As filed with the Securities and Exchange Commission on February 6, 2004
Registration No.
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CASUAL MALE RETAIL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2623104
(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
555 Turnpike Street, Canton, Massachusetts 02021
(781) 828-9300
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
---------------
Dennis Hernreich
Executive Vice President, Chief Operating Officer and
Chief Financial Officer
Casual Male Retail Group, Inc.
555 Turnpike Street, Canton, Massachusetts 02021
(781) 828-9300
(Name, address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
-----------------
Copy to:
Peter G. Smith, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
(212) 715-9100
----------------
Approximate Date of Commencement of Proposed Sale to the Public: From time to
time after the effective date of this Registration Statement.
----------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
Proposed
Title of each class Maximum
of Offering Aggregate Amount of
securities to be Amount to Price Offering Registration
registered be Registered Per Unit Price(1) Fee
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5% Convertible
Senior Subordinated
Notes Due 2024 $100,000,000.00(2) 100% $100,000,000(2) $12,670.00
- --------------------------------------------------------------------------------
Common Stock, par
value $0.01 per
share 9,390,000.00(3) -- (4) -- (4) -- (4)
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933, as amended (the
"Securities Act"), and exclusive of any accrued interest.
(2) Represents the aggregate outstanding principal amount of 5% Convertible
Senior Subordinated Notes Due 2024 (the "Notes").
(3) Represents the number of shares of our common stock that are initially
issuable upon conversion of the Notes at a rate of approximately 93.90
shares of common stock per $1,000 principal amount of Notes, and an initial
conversion price of $10.65 per share of common stock. Pursuant to Rule 416
of the Securities Act, this registration statement also covers such
additional shares that may be issued as a result of a change in the amount
of securities being offered or issued to prevent dilution resulting from
stock splits, stock dividends or similar transactions.
(4) Pursuant to Rule 457(i) under the Securities Act, there is no filing fee
with respect to shares of common stock issuable upon conversion of the Notes
because no additional consideration will be received in connection with the
exercise of the conversion privilege.
---------------
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 Commission, acting pursuant to said Section 8(a),
may determine.
Preliminary Prospectus, Subject to Completion, dated February 6, 2004
$100,000,000 Principal Amount of
5% Convertible Senior Subordinated Notes Due 2024
and
Shares of Common Stock Issuable Upon Conversion of the Notes
We issued $100 million aggregate principal amount of our 5% Convertible
Senior Subordinated Notes due 2024 in a private placement in November 2003. This
prospectus will be used by the selling securityholders listed on pages 46-52 to
resell their notes and the common stock issuable upon conversion of the notes.
The notes bear interest at the annual rate of 5%, beginning November 18,
2003. We will pay interest on January 1 and July 1 of each year, commencing on
July 1, 2004, subject to certain exceptions if the notes are converted, redeemed
or repurchased prior to the interest payment date. Interest is computed on the
basis of a 360-day year comprising of twelve 30-day months. The notes are
convertible at any time prior to maturity into shares of our common stock at a
conversion rate of approximately 93.90 shares per $1,000 principal amount of
notes, subject to certain adjustments. This is equivalent to a conversion price
of $10.65 per share. Our common stock is quoted on the Nasdaq National Market
under the symbol "CMRG." The last reported sale price of our common stock on
February 3, 2004 was $6.66 per share.
On or after January 6, 2007, we may redeem the notes, in whole or in part,
at the redemption price, which is 100% of the principal amount, plus accrued and
unpaid interest, if any, to, but excluding, the redemption date. You may require
us to purchase all or a portion of your notes on January 1, 2009, January 1,
2014 or January 1, 2019, in cash, or by delivery of shares of our common stock,
at our option, or upon the occurrence of a fundamental change, in cash, as
described in this prospectus, in each case at a price equal to 100% of the
principal amount of notes being purchased, plus accrued and unpaid interest, and
accrued and unpaid additional interest, if any, to, but excluding, the date of
purchase.
The notes are unsecured obligations and are subordinated in right of
payment to all existing and future designated senior debt. The notes are not
subordinated to our 12% senior subordinated notes due 2010 or our 5%
subordinated notes due 2007. The notes are effectively subordinated to existing
and future indebtedness and other liabilities, including trade payables, of our
subsidiaries.
Investing in our securities involves risks that are described in the "Risk
Factors" section beginning on page 8 of this prospectus.
We will not receive any cash proceeds from the sale of the notes or the
shares of common stock offered under this prospectus. We are responsible for the
payment of certain expenses incident to the registration of the securities.
Neither the Securities and Exchange Commission, any state securities
commission nor any other regulatory body has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is , 2004.
The information in this prospectus is not complete and may be changed. The
selling securityholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Important Notice about the Information Presented in this Prospectus
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. For further information,
see the section of this prospectus entitled "Where You Can Find More
Information." We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date on the front cover of this prospectus only. Our
business, financial condition, results of operations and prospects may have
changed since that date.
TABLE OF CONTENTS
PROSPECTUS SUMMARY...........................................................1
RATIO OF EARNINGS TO FIXED CHARGES...........................................6
FORWARD LOOKING INFORMATION..................................................7
RISK FACTORS.................................................................8
USE OF PROCEEDS.............................................................16
DESCRIPTION OF NOTES........................................................17
DESCRIPTION OF CAPITAL STOCK................................................36
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS............................39
SELLING SECURITYHOLDERS.....................................................46
PLAN OF DISTRIBUTION........................................................53
LEGAL MATTERS...............................................................55
EXPERTS.....................................................................55
WHERE YOU CAN FIND MORE INFORMATION.........................................56
i
PROSPECTUS SUMMARY
The following summary may not contain all the information that may be
important to you and is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this prospectus.
You should read the entire prospectus, especially the risks set forth under the
heading "Risk Factors", as well as the information to which we refer you and the
information incorporated by reference, before making an investment decision.
When used in this prospectus, the terms "Casual Male," "we," "our" and
"us" refer to Casual Male Retail Group, Inc. and our consolidated subsidiaries,
unless otherwise specified. References in this prospectus to years are to our
52-week or 53-week fiscal year, which ends on the Saturday nearest to January
31. For example, references to "fiscal 2003" mean our fiscal year ended February
1, 2003.
Our Business
We are the largest specialty retailer of big and tall men's apparel in the
United States. We operate 481 Casual Male Big & Tall stores, the Casual Male
catalog business, two e-commerce websites, 58 Levi's(R)/Dockers(R) Outlet by
Designs outlet stores and 21 Ecko Unltd.(R) outlet and retail stores, all of
which are located throughout the United States and Puerto Rico.
Background
Prior to May 2002, our business primarily consisted of owning and
operating Levis(R)/Dockers(R) and Candies(R) branded apparel mall and outlet
stores. With limited opportunity to expand our mature Levis(R)/Dockers(R)
business, we acquired substantially all of the assets of Casual Male Corp. and
certain of its subsidiaries at a bankruptcy court-ordered auction in May 2002.
At the time of the acquisition, Casual Male Corp. was the largest retailer in
the United States of men's clothing in the "big and tall" market. In April 2002,
we entered into a joint venture with Ecko Complex, LLC, a leading design-driven
lifestyle brand targeting young men and women, to open and operate Ecko
Unltd.(R) branded outlet stores.
Following our acquisition of Casual Male, we re-evaluated our strategic
initiatives. In light of the significant opportunity to grow the Casual Male
business and the continued significant deterioration in our Levi's(R)/Dockers(R)
business, we announced that we would downsize and eventually exit the
Levi's(R)/Dockers(R) business. We also announced that we would exit the
Candies(R) outlet business, and we completed such exit by the end of fiscal
2003. These decisions enabled management to focus our resources and energies
primarily on growing our Casual Male business and, to a lesser extent, expanding
the operations of our Ecko joint venture.
Since the Casual Male acquisition, we have operated in two segments: our
"Casual Male business" and our "Other Branded Apparel businesses."
Casual Male Business
Our Casual Male business is a multi-channel retailer that offers our
customers multiple ways to purchase men's big and tall apparel. The business
consists of:
o 415 Casual Male Big & Tall full-price retail stores, located
primarily in strip centers, power centers and stand-alone locations;
o 66 Casual Male Big & tall outlet stores, located in outlet
shopping centers;
o the "Casual Male Big & Tall" catalog, for which we issued 17
editions in fiscal 2004; and
o our e-commerce business, which includes the www.casualmale.com and
www.reppbigandtall.com websites and a Casual Male Big & Tall apparel
shop on the Amazon.com website.
Since our acquisition of the Casual Male business in May 2002, in order to
revitalize the Casual Male brand and increase our share of the $5.3 billion big
and tall apparel men's market, we have implemented several merchandising
strategies, including:
o changing our store format to merchandise our stores by lifestyle,
such as traditional, active and contemporary;
o targeting the fast-growing "under 30" big and tall customer
segment;
o announcing an exclusive marketing agreement with George Foreman, as
well as launching an exclusive line of clothing with the George
Foreman brand, commencing in Spring 2004;
o launching a custom fit program, by which customers can purchase
certain styles of clothing that are custom made to specific fit
requirements;
o broadening our merchandise offerings by introducing selected
branded products, including professional sports apparel; and
o introducing new systems infrastructure to improve inventory
management, maintain in-stock positions in critical sizes for all
stores and tailor lifestyle merchandise assortments to the
demographic characteristics of each store.
Other Branded Apparel Businesses
Ecko Unltd.(R)
We have entered into a joint venture with Ecko Complex, LLC, under which
we own and manage retail outlet stores bearing the name Ecko Unltd.(R) and
featuring Ecko(R) branded merchandise. We believe that our Ecko Unltd(R). outlet
stores represent an opportunity in the outlet marketplace for the underdeveloped
young men's and junior market because Ecko(R) is believed to be a cross-over
youth brand appealing to both urban and suburban youth with a core customer
between the ages of 14 to 24. The average Ecko outlet store is approximately
3,500 sq. ft. and generates an average of $350 in sales per gross square foot
annually. We currently operate 21 Ecko Unltd(R) outlet stores and one Ecko
Unltd.(R) retail store and we believe we have an opportunity to open a total of
75 stores. We intend to open 11 net new Ecko stores in fiscal 2005.
Levi's(R)/Dockers(R) Outlets
We currently operate 58 Levi's(R)/Dockers(R) outlet stores, 3 of which we
are in the process of closing. We plan to close the remaining stores in the next
24 months. We expect that our remaining 55 Levi's(R)/Dockers(R) stores will
either be closed on or before the end of their respective lease terms.
Corporate Information
We were originally incorporated in Delaware as Designs, Inc. in 1976. We
changed our name to Casual Male Retail Group, Inc. shortly following our
acquisition of substantially all of the assets of Casual Male Corp and certain
of its subsidiaries in May 2002. The address of our principal corporate and
executive office is at 555 Turnpike Street, Canton, Massachusetts 02021. Our
telephone number at our headquarters is
2
(781) 828-9300. Our website is located at http://www.casualmale.com. The
information contained on our website is not part of this prospectus.
3
The Offering
Securities offered........... $100,000,000 aggregate principal amount of 5%
Convertible Senior Subordinated Notes due January
1, 2024.
Offering price............... 100% of the principal amount of the notes plus
accrued interest, if any.
Interest..................... The notes bear interest at an annual rate of 5%.
Interest is payable on January 1 and July 1 of
each year, beginning July 1, 2004.
Maturity date................ January 1, 2024.
Conversion................... The notes are convertible at the option of the
holder into shares of our common stock at any
time prior to maturity, unless the notes are
earlier redeemed, purchased or repurchased. The
notes are convertible at a conversion rate of
approximately 93.90 shares per $1,000 principal
amount of notes, subject to certain adjustments.
This is equivalent to a conversion price of
$10.65 per share. Holders of notes called for
redemption or submitted for repurchase will be
entitled to convert the notes up to the close of
business on the business day immediately
preceding the date fixed for redemption or
repurchase, as the case may be. See "Description
of Notes--Conversion."
Ranking...................... The notes are general unsecured obligations. The
notes are subordinated in right of payment to all
existing and future "designated senior debt," as
defined in "Description of Notes -- Ranking." The
notes are not subordinated to our 12% senior
subordinated notes due 2010 or our 5%
subordinated notes due 2007. The notes are
effectively subordinated to the existing and
future indebtedness and other liabilities,
including trade payables, of our subsidiaries. As
of November 1, 2003 we had approximately $55.0
million of outstanding designated senior debt for
purposes of the indenture and the aggregate
amount of indebtedness and other liabilities of
our subsidiaries was approximately $137 million
(excluding intercompany liabilities and
liabilities of the type not required to be
recorded on the balance sheet in accordance with
GAAP). See "Description of Material Indebtedness"
and "Description of Notes--Ranking."
Limitation on incurring The indenture for the notes will restrict our
subordinated indebtedness ability to incur additional indebtedness that is
senior to the notes........ senior to the notes and subordinate in right of
payment to our designated senior debt.
Optional redemption.......... On or after January 6, 2007, we may redeem the
notes, in whole or in part, at the redemption
price, which is 100% of the principal amount,
plus accrued and unpaid interest and any
additional interest, to, but excluding, the
redemption date. See "Description of
Notes--Optional Redemption by Casual Male."
Sinking fund................. None.
Purchase of the notes at You may require us to repurchase all or a portion
option of the holder on a of your notes in cash or by delivery of shares of
specified date............. our common stock, at our option, on January 1,
2009, January 1, 2014 or January 1, 2019, at a
purchase price equal to 100% of the principal
amount of the notes being purchased, plus accrued
and unpaid interest and any additional interest,
to, but excluding, the purchase date. See
"Description of Notes--Purchase at Option of the
Holder."
Repurchase at option of Upon a "fundamental change," as defined in
holders upon a fundamental "Description of Notes-- Repurchase at Option of
change..................... Holders Upon a Fundamental Change," you may
require us to
4
repurchase your notes at 100% of the principal
amount of the notes, plus accrued and unpaid
interest and any additional interest, to, but
excluding, the repurchase date. See "Description
of Notes--Repurchase at Option of Holders Upon a
Fundamental Change."
Use of proceeds.............. We will not receive any cash proceeds from the
sale of the notes or the shares of common stock
offered under this prospectus. See "Use of
Proceeds."
Events of default............ The following are events of default under the
indenture governing the notes:
o we fail to pay the principal of or premium,
if any, on any note when due;
o we fail to pay any interest, including any
additional interest, on any note when due and
that default continues for 30 days;
o we fail to provide timely notice of a
fundamental change;
o we fail to perform any other covenant in the
indenture, which failure continues for 60 days
following notice as provided in the indenture;
o any indebtedness under any bonds, debentures,
notes or other evidences of indebtedness for
money borrowed, or any guarantee thereof, by us
or any of our subsidiaries, in an aggregate
principal amount in excess of $5 million is not
paid when due either at its stated maturity or
upon acceleration thereof, and such indebtedness
is not discharged, or such acceleration is not
rescinded or annulled, within a period of 30 days
after notice as provided in the indenture; and
o certain events of bankruptcy, insolvency or
reorganization involving us or any of our
subsidiaries.
See "Description of Notes--Events of Default."
The PORTALsm Market; Listing The notes are eligible for The PORTALsm Market of
of common stock............ the National Association of Securities Dealers,
Inc. Our common stock is quoted on the Nasdaq
National Market under the symbol "CMRG."
Registration rights.......... We entered into a registration rights agreement
with Thomas Weisel Partners LLC (the "Initial
Purchaser") pursuant to which we agreed to file a
shelf registration statement with the SEC with
respect to the notes and the common stock
issuable upon conversion of the notes within 90
days after the notes are issued and to use our
reasonable efforts to cause such registration
statement to be declared effective within 180
days after the notes are issued. If we fail to
comply with certain of our obligations under the
registration rights agreement, additional
interest will be payable on the notes and the
common stock issuable upon conversion of the
notes. See "Description of Notes--Registration
Rights."
Governing law................ The indenture, the notes and the registration
rights agreement are governed by the laws of the
State of New York.
5
Ratio of Earnings to Fixed Charges
The following table sets forth the ratio of earnings to fixed charges for
the nine months ended November 2, 2002 and November 1, 2003 and for each of the
preceding five fiscal years. In calculating these ratios, earnings include
pre-tax income from continuing operations before adjustment for minority
interest in consolidated subsidiaries plus fixed charges and exclude equity in
net income of our affiliates. Fixed charges include gross interest expense,
amortization of deferred financing expenses and an amount equivalent to interest
included in rental charges. We have assumed that one-third of rental expense is
representative of the interest factor.
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Nine months ended
-----------------
1999 2000 2001 2002 2003 November 2, 2002 November 1, 2003
---- ---- ---- ---- ---- ---------------- ----------------
(unaudited)
Ratio of earnings to -- -- 1.46 -- -- -- --
fixed charges(1)...
- -----------
(1) In fiscal years 1999, 2000, 2002 and 2003, and in the nine months ended
November 2, 2002 and November 1, 2003, earnings were not sufficient to
cover fixed charges by approximately $29.9 million, $10.9 million, $1.5
million, $22.7 million, $10.3 million and $2.6 million, respectively.
6
FORWARD LOOKING INFORMATION
Some of the statements in this prospectus and in documents incorporated by
reference constitute forward-looking statements. These forward-looking
statements reflect our current views with respect to future events or our
financial performance, and involve certain known and unknown risks,
uncertainties and other factors, including those identified below, which may
cause our or our industry's actual or future results, levels of activity,
performance or achievements to differ materially from those expressed or implied
by any forward-looking statements or from historical results. In some cases, you
can identify forward-looking statements by terminology such as "may," "will,"
"could," "would," "should," "believe," "expect," "plan," "anticipate," "intend,"
"estimate," "predict," "potential" and other expressions which indicate future
events and trends. We have no duty to update or revise any forward-looking
statements after the date of this prospectus or to conform them to actual
results, new information, future events or otherwise.
