respect
to certain securities of the Company held by the Initial Holder, including,
without limitation, the registration on a shelf registration statement of
certain shares of Common Stock;
NOW, THEREFORE, it is agreed as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Affiliate" shall mean, with respect to any Person, (a) any
Person which directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person, or (b) any Person who is a director or
executive officer (i) of such Person, (ii) of any subsidiary of such
Person, or (iii) of any Person described in clause (a) above or, with
respect to the Holder, the Company; provided that any Affiliate of a
corporation shall be deemed an Affiliate of such corporation's
stockholders. For purposes of this definition, "control" of a Person
shall mean the power, direct or indirect, (i) to vote or direct the
voting of more than 5% of the outstanding shares of voting stock of
such Person, or (ii) to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value per
share, of the Company, as constituted as of the date of this Agreement.
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"Company" is defined in the preamble.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Holder" shall mean any holder of outstanding Registrable
Securities or anyone who holds outstanding Registrable Securities to
whom the registration rights conferred by this Agreement have been
transferred in compliance with this Agreement.
"Permitted Transferee" is defined in Section 11(b).
"Person" shall mean an individual or a corporation,
association, partnership, joint venture, organization, business, trust,
or any other entity or organization, including a government or any
subdivision or agency thereof.
"Registrable Securities" shall mean the following:
(a) all shares of Common Stock issued to the Initial
Holder pursuant to the Purchase Agreement and outstanding on
the date hereof and owned of record by the Initial Holder as
of the date hereof;
(b) all shares of Common Stock issued to the Initial
Holder pursuant to the Purchase Agreement and outstanding on
the date hereof and owned of record by a Permitted Transferee
of the Initial Holder; and
(c) any shares of capital stock issued or issuable by
the Company in respect of any shares of Common Stock referred
to in the foregoing clauses (a) and (b) by way of a stock
dividend or stock split or in connection with a combination or
subdivision of shares, reclassification, recapitalization,
merger, consolidation or other reorganization of the Company.
As to any particular Registrable Securities that have been
issued, such securities shall cease to be Registrable Securities when
(i) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and
such securities shall have been disposed of under such registration
statement, (ii) they shall have been distributed to the public pursuant
to Rule 144 under the Securities Act, (iii) they shall have been
otherwise transferred or disposed of, and new certificates therefor not
bearing a legend restricting further transfer shall have been delivered
by the Company, and subsequent transfer or disposition of them shall
not require their registration or qualification under the Securities
Act or any similar state law then in force, or (iv) they shall have
ceased to be outstanding.
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"Registration Expenses" shall mean any and all out-of-pocket
expenses incident to the Company's performance of or compliance with
Sections 4 hereof, including, without limitation, all Commission, New
York Stock Exchange, Inc. ("NYSE") listing and filing fees, all fees
and expenses of complying with securities and blue sky laws (including
the reasonable fees and disbursements of underwriters' counsel in
connection with blue sky qualifications and NYSE filings), all fees and
expenses of the transfer agent and registrar for the Registrable
Securities, all printing expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants,
including the expenses of any special audits and/or "cold comfort"
letters required by or incident to such performance and compliance, and
one firm of counsel (other than in-house counsel) retained by the
Company, but excluding underwriting discounts and commissions and
applicable transfer and documentary stamp taxes, if any, and fees and
expenses of any counsel retained by the seller of the Registrable
Securities, which shall be borne by the seller of the Registrable
Securities in all cases.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Sole Stockholder" is defined in Section 11(b).
2. Restrictive Legend. Upon the execution of this Agreement, in
addition to any other legend which the Company may deem advisable under the
Securities Act and certain state securities laws, each certificate representing
shares of the Registrable Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO
THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS AGAINST TRANSFER
CONTAINED IN A REGISTRATION RIGHTS AGREEMENT, DATED AS
OF MARCH 28, 1997. A COPY OF SAID REGISTRATION RIGHTS
AGREEMENT IS AVAILABLE FOR INSPECTION, WITHOUT CHARGE,
AT THE OFFICES OF THE COMPANY."
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The obligations of each party hereto shall be binding upon each
transferee to whom shares of Registrable Securities are transferred by any party
hereto.