The following factors, among others, could cause our or our industry's
future results to differ materially from historical results or those
anticipated:
o overall economic and business conditions;
o competitive factors in the industries in which we conduct our
business;
o changes in governmental regulation;
o the demand for our goods and services;
o the fact that our customers may cancel orders they have placed with us,
in whole or in part, without advance notice;
o changes in tax requirements, including tax rate changes, new tax
laws and revised tax law interpretations;
o changes in generally accepted accounting principles or
interpretations of those principles by governmental agencies and
self-regulatory groups;
o developments in and results of litigation;
o interest rate fluctuations, foreign currency rate fluctuations and
other capital market conditions;
o economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer
capital across borders;
o changes in the cost of raw materials used in our business;
o the timing, impact and other uncertainties of acquisitions that we
may consider or consummate; and
o our ability to achieve anticipated synergies and other cost savings in
connection with such acquisitions.
These factors and the risk factors described in this document are all of
the important factors of which we are aware that could cause actual results,
performance or achievements to differ materially from those expressed in any of
our forward-looking statements. We operate in a continually changing business
environment, and new risk factors emerge from time to time. Other unknown or
unpredictable factors also could have material adverse effects on our future
results, performance or achievements. We cannot assure you that projected
results or events will be achieved or will occur.
7
Risk Factors
You should carefully consider the following information with the other
information contained or incorporated by reference in this prospectus.
Risks Related to Our Company and Our Industry
Our ability to continue to expand our Casual Male stores may be limited.
A large part of our growth has resulted from the addition of new Casual
Male stores and the increased sales volume and profitability provided by these
stores. We will continue to depend on adding new stores to increase our sales
volume and profitability. We believe that our ability to increase the number of
Casual Male stores in the United States substantially in excess of the number of
our current stores will be limited due to capital constraints, market conditions
and other factors. When we enter new markets, we must:
o obtain suitable store locations in light of the local real estate
market conditions;
o hire and train personnel;
o establish distribution methods; and
o advertise our brand names and our distinguishing characteristics
to consumers who may not be familiar with us.
As a result of these and other factors, opening new stores is often costly
and entails significant risk. We cannot assure you that we will be able to open
and operate new stores on a timely and profitable basis. The costs associated
with opening new stores may negatively affect our results of operations.
We may be unable to successfully predict fashion trends and customer
preferences.
Customer tastes and fashion trends are volatile and tend to change
rapidly. Our success depends in large part upon our ability to effectively
predict and respond to changing fashion tastes and consumer demands and to
translate market trends to appropriate saleable product offerings. If we are
unable to successfully predict or respond to changing styles or trends and
misjudge the market for products or any new product lines, our sales will be
lower and we may be faced with a substantial amount of unsold inventory or
missed opportunities. In response, we may be forced to rely on additional
markdowns or promotional sales to dispose of excess, slow-moving inventory,
which would decrease our revenues and margins. In addition, the failure to
satisfy consumer demand could have serious longer-term consequences, such as an
adverse impact on our brand value and the loss of market share to our
competitors.
Our business is highly competitive, and competitive factors may reduce our
revenues and profit margins.
The United States men's big and tall apparel market is highly competitive
with many national and regional department stores, specialty apparel retailers
and discount stores offering a broad range of apparel products similar to the
products that we sell. Besides retail competitors, we consider any manufacturer
of big and tall merchandise operating in outlet malls throughout the United
States to be a competitor. It is also possible that another competitor, either a
mass merchant or a men's specialty store or specialty apparel catalog, could
gain market share in men's big and tall apparel due to more favorable pricing,
locations, brand and fashion assortment and size availability. The presence in
the marketplace of various fashion trends and the limited availability of shelf
space also can affect competition. We may not be able to compete
8
successfully with our competitors in the future and could lose brand recognition
and market share. A significant loss of market share would adversely affect our
revenues and results of operations.
Our sales will decline if we do not successfully advertise and market our
products.
Our business is directly affected by the success or failure of our
advertising and promotional efforts and those of our vendors. Future advertising
efforts by us, our vendors or our other licensors may be costly and may not
result in increased sales. If we were to undertake a major advertising campaign
without success, then our failure to realize any revenues from our advertising
and promotional expenditures, together with the possible adverse impact on our
brand value and loss of market share, would have a negative impact upon our
revenues. In either case, increased costs and decreased margins, accompanied by
static or decreased revenues, would cause a decline in our results of
operations.
Our success significantly depends on our key personnel and our ability to
attract and retain additional personnel.
Our future success is dependent on the personal efforts, performance and
abilities of our key management. For example, the loss of the services of David
Levin, our President and Chief Executive Officer, or Dennis Hernreich, our Chief
Operating Officer and Chief Financial Officer, each of whom is an integral part
of our daily operations and are primary decision makers in all our important
operating matters, could significantly impact our business until adequate
replacements can be identified and put in place. The loss of any of our senior
management may result in:
o a loss of organizational focus,
o poor operating execution;
o an inability to identify and execute potential strategic
initiatives such as joint venture and licensing opportunities;
o an impairment in our ability to identify new store locations; and
o an inability to consummate possible acquisitions.
These adverse results could, among other things, reduce potential
revenues, prevent us from diversifying our product lines and geographic
concentrations, and expose us to downturns in our markets. The loss of those
individuals as well as our chairman, Seymour Holtzman, who also has many years
of experience in the capital markets, could negatively impact our ability to
obtain additional debt or equity financing for our operations or to refinance
existing indebtedness, or the terms that might be negotiated for such financing
or refinancing. Those circumstances in turn could ultimately result in a
significant decline in profitability and decline in our financial condition. The
competition is intense for the type of highly skilled individuals with relevant
industry experience that we require and we may not be able to attract and retain
new employees of the caliber needed to achieve our objectives.
We need to timely complete the implementation of our information systems and
control procedures.
We depend heavily upon technology and information systems to control
inventory, sales, markdowns, merchandise on hand and other critical information.
Any significant deficiencies in our management information systems resulting in
less than optimal systems performance could have a negative impact upon our
business. For example, since the information systems provide vital information
with respect to specific merchandise sales at the SKU level, replenishment
requirements to maintain optimum
9
inventory levels, and sell through data from which markdown requirements are
identified to most productively sell through poor selling SKUs, if that
information is not consistently provided on a timely and accurate basis our
sales could be severely impacted, or our gross margins could be adversely
affected.
We periodically review, improve and, under certain circumstances, replace
our technology and management information systems to provide enhanced support to
all operating areas. If such upgrades and enhancements are not successfully
implemented, then the current systems may not be able to continue to support
adequately our management information requirements. Currently, we are undergoing
a significant effort to replace our existing antiquated legacy systems, as part
of the process of integrating the historical Designs, Inc. and Casual Male
operations. It is critically important to the successful operation of our
business that the implementation of our systems integration process, which
entails the replacement, enhancement, or upgrade of all Casual Male's vital
former information systems, be completed within budget and timely without
disruption to our daily operations. We anticipate that the implementation will
require approximately 12 months to complete at a remaining cost of $1.8 million.
If we are unable to complete these projects within budget and on time, our
operating results will suffer.
The loss of, or disruption in, our centralized distribution center could
negatively impact our business and operations.
All merchandise for our Casual Male stores is received into our
centralized distribution center in Canton, Massachusetts, where the inventory is
then processed, sorted and shipped to our stores. We depend in large part on the
orderly operation of this receiving and distribution process, which depends, in
turn, on adherence to shipping schedules and effective management of the
distribution center. Although we believe that our receiving and distribution
process is efficient and well positioned to support our expansion plans, we
cannot assure you that events beyond our control, such as disruptions in
operations due to fire or other catastrophic events, employee matters or
shipping problems, would not result in delays in the delivery of merchandise to
our stores.
Although we maintain business interruption and property insurance, we
cannot assure you that our insurance will be sufficient, or that insurance
proceeds will be timely paid to us, in the event our distribution center is shut
down for any reason or if we incur higher costs and longer lead times in
connection with a distribution at our distribution center.
We are dependent on third parties for the manufacture of the products we sell.
We do not own or operate any manufacturing facilities and are therefore
entirely dependent on third parties for the manufacture of the products we sell.
Without adequate supplies of merchandise to sell to our customers in the
merchandise styles and fashions demanded by our particular customer base, sales
would decrease materially and our business would suffer. Furthermore,
approximately 75% of our merchandise consists of private label items made
specifically for Casual Male and our customers. In the event that manufacturers
are unable or unwilling to ship products to us in a timely manner or continue to
manufacture products for us, we would have to rely on other current
manufacturing sources or identify and qualify new manufacturers. We might not be
able to identify or qualify such manufacturers for existing or new products in a
timely manner and such manufacturers might not allocate sufficient capacity to
us in order to meet our requirements. The consequences of not securing adequate
and timely supplies of private label merchandise would negatively impact proper
inventory levels, sales and gross margin rates, and ultimately our results of
operations.
In addition, even if our current manufacturers continue to manufacture our
products, they may not maintain adequate controls with respect to product
specifications and quality and may not continue to produce products that are
consistent with our standards. If we are forced to rely on products of inferior
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quality, then our brand recognition and customer satisfaction would be likely to
suffer. These manufacturers may also increase the cost to us of the products we
purchase from them. If our suppliers increase our costs, our margins may be
adversely affected.
Should we experience significant unanticipated demand, we will be required
to significantly expand our access to manufacturing, both from current and new
manufacturing sources. If such additional manufacturing capacity is not
available on terms as favorable as those obtained from current sources, then our
revenues or margins, or both, will suffer.
In addition, a significant portion of our merchandise is directly imported
from other countries, and U.S. domestic suppliers who source their goods from
other countries supply most of our remaining merchandise. If imported goods
become difficult or impossible to bring into the United States, due to tariffs,
embargoes or other reasons and if we cannot obtain such merchandise from other
sources at similar costs, then our sales, gross margins and profit margins would
significantly decline. Furthermore, in the event that commercial transportation
is curtailed or substantially delayed, we may not be able to maintain adequate
inventory levels of important merchandise levels on a consistent basis, which
would negatively impact our sales and potentially erode the confidence of our
customer base, leading to further loss of sales and an adverse impact on our
results of operations.
In extreme circumstances, it may be necessary to close less productive
stores so as to consolidate important merchandise categories into our most
productive stores, which would severely impact our results of operations and
cash flow.
Exiting our Levi's(R)/Dockers(R) business may subject us to significant costs
and divert resources.
In light of the continued significant deterioration in our
Levi's(R)/Dockers(R) operations, we announced that we would downsize and
eventually exit this business. In connection with this restructuring, we have
incurred and will need to continue to incur significant exit costs associated
with the termination of leases, liquidation of inventory and various employee
matters. In addition, the restructuring of this business may divert managerial
and other resources from our core businesses and may subject us to litigation.
We have recorded restructuring charges totaling $41.3 million to date in
connection with the restructuring of our Levi's(R)/Dockers(R) business, and
expect to record additional restructuring charges as we complete this
initiative. These charges have reduced and will continue to reduce our net
income, and if future charges exceed our expectations, our stock price may be
adversely affected.
Our results of operations will be adversely affected if our George Foreman
line of apparel is unsuccessful.
We have entered into an exclusive endorsement and licensing arrangement
for a men's apparel line with George Foreman, the well-known boxing personality.
Under the terms of this arrangement, we are obligated to make significant
payments to Mr. Foreman regardless of the success of the product line, and we
intend to incur significant marketing costs in connection with the promotion of
this product line. As a result of these expenditures, if sales from this product
line do not meet our expectations our results of operations will be adversely
affected. Furthermore, we are subject to risks associated with having our brand
identified with a celebrity personality. If our customers do not care for Mr.
Foreman, or if this product line is not successful, our brand value will suffer.
The loss of any of our key trademarks or licenses could adversely affect
demand for our products.
We own and use a number of trademarks and operate under several trademark
license agreements. We believe that these trademarks have significant value and
are instrumental in our ability to create and
11
sustain demand for and to market our products. We cannot assure you that these
trademarks and licensing agreements will remain in effect and enforceable or
that any license agreements, upon expiration can be renewed on acceptable terms
or at all. In addition, any future disputes concerning these trademarks and
licenses may cause us to incur significant litigation costs or force us to
suspend use of the disputed trademarks.
Our business is seasonal and is affected by general economic conditions.
Like most other retail businesses, our business is seasonal. Historically,
over 30% of our net sales have been made and approximately 70% of our operating
income has been generated during November, December and January. Like other
retail businesses, our operations may be negatively affected by local, regional
or national economic conditions, such as levels of disposable consumer income,
consumer debt, interest rates and consumer confidence. Any economic downturn
might cause consumers to reduce their spending, which could negatively affect
our sales. A sustained economic downturn would likely have an adverse affect on
our results of operations.
Acts of terrorism could negatively impact our operating results and financial
condition.
The continued threat of terrorism and heightened security measures in
response to an act of terrorism may disrupt commerce and undermine consumer
confidence which could negatively impact our sales by causing consumer spending
to decline. Furthermore, an act of terrorism or war, or the threat thereof,
could negatively impact our business by interfering with our ability to obtain
merchandise from vendors or substitute suppliers at similar costs in a timely
manner.
Our cost savings and expense reductions resulting from the acquisition of
Casual Male may be less than anticipated.
We anticipate significant, continued cost savings following our May 2002
acquisition of substantially all the assets of Casual Male, primarily through
headcount reductions, renegotiations of contractual arrangements for supplies
and services associated with the operation for more favorable pricing terms,
elimination of inefficient and costly business processes and costs by
streamlining our management information systems and economies of scale in
purchasing. It is possible that some of the contemplated reductions could fail
to take place on the scale proposed due to unforeseen or underestimated needs
for the employees in question. It is also possible that the cost savings
associated with achieving purchasing economies fail to materialize due to
unsuccessful negotiations with key vendors. There is also a cost to realizing
the potential savings and these costs could potentially be higher than
originally contemplated in management's projections. In such an instance, the
amount of the cost savings would be offset by the higher costs of realizing the
savings, thereby reducing the overall benefit of the acquisition of Casual Male
and reducing our expected profitability. If there are substantial failures to
achieve these cost savings, cash flow and the servicing of debt related to that
acquisition could also be reduced.
We face greater challenges in managing several brands in multiple channels of
distribution.
Several retailers have had problems executing a corporate strategy aimed
at operating multiple brands in multiple channels. We have expertise in the
outlet channel of distribution, but our acquisition of Casual Male caused us to
conduct operations in the specialty store and internet channels of distribution.
We are now also responsible for all aspects of brand management with respect to
the Casual Male brand, including advertising and promotion, and the servicing
and merchandising of private label merchandise, which currently represent
approximately 75% of Casual Male's merchandise inventory. Under our current
operating model, this function is mostly the responsibility of the branded
manufacturer. If the managing of multiple brands within multiple channels is
poorly executed, we will not achieve our expected level of
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profitability, and could ultimately be compelled to eliminate the multiple brand
strategy so that the organization may focus on a single brand strategy.
A reduction in the size of our target market and shifts in customer
purchasing habits will adversely affect our sales.
As more and more food retailers begin to compete on the basis of providing
more healthy menus, and American popular culture becomes more health conscious,
the size of our target demographic could decrease, resulting in lower sales. In
addition, recent statistics have shown that the overall levels of the men's
apparel sales have been decreasing, in part due to a lesser percentage of men's
apparel being bought by women. If this trend continues and we are unable to
adjust our business model to reflect the trend, our results of operations and
cash flow will be impacted.
Risks Related to Our Corporate Structure and Stock
Our stock price has been and may continue to be extremely volatile due to many
factors.
The market price of our common stock has fluctuated in the past and may
increase or decrease rapidly in the future depending on news announcements and
changes in general market conditions. Between January 31, 2003 and February 3,
2004, the closing price of our common stock ranged from a low of $1.95 per share
to a high of $9.44 per share. The following factors, among others, may cause
significant fluctuations in our stock price:
o news announcements regarding quarterly or annual results of
operations;
o monthly comparable store sales;
o acquisitions;
o competitive developments;
o litigation affecting us; or
o market views as to the prospects of the retail industry
generally.
Rights of our stockholders may be negatively affected if we issue any of the
shares of preferred stock which our Board of Directors has authorized for
issuance.
We have available for issuance 1,000,000 shares of preferred stock, par
value $.01 per share. Our board of directors is authorized to issue any or all
of this preferred stock, in one or more series, without any further action on
the part of shareholders. The rights of our shareholders may be negatively
affected if we issue a series of preferred stock in the future that has
preference over our common stock with respect to the payment of dividends or
distribution upon our liquidation, dissolution or winding up.
State laws and our certificate of incorporation may inhibit potential
acquisition bids that could be beneficial to our stockholders.
We are subject to certain provisions of Delaware law, which could also
delay or make more difficult a merger, tender offer or proxy contest involving
us. In particular, Section 203 of the Delaware General Corporation Law prohibits
a Delaware corporation from engaging in certain business combinations with any
interested stockholder for a period of three years unless specific conditions
are met. In addition,
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certain provisions of Delaware law could have the effect of delaying, deferring
or preventing a change in control of us, including, without limitation,
discouraging a proxy contest or making more difficult the acquisition of a
substantial block of our common stock. The provisions could also limit the price
that investors might be willing to pay in the future for shares of our common
stock.
Conversion of the notes could result in dilution to holders of our common stock.
If the holders of the notes convert such notes, we would be required to
issue to such holders approximately 9.39 million additional shares of common
stock, which would result in dilution to holders of our common stock.
Additionally, the impact of the 9.39 million additional shares of common stock
would not have an impact to historical earnings per share of the Company because
the conversion of such shares would have been antidilutive.
Risks Related to the Notes
Substantial leverage and debt service obligations may adversely affect our cash
flow.
At November 1, 2003 we had approximately $129.7 million of long-term
indebtedness. In connection with our sale of the notes to the Initial Purchaser
now being offered by the selling securityholders under this prospectus, we
incurred an additional $100 million of indebtedness. We used $24.5 million of
the proceeds from our note offering to retire our 12% senior subordinated notes
due 2007, and we sought and received early redemption of approximately $21.8
million of our 12% senior subordinated notes due 2010. An early redemption
premium of $1.4 million was paid on our 12% senior subordinated notes due 2010.
We also used $40.3 million of the proceeds of such note offering to reduce
outstanding borrowings under our credit facility and used $7.9 million of such
proceeds to repurchase 1,000,000 shares of our common stock. We may be unable to
generate cash sufficient to pay the principal of, interest on and other amounts
due in respect of our indebtedness when due. We may also obtain additional
long-term debt, working capital lines of credit and lease lines and borrow
additional amounts under our existing credit facility.
Our substantial leverage could have significant negative consequences,
including:
o increasing our vulnerability to general adverse economic and
industry conditions;
o limiting our ability to obtain additional financing;
o requiring the dedication of a portion of our expected cash flow from
operations to service our indebtedness, thereby reducing the amount
of our expected cash flow available for other purposes, including
capital expenditures;
o limiting our flexibility in planning for, or reacting to, changes
in our business and the industry in which we compete; and
o placing us at a possible competitive disadvantage relative to less
leveraged competitors and competitors that have better access to
capital resources.
The notes are subordinated, and there are no financial covenants in the
indenture.
The notes are unsecured and subordinated in right of payment to all of our
existing and future designated senior debt. Under the terms of our indenture, we
may also incur additional designated senior debt from time to time. In the event
of our bankruptcy, liquidation or reorganization or upon acceleration of
14
the notes due to an event of default under the indenture and in certain other
events, we will not be able to repay the notes until after we have satisfied all
of our designated senior debt obligations. As a result, we may not have
sufficient assets remaining to pay amounts due on any or all of the outstanding
notes.
The notes also are effectively subordinated to the liabilities, including
trade payables, of our subsidiaries. As a result, our right to receive assets of
any subsidiaries upon their liquidation or reorganization, and the rights of the
holders of the notes to share in those assets, would be subject to the claims of
the creditors of the subsidiaries.
Substantially all of our assets are held, and most of our revenues are
generated, by our subsidiaries. Our subsidiaries are not restricted from
incurring additional debt or liabilities under the indenture. In addition, we
are not restricted from paying dividends or issuing or repurchasing our
securities under the indenture. If we or our subsidiaries were to incur
additional debt or liabilities, our ability to pay our obligations on the notes
could be adversely affected. As of November 1, 2003, we had approximately $55.0
million of outstanding designated senior debt, and the aggregate amount of
indebtedness and other liabilities of our subsidiaries was approximately $137.0
million (excluding intercompany liabilities and liabilities of the type not
required to be recorded on the balance sheet in accordance with accounting
principals generally accepted in the United States of America, or GAAP).
We may be unable to repay, repurchase or redeem the notes.
At maturity, the entire outstanding principal amount of the notes will
become due and payable by us. Upon a fundamental change, as defined in the
indenture, you may require us to repurchase all or a portion of your notes. In
addition, you may require us to purchase notes on January 1, 2009, January 1,
2014 or January 1, 2019. We may not have enough funds or be able to arrange for
additional financing to pay the principal at maturity or to repurchase the notes
tendered by the holders. We may also opt to purchase the notes with our common
stock and you may not receive cash for such purchase. Our credit facility and
certain of our debt agreements provide that a fundamental change constitutes an
event of default. Future credit agreements or other agreements relating to our
indebtedness might contain similar provisions. If the maturity date or a
fundamental change occurs at a time when we are prohibited from repaying or
repurchasing the notes, we could seek the consent of our lenders to purchase the
notes or could attempt to refinance this debt. If we do not obtain the necessary
consents or refinance the debt, we will be unable to repay or repurchase the
notes. Our failure to repay the notes at maturity or repurchase tendered notes
would constitute an event of default under the indenture, which might constitute
a default under the terms of our other debt. In such circumstances, or if a
fundamental change would constitute an event of default under our senior debt,
the subordination provisions of the indenture would possibly limit or prohibit
payments to you. The term "fundamental change" is limited to certain specified
transactions and may not include other events that might harm our financial
condition. Our obligation to offer to purchase the notes upon a fundamental
change would not necessarily afford you protection in the event of a highly
leveraged transaction, reorganization, merger or similar transaction involving
us.
A market may not develop for the notes.
Prior to this offering there has been no trading market for the notes. The
Initial Purchaser has advised us that it currently intends to make a market in
the notes. The Initial Purchaser is not, however, obligated to make a market and
may discontinue this market-making activity at any time without notice. In
addition, market-making activity by the Initial Purchaser will be subject to the
limits imposed by the Securities Act of 1933 and the Securities Exchange Act of
1934. As a result, a market for the notes may not develop or, if one does
develop, it may not be maintained. If an active market for the notes fails to
develop or be sustained, the trading price of the notes could decline
significantly.
15
The price at which our common stock may be purchased on the Nasdaq National
Market is currently lower than the conversion price of the notes and may
remain lower in the future.
Prior to electing to convert notes, the note holder should compare the
price at which our common stock is trading in the market to the conversion price
of the notes. Our common stock trades on the Nasdaq National Market under the
symbol "CMRG." On February 3, 2004, the last reported sale price of our common
stock was $6.66 per share. The initial conversion price of the notes is $10.65
per share. The market prices of our securities are subject to significant
fluctuations. Such fluctuations, as well as economic conditions generally, may
adversely affect the market price of our securities, including our common stock
and the notes.
The notes may not be rated or may receive a lower rating than anticipated.
We believe that it is unlikely that the notes will be rated. If, however,
one or more rating agencies rate the notes and assign the notes a rating lower
than the rating expected by investors, or reduce their rating in the future, the
market price of the notes and our common stock would be harmed.
USE OF PROCEEDS
We will not receive any cash proceeds from the sale of the notes or the
shares of common stock offered by this prospectus.
16
DESCRIPTION OF NOTES
The notes were issued under an indenture dated as of November 18, 2003,
between us and U.S. Bank National Association, as trustee. Copies of the
indenture and the registration rights agreement entered into with the Initial
Purchaser of the notes are filed as exhibits to the Company's Quarterly Report
on Form 10-Q filed with the SEC on December 9, 2003 for the quarterly period
ended November 1, 2003 and may be obtained in the manner indicated under "Where
You Can Find More Information." The following is a summary of certain provisions
of the indenture and the registration rights agreement and does not purport to
be complete. Reference should be made to all provisions of the indenture and the
registration rights agreement, including the definitions of certain terms
contained therein. As used in this section, the terms "CMRG," the "company,"
"we," "us" and "our" refer to Casual Male Retail Group, Inc., but not any of our
subsidiaries, unless the context requires otherwise.
General
The notes have been issued in a $100,000,000 aggregate principal amount.
The notes will be issued only in denominations of $1,000 or in multiples of
$1,000. The notes will mature on January 1, 2024, unless earlier converted,
redeemed, purchased or repurchased by us upon a fundamental change.
The notes bear interest at the annual rate of 5%, beginning November 18,
2003. We will pay interest on January 1 and July 1 of each year, commencing on
July 1, 2004 , subject to certain exceptions if the notes are converted,
redeemed or repurchased prior to the interest payment date. Interest is computed
on the basis of a 360-day year comprising of twelve 30-day months.
You may convert the notes into shares of our common stock initially at the
conversion rate stated on the front cover of this prospectus at any time before
the close of business on the maturity date, unless the notes have been
previously redeemed, purchased or repurchased. Holders of notes called for
redemption or submitted for repurchase will be entitled to convert the notes up
to and including the business day immediately preceding the date fixed for
redemption or repurchase, as the case may be. The conversion rate may be
adjusted as described below.
The notes are general unsecured obligations and are subordinate in right
of payment to all existing and future designated senior debt. The notes are not
subordinated to our 12% senior subordinated notes due 2010 or our 5% senior
subordinated notes due 2007. The notes are effectively subordinated to the
existing and future indebtedness and other liabilities, including trade
payables, of our subsidiaries. The indenture governing the notes will restrict
our ability to incur additional indebtedness that is senior to the notes and
subordinate in right of payment to our designated senior debt. Neither we nor
any of our subsidiaries are subject to any financial covenants under the
indenture. In addition, neither we nor any of our subsidiaries are restricted
under the indenture from paying dividends or issuing or repurchasing our
securities.
On or after January 6, 2007, we may redeem the notes, in whole or in part.
You may require us to purchase all or a portion of your notes on January 1,
2009, January 1, 2014 or January 1, 2019 as described below under "--Purchase at
Option of the Holder." If we experience a fundamental change, you will have the
right to require us to repurchase your notes as described below under
"--Repurchase at Option of Holders Upon a Fundamental Change." We will maintain
an office in the City of New York where the notes may be presented for
registration, transfer, exchange or conversion. This office will initially be an
office or agency of the trustee. Except under limited circumstances described
below, the notes will be issued only in fully registered book-entry form,
without coupons, and will be represented by one or more global notes. There will
be no service charge for any registration of transfer or exchange of notes. We
may, however, require holders to pay a sum sufficient to cover any tax or other
governmental charge payable in connection with certain transfers or exchanges.
17
Conversion
You may convert your notes, at your option, in whole or in part, into
shares of our common stock at any time on or prior to the close of business on
the maturity date, unless the notes have been previously redeemed, purchased or
repurchased. The initial conversion rate is equal to approximately 93.90 shares
per $1,000 principal amount of notes. The conversion rate is equivalent to a
conversion price of $10.65 per share. The conversion rate will be subject to
adjustment, as described below.
If the notes are called for redemption or are subject to repurchase, your
conversion rights on the notes called for redemption or submitted for repurchase
will expire at the close of business on the last business day before the
redemption date or repurchase date, as the case may be. If, however, we default
in the payment of the redemption price or repurchase price, your conversion
right will terminate at the close of business on the date the default is cured
and the notes are redeemed or repurchased.
Owners who hold beneficial interests in the notes through participants or
indirect participants who desire to convert their interests into common stock
should contact their brokers or the participants or indirect participants
through whom they hold such beneficial interests to obtain information on
procedures, including proper forms and cut-off times, for submitting requests
for conversion. If you hold certificated notes, you may convert all or part of
any note by delivering the note to the office of the trustee in the Borough of
Manhattan, the City of New York, accompanied by a duly signed and completed
conversion notice, a copy of which may be obtained by the trustee. The
conversion date will be the date on which the note and the duly signed and
completed conversion notice are so delivered.
As promptly as practicable on or after the conversion date, we will issue
and deliver to the trustee a certificate or certificates for the number of full
shares of our common stock issuable upon conversion. The certificate will then
be sent by the trustee to the conversion agent for delivery to the holder. The
shares of our common stock issued upon conversion of the notes will be fully
paid and nonassessable and will rank equally with the other shares of our common
stock. We will not issue fractional shares of common stock upon conversion of
the notes. Instead, we will pay cash based on the closing market price of our
common stock at the close of business on the last trading date preceding the
conversion date.
Except as described in this paragraph, if you surrender a note for
conversion on a date that is not an interest payment date, you will not be
entitled to receive any interest for the period from the next preceding interest
payment date to the conversion date. Any note surrendered for conversion during
the period from the close of business on any regular record date to the opening
of business on the next succeeding interest payment date (except notes, or
portions thereof, called for redemption or subject to repurchase) must be
accompanied by payment of an amount equal to the interest payable on such
interest payment date on the principal amount of notes being surrendered for
conversion. In the case of any note that has been converted after any regular
record date but before the next succeeding interest payment date, interest
payable on the interest payment date shall be payable on the interest payment
date notwithstanding the conversion, and the interest shall be paid to the
holder of such note on the regular record date.
No other payment or adjustment for interest, or for any dividends in
respect of our common stock, will be made upon conversion. Holders of our common
stock issued upon conversion of the notes will not be entitled to receive any
dividends payable to holders of our common stock as of any record time or date
before the close of business on the conversion date.
You will not be required to pay any taxes or duties relating to the issue
or delivery of our common stock on conversion, but you will be required to pay
any tax or duty relating to any transfer involved in the issue or delivery of
our common stock in a name other than yours. Certificates representing shares of
our
18
common stock will not be issued or delivered unless all taxes and duties, if
any, payable by you have been paid.
The conversion rate will be subject to adjustment for, among other things:
(i) the issuance of shares of our common stock as a dividend or
distribution on shares of our common stock;
(ii) the issuance to all holders of our common stock of rights,
options or warrants entitling them to subscribe for or purchase our common
stock at less than the then current market price of our common stock as of
the record date for stockholders entitled to receive such rights, options
or warrants, provided that the conversion rate will be readjusted to the
extent that such rights, options or warrants are not exercised prior to
the expiration;
(iii) subdivisions and combinations of our common stock;
(iv) distributions to all holders of our common stock of evidences
of our indebtedness, shares of capital stock, cash or assets, including
securities, but excluding: those dividends, rights, options, warrants and
distributions referred to in clause (i) or (ii) above; dividends and
distributions paid exclusively in cash; and distributions of rights to
holders of common stock pursuant to a stockholder rights plan;
(v) distributions consisting exclusively of cash, excluding any cash
portion of distributions referred to immediately above or cash distributed
upon a merger or consolidation as discussed below, to all holders of our
common stock;
(vi) the purchase of our common stock pursuant to a tender offer
made by us or any of our subsidiaries.
We will not be required to make any adjustment to the conversion rate
unless the adjustment would require a change of at least 1.0% of the conversion
rate. However, we will carry forward and take into account any adjustments that
are less than 1.0% of the conversion rate in any subsequent adjustment that
would otherwise be required to be made.
Our subsidiary LP Innovations, Inc. ("LPI") has filed a registration
statement on Form S-1 relating to the potential distribution to each of our
stockholders of rights to purchase shares of LPI's common stock. Any such
distribution would be subject to the conversion rate adjustment provisions of
paragraph (iv) above. We do not believe that such a distribution would cause the
conversion rate to increase by greater than 1.0%.
We will compute all adjustments to the conversion rate and will give
notice by mail to holders of the registered notes of any adjustments.
To the extent that we have a rights plan in effect upon conversion of the
notes into common stock, you will receive, in addition to the common stock, the
rights under the rights plan whether or not the rights have separated from the
common stock at the time of conversion, subject to limited exceptions. In
addition to the foregoing adjustments, we may increase the conversion rate to
avoid or diminish income tax to holders of our common stock in connection with
any event treated for United States federal income tax purposes as a dividend of
stock or stock rights.
19
In the event of:
o any reclassification of our common stock,
o a consolidation, merger or combination involving us, or
o a sale or conveyance to another person or entity of all or
substantially all of our property and assets,
in which holders of our common stock would be entitled to receive stock, other
securities, other property, assets or cash for their common stock, upon
conversion of your notes you will be entitled to receive the same type of
consideration that you would have been entitled to receive if you had converted
your notes into our common stock immediately prior to any of these events. The
preceding sentence will not apply to a merger or sale of all or substantially
all of our assets that does not result in any reclassification, conversion,
exchange or cancellation of our common stock.
We may, from time to time, increase the conversion rate for any period of
at least 20 days if our board of directors determines that the increase would be
in our best interest. The board of directors' determination in this regard will
be conclusive. We will give holders of the notes at least 15 days notice of any
such increase in the conversion rate.
You may, in some circumstances, be deemed to have received a distribution
subject to U.S. federal income tax as a result of an adjustment or the
non-occurrence of an adjustment to the conversion price. See "Certain United
States Federal Income Tax Considerations--U.S. Holders."
Ranking
The notes are unsecured obligations and are subordinated in right of
payment to all existing and future designated senior debt and, as a result, the
payment of the principal of, any premium and interest, including additional
interest, if any, on the notes, including amounts payable on any redemption or
repurchase, are subordinated to the prior payment in full, in cash or other
payment satisfactory to the holders of designated senior debt, of all of our
designated senior debt to the extent provided in the indenture. The notes will
also be effectively subordinated to the existing and future indebtedness or
other liabilities, including trade payables, of our subsidiaries. As of November
1, 2003 we had approximately $55.0 million of outstanding designated senior
debt, and the aggregate amount of indebtedness and other liabilities of our
subsidiaries was approximately $137.0 million (excluding intercompany
liabilities and liabilities of the type not required to be recorded on the
balance sheet in accordance with GAAP).