3. Transfers of Registrable Securities. (a) The Registrable Securities
may not be sold, assigned, transferred or pledged except upon the conditions
specified in this Agreement, which conditions are intended to ensure compliance
with the provision of the Securities Act. Each Holder will cause any proposed
purchaser, assignee, transferee or pledgee of Registrable Securities held by a
Holder to agree to take and hold such securities subject to the provisions and
upon the conditions specified in this Agreement.
(b) Each Holder agrees not to make any disposition of all or a portion
of any Registrable Securities unless and until:
(i) There is in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(ii) Such Holder shall have notified the Company of the
proposed disposition, including a proposed disposition pursuant to Rule
144, and shall have furnished the Company with a detailed statement of
the circumstances surrounding such disposition, including, if
reasonably requested by the Company, a supporting opinion of counsel
that such disposition shall not require registration of such shares
under the Securities Act.
4. Shelf Registration. (a) At any time after the date hereof through
the second anniversary of the date of this Agreement, the Company shall, as
promptly as practicable and in no event later than 45 days after receipt of a
written notice from the Holder, file and cause to be declared effective, within
90 days thereafter, a "shelf" registration statement on Form S-3 or any
appropriate Form under the Securities Act for an offering to be made on a
continuous basis pursuant to Rule 415 under the Securities Act or any similar
rule that may be adopted by the Commission covering the public resale in market
transactions on a non- underwritten basis of the Registrable Securities. The
Company agrees to use its best efforts to keep such shelf registration statement
continuously effective, supplemented and amended for the earlier of (i) a period
of two years following the date on which such registration statement is declared
effective by the Commission or (ii) the time when all of the Registrable
Securities have been sold to the public through an effective shelf registration
statement. Notwithstanding the foregoing, the period of time that the Company
shall keep the shelf registration statement effective shall be extended, if
necessary, by the period of time the Holder refrains from selling shares of
Common Stock included in a shelf registration statement in accordance with the
provisions of either Section 6(i) or Section 11(e) hereof.
(b) Neither the Company nor any of its security holders (other than the
Holder) shall have the right to include any securities of the Company in the
shelf registration statement.
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(c) The Holder may not include shares of the Registrable Securities in
any shelf registration statement pursuant to this Agreement unless and until it
has furnished to the Company in writing, within twenty (20) days after receipt
of a request therefor, such information specified in Item 507 of Regulation S-K
under the Securities Act or under any other rule or regulation under the
Securities Act for use in connection with any shelf registration statement or
prospectus or preliminary prospectus included therein. The Holder agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company not materially
misleading.
5. Registration Procedures. If and whenever the Company is required by
the provisions of Section 4 to use its best efforts to effect the registration
of any shares of Common Stock under the Securities Act, the Company will, as
expeditiously as possible:
(a) use reasonable efforts to furnish to each seller of
Registrable Securities named in such registration statement, copies of
the registration statement before its filing with the Commission, and
to reasonably respond to comments received from such persons;
(b) advise each seller of Registrable Securities named in such
registration statement under such registration statement (i) when the
prospectus or any prospectus supplement or post-effective amendment has
been filed and when the same has become effective, (ii) whether the
Commission has issued any stop order suspending the effectiveness of a
registration statement of the Company, and (iii) whether any state
securities commission has suspended the qualification of the
Registrable Securities for sale in any jurisdiction;
(c) prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
the period specified in Section 4(a) hereof, as the case may be, and
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement in accordance with the sellers' intended method of
disposition set forth in such registration statement for such period;
(d) furnish to each seller of Registrable Securities such
number of copies of the registration statement and the prospectus
included therein (including each preliminary prospectus) and such other
documents as those persons reasonably may request in order to
facilitate the public sale or other disposition of the Registrable
Securities covered by such registration statement;
(e) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of
Registrable Securities or, in the case of an underwritten
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public offering, the managing underwriter reasonably shall request;
provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
(f) use its best efforts to list the securities covered by
such registration statement with the NYSE;
(g) immediately notify each seller of Registrable Securities
under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing and, at the request of any
such seller, deliver a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing;
(h) subject to execution of confidentiality agreements that
are reasonably satisfactory to the Company, make available upon
reasonable notice and at reasonable times for inspection by each seller
of Registrable Securities, and any attorney, accountant or other agent
retained by such seller, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
requested by any such seller, attorney, accountant or agent in
connection with such registration statement reasonably necessary, in
the opinion of counsel for such person, to conduct a reasonable
investigation in accordance with Section 11 of the Securities Act;
(i) if requested by any Holder in connection with such sale,
if any, include in any registration statement or prospectus, pursuant
to a supplement or post-effective amendment if necessary, such
information as such persons may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" and make all required filing of such prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters reasonably requested to be included
in such prospectus or post-effective amendment; and
(j) the Registration Expenses incurred in connection with each
registration of Registrable Securities requested pursuant to Section 4
shall be paid by the Company. All expenses other than Registration
Expenses in connection with the registration
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statement under Section 4 shall be borne by the participating sellers
in proportion to the number of shares sold by each.
In connection with each registration hereunder, the sellers of
Registrable Securities will furnish to the Company in writing such information
with respect to themselves and the proposed distribution by them as reasonably
shall be necessary in order to assure compliance with the Federal and applicable
state securities laws. The Company may exclude any seller who fails to provide
such information in an accurate and timely manner.
6. Hold-Back Agreement. Each Holder of Registrable Securities agrees
not to effect any public sale or distribution (including sales pursuant to Rule
144 and the shelf registration statement referred to in Section 4 hereof) of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities: (i) during the seven days prior
to and the 180-day period beginning on the effective date of any underwritten
offering of securities of the Company under the Securities Act for sale to the
public, whether for the account of the Company or for the account of other
security holders or both, unless the underwriters managing the registered public
offering otherwise agree and provided that all persons selling securities in
such offering and all of the Company's executive officers and directors execute
similar agreements on the same terms, and (ii) during any period when such
Holder is in possession of material non-public information in violation of the
Federal and/or applicable state securities laws.
7. Indemnification and Contribution. (a) In the event of a registration
of any Registrable Securities under the Securities Act pursuant to Section 4,
the Company will indemnify and hold harmless each seller of such Registrable
Securities thereunder, and each other person, if any, who controls such seller
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such seller, underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act pursuant to
Section 4, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each such seller and each such controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such seller or
any such controlling person in writing specifically for use in such registration
statement or prospectus.
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(b) In the event of a registration of any of the Registrable Securities
under the Securities Act pursuant to Section 4, each seller of such Registrable
Securities thereunder, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which such Registrable Securities were registered under the Securities Act
pursuant to Section 4, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer and director for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that such seller will be liable hereunder in any such case if and only
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the Company by such
seller specifically for use in such registration statement or prospectus;
provided, further, that the liability of each seller hereunder shall be limited
to the proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of the shares sold by
such seller under such registration statement bears to the total public offering
price of all securities sold thereunder, but not in any event to exceed the net
proceeds received by such seller from the sale of Registrable Securities covered
by such registration statement (as further reduced by any damages or other
amounts such seller was otherwise required to pay by reason of such omission or
alleged omission or such untrue or alleged untrue statement).
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 7 and shall only relieve it
from any liability which it may have to such indemnified party under this
Section 7 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 7 for any legal expenses subsequently incurred by such
indemnified party in
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connection with the defense thereof other than reasonable costs of investigation
and of liaison with counsel so selected; provided, however, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to select
a separate counsel reasonably acceptable to the indemnifying party and to assume
such legal defenses and otherwise to participate in the defense of such action,
with the reasonable expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred. No indemnifying party, in defense of any such action, shall,
except with the consent of each indemnified party, consent to the entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving, by the claimant or plaintiff, to such indemnified party
of a release from all liability in respect to such action.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any Holder of
Registrable Securities exercising rights under this Agreement, or any
controlling person of any such Holder, makes a claim for indemnification
pursuant to this Section 7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 7 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling Holder
or any such controlling person in circumstances for which indemnification is
provided under this Section 7; then, and in each such case, the Company and such
Holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such proportion
so that such Holder is responsible for the portion represented by the percentage
that the public offering price of its Registrable Securities offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (A) no such Holder
will be required to contribute any amount in excess of the net proceeds received
by it from the sale of Registrable Securities covered by such registration
statement (as further reduced by any damages or other amounts such Holder was
otherwise required to pay in connection with such losses, claims, damages or
liabilities) and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
8. Changes in Common Stock. If, and as often as, there is any change in
the Registrable Securities by way of a stock split, stock dividend, combination
or reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and
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privileges granted hereby shall continue with respect to the Registrable
Securities as so changed.