"Designated senior debt" means (i) all indebtedness and obligations of
Casual Male under its Third Amended and Restated Loan and Security Agreement
dated as of May 14, 2002, as amended by the First Amendment thereto dated as of
October 16, 2002 and by the Second Amendment thereto dated as of November 3,
2003, by and among us, Fleet Retail Finance, Inc., the lenders identified in the
agreement, and Designs Apparel, Inc. and any other agreement between Casual Male
and any bank, commercial finance lender or other institutional lender regularly
engaged in the business of lending money, providing for unsubordinated revolving
credit loans, term loans, receivables financing, factoring arrangements, capital
leases or letters of credit including, without limitation, any amendments,
supplements, deferrals, renewals, extensions, replacements, refinancings,
restructurings, repayments or refundings thereof, or amendments, modifications
or supplements thereto and any agreement providing therefore, whether by or with
the same or any bank, commercial finance lender or other institutional lender
regularly engaged in the business of lending money, and including related notes,
guarantee and note agreements and other instruments and
20
agreements executed in connection therewith, (ii) all indebtedness and
obligations of Casual Male incurred to repurchase notes issued pursuant to this
offering pursuant to the exercise by a holder of its repurchase option in the
event of a fundamental change or on a purchase date for the notes, and any
amendments, supplements, deferrals, renewals, extensions, replacements,
refinancings, repayments or refundings thereof, or amendments or modifications
or supplements thereto, and (iii) any other indebtedness and obligations of
Casual Male in an aggregate amount not to exceed $20 million issued after
November 12, 2003 to any person that is not an affiliate of Casual Male or any
affiliate of any direct or indirect subsidiary of Casual Male, so long as such
indebtedness or obligation explicitly states that it shall be "designated senior
debt" for the purposes of the indenture governing the notes.
We may not make any payment on account of principal, premium or interest,
including additional interest, if any, on the notes, or redeem or repurchase the
notes, if:
o we default in our obligations to pay principal, premium, interest or
other amounts on our designated senior debt, including a default
under any redemption or repurchase obligation, and the default
continues beyond any applicable grace period that we may have to
make these payments; or
o any other default occurs and is continuing on any designated
senior debt, and
(i) the default permits the holders of the designated senior debt
to accelerate its maturity; and
(ii) the trustee has received a payment blockage notice from us,
the holder of such debt or such other person permitted to give
such notice under the indenture.
If payments on the notes have been blocked by a payment default on
designated senior debt, payments on the notes may resume when the payment
default has been cured or waived or ceases to exist.
If payments on the notes have been blocked by a nonpayment default on
designated senior debt, payments on the notes may resume on the earlier of:
o the date the nonpayment default is cured or waived or ceases to
exist; or
o 179 days after the payment blockage notice is received.
No nonpayment default that existed on the day a payment blockage notice
was delivered to the trustee can be used as the basis of any subsequent payment
blockage notice. In addition, once a holder of designated senior debt has
blocked payment on the notes by giving a payment blockage notice, no new period
of payment blockage can be commenced pursuant to a subsequent payment blockage
notice unless and until both of the following are satisfied:
o 365 days have elapsed since the initial effectiveness of the
immediately prior payment blockage notice; and
o all scheduled payments of principal, any premium and interest with
respect to the notes that have come due have been paid in full in
cash.
In addition, all principal, premium, if any, interest and other amounts
due on all designated senior debt must be paid in full in cash before you are
entitled to receive any payment otherwise due upon:
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o any acceleration of the principal on the notes as a result of any
event of default of the notes; or
o any payment or distribution of our assets to creditors upon any
dissolution, winding up, liquidation or reorganization, whether
voluntary or involuntary, marshaling of assets, assignment for the
benefit of creditors, or in bankruptcy, insolvency, receivership or
other similar proceedings.
In the event of insolvency, creditors who are holders of designated senior
debt are likely to recover more, ratably, than you because of this
subordination. The subordination may result in a reduction or elimination of
payments on the notes to you. The subordination will not prevent the occurrence
of any event of default under the indenture.
If either the trustee or any holder of notes receives any payment or
distribution of our assets in contravention of these subordination provisions
before all designated senior debt is paid in full, then such payment or
distribution will be held by the recipient in trust for the benefit of holders
of designated senior debt to the extent necessary to make payment in full of all
senior debt remaining unpaid.
The notes are "structurally subordinated" to all indebtedness and other
liabilities of our subsidiaries, including trade payables and lease obligations.
This occurs because our right to receive assets of any of our subsidiaries upon
its liquidation or reorganization, and your right to participate in those
assets, are effectively subordinated to the claims of that subsidiary's
creditors, including trade creditors, except to the extent that we are
recognized as a creditor of such subsidiary. If we are recognized as a creditor
of that subsidiary, our claims would still be subordinate to any security
interest in the assets of the subsidiary and any indebtedness of the subsidiary
senior to us.
Except as described in the next section, the indenture does not limit our
ability or the ability of our subsidiaries to incur any liabilities including
indebtedness. If we incur additional indebtedness, our ability to pay our
obligations on the notes could be affected. We expect from time to time to incur
additional indebtedness and other liabilities.
We are obligated to pay reasonable compensation to the trustee. We will
indemnify the trustee against any losses, liabilities or expenses incurred by it
in connection with its duties. The trustee's claims for such payments is senior
to the claims of the note holders.
Limitation on Incurring Subordinated Indebtedness Senior to the Notes
The indenture will provide that we shall not, directly or indirectly,
incur, or suffer to exist, any indebtedness that by its terms would expressly
rank senior in right of payment to the notes and subordinate in right of payment
to any of our designated senior indebtedness.
For purposes of the indenture for the notes, "incur" means, with respect
to any indebtedness or other obligation to any person, to create, issue, incur
(including by conversion, exchange or otherwise), assume, guarantee or otherwise
become liable in respect of such indebtedness or other obligation or the
recording, as required pursuant to GAAP or otherwise, of any such indebtedness
or other obligation on the balance sheet of such person (and "incurrence,"
"incurred" and "incurring" shall have meanings correlative to the foregoing).
Indebtedness of any person or company that we acquire or any of such person or
company's subsidiaries existing at the time such person or company becomes our
subsidiary (or is merged into or consolidated with or any subsidiary of us),
whether or not such indebtedness was incurred in connection with, as a result
of, or in contemplation of, such person or company becoming a subsidiary of us
(or being
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merged into or consolidated with us or any subsidiary), shall be deemed incurred
at the time any such person or company becomes a subsidiary or merges into or
consolidates with us or any of our subsidiaries.
Optional Redemption by Casual Male
On or after January 6, 2007, we may redeem the notes, in whole or in part,
at the redemption price, which is 100% of the principal amount plus accrued and
unpaid interest and additional interest, if any. If we elect to redeem all or
part of the notes, we will give at least 20, but no more than 60, days notice
to you. In each case, we will pay interest to, but excluding, the redemption
date.
If we decide to redeem fewer than all of the notes, the trustee will
select the notes to be redeemed by lot or, in its discretion, on a pro rata
basis. If any note is to be redeemed in part only, a new note in principal
amount equal to the unredeemed principal portion will be issued. If a portion of
your notes is selected for partial redemption and you convert a portion of your
notes, the converted portion will be deemed to be part of the portion selected
for redemption.
No sinking fund is provided for the notes, which means that the indenture
does not require us to redeem or retire the notes periodically.
Purchase at Option of the Holder
You have the right to require us to purchase your notes for cash or by
delivery of shares of our common stock, at our option, on January 1, 2009,
January 1, 2014 or January 1, 2019. We will be required to purchase any
outstanding note for which you deliver a written purchase notice to the paying
agent. This notice must be delivered during the period beginning at any time
from the opening of business on the date that is 20 business days prior to the
purchase date until the close of business on the purchase date. If a purchase
notice is given and withdrawn during that period, we will not be obligated to
purchase the notes listed on the notice. Our repurchase obligation will be
subject to certain additional conditions.
The purchase price payable for a note will be equal to 100% of its
principal amount plus accrued and unpaid interest and additional interest, if
any, to, but excluding, the repurchase date.
Your right to require us to purchase notes is exercisable by delivering a
written purchase notice to the paying agent within 20 business days of the
repurchase date. The paying agent initially is the trustee.
The purchase notice must state:
o if certificated notes have been issued, the note certificate numbers
(or, if your notes are not certificated, your purchase notice must
comply with appropriate DTC procedures);
o the portion of the principal amount of notes to be purchased,
which must be in $1,000 multiples; and
o that the notes are to be repurchased by us pursuant to the
applicable provisions of the notes and the indenture.
You may withdraw any written repurchase notice by delivering a written
notice of withdrawal to the paying agent prior to the close of business on the
repurchase date. The withdrawal notice must state:
o the principal amount of the withdrawn notes;
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o if certificated notes have been issued, the certificate numbers of
the withdrawn notes (or, if your notes are not certificated, your
withdrawal notice must comply with appropriate DTC procedures); and
o the principal amount, if any, which remains subject to the purchase
notice.
We must give notice of an upcoming purchase date to all noteholders not
less than 20 business days prior to the purchase date at their addresses shown
in the register of the registrar. We will also give notice to beneficial owners
as required by applicable law. This notice will state, among other things, the
procedures that holders must follow to require us to repurchase their notes.
Payment of the purchase price for a note for which a purchase notice has
been delivered and not withdrawn is conditioned upon book-entry transfer or
delivery of the note, together with necessary endorsements, to the paying agent
at its office in the Borough of Manhattan, the City of New York, or any other
office of the paying agent, at any time after delivery of the purchase notice.
Payment of the purchase price for the note will be made promptly following the
later of the purchase date and the time of book-entry transfer or delivery of
the note. If the paying agent holds money or securities sufficient to pay the
repurchase price of the note on the business day following the repurchase date,
then, on and after the date:
o the note will cease to be outstanding;
o interest will cease to accrue; and
o all other rights of the holder will terminate.
This will be the case whether or not book-entry transfer of the note has
been made or the note has been delivered to the paying agent, and all other
rights of the noteholder will terminate, other than the right to receive the
purchase price upon delivery of the note.
Our ability to purchase notes with cash may be limited by the terms of our
then-existing borrowing agreements. Even though we become obligated to purchase
any outstanding notes on a repurchase date, we may not have sufficient funds to
pay the repurchase price on that repurchase date. See "Risk Factors--We may be
unable to repay, repurchase or redeem the notes."
We will comply with any applicable provisions of Rule 13e-4 and any other
tender offer rules under the Securities Exchange Act of 1934.
Repurchase at Option of Holders Upon a Fundamental Change
If a "fundamental change" as defined below occurs, you will have the
right, at your option, to require us to repurchase all of your notes not
previously converted or called for redemption, or any portion of the principal
amount thereof, that is equal to $1,000 or an integral multiple of $1,000. The
price we are required to pay is 100% of the principal amount of the notes to be
repurchased, together with accrued but unpaid interest and additional interest,
if any, to, but excluding, the repurchase date.
Within 30 calendar days after the occurrence of a fundamental change, we
are obligated to give to you notice of the fundamental change and of the
repurchase right arising as a result of the fundamental change. We must also
deliver a copy of this notice to the trustee. To exercise the repurchase right,
you must deliver on or before the close of business on the business day prior to
the repurchase date written notice to the trustee of your exercise of your
repurchase right, together with the notes with respect to which the right
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is being exercised. We are required to repurchase the notes on the date that is
30 business days after the date of our notice.
A fundamental change will be deemed to have occurred, at any time after
the notes are originally issued if any of the following occurs:
o during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of
Casual Male (together with any new directors whose election to the
board of directors, or whose nomination for election by the
stockholders of Casual Male, was approved by a vote of a majority of
the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the board of directors then in office; or
o any person acquires beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition transaction or
series of transactions, of shares of our capital stock entitling the
person to exercise more than 50% of the total voting power of all
shares of our capital stock entitled to vote generally in elections
of directors, other than an acquisition by us, any of our
subsidiaries or any of our employee benefit plans; or
o we merge or consolidate with or into any other person, any merger of
another person into us or we convey, sell, transfer or lease all or
substantially all of our assets to another person, other than:
(i) any transaction involving a merger or consolidation that does
not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of our capital stock and
pursuant to which the holders of more than 50% of the total
voting power of all shares of our capital stock entitled to
vote generally in elections of directors immediately prior to
such transaction have the entitlement to exercise, directly or
indirectly, more than 50% of the total voting power of all
shares of capital stock entitled to vote generally in the
election of directors of the continuing or surviving
corporation in generally the same proportion immediately after
such transaction; or
(ii) any transaction effected solely to change our jurisdiction of
incorporation and results in a reclassification, conversion or
exchange of outstanding shares of our common stock into solely
shares of common stock.
o the common stock into which the notes are convertible ceases to be
quoted on the Nasdaq National Market and is not listed on an
established national securities exchange or automated
over-the-counter trading market in the United States.
However, a fundamental change shall not be deemed to have occurred if the
closing price per share of our common stock for any five trading days within the
period of 10 consecutive trading days ending immediately after the later of the
fundamental change or the public announcement of, the fundamental change (in the
case of a fundamental change relating to an acquisition of capital stock under
the second bullet above) or the period of 10 consecutive trading days ending
immediately before the fundamental change relating to a merger, consolidation or
asset sale (in the case of a fundamental change relating to a merger,
consolidation or asset sale under the third bullet above) shall equal or exceed
105% of the conversion price of the notes in effect on each such trading day.
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For purposes of these provisions:
o whether a person is a "beneficial owner" will be determined in
accordance with Rule 13d-3 under the Exchange Act; and
o "person" includes any syndicate or group that would be deemed to be
a "person" under Section 13(d)(3) of the Exchange Act.
The rules and regulations promulgated under the Exchange Act require the
dissemination of prescribed information to security holders in the event of an
issuer tender offer and may apply in the event that the repurchase option
becomes available to you. We will comply with this rule to the extent it applies
at that time.
The definition of fundamental change includes the conveyance, transfer,
sale, lease or disposition of all or substantially all of our assets. There is
no precise, established legal definition of the phrase "substantially all." The
phrase will likely be interpreted under applicable state law and will depend on
particular facts and circumstances. As a result of the uncertainty as to the
definition of the phrase "substantially all," we cannot assure you how a court
would interpret this phrase if you elect to exercise your rights following the
occurrence of a transaction that you believe constitutes a transfer of
"substantially all" of our assets. Accordingly, your ability to require us to
repurchase your notes as a result of the conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide you with protection
if we are involved in a highly leveraged or other transaction that may adversely
affect you.
This fundamental change purchase feature may make more difficult or
discourage a takeover of us and the removal of incumbent management. We are not,
however, aware of any specific effort to accumulate shares of our common stock
or to obtain control of us by means of a merger, tender offer, solicitation or
otherwise. In addition, the fundamental change purchase feature is not part of a
plan by management to adopt a series of anti-takeover provisions. Instead, the
fundamental change purchase feature is a result of negotiations between us and
the Initial Purchaser.
Our ability to repurchase notes upon the occurrence of a fundamental
change is subject to important limitations. Certain of our debt agreements may
prohibit our redemption or repurchase of the notes. Moreover, a fundamental
change could cause an event of default under, or be prohibited or limited by,
the terms of our senior debt. As a result, unless we were to obtain a waiver
from our other lenders, a repurchase of the notes could be prohibited under the
subordination provisions of the indenture until the senior debt is paid in full.
If holders elect to have us repurchase notes upon a fundamental change, we may
not have the financial resources, or be able to arrange financing, to pay the
repurchase price in cash for all the notes that might be delivered by holders of
notes seeking to exercise the repurchase right. If we were to fail to repurchase
the notes when required following a fundamental change, an event of default
under the indenture would occur, whether or not such repurchase is permitted by
the subordination provisions of the indenture. Any such default may, in turn,
cause a default under our other debt. See "--Subordination."
Mergers and Sales of Assets by Casual Male
We may not consolidate with or merge into any other entity or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any entity, and we may not permit any entity to consolidate with or merge
into us or convey, transfer, sell or lease such entity's properties and assets
substantially as an entirety to us unless:
26
o the entity formed by such consolidation or into or with which we are
merged, or in the case of a merger pursuant to section 251(g) of the
Delaware General Corporation Law, the resulting holding company so
long as such holding company, after giving effect to such merger and
related transactions, is a corporation and holds substantially all
of our properties and assets either directly or in a manner not
materially more adverse to the interests of the holders than the
manner in which such properties and assets were held by us prior to
such merger, or the entity to which our properties and assets are so
conveyed, transferred, sold or leased shall be a corporation
organized and existing under the laws of the United States, any
state within the United States or the District of Columbia and, if
we are not the surviving entity, the surviving entity assumes the
payment of the principal of, premium, if any, and interest on the
notes and the performance of our other covenants under the
indenture;
o immediately after giving effect to the transaction, no event of
default, and no event that, after notice or lapse of time or both,
would become an event of default, will have occurred and be
continuing; and
o other conditions specified in the indenture are met.
When such a person assumes our obligations in such circumstances, subject
to certain exceptions, we shall be discharged from all obligations under the
notes and the indenture.
Events of Default
If any of the following occurs, it would constitute an event of default
under the indenture:
o failure to pay principal of or premium, if any, on any note when
due;
o failure to pay any interest, including any additional interest,
if any, on any note when due, which failure continues for
30 days;
o failure to provide timely notice of a fundamental change;
o failure to perform any other covenant in the indenture, which
failure continues for 60 days following notice as provided in the
indenture;
o failure to pay any indebtedness under any bonds, debentures,
notes or other evidences of indebtedness for money borrowed, or
any guarantee thereof, by us or any of our subsidiaries, in an
aggregate principal amount in excess of $5 million when due
either at its stated maturity or upon acceleration thereof, and
such indebtedness is not discharged, or such acceleration is not
rescinded or annulled, within a period of 30 days after notice as
provided in the indenture; and
o certain events of bankruptcy, insolvency or reorganization
involving us or any of our subsidiaries.
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default shall occur and be continuing, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any holder, unless the holder shall
have offered reasonable indemnity to the trustee. Subject to providing
indemnification of the trustee, the holders of a majority in aggregate principal
amount of the outstanding notes will have the right to direct the time, method
27
and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee.
If an event of default, other than an event of default arising from events
of insolvency, bankruptcy or reorganization, occurs and is continuing, either
the trustee or the holders of at least 25% in principal amount of the
outstanding notes may accelerate the maturity of all notes. After such
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principal amount of outstanding notes may, however,
under certain circumstances, rescind and annul the acceleration if all events of
default, other than the non-payment of principal of the notes that have become
due solely by such declaration of acceleration, have been cured or waived as
provided in the indenture. If an event of default arising from events of
insolvency, bankruptcy or reorganization occurs, then the principal of, and
accrued interest on, all the notes will automatically become immediately due and
payable without any declaration or other act on the part of the holders of the
notes or the trustee. For information as to waiver of defaults, see "--Meetings,
Modification and Waiver" below.
You will not have any right to institute any proceeding with respect to
the indenture, or for any remedy under the indenture, unless:
o you give the trustee written notice of a continuing event of
default;
o the holders of at least 25% in aggregate principal amount of the
outstanding notes have made written request and offered reasonable
indemnity to the trustee to institute proceedings;
o the trustee has not received from the holders of a majority in
aggregate principal amount of the outstanding notes a direction
inconsistent with the written request; and
o the trustee shall have failed to institute such proceeding within 60
days of the written request.
These limitations do not, however, apply to a suit instituted by you for
the enforcement of payment of the principal of, premium, if any, or interest,
including additional interest, on your note on or after the respective due dates
expressed in your note or your right to convert your note in accordance with the
indenture.
We are required to furnish to the trustee annually a statement as to the
performance of certain of our obligations under the indenture and as to any
default in such performance.
Meetings, Modification and Waiver
The indenture contains provisions for convening meetings of the holders of
notes to consider matters affecting their interests.
Certain limited modifications of the indenture may be made without the
necessity of obtaining the consent of the holders of the notes. Other
modifications and amendments of the indenture may be made, compliance by us with
certain restrictive provisions of the indenture may be waived and any past
defaults by us under the indenture (except a default in the payment of
principal, premium, if any, or interest) may be waived, either:
o with the written consent of the holders of not less than a majority
in aggregate principal amount of the notes at the time outstanding;
or
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o by the adoption of a resolution, at a meeting of holders of the
notes at which a quorum is present, by the holders of at least 66?%
in aggregate principal amount of the notes represented at such
meeting.
The quorum at any meeting called to adopt a resolution will consist of
persons holding or representing a majority in aggregate principal amount of the
notes at the time outstanding and, at any reconvened meeting adjourned for lack
of a quorum, 25% of such aggregate principal amount.
A modification or amendment, however, requires the consent of the holder
of each outstanding note affected by such modification or amendment if it would:
o change the stated maturity of the principal of, or interest on, a
note;
o reduce the principal amount of, or any premium or the rate of
interest payable on, any note;
o reduce the amount payable upon a redemption or mandatory
repurchase upon a fundamental change;
o reduce the amount of principal payable upon acceleration of the
maturity of the note;
o modify the provisions with respect to the repurchase rights of
holders of notes in a manner adverse to the holders;
o modify our right to redeem the notes in a manner adverse to the
holders;
o change the place or currency of payment on a note;
o impair the right to institute suit for the enforcement of any
payment on any note;
o modify our obligation to maintain an office or agency in the City
of New York;
o adversely affect the right to convert the notes other than a
modification or amendment required by the terms of the indenture;
o modify our obligation to deliver information required under Rule
144A of the Securities Act to permit resales of the notes and common
stock issued upon conversion of the notes if we cease to be subject
to the reporting requirements under the Exchange Act;
o reduce the above-stated percentage of the principal amount of the
holders whose consent is needed to modify or amend the indenture;
o reduce the percentage of the principal amount of the holders whose
consent is needed to waive compliance with certain provisions of the
indenture or to waive certain defaults; or
o reduce the percentage required for the adoption of a resolution or
the quorum required at any meeting of holders of notes at which a
resolution is adopted.
Payment
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We will make all payments of principal and interest on the notes by dollar
check drawn on an account maintained at a bank in the City of New York. If you
hold registered notes with a face value greater than $2,000,000, at your request
we will make payments of principal or interest to you by wire transfer to an
account maintained by you at a bank in the City of New York. Payment of any
interest on the notes will be made to the entity in whose name the note, or any
predecessor note, is registered at the close of business on June 15 or December
15, whether or not a business day, immediately preceding the relevant interest
payment date (a "regular record date"). If you hold registered notes with a face
value in excess of $2,000,000 and you would like to receive payments by wire
transfer, you will be required to provide the trustee with wire transfer
instructions at least 15 days prior to the relevant payment date. Payments made
to DTC as holder of one or more global notes will be made by wire transfer.
Payments on any global note registered in the name of DTC or its nominee
will be payable by the trustee to DTC or its nominee in its capacity as the
registered holder under the indenture. Under the terms of the indenture, we and
the trustee will treat the persons in whose names the notes, including any
global note, are registered as the owners for the purpose of receiving payments
and for all other purposes. Consequently, neither we, the trustee nor any of our
agents or the trustee's agents has or will have any responsibility or liability
for:
o any aspect of DTC's records or any participant's or indirect
participant's records relating to or payments made on account of
beneficial ownership interests in the global note, or for
maintaining, supervising or reviewing any of DTC's records or any
participant's or indirect participant's records relating to the
beneficial ownership interests in the global note; or
o any other matter relating to the actions and practices of DTC or any
of its participants or indirect participants.
We will not be required to make any payment on the notes due on any day
that is not a business day until the next succeeding business day. The payment
made on the next succeeding business day will be treated as though it were paid
on the original due date and no interest will accrue on the payment for the
additional period of time.
We have initially appointed the trustee as paying agent and conversion
agent. We may terminate the appointment of any paying agent or conversion agent
and appoint additional or other paying agents and conversion agents. Until,
however, the notes have been delivered to the trustee for cancellation, or
moneys sufficient to pay the principal of, premium, if any, and interest on the
notes have been made available for payment and either paid or returned to us as
provided in the indenture, the trustee will maintain an office or agency in the
Borough of Manhattan, the City of New York for surrender of notes for
conversion. Notice of any termination or appointment and of any change in the
office through which any paying agent or conversion agent will act will be given
in accordance with "-- Notices" below.
All moneys deposited with the trustee or any paying agent, or then held by
us, in trust for the payment of principal of, premium, if any, or interest on
any notes that remain unclaimed at the end of two years after the payment has
become due and payable will be repaid to us, and you will then look only to us
for payment.
Purchase of Notes by Casual Male
We may, to the extent permitted by applicable law, at any time purchase
notes in the open market, by tender at any price or by private agreement. Any
note that we purchase may, to the extent permitted by applicable law and subject
to restrictions contained in the purchase agreement with the Initial Purchaser,
be re-issued or resold or may, at our option, be surrendered to the trustee for
cancellation.
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Surrender and Cancellation of Notes
All notes surrendered for payment, redemption, registration of transfer or
exchange or conversion shall, if surrendered to any person other than the
trustee, be delivered to the trustee. All notes delivered to the trustee shall
be cancelled promptly by the trustee. No notes shall be authenticated in
exchange for any notes cancelled as provided in the indenture.
Notices
Notice to holders of the registered notes will be given by mail to the
addresses as they appear in the security register. Notices will be deemed to
have been given on the date of such mailing.
Notice of a redemption of notes will be given not less than 30 or more
than 60 days prior to the redemption date and will specify the redemption date.
A notice of redemption of the notes will be irrevocable.
Replacement of Notes
We will replace any note that becomes mutilated, destroyed, stolen or lost
at the expense of the holder upon delivery to the trustee of the mutilated notes
or evidence of the loss, theft or destruction satisfactory to us and the
trustee. In the case of a lost, stolen or destroyed note, indemnity satisfactory
to the trustee and us may be required at the expense of the holder of the note
before a replacement note will be issued.
Payment of Stamp and Other Taxes
We will pay all stamp and other duties, if any, that may be imposed by the
United States or any political subdivision thereof or taxing authority thereof
or therein with respect to the issuance of the notes or of shares of stock upon
conversion of the notes. We will not be required to make any payment with
respect to any other tax, assessment or governmental charge imposed by any
government or any political subdivision thereof or taxing authority thereof or
therein.
Registration Rights
We entered into a registration rights agreement with the Initial
Purchaser. The following summary of certain provisions of the registration
rights agreement is not complete and is subject to, and qualified in its
entirety by reference to, all the provisions of the registration rights
agreement, a copy of which will be made available to beneficial owners of the
notes upon request to us.
In the registration rights agreement we agreed, for the benefit of the
holders of the notes and the shares of common stock issuable upon conversion of
the notes (the "registrable securities"), that we will, at our expense:
o file with the SEC, within 90 days after the date the notes are
issued, a shelf registration statement covering resales of the
registrable securities;
o use reasonable efforts to cause the shelf registration statement to
be declared effective under the Securities Act within 180 days after
the date the notes are originally issued; and
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o use reasonable efforts to keep effective the shelf registration
statement until two years after the date the notes are issued or, if
earlier, until the notes and the common stock issuable upon
conversion of the notes are no longer deemed registrable securities
within the meaning of the registration rights agreement.
We will be permitted to suspend the use of the prospectus that is part of
the shelf registration statement in connection with the sales of registrable
securities during prescribed periods of time for business reasons, including
acquisitions and divestitures of assets, pending corporate developments, public
filings with the SEC and similar events. The periods during which we can suspend
the use of the prospectus may not, however, exceed a total of 45 days in any
90-day period or a total of 90 days in any 365-day period. We will provide to
each holder of registrable securities copies of the prospectus that is a part of
the shelf registration statement, notify each holder when the shelf registration
statement has become effective and take certain other actions required to permit
public resales of the registrable securities.
We will pay predetermined additional interest if the shelf registration
statement is not timely filed or made effective or if the prospectus is
unavailable for periods in excess of those permitted above. The rates at which
additional interest will accrue will be as follows:
o 0.25% of the aggregate principal amount of the notes per annum to
and including the 90th day after the registration default; and
o 0.50% of the aggregate principal amount of the notes per annum from
and after the 91st day after the registration default.
In the event notes that are registrable securities are converted into
shares of common stock that are restricted securities, any additional interest
will accrue on such shares at the rates described above, applied to the
conversion price at that time.
A holder who elects to sell any registrable securities pursuant to the
shelf registration statement:
o will be required to be named as a selling security holder in the
related prospectus;
o may be required to deliver a prospectus to purchasers;
o may be subject to certain civil liability provisions under the
Securities Act in connection with those sales; and
o will be bound by the provisions of the registration rights agreement
that apply to a holder making such an election, including certain
indemnification provisions.
We will give notice of our intention to file the shelf registration
statement, which we refer to as a filing notice, to each of the holders of the
notes in the same manner as we would give notice to holders of notes under the
indenture. The filing notice will seek, among other things, a determination from
each of such holders as to whether such holder elects to have its registrable
securities registered for sale pursuant to the shelf registration statement. We
will mail the notice and questionnaire to the holders of registrable securities
not less than 30 calendar days prior to the time we intend in good faith to have
the shelf registration statement declared effective.
No holder of registrable securities will be entitled:
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o to be named as a selling security holder in the shelf registration
statement as of the date the shelf registration statement is
declared effective; or
o to use the prospectus forming a part of the shelf registration
statement for offers and resales of registrable securities at any
time,
unless such holder has returned a completed and signed notice in the form
attached as Appendix A to this prospectus by the deadline for response set forth
in the notice and questionnaire.
Holders of registrable securities will, however, have at least 28 calendar
days from the date on which the notice and questionnaire is first mailed to
return a completed and signed notice and questionnaire to us.
Beneficial owners of registrable securities who have not returned a notice
and questionnaire by the questionnaire deadline described above may receive
another notice and questionnaire from us upon request. Following our receipt of
a completed and signed notice and questionnaire after the questionnaire
deadline, we will use our reasonable efforts to file within ten business days
any amendments or supplements to the shelf registration statement or supplements
to the related prospectus as are necessary to allow holders to be named as
selling securityholders in the prospectus contained in it. Notwithstanding any
of the foregoing, we will not be required to file more than one post-effective
amendment to the shelf registration statement during any 30-day period. We will
pay the additional amounts described above to a holder if we fail to make a
filing in the time required with respect to such holder or, in the event such
filing is a post-effective amendment to the shelf registration statement that is
required to be declared effective under the Securities Act, if such
post-effective amendment is not declared effective within 45 days to the filing.
We agreed in the registration rights agreement to use our reasonable
efforts to cause the shares of common stock issuable upon conversion of the
notes to be quoted on the Nasdaq National Market.
We will pay all registration expenses of the shelf registration, provide
each holder that is selling registrable securities pursuant to the shelf
registration statement copies of the related prospectus and take other actions
as are required to permit, subject to the foregoing, unrestricted resales of the
registrable securities. Selling securityholders remain responsible for all
selling expenses (i.e., commissions and discounts).
Governing Law
The indenture, the notes, and the registration rights agreement are
governed by and construed in accordance with the laws of the state of New York.
The Trustee
U.S. Bank National Association has agreed to serve as the trustee under
the indenture. The trustee is permitted to deal with us and any of our
affiliates with the same rights as if it were not trustee. Under the Trust
Indenture Act, however, if the trustee acquires any conflicting interest and
there exists a default with respect to the notes, the trustee must eliminate
such conflict or resign.
The holders of a majority in principal amount of all outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy or power available to the trustee. Any such
direction may not, however, conflict with any law or the indenture, may not be
unduly prejudicial to the rights of another holder or the trustee and may not
involve the trustee in personal liability.
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If an event of default occurs and is continuing, the trustee will be
required to use the degree of care of a prudent person in the conduct of his own
affairs in the exercise of its powers. Subject to such provisions, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any of the holders of notes, unless they shall have
furnished to the trustee reasonable security or indemnity.
Form, Denomination and Registry
The notes will be issued:
o only in fully registered form;
o without interest coupons; and
o in denominations of $1,000 and greater multiples.
Global Note, Book-Entry Form
The notes are evidenced by one or more global notes, which are deposited
with the trustee as custodian for The Depository Trust Company, or DTC, and
registered in the name of Cede & Co., as nominee of DTC. Except as set forth
below, record ownership of the global note may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee.
DTC was created to hold securities of institutions that have accounts with
DTC (called "participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, which may include the
Initial Purchaser, banks, trust companies, clearing corporations and certain
other organizations. Some of the participants or their representatives, together
with other entities, own DTC. Access to DTC's book-entry system is also
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, whether
directly or indirectly (called "indirect participants").
DTC or its nominee is considered the sole owner and holder of the global
notes for all purposes. Except as otherwise provided in this section, as a
holder of a beneficial interest in the global notes, you will not be entitled to
have notes represented by the global note registered in your name, will not
receive physical delivery of certificated securities and will not be considered
to be the owner or holder of the global note or any note it represents for any
purpose.
We expected that, pursuant to procedures established by DTC, upon the
deposit of the global security with DTC, DTC will credit, on its book-entry
registration and transfer system, the principal amount of notes represented by
such global security to the accounts of participants. The Initial Purchaser will
designate the accounts to be credited. Ownership of beneficial interests in the
global security will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in the global
security will be shown on, and the transfer of those beneficial interests will
be effected only through, records maintained by DTC (with respect to
participants' interests), the participants and the indirect participants. The
laws of some jurisdictions may require that certain purchasers of securities
take physical delivery of such securities in definitive form. These limits and
laws may impair the ability to transfer or pledge beneficial interests in the
global security to such persons.
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Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
We will make cash payments of interest on and principal of and the
redemption or repurchase price of the global note, as well as any payment of
additional interest, to Cede & Co. We will make these payments by wire transfer
of immediately available funds on each payment date.
We have been informed that DTC's practice is to credit participants'
accounts on the payment date with payments in amounts proportionate to their
respective beneficial interests in the notes represented by the global note as
shown on DTC's records, unless DTC has reason to believe that it will not
receive payment on that payment date. Payments by participants to owners of
beneficial interests in notes represented by the global note held through
participants will be the responsibility of those participants, as is now the
case with securities held for the accounts of customers registered in street
name.
We will send any redemption notices to Cede & Co. We understand that if
less than all the notes are being redeemed, DTC's practice is to determine by
lot the amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede & Co. will consent or vote
with respect to the notes. We have been advised that under its usual procedures,
DTC will mail an omnibus proxy to us as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
participants to whose accounts the notes are credited on the record date
identified in a listing attached to the omnibus proxy.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes, including the presentation of notes for exchange, only at the
direction of one or more participants to whose account with DTC interests in the
global note are credited and only in respect of such portion of the principal
amount of the notes represented by the global notes as to which such participant
or participants has or have given such direction. Because DTC can only act on
behalf of participants, who in turn act on behalf of indirect participants, the
ability of a person having a beneficial interest in the principal amount
represented by the global note to pledge the interest to persons or entities
that do not participate in the DTC book-entry system, or otherwise take actions
in respect of that interest, may be affected by the lack of a physical
certificate evidencing its interest.