9. Public Information. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
(c) furnish to each Holder of the Registrable Securities,
forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, the Securities
Act, and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents
filed by the Company as such Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing such Holder
to sell its shares of Common Stock without registration or pursuant to
a shelf registration.
10. Representations and Warranties of the Company. The Company
represents and warrants to each of the other parties hereto as follows:
(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any
court or other agency of government, the Certificate of Incorporation
or By-laws of the Company or any provision of any indenture, agreement
or other instrument to which it or any or its properties or assets is
bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of
the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization and moratorium laws
and other laws of general application affecting enforcement of
creditors' rights generally and (ii) the availability of equitable
remedies as such remedies may be limited by equitable principles of
general applicability (regardless of whether enforcement is sought in a
proceeding in equity or at law).
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11. Miscellaneous. (a) This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter of this
Agreement, and supersedes and replaces all prior agreements, understandings and
commitments with respect to such subject matter.
(b) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or
not; provided, however, that the registration rights conferred herein to the
Initial Holder of the Registrable Securities shall inure to the benefit of a
transferee if (i) the number of shares of Common Stock transferred to such
transferee equals at least 20% of the total number of shares of Registrable
Securities issued pursuant to the Purchase Agreement, (ii) such transferee is a
partner, shareholder, heir, executor, administrator, legal representative,
successor, or Affiliate of the Initial Holder or a member of the Initial
Holder's family, any trust solely for the Initial Holder's benefit or the
benefit of any member of the Initial Holder's family provided that the Initial
Holder acts as trustee and retains the sole power to direct the voting and
disposition of such Registrable Securities of the Initial Holder, (iii) the
transferee is not deemed by the board of directors of the Company, in its
reasonable judgment, to be a competitor of the Company, and (iv) the transferee
assumes the obligations of such transferor under this Agreement (a "Permitted
Transferee"). Notwithstanding the foregoing, nothing contained herein shall be
deemed to preclude a transfer of Registrable Securities: (i) from the Initial
Holder to the sole stockholder of the Initial Holder (the "Sole Stockholder")
and (ii) from the Sole Stockholder to a charitable remainder trust established
by the co-trustees of the Sole Stockholder. Except for the provisions contained
in Section 7, this Agreement shall terminate with respect to any Holder when
such Holder no longer owns any Registrable Securities.
(c) All notices, requests, consents and other communications hereunder
shall be in writing and shall be mailed by certified or registered mail, return
receipt requested, postage pre-paid, or telexed, in the case of non-U.S.
residents, addressed as follows:
(i) if to the Company, or the Holder, at the address with such
copies as set forth in the Purchase Agreement; and
(ii) if to any subsequent Holder of Registrable Securities, to
it at such address as may have been furnished to the Company in writing
by such Holder.
(d) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and a majority
of the Holders of the Registrable Securities; provided, however, that no
modification or amendment shall be effective to reduce the percentage of shares
of any of the foregoing parties whose consent is required under this Section
11(d).
(e) Notwithstanding the provisions of Section 5, the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective,
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shall be suspended for a period not to exceed 120 days in any 24-month period if
there exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed.