The global notes will not be registered in the name of any person, or
exchanged for notes that are registered in the name of any person, other than
DTC or its nominee, unless DTC is unwilling, unable or no longer qualified to
continue acting as the depositary for the global note or an event of default
with respect to the notes represented by the global notes has occurred and is
continuing. In those circumstances, DTC will exchange the global note for
certificated notes that it will distribute to its participants.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of the
state of New York;
o a member of the Federal Reserve System;
o a clearing corporation within the meaning of the Uniform
Commercial Code, as amended; and
o a clearing agency registered pursuant to the provisions of
Section 17A of the Exchange Act.
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The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to beneficial
interests in the global note.
Certificated Notes
Qualified institutional buyers may request that certificated notes be
issued in exchange for notes represented by a global note.
DESCRIPTION OF CAPITAL STOCK
We are authorized to issue a total of 76,000,000 shares, consisting of
75,000,000 shares of common stock and 1,000,000 shares of preferred stock. The
following is a summary of some of the rights and privileges pertaining to our
common stock. For a full description of our common stock and our preferred
stock, you should refer to our certificate of incorporation and by-laws.
Our Common Stock
As of February 3, 2004, there were 35,073,756 shares of our common stock
outstanding. The holders of our common stock are entitled to one vote per share
on all matters to be voted upon by the stockholders. None of our common
stockholders will be entitled to cumulate votes at any election of directors.
Subject to preferences that are applicable to any series of our preferred stock
that may come into existence in the future, the holders of our common stock are
entitled to receive such dividends, if any, as may be declared from time to time
by our board out of legally available funds. In the event of our liquidation,
dissolution or winding up, the holders of our common stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
rights of any other series of our preferred stock that may come into existence
in the future. Holders of our common stock have no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions available to the holders of our common stock.
Our Preferred Stock
Our board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may be
greater than the rights of the common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the board of directors determines the
specific rights of the holders of such preferred stock. However the effects
might include, among other things:
o restricted dividends on the common stock;
o diluting the voting power of the common stock;
o impairing the liquidation rights of the common stock; or
o delaying or preventing a fundamental change in control of our
company without further action by our stockholders.
Warrants
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As of November 1, 2003, there were outstanding warrants to purchase an
aggregate of up to 3,383,871 shares of our common stock at a weighted average
exercise price of $5.75 per share. These warrants are currently exercisable in
full and expire between April 2007 and 2010.
Options
As of November 1, 2003, there were an aggregate of 2,402,325 shares of our
common stock subject to outstanding options at a weighted average exercise price
of $4.18 per share under our 1992 Stock Incentive Plan, as amended. In addition,
as of November 1, 2003, there were an aggregate of 1,050,000 shares of our
common stock issued outside of our 1992 Stock Incentive Plan subject to
outstanding options at a weighted average exercise price of $3.04. In addition,
3,677,842 shares were reserved for future issuance upon exercise of options that
may be granted under the plan after November 1, 2003.
Registration Rights of Certain Holders
Holders of warrants to purchase 1,182,400 shares of our common stock
issued in connection with our outstanding 12% Senior Subordinated Notes due 2010
are entitled to require us to register the shares issuable upon exercise of such
warrants on a Form S-3 registration statement. In addition, from time to time,
we have issued and may continue to issue shares of capital stock, warrants,
convertible notes or other securities entitled to registration rights. All
previously issued securities entitled to such registration rights, other than
the shares issuable upon exercise of the warrants to purchase 1,182,400 shares
of our common stock described above, have been registered pursuant to a
registration statement on Form S-3 in September 2002. Accordingly, all such
previously granted registration rights have been satisfied.
Antitakeover Effects of Provisions of Our Certificate of Incorporation, Our
Bylaws and Delaware Law
Provisions of our certificate of incorporation and bylaws, as well as
provisions of Delaware law, could make it more difficult for a third party to
acquire us and to remove incumbent officers and directors. These provisions,
summarized below, are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of us to first negotiate with us. These provisions could
discourage potential acquisition proposals and could delay or prevent a change
in control. These provisions are also intended to enhance the likelihood of
continuity and stability in the composition of our board and in the policies
formulated by our board of directors and to discourage certain types of
transactions that may involve an actual or threatened change of control. These
provisions are designed to reduce our vulnerability to an unsolicited
acquisition proposal and to discourage certain tactics that may be used in proxy
fights. These provisions could, however, have the effect of discouraging others
from making tender offers for our shares and, as a consequence, they also may
inhibit fluctuations in the market price of our shares that could result from
actual or rumored takeover attempts. These provisions also may have the effect
of preventing changes in our management. We believe that the benefits of
increased protection of our ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging those proposals because, among other things,
negotiation of those proposals could result in an improvement of their terms.
Preferred Stock. Our board of directors, without stockholder approval, has
the authority under our certificate of incorporation to issue up to 1,000,000
shares of convertible preferred stock with rights superior to the rights of the
holders of our common stock. As a result, preferred stock could be issued
quickly and easily, could hurt the rights of holders of common stock and could
be issued with terms calculated to delay or prevent a change of control or make
removal of management more difficult.
37
Stockholder Meetings. Certain provisions of our bylaws may have the effect
of delaying, deferring or preventing a change of control through limitations on
the right of stockholders to call, or determine the agenda for, special
stockholder meetings, including a requirement for advance notification of
stockholder proposals.
Delaware Antitakeover Law. We are subject to Section 203 of the Delaware
General Corporation Law, which 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
becomes an interested stockholder, unless, before that date, the board of
directors of the corporation approves either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder;
upon consummation of the transaction that resulted in the stockholder becoming
an interested stockholder, the interested stockholder owns at least 85% of the
outstanding voting stock, excluding shares held by directors, officers and
employee stock plans; or, on or after the consummation date, the business
combination is approved by the board of directors and by the affirmative vote at
an annual or special meeting of stockholders of at least 66?% of the outstanding
voting stock that is not owned by the interested stockholder. For purposes of
Section 203, a business combination includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder. An
interested stockholder is generally a person who, together with affiliates and
associates of that person, (a) owns 15% or more of the corporation's voting
stock or (b) is an affiliate or associate of the corporation and was the owner
of 15% or more of the outstanding voting stock of the corporation at any time
within the prior three years.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is American Stock
Transfer and Trust Company. Its address is 59 Maiden Lane, Plaza Level, New
York, NY 10038.
Listing
Our common stock is quoted on the Nasdaq National Market under the symbol
"CMRG."
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following discusses the material U.S. federal income tax consequences
to holders, and U.S. estate tax consequences to non-U.S. holders (defined
below), relating to the ownership, conversion and disposition of the notes and
the ownership and disposition of common stock into which the notes may be
converted. This discussion is for general information only and does not address
all aspects of U.S. federal income taxation that may be relevant to you in light
of your personal circumstances. This summary is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable existing and
proposed U.S. Treasury regulations, and judicial authority and current
administrative rulings and practice, all of which are subject to change,
possibly on a retroactive basis, or to differing interpretation. Except as
otherwise noted, this summary applies only to holders that hold the notes and
our common stock into which the notes may be converted as capital assets within
the meaning of Section 1221 of the Code (generally, for investment). It does not
address tax consequences applicable to those U.S. holders that may be subject to
special tax rules, including financial institutions, regulated investment
companies, tax-exempt organizations, expatriates, persons subject to the
alternative minimum tax provisions of the Code, pension funds, insurance
companies, dealers in securities or foreign currencies, persons that will hold
notes as a position in a hedging transaction, straddle, conversion transaction
or other risk reduction transaction for tax purposes, persons deemed to sell
notes or common stock under the constructive sale provisions of the Code,
persons who hold notes through a partnership or other pass through entity, or
persons whose functional currency is not the U.S. dollar (except as disclosed
below under "Non-U.S. Holders"). We have not sought any ruling from the Internal
Revenue Service (the "IRS") with respect to the statements made and the
conclusions reached in the following summary, and there can be no assurance that
the IRS or a court will agree with our statements and conclusions. Moreover,
this discussion does not address the effect of the federal estate and gift tax
laws on U.S. holders or the effect of any applicable state, local or foreign tax
laws.
THE FOLLOWING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL
INFORMATION ONLY. IT IS NOT TAX ADVICE. INVESTORS CONSIDERING THE PURCHASE OF
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF
THE U.S. FEDERAL INCOME TAX AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS
AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR
FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
For purposes of this discussion, the term U.S. holder means a beneficial
owner of a note or common stock that is for U.S. federal income tax purposes:
o a citizen or resident of the U.S.;
o a corporation created or organized under the laws of the U.S. or
any state;
o an estate, the income of which is subject to U.S. federal income
taxation regardless of its source; or
o a trust if (a) its administration is subject to the primary
supervision of a court within the U.S. and one or more U.S. persons
have authority to control all of its substantial decisions, or (b)
it has a valid election in effect under applicable Treasury
regulations to be treated as a U.S. person.
A non-U.S. holder means a holder of a note or common stock that is not a
U.S. holder for U.S. federal income tax purposes. For U.S. federal income tax
purposes, income earned through a foreign or domestic partnership or similar
entity is generally attributed to its owners. A beneficial owner of notes that
39
is a partnership for U.S. federal income tax purposes, and the partners in such
a partnership, should consult their tax advisors about the U.S. federal income
tax consequences of holding and disposing of the notes and common stock.
U.S. Holders
The following is a summary of the material U.S. federal income tax
consequences resulting from the ownership, conversion and disposition of the
notes and ownership and disposition of common stock by U.S. holders.
The Notes
Interest
Interest paid on the notes will be includible in the income of a U.S.
holder as ordinary income at the time the interest is received or accrued, in
accordance with each U.S. holder's method of accounting for U.S. federal
income tax purposes.
In certain circumstances we may be obligated to pay holders additional
interest if we do not cause to be declared or keep effective a registration
statement, as described under "Description of Notes -- Registration Rights." We
intend to take the position that the likelihood that we will be obligated to pay
additional interest is remote. Our determination that this contingency is remote
is binding on holders unless they disclose a contrary position in the manner
required by applicable Treasury regulations. Our determination is not, however,
binding on the IRS. Remote contingencies are not taken into account unless and
until they occur. If we are required to pay additional interest, U.S. holders
would likely recognize additional income in accordance with their method of
accounting for U.S. federal income tax purposes.
Sale
Except as set forth below under "U.S. Holders -- The Notes -- Conversion"
and "U.S. Holders -- The Notes -- Market Discount", upon the sale, exchange,
redemption for cash or other taxable disposition of a note, a U.S. holder will
recognize capital gain or loss equal to the difference between the amount
realized on the disposition and the U.S. holder's adjusted tax basis in that
note. For these purposes, the amount realized on the disposition of a note does
not include any amount attributable to accrued but unpaid interest, which will
be taxable as such unless previously taken into income. A U.S. holder's adjusted
tax basis in a note generally will be the purchase price of that note on the
date of purchase increased by any market discount previously included in income
by the holder and reduced by any amortized premium. For a discussion of market
discount and premium, see "U.S. Holders--The Notes--Market Discount" and "U.S.
Holders--The Notes--Premium." Gain or loss so recognized will be capital gain or
loss and will be long-term capital gain or loss if, at the time of the
disposition, the note has been held for more than one year. Long-term capital
gains of non-corporate taxpayers are taxed at lower rates than those applicable
to ordinary income. The deductibility of capital losses is subject to
limitation.
Market Discount
A holder of notes may be affected by the impact on a purchaser of the
market discount provisions of the Code. For this purpose, and subject to a de
minimis exception, the market discount on a note generally will equal the
amount, if any, by which the stated redemption price at maturity of the note
(which is its stated principal amount) exceeds the holder's adjusted tax basis
in the note when purchased. Subject to a limited exception, these provisions
generally require a U.S. holder who acquires a note at a market discount to
include as ordinary income upon the disposition, retirement or gift of that note
an amount equal to the
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lesser of (i) the gain realized upon the disposition or retirement or, in the
case of a gift, the appreciation in the notes, and (ii) the accrued market
discount on that note at the time of disposition, maturity or gift, unless the
U.S. holder elects to include accrued market discount in income over the
remaining life of the note.
The election to include market discount in income over the life of the
note, once made, applies to all market discount obligations acquired on or after
the first taxable year to which the election applies and may not be revoked
without the consent of the IRS. In general, market discount will be treated as
accruing on a straight-line basis over the remaining term of the note at the
time of acquisition, or, at the election of the U.S. holder, under a constant
yield method. A U.S. holder who acquires a note at a market discount and who
does not elect to include accrued market discount in income over the life of the
note may be required to defer the deduction of a portion of the interest on any
indebtedness incurred or maintained to purchase or carry the note until maturity
or until the note is disposed of in a taxable transaction. If a U.S. holder
acquires a note with market discount and receives common stock upon conversion
of the note, the amount of accrued market discount not previously included in
income with respect to the converted note through the date of conversion will be
treated as ordinary income when the holder disposes of the common stock. The
rules regarding market discount are complex, and U.S. holders should consult
their tax advisors.
Premium
A U.S. holder who purchases a note at a premium over its stated principal
amount, plus accrued interest, generally may elect to amortize that premium from
the purchase date to the note's maturity date under a constant-yield method.
Amortizable premium, however, will not include any premium attributable to a
note's conversion feature. The premium attributable to the conversion feature is
the excess, if any, of the note's purchase price over what the note's fair
market value would be if there were no conversion feature. Amortized premium,
which reduces the holder's basis in the note, can only offset interest income on
a note and may not be deducted against other income. The election to amortize
premium on a constant yield method, once made, applies to all debt obligations
held or subsequently acquired by the electing U.S. holder on or after the first
day of the first taxable year to which the election applies and may not be
revoked without the consent of the IRS. The rules regarding premium are complex,
and U.S. holders should consult their tax advisors.
Conversion
A U.S. holder will not recognize any income, gain or loss upon conversion
of a note into our common stock or upon the receipt of our common stock by a
U.S. holder in the event that we are required to repurchase notes from such U.S.
holder on a specified date and we choose to satisfy our obligation with our
common stock except, in each case, with respect to cash received in lieu of a
fractional share of common stock or in payment of accrued interest (which will
be taxable as such). A U.S. holder's tax basis in the common stock received on
conversion of a note will be the same as the U.S. holder's adjusted tax basis in
the note at the time of conversion reduced by any basis allocable to a
fractional share. The holding period for the common stock received on conversion
will generally include the holding period of the note converted.
Cash received in lieu of a fractional share of common stock upon
conversion will be treated as a payment in exchange for a fractional share of
common stock and generally will result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the U.S.
holder's adjusted tax basis allocable to the fractional share).
41
Constructive Dividends
The conversion price of the notes may be adjusted under certain
circumstances. Section 305 of the Code treats certain actual or constructive
distributions of stock with respect to stock or convertible securities as a
dividend distribution taxable as ordinary income to the extent of the issuer's
current and accumulated earnings and profits. Under applicable Treasury
regulations, an adjustment to the conversion price of the notes may, under
certain circumstances, be treated as a constructive dividend under these rules
to the extent it increases the proportional interest of a U.S. holder of a note
in our fully diluted common stock, whether or not the holder ever converts the
note into our common stock and even though the noteholder will not have actually
received any cash or other property. For example, in the event that the
conversion price is lowered in connection with a distribution of rights to
acquire shares of LPI common stock, as described above under "Description of
Notes--Conversion," noteholders would likely be treated as receiving a
constructive dividend taxable as ordinary income to the extent of our current
and accumulated earnings and profits. Generally, a holder's tax basis in a note
will be increased by the amount of any constructive dividend. Not all changes in
conversion price that allow noteholders to receive more stock on conversion,
however, would increase the noteholders' proportionate interests in our stock.
For instance, a change in conversion price could simply prevent the dilution of
the noteholders' interests upon a stock split or other change in capital
structure. Changes of this type, if made pursuant to a bona fide, reasonable
adjustment formula, are not treated as constructive dividends. Conversely, a
failure to adjust the conversion price of the notes to reflect a stock dividend
or similar event could in some circumstances give rise to constructive dividend
income to holders of our common stock.
Common Stock
Dividends
Distributions received on our common stock will be treated as a dividend,
subject to tax as ordinary income, to the extent of our current and accumulated
earnings and profits as of the end of the year of distribution. For taxable
years beginning after December 31, 2002 and before January 1, 2009, subject to
certain exceptions, dividends received by individual shareholders generally
would be taxed at the same preferential rates that apply to long-term capital
gains. Any excess will be treated as a tax-free return of capital to the extent
of the U.S. holder's adjusted tax basis in the common stock and thereafter as
gain from the sale or exchange of that stock. Subject to applicable rules, U.S.
holders that are corporations may be eligible to claim a deduction equal to a
portion of any distributions received that are treated as dividends. Special
rules may apply to corporate U.S. holders upon the receipt of any "extraordinary
dividends" with respect to the common stock.
Sale
Upon the sale, exchange or other taxable disposition of our common stock,
a U.S. holder will recognize capital gain or loss equal to the difference
between (i) the amount of cash and the fair market value of any property
received upon the disposition and (ii) the U.S. holder's adjusted tax basis in
the common stock. Such capital gain or loss will be long-term if the U.S.
holder's holding period is more than one year.
Non-U.S. Holders
The following discussion is a summary of the material U.S. federal
income and estate tax consequences resulting from the ownership, conversion
and disposition of the notes and ownership and disposition of common stock by
non-U.S. holders.
42
Interest
Interest income paid on the notes to a non-U.S. holder should not be
subject to U.S. federal income tax or withholding tax (subject to the
discussion below regarding backup withholding) if:
o the interest is not effectively connected with the conduct of a
trade or business within the U.S. by the non-U.S. holder;
o the non-U.S. holder does not actually or constructively own 10%
or more of the total voting power of all classes of our stock
entitled to vote;
o the non-U.S. holder is not a "controlled foreign corporation"
that is related to us through stock ownership; and
o the non-U.S. holder, under penalty of perjury, certifies to us or
our agent on IRS Form W-8BEN (or appropriate substitute form)
that it is not a U.S. person and provides its name and address
(or otherwise satisfies the applicable identification
requirements).
If a non-U.S. holder satisfies certain requirements, the certification
described above may be provided by a securities clearing organization, a bank,
or other financial institution that holds customers' securities in the ordinary
course of its trade or business. Foreign partnerships and certain foreign trusts
must provide additional documentation with respect to their partners or
beneficiaries.
A non-U.S. holder that is not exempt from tax on interest under these
rules will be subject to U.S. federal income tax withholding at a rate of 30% on
payments of interest, unless (i) the interest is effectively connected with the
conduct of a U.S. trade or business of the non-U.S. holder or a lower treaty
rate applies and (ii) the non-U.S. holder provides us with proper certification
as to the non-U.S. holder's exemption from, or as to the reduced rate of,
withholding on Form W-8ECI or W-8BEN (or appropriate substitute form),
respectively. If the interest is effectively connected with the conduct of a
U.S. trade or business, it will be subject to the U.S. federal income tax on net
income that applies to U.S. persons generally and, under certain circumstances
with respect to corporate holders, to the branch profits tax, which is generally
imposed at a 30% rate, subject in each case to income tax treaty exceptions.
While not entirely clear, the above discussion should be applicable to
additional interest, if any, received by non-U.S. holders.
Constructive Dividends
As discussed above, an adjustment to the conversion price of the notes
could potentially give rise to a deemed distribution to holders of the notes.
See "U.S. Holders--The Notes--Constructive Dividends" above. With respect to
non-U.S. holders, the deemed distribution would be subject to the rules below
regarding withholding of U.S. federal tax on dividends in respect of common
stock. See "Non-U.S. Holders--Dividends" below.
Conversion
A non-U.S. holder will not be subject to U.S. federal income tax on the
conversion of a note into shares of our common stock. To the extent a non-U.S.
holder receives cash in lieu of a fractional share of common stock on
conversion, that cash may give rise to gain that would be subject to the rules
described below with respect to the sale or exchange of a note or common stock.
See "Non-U.S. Holders--Sale of Notes and Common Stock."
43
Dividends
If we make distributions on our common stock, those distributions
generally will be treated as a dividend to the extent of our current and
accumulated earnings and profits as of the end of the year of distribution.
Subject to the discussion below of backup withholding, any such distribution
treated as dividends to a non-U.S. holder generally will be subject to a 30%
U.S. federal withholding tax, unless (i) the dividend is effectively connected
with the conduct of a U.S. trade or business of the non-U.S. holder or a lower
treaty rate applies and (ii) the non-U.S. holder provides us with proper
certification as to the non-U.S. holder's exemption from, or as to the reduced
rate of, withholding on Form W-8ECI or W-8BEN (or appropriate substitute form),
respectively. If the dividend is effectively connected with the conduct of a
U.S. trade or business, it will be subject to the U.S. federal income tax on net
income that applies to U.S. persons generally and, under certain circumstances
with respect to corporate holders, to the branch profits tax, which is generally
imposed at a 30% rate, subject in each case to income tax treaty exceptions.
Sale of Notes and Common Stock
A non-U.S. holder will not be subject to U.S. federal income tax or
withholding tax on gain realized on the sale, exchange, redemption or other
disposition of a note or common stock, unless:
o in the case of an individual non-U.S. holder, that holder is
present in the U.S. for 183 days or more in the year of the
disposition and certain other requirements are met; or
o the gain is effectively connected with the conduct of a U.S.
trade or business of the non-U.S. holder.
If the gain is effectively connected to the conduct of a U.S. trade or
business, it will be subject to the U.S. federal income tax on net income that
applies to U.S. persons generally and, under certain circumstances with respect
to corporate holders, to the branch profits tax, which is generally imposed at a
30% rate, subject in each case to income tax treaty exceptions.
Notwithstanding the above, if we are or become a U.S. real property
holding corporation (a "USRPHC"), a non-U.S. holder could be subject to federal
income tax with respect to gain realized on the disposition of notes or shares
of common stock. Amounts withheld, if any, with respect to such gain pursuant to
the rules applicable to dispositions of U.S. real property interests would be
creditable against that non-U.S. holder's U.S. federal income tax liability and
could entitle that non-U.S. holder to a refund upon furnishing required
information to the IRS. In general, we would be a USRPHC if interests in U.S.
real estate comprised most of our assets. We do not believe that we are a USRPHC
or will become a USRPHC in the future.
United States Federal Estate Tax
A note held by an individual who is not a citizen or resident of the U.S.,
as specifically defined for U.S. federal estate tax purposes, at the time of
death will not be includible in the decedent's gross estate for U.S. estate tax
purposes, provided that such holder or beneficial owner did not at the time of
death actually or constructively own 10% or more of the combined voting power of
all of our classes of stock entitled to vote, and provided that, at the time of
death, payments with respect to such note would not have been effectively
connected with the conduct by such holder of a trade or business within the U.S.
Common stock actually or beneficially held by an individual who is not a citizen
or resident of the U.S., as specifically
44
defined for U.S. federal estate tax purposes, at the time of death (or who
previously transferred such stock subject to certain retained rights or powers)
will be subject to U.S. federal estate tax unless otherwise provided by an
applicable estate tax treaty.
Backup Withholding and Information Reporting
The Code and the Treasury regulations require those who make specified
payments to report the payments to the IRS. Among the specified payments are
interest, dividends, and proceeds paid by brokers to their customers. The
required information returns enable the IRS to determine whether the recipient
properly included the payments in income. This reporting regime is reinforced by
"backup withholding" rules. These rules require the payors to withhold tax from
payments subject to information reporting if the recipient fails to cooperate
with the reporting regime by failing to provide the recipient's taxpayer
identification number to the payor, furnishing an incorrect identification
number, or repeatedly failing to report interest or dividends on his returns.
The withholding tax rate is currently 28 percent.
Non-exempt U.S. holders will be subject to information reporting with
respect to payments of interest on notes and dividends on common stock, and
under certain circumstances, payments of principal. Non-exempt U.S. holders who
are subject to information reporting and who do not provide appropriate
information when requested may be subject to backup withholding. U.S. holders
should consult their tax advisors.
Payments of interest on notes and dividends on common stock to non-U.S.
holders will be subject to information reporting on Form 1042-S. If the notes
are held by a non-U.S. holder through a non-U.S., and non-U.S. related, broker
or financial institution, backup withholding generally would not be required.
Backup withholding may apply if the notes are held by a non-U.S. holder through
a U.S., or U.S. related, broker or financial institution and the non-U.S. holder
fails to provide appropriate information. Non-U.S. holders should consult their
tax advisors.
Any amounts withheld from a payment under the backup withholding rules
will be allowed as a refund or credit against a holder's federal income tax
liability, provided that the required information is furnished to the IRS. Some
holders (including, among others, U.S. corporations) are generally not subject
to information reporting and backup withholding.
45
SELLING SECURITYHOLDERS
We originally issued the notes to the Initial Purchaser in a private
placement in November 2003. Our net proceeds from the sale and issuance of the
notes to the Initial Purchaser were approximately $95.8 million, after deducting
the discount and estimated expenses of the offering. The notes were immediately
resold by the Initial Purchaser to persons reasonably believed by the Initial
Purchaser to be qualified institutional buyers within the meaning of Rule 144A
under the Securities Act in transactions exempt from registration under the
Securities Act. Selling securityholders, including their transferees, pledgees
or donees or their successors, may from time to time offer and sell the notes
and the common stock into which the notes are convertible pursuant to this
prospectus. Our registration of the notes and the shares of common stock
issuable upon conversion of the notes does not necessarily mean that the selling
securityholders will sell all or any of the notes or the common stock. Unless
set forth below, none of the selling securityholders has had within the past
three years any material relationship with us or any of our predecessors or
affiliates.
The following table sets forth certain information as of February 6, 2004,
except where otherwise noted, concerning the principal amount of notes
beneficially owned by each selling securityholder and the number of shares of
common stock that may be offered from time to time by each selling
securityholder under this prospectus. The information is based on information
provided by or on behalf of the selling securityholders. The number of shares of
common stock issuable upon conversion of the notes shown in the table below
assumes conversion of the full amount of notes held by each holder at an initial
conversion price of $10.65 per share. This conversion price is subject to
adjustments in certain circumstances. Because the selling securityholders may
offer all or some portion of the notes or the common stock issuable upon
conversion of the notes, we have assumed for purposes of the table below that
the selling securityholders will sell all of the notes or convert all of the
notes and sell all of the common stock issuable upon conversion of the notes
offered by this prospectus. In addition, the selling securityholders identified
below may have sold, transferred or otherwise disposed of all or a portion of
their notes since the date on which they provided the information regarding
their notes in transactions exempt from the registration requirements of the
Securities Act. Information about the selling securityholders may change over
time. Any changed information given to us by the selling securityholders will be
set forth in prospectus supplements if and when necessary.
46
Other Shares of
Common Stock
Beneficially
Owned Before
Aggregate Shares of the Offering
Principal Common Stock and Assumed to Percentage of
Amount of Notes Percentage of Issuable Upon be Owned Common Stock
Beneficially Notes Outstanding Conversion of Following the Outstanding
Owned and ** the Notes Offering ****
Name* Offered ***
KBC Financial Products USA Inc.(1) $ 1,850,000 1.9 173,715 None --
Wachovia Capital Markets LLC(2) 2,250,000 2.3 211,275 None --
S.A.C. Capital Associates, LLC(3) 10,000,000 10.0 939,000 None 2.7
Ellsworth Convertible Growth and Income
Fund, Inc.(4) 1,500,000 1.5 140,850 None --
Bancroft Convertible Fund, Inc.(5) 1,500,000 1.5 140,850 None --
Silvercreek Limited Partnership(6) 3,540,000 3.6 332,406 None --
Silvercreek II Limited(7) 1,760,000 1.8 165,264 None --
Newport Alternative Income Fund(8) 700,000 -- 2730 None --
Fist-Franklin Convertible
Securities Fund(9) 7,000,000 7.0 657,300 None 1.9
- -------------------
1 Mr. Luke Edwards, Managing Director of KBC Financial Products USA Inc.,
exercises investing and voting control over such securities. KBC Financial
Products USA Inc. is a registered broker-dealer.
2 Wachovia Capital Markets LLC is a publicly held registered investment
company and a registered broker-dealer.
3 S.A.C. Capital Advisors, LLC and S.A.C. Capital Associates, LLC share
voting and investment power with respect to the securities listed on the
table. Mr. Steven A. Cohen controls both entities and exercises voting and
investment power on their behalf.
4 Ellsworth Convertible Growth and Income Fund, Inc. is a publicly held
registered investment company.
5 Bancroft Convertible Fund, Inc. is a publicly held registered investment
company.
6 Silvercreek Management Inc. is the investment advisor for Silvercreek
Limited Partnership with respect to the securities listed on the table.
Louise Morwick and Bryn Joynt, respectively President and Vice President
of Silvercreek Management Inc., exercise voting and investment power over
such securities.
7 Silvercreek Management Inc. is the investment advisor for Silvercreek II
Limited with respect to the securities listed on the table. Louise Morwick
and Bryn Joynt, respectively President and Vice President of Silvercreek
Management Inc., exercise voting and investment power over such
securities.
8 Silvercreek Management Inc. is the investment advisor for Newport
Alternative Income Fund with respect to the securities listed on the
table. Louise Morwick and Bryn Joynt, respectively President and Vice
President of Silvercreek Management Inc., exercise voting and investment
power over such securities.
9 Fist-Franklin Convertible Securities Fund is a publicly held registered
investment company.
47
Other Shares of
Common Stock
Beneficially
Owned Before
Aggregate Shares of the Offering
Principal Common Stock and Assumed to Percentage of
Amount of Notes Percentage of Issuable Upon be Owned Common Stock
Beneficially Notes Outstanding Conversion of Following the Outstanding
Owned and ** the Notes Offering ****
Name* Offered ***
Piper Jaffray Cos.(10) 2,000,000 2.0 187,800 None --
Clinton Multistrategy Master Fund, Ltd.(11) 500,000 -- 46,950 None --
Clinton Riverside Convertible Portfolio
Limited(12) 750,000 -- 70,425 None --
Arkansas PERS(13) 1,045,000 1.0 98,125 None --
ICI American Holdings Trust(14) 180,000 -- 16,902 None --
Astrazeneca Holdings Pension(15) 250,000 -- 23,475 None --
Delaware PERS(16) 800,000 -- 75,120 None --
Syngenta AG(17) 135,000 -- 12,676 None --
- -----------------
10 Piper Jaffray Cos. is a publicly held registered investment company and a
registered broker-dealer.
11 Clinton Group, Inc. is the investment advisor for Clinton Multistrategy
Master Fund, Ltd. with respect to the securities listed on the table. Mike
Vacca, Senior Portfolio Manager at Clinton Group, Inc., exercises voting
and investment power over such securities.
12 Clinton Group, Inc. is the investment advisor for Clinton Riverside
Convertible Portfolio Limited with respect to the securities listed on the
table. Mike Vacca, Senior Portfolio Manager at Clinton Group, Inc.,
exercises voting and investment power over such securities.
13 Froley Revy Investment Company Inc. is the investment advisor for Arkansas
PERS with respect to the securities listed on the table. Ann Houlihan
exercises voting and investment power over such securities on behalf of
Froley Revy Investment Company Inc.
14 Froley Revy Investment Company Inc. is the investment advisor for ICI
American Holdings Trust with respect to the securities listed on the
table. Ann Houlihan exercises voting and investment power over such
securities on behalf of Froley Revy Investment Company Inc.
15 Froley Revy Investment Company Inc. is the investment advisor for
Astrazeneca Holdings Pension with respect to the securities listed on the
table. Ann Houlihan exercises voting and investment power over such
securities on behalf of Froley Revy Investment Company Inc.
16 Froley Revy Investment Company Inc. is the investment advisor for Delaware
PERS with respect to the securities listed on the table. Ann Houlihan
exercises voting and investment power over such securities on behalf of
Froley Revy Investment Company Inc.
17 Froley Revy Investment Company Inc. is the investment advisor for Syngenta
AG with respect to the securities listed on the table. Ann Houlihan
exercises voting and investment power over such securities on behalf of
Froley Revy Investment Company Inc.
48
Other Shares of
Common Stock
Beneficially
Owned Before
Aggregate Shares of the Offering
Principal Common Stock and Assumed to Percentage of
Amount of Notes Percentage of Issuable Upon be Owned Common Stock
Beneficially Notes Outstanding Conversion of Following the Outstanding
Owned and ** the Notes Offering ****
Name* Offered ***
State of Oregon/Equity(18) 2,480,000 2.5 232,872 None --
Froley Revy Investment
Convertible Security Fund(19) 60,000 -- 5,634 None --
BNP Paribas Equity Strategies, SNC(20) 1,657,000 1.7 155,592 4,137 --
CooperNeff Convertible Strategies
(Cayman) Master Fund, L.P.(21) 1,640,000 1.6 153,996 None --
Singlehedge U.S. Convertible Arbitrage
Fund(22) 462,000 -- 43,381 None --
Lyxor/Convertible Arbitrage Fund Limited(23) 167,000 -- 15,681 None --
- --------------------
18 Froley Revy Investment Company Inc. is the investment advisor for State of
Oregon/Equity with respect to the securities listed on the table. Ann
Houlihan exercises voting and investment power over such securities on
behalf of Froley Revy Investment Company Inc.
19 Froley Revy Investment Company Inc. is the investment advisor for Froley
Revy Investment Convertible Security Fund with respect to the securities
listed on the table. Ann Houlihan exercises voting and investment power
over such securities on behalf of Froley Revy Investment Company Inc.
20 CooperNeff Advisors Inc. is the investment advisor for BNP Paribas Equity
Strategies, SNC with respect to the securities listed on the table.
CooperNeff Advisors Inc. is a wholly subsidiary of CooperNeffGroup, Inc.,
which is in turn wholly owned on a consolidated basis by BNP Paribas, SA,
a foreign public company. BNP Paribas Equity Strategies, SNC is an
affiliate of BNP Paribas Brokerage Services, Inc., a registered
broker-dealer.
21 CooperNeff (Cayman) Ltd. is the general partner of CooperNeff Convertible
Strategies (Cayman) Master Fund, L.P. CooperNeff Advisors Inc. is the
investment advisor to CooperNeff (Cayman) Ltd. with respect to the
securities listed on the table. CooperNeff Advisors Inc. is a controlled
subsidiary of CooperNeff Group, Inc., which is in turn wholly owned on a
consolidated basis by BNP Paribas, SA, a foreign public company.
22 CooperNeff Advisors Inc., investment advisor to Singlehedge U.S.
Convertible Arbitrage Fund with respect to the securities listed on the
table, is a controlled subsidiary of CooperNeff Group, Inc., which is in
turn wholly owned on a consolidated basis by BNP Paribas, SA, a foreign
public company.
23 SG Hambros Fund Managers (Jersey) Limited, investment advisor to
Lyxor/Convertible Arbitrage Fund Limited with respect to the securities
listed on the table, is indirectly wholly owned by SOCIETE GENERALE, a
foreign public company.