(f) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
(g) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(h) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT. EACH OF THE
PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS
AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE
MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO
SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. EACH PARTY AGREES
THAT JURISDICTION AND VENUE WILL BE PROPER IN THE COURTS OF THE STATE OF
CONNECTICUT OR THE UNITED STATES DISTRICT COURTS FOR THE DISTRICT OF CONNECTICUT
AND WAIVES ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. EACH PARTY WAIVES
PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING
AN ACTION OR PROCEEDING SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL
JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE PARTY AT THE
ADDRESS SET FORTH IN THIS AGREEMENT, OR AS OTHERWISE PROVIDED BY THE LAWS OF THE
STATE OF CONNECTICUT OR THE UNITED STATES. THE CHOICE OF FORUM SET FORTH IN THIS
SECTION 11(h) SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN ANY OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
(i) THE HOLDER WAIVES ITS RIGHTS, IF ANY, TO JURY TRIAL IN RESPECT TO
ANY DISPUTE OR CLAIMS BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO
OR IN RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION, PERFORMANCE,
SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN
RESPECT OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION ANY CLAIM UNDER
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<PAGE>
THE SECURITIES ACT, THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, ANY OTHER
STATE OR FEDERAL LAW RELATING TO SECURITIES OR FRAUD OR BOTH, THE RACKETEER
INFLUENCED AND CORRUPT ORGANIZATIONS ACT, AS AMENDED, OR FEDERAL OR STATE COMMON
LAW, AND ANY SUCH DISPUTE OR CLAIMS SHALL BE SUBMITTED TO, AND RESOLVED
EXCLUSIVELY PURSUANT TO, ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH ARBITRATION
SHALL TAKE PLACE IN HARTFORD, CONNECTICUT, AND SHALL BE SUBJECT TO THE
SUBSTANTIVE LAW OF THE STATE OF CONNECTICUT. DECISIONS AS TO FINDINGS OF FACT
AND CONCLUSIONS OF LAW PURSUANT TO SUCH ARBITRATION SHALL BE FINAL, CONCLUSIVE
AND BINDING ON THE PARTIES, SUBJECT TO CONFIRMATION, MODIFICATION OR CHALLENGE
PURSUANT TO 9 U.S.C. ss.ss. 1 ET SEQ. ANY FINAL AWARD SHALL BE ENFORCEABLE AS A
JUDGMENT OF A COURT OF RECORD.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
effective as of the date first above written.
ETHAN ALLEN INTERIORS INC.
By: /s/ M. Farooq Kathwari
Name: M. Farooq Kathwari
Title: President
CARRIAGE HOUSE INTERIORS OF
COLORADO, INC.
By: /s/ Royce R. Baker
Name: Royce R. Baker
Title: President
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EXHIBIT 5
OPINION OF COUNSEL
May 21, 1997
Ethan Allen Interiors Inc.
Ethan Allen Drive
Danbury, Connecticut 06813
Ladies and Gentlemen:
We are acting as special counsel to Ethan Allen Interiors Inc. (the
"Company") in connection with the registration under the Securities Act of 1933,
as amended, of 73,112 shares (the "Shares") of the Company's common stock, $.01
par value per share (the "Common Stock"), to be offered by certain selling
stockholders of the Company (the "Selling Stockholders") upon the terms and
subject to the conditions set forth in the Company's Registration Statement on
Form S-3 covering the Shares (the "Registration Statement") filed with the
Securities and Exchange Commission.
In connection therewith, we have examined the Registration Statement
and such other documents and instruments as we have deemed necessary or
appropriate for the expression of the opinions contained herein.
We have assumed the authenticity and completeness of all records,
certificates and other instruments submitted to us as originals, the conformity
to original documents of all records, certificates and other instruments
submitted to us as copies, the authenticity and completeness of the originals of
those records, certificates and other instruments submitted to us as copies and
the correctness of all statements of fact contained in all records, certificates
and other instruments that we have examined.
Based on and in reliance upon the foregoing, we are of the opinion that
the Shares proposed to be offered by the Selling Stockholders have been duly and
validly authorized for issuance and are fully paid and nonassessable shares of
Common Stock.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters."
Very truly yours,
/s/ Mayer, Brown & Platt
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EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Ethan Allen Interiors Inc.
We consent to incorporation by reference in the registration statement on Form
S-3 of Ethan Allen Interiors Inc. of our report dated July 31, 1996, relating to
the consolidated balance sheets of Ethan Allen Interiors Inc. and Subsidiary as
of June 30, 1996 and 1995, and the related consolidated statements of
operations, shareholders' equity and cash flows and related schedules for each
of the years in the three-year period ended June 30, 1996, which report appears
in the June 30, 1996 annual report on Form 10-K of Ethan Allen Interiors Inc.
Our report refers to a change in the method of accounting for packaging costs in
the year ended June 30, 1995.
/s/ KPMG Peat Marwick
Danbury, Connecticut
May 21, 1997
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