49
Other Shares of
Common Stock
Beneficially
Owned Before
Aggregate Shares of the Offering
Principal Common Stock and Assumed to Percentage of
Amount of Notes Percentage of Issuable Upon be Owned Common Stock
Beneficially Notes Outstanding Conversion of Following the Outstanding
Owned and ** the Notes Offering ****
Name* Offered ***
Grace Convertible Arbitrage Fund, LTD.(24) 4,750,000 4.8 446,025 None 1.3
Grace Brothers, LTD.(25) 1,000,000 1.0 93,900 None --
Sturgeon Limited(26) 224,000 -- 224,000 None --
Akanthos Arbitrage Master Fund, LP(27) 5,000,000 5.0 469,500 None 1.3
TQA Master Fund, LTD.(28) 636,000 -- 59,720 None --
TQA Master Plus Fund, LTD.(29) 951,000 -- 89,298 None --
Zurich Institutional Benchmarks Master
Fund, LTD.(30) 150,000 -- 14,085 None --
- ---------------
24 The general partner of Grace Convertible Arbitrage Fund, LTD. is Grace
Brothers Management, LLC. Bradford Whitmore and Michael Braicov exercise
investment and voting control on behalf of Grace Brothers Management, LLC.
Grace Convertible Arbitrage Fund, LTD. is affiliated with Grace Brothers,
LTD., a registered broker-dealer.
25 Bradford Whitmore and Michael Braicov, general partners of Grace Brothers
LTD, exercise investment and voting control. Grace Brothers, LTD. is a
registered broker-dealer.
26 CooperNeff Advisors Inc. is the investment advisor to Sturgeon Limited
with respect to the securities listed on the table. CooperNeff Advisors
Inc. is a controlled subsidiary of CooperNeff Group, Inc., which is in
turn wholly owned on a consolidated basis by BNP Paribas, SA, a foreign
public company.
27 Akanthos Capital Management, LLC is the general partner of Akanthos
Arbitrage Master Fund, LP. Michael Kao, Managing Member of Akanthos
Capital Management, LLC, exercises investment and voting control on behalf
of such entity.
28 TQA Investors, L.L.C. is the investment advisor to TQA Master Fund, LTD.
with respect to the securities listed on the table. Robert Butman,
Managing Member of TQA Investors, L.L.C., exercises voting and investment
power over such securities.
29 TQA Investors, L.L.C. is the investment advisor to TQA Master Plus Fund,
LTD. with respect to the securities listed on the table. Robert Butman,
Managing Member of TQA Investors, L.L.C., exercises voting and investment
power over such securities.
30 TQA Investors, L.L.C. is the investment advisor to Zurich Institutional
Benchmarks Master Fund, LTD. with respect to the securities listed on the
table. Robert Butman, Managing Member of TQA Investors, L.L.C., exercises
voting and investment power over such securities.
50
Other Shares of
Common Stock
Beneficially
Owned Before
Aggregate Shares of the Offering
Principal Common Stock and Assumed to Percentage of
Amount of Notes Percentage of Issuable Upon be Owned Common Stock
Beneficially Notes Outstanding Conversion of Following the Outstanding
Owned and ** the Notes Offering ****
Name* Offered ***
Lexington Vantage Fund(31) 16,000 -- 1,502 None --
Sphinx Fund(32) 40,000 -- 3756 None --
Xavex-Convertible Arbitrage 7 Fund(33) 144,000 -- 13,521 None --
Highbridge International LLC(34) 2,000,000 2.0 187,800 None --
LDG Limited(35) 63,000 -- 5,915 None --
Argent Classic Convertible
Arbitrage Fund (Bermuda) Ltd.(36) 2,600,000 2.6 244,140 None --
- ----------------------
31 TQA Investors, L.L.C. is the investment advisor to Lexington Vantage Fund
with respect to the securities listed on the table. Robert Butman,
Managing Member of TQA Investors, L.L.C., exercises voting and investment
power over such securities.
32 TQA Investors, L.L.C. is the investment advisor to Sphinx Fund with
respect to the securities listed on the table. Robert Butman, Managing
Member of TQA Investors, L.L.C., exercises voting and investment power
over such securities.
33 TQA Investors, L.L.C. is the investment advisor to Xavex-Convertible
Arbitrage 7 Fund with respect to the securities listed on the table.
Robert Butman, Managing Member of TQA Investors, L.L.C., exercises voting
and investment power over such securities.
34 Highbridge Capital Management LLC is the Managing Member of Highbridge
International LLC. Glenn Dubin & Henry Swieca are the Managing Members of
Highbridge Capital Management LLC and exercise investment and voting
control on behalf of such entity. Highbridge International LLC is a
subsidiary of Highbridge Capital Management LLC, a registered
broker-dealer.
35 TQA Investors, L.L.C. is the investment advisor to LDG Limited with
respect to the securities listed on the table. Robert Butman, John Idone,
George Esser, Paul Bucci and Bartholomew Tesoriero, Managing Members of
TQA Investors, L.L.C., exercise voting and investment power over such
securities.
36 Henry Cox and Allan Marshall are the controlling shareholders of Argent
Classic Convertible Arbitrage Fund (Bermuda) Ltd. Argent International
Management Company, LLC is the investment advisor to Argent Classic
Convertible Arbitrage Fund (Bermuda) Ltd. with respect to the securities
listed on the table. Nathanial Brown and Robert Richardson exercise voting
and investment power over such securities on behalf of Argent
International Management Company, LLC.
51
Other Shares of
Common Stock
Beneficially
Owned Before
Aggregate Shares of the Offering
Principal Common Stock and Assumed to Percentage of
Amount of Notes Percentage of Issuable Upon be Owned Common Stock
Beneficially Notes Outstanding Conversion of Following the Outstanding
Owned and ** the Notes Offering ****
Name* Offered ***
Argent Classic Convertible Arbitrage Fund
L.P.(37) 600,000 -- 56,340 None --
Argent Classic Convertible Arbitrage Fund
II, L.P.(38) 100,000 -- 9,390 None --
Xavex Convertible Arbitrage 10 Fund(39) 200,000 -- 18,780 None --
Any other holder of Notes or future
transferee, pledgee, donee or
successor of any holder***** 39,300,000 39.3 3,690,270 -- 10.5
- ---------------
* Other selling securityholders may be identified at a later date.
Certain selling securityholders are, or are affiliates of, registered
broker-dealers. These selling securityholders have represented that they
acquired their securities in the ordinary course of business and, at the
time of the acquisition of the securities, had no agreements or
understandings, directly or indirectly, with any person to distribute the
securities. To the extent that we become aware that any such selling
securityholders did not acquire its securities in the ordinary course of
business or did have such an agreement or understanding, we will file a
post-effective amendment to registration statement of which this
prospectus is a part to designate such person as an "underwriter" within
the meaning of the Securities Act of 1933.
** Unless otherwise noted, none of these selling securityholders would
beneficially own 1% or more of the outstanding Notes.
*** Assumes conversion of all of the holder's notes at our initial conversion
rate of approximately 93.90 shares of common stock per 1,000 principal
amount of the notes. This conversion rate is subject to adjustment as
described under "Description of Notes--Conversion." As a result, the
number of shares of common stock issuable upon conversion of the notes may
change in the future. Excludes shares of common stock that may be issued
by us upon the repurchase of the notes and fractional shares. Holders will
receive a cash adjustment for any fractional share amount resulting from
conversion of the notes, as described under "Description of
Notes--Conversion."
**** Based on the 35,073,756 outstanding shares of CMRG as of February 3, 2004,
none of these selling securityholders would beneficially own 1% or more of
the outstanding shares following the sale of securities in the offering.
***** Assumes that any other holders of Notes, or any future transferees,
pledgees, donees or successors of or from any such other holders of Notes,
do not beneficially own any common stock other than the common stock
issuable upon conversion of the Notes at the initial conversion rate.
- -------------------
37 Bruce McMahan, Saul Schwartzman and John Gordon are the general partners
of Argent Classic Convertible Arbitrage Fund L. P. Argent Management
Company, LLC is the investment advisor to Argent Classic Convertible
Arbitrage Fund L. P. with respect to the securities listed on the table.
Nathanial Brown and Robert Richardson exercise voting and investment power
over such securities on behalf of Argent Management Company, LLC.
38 Bruce McMahan, Saul Schwartzman and John Gordon are the general partners
of Argent Classic Convertible Arbitrage Fund II L. P. Argent Management
Company, LLC is the investment advisor to Argent Classic Convertible
Arbitrage Fund II L. P. with respect to the securities listed on the
table. Nathanial Brown and Robert Richardson exercise voting and
investment power over such securities on behalf of Argent Management
Company, LLC.
39 Bruce McMahan, Saul Schwartzman and John Gordon are the controlling
shareholders of Xavex Convertible Arbitrage 10 Fund. Argent International
Management Company, LLC is the investment advisor to Xavex Convertible
Arbitrage 10 Fund with respect to the securities listed on the table.
Nathanial Brown and Robert Richardson exercise voting and investment power
over such securities on behalf of Argent International Management Company,
LLC.
52
PLAN OF DISTRIBUTION
The selling securityholders and their successors, which includes their
pledgees, donees, partnership distributees and other transferees receiving the
notes or common stock from the selling securityholders in non-sale transfers,
may sell the notes and the underlying common stock directly to purchasers or
through underwriters, broker-dealers or agents. Underwriters, broker-dealers or
agents may receive compensation in the form of discounts, concessions or
commissions from the selling securityholders or the purchasers. These discounts,
concessions or commissions may be in excess of those customary in the types of
transactions involved.
The notes and the underlying common stock may be sold in one or more
transactions at:
o fixed prices that may be changed;
o prevailing market prices at the time of sale;
o prices related to the prevailing market prices;
o varying prices determined at the time of sale; or
o negotiated prices.
These sales may be effected in transactions, which may involve cross or
block transactions, in the following manner:
53
o on any national securities exchange or quotation service on which
the notes or the common stock may be listed or quoted at the time of
sale;
o in the over-the-counter-market;
o in transactions otherwise than on these exchanges or services or in
the over-the-counter market (privately negotiated transactions);
o through the writing and exercise of options, whether these options
are listed on an options exchange or otherwise; or
o through any combination of the foregoing.
Selling securityholders may enter into hedging transactions with
broker-dealers or other financial institutions which may in turn engage in short
sales of the notes or the underlying common stock and deliver these securities
to close out short positions. In addition, the selling securityholders may sell
the notes and the underlying common stock short and deliver the notes and
underlying common stock to close out short positions or loan or pledge the notes
or the underlying common stock to broker-dealers that in turn may sell such
securities.
Selling securityholders may sell or transfer their notes and shares of
common stock issuable upon conversion of the notes other than by means of this
prospectus. In particular, any securities covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A under the Securities Act may
be sold thereunder, rather than pursuant to this prospectus.
The aggregate proceeds to the selling securityholders from the sale of the
notes or underlying common stock will be the purchase price of the notes or
common stock less any discounts and commissions. A selling securityholder
reserves the right to accept and, together with their agents, to reject any
proposed purchase of notes or common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.
In order to comply with the securities laws of some jurisdictions, if
applicable, the holders of notes and common stock into which the notes are
convertible may sell in some jurisdictions through registered or licensed broker
dealers. In addition, under certain circumstances in some jurisdictions, the
holders of notes and the common stock into which the notes are convertible may
be required to register or qualify the securities for sale or comply with an
available exemption from the registration and qualification requirements.
Our common stock is quoted on the Nasdaq National Market. Since their
initial issuance, the notes have been eligible for The PORTALsm Market of the
National Association of Securities Dealers, Inc. However, notes sold by means of
this prospectus are not expected to remain eligible for The PORTALsm Market. We
do not intend to list the notes for quotation on any other automated interdealer
quotation system on or any securities exchange. Accordingly, we cannot guarantee
that any trading market will develop for the notes.
The selling securityholders and any underwriters, broker-dealers or agents
that participate in the sale of the notes and common stock into which the notes
are convertible may be deemed to be "underwriters" within the meaning of the
Securities Act. In this case, any discounts, commissions, concessions or profit
they earn on any resale of the notes or the shares of the underlying common
stock may be underwriting discounts and commissions under the Securities Act. In
addition, selling securityholders who are deemed to be "underwriters" within the
meaning of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act and may be subject to statutory liabilities,
including, but not limited to, liabilities under Sections 11, 12 and 17 of the
Securities Act.
54
The selling securityholders and any other persons participating in the
distribution of the notes and the underlying common stock will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Regulation M of the Exchange Act may limit the timing of purchases
and sales of the notes and underlying common stock by the selling
securityholders and any such other person. In addition, Regulation M may
restrict the ability of any person participating in the distribution to engage
in market-making activities with respect to the particular securities being
distributed for a period of up to five business days prior to the commencement
of the distribution. This may affect the marketability of the notes and the
underlying common stock.
If required, the specific notes or common stock to be sold, the names of
the selling securityholders, the respective purchase prices and public offering
prices, the names of any agent, dealer or underwriter and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.
We entered into a registration rights agreement for the benefit of the
holders of the notes to register the notes and common stock into which the notes
are convertible under applicable federal securities laws under specific
circumstances and specific times. Under the registration rights agreement, the
selling securityholders and we have agreed to indemnify each other and our
respective controlling persons against, and in certain circumstances to provide
contribution with respect to, specific liabilities in connection with the offer
and sale of the notes and the common stock, including liabilities under the
Securities Act. We will pay substantially all of the expenses incident to the
registration of the notes and the common stock, except that the selling
securityholders will pay all brokers' commissions and, in connection with an
underwritten offering, if any, underwriting discounts and commissions. See
"Description of Notes--Registration Rights" above.
LEGAL MATTERS
The validity of the notes and common stock underlying the notes is being
passed upon for us by Kramer Levin Naftalis & Frankel LLP, New York, New York.
EXPERTS
The consolidated financial statements of Casual Male Retail Group, Inc.
appearing in CMRG's Annual Report on Form 10-K for the year ended February 1,
2003 (Fiscal 2003), have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
55
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy materials that we have filed
with the SEC at the SEC's public reference room located at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further information on the public reference room. Our SEC filings also are
available to the public on the SEC's web site at www.sec.gov, which contains
reports, proxies and information statements and other information regarding
issuers that file electronically. Access to this information as well as other
information on the Company is also available on the Company's website at
http://www.cmrginc.com and clicking on "Investor Relations."
This prospectus "incorporates by reference" information that we have filed
with or furnished to the SEC under the Exchange Act, which means that we are
disclosing important information to you by referring you to those documents. Any
statement contained in this prospectus or in any document incorporated or deemed
to be incorporated by reference into this prospectus will be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or any subsequently filed document which
also is, or is deemed to be, incorporated by reference into this prospectus
modifies or supersedes that statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this prospectus. We incorporate by reference into this prospectus the following
documents that we have previously filed with the SEC and any future filings that
we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this prospectus until all of the securities covered by
this prospectus are sold by the selling securityholders:
o Our Annual Report on Form 10-K for the fiscal year ended February 1,
2003;
o Our Quarterly Reports on Form 10-Q for the fiscal quarters ended May
3, 2003, August 2, 2003 and November 1, 2003;
o Our Current Reports on Form 8-K filed on August 21, 2003, November
10, 2003, November 12, 2003, November 13, 2003, November 13, 2003
and November 20, 2003; and
o All other reports filed by us pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the
annual report referred to above.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Casual Male Retail Group, Inc.
555 Turnpike Street
Canton, Massachusetts 02021,
Attn: Arlene Feldman
(781) 828-9300
56
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses Of Issuance And Distribution
The Registrant is paying all of the expenses related to this offering. The
following table sets forth the approximate amount of fees and expenses payable
by the Registrant in connection with this Registration Statement and the
distribution of the shares of the securities being registered hereby. The
selling securityholders will bear all underwriting discounts, commissions or
fees attributable to the sale of the registrable securities.
SEC registration fee $12,670.00
Legal fees and expenses $30,000.00
Accounting fees and expenses $15,000.00
Printing and engraving expenses $5,000.00
Miscellaneous $10,000.00
---------------
Total $72,670.00
Item 15. Indemnification of Directors and Officers
The Registrant's Restated Certificate of Incorporation, as amended (the
"Certificate "), provides that no director of the Registrant shall be personally
liable to the Registrant or to any of its stockholders for monetary damages
arising out of such director's breach of fiduciary duty, except to the extent
that the elimination or limitation of liability is not permitted by the Delaware
General Corporation Law. The Delaware General Corporation Law, as currently in
effect, permits charter provisions eliminating the liability of directors for
breach of fiduciary duty, except that directors remain liable for (i) any breach
of the directors' duty of loyalty to a company or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) any payment of a dividend or approval of a stock
repurchase that is illegal under Section 174 of the Delaware General Corporation
Law, or (iv) any transaction from which the directors derived an improper
personal benefit. The effect of this provision of the Certificate is that
directors cannot be held liable for monetary damages arising from breaches of
their duty of care, unless the breach involves one of the four exceptions
described in the preceding sentence. The provision does not prevent stockholders
from obtaining injunctive or other equitable relief against directors, nor does
it shield directors from liability under federal or state securities laws. The
Certificate and the Registrant's By-Laws further provide for indemnification of
the Registrant's directors and officers to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law, including circumstances in
which indemnification is otherwise discretionary.
Item 16. Exhibits
Exhibit No. Description
----------- -----------
4.1 Indenture, dated as of November 18, 2003, by and between Casual
Male Retail Group, Inc. and U.S. Bank National Association.
(Included as Exhibit 4.1 to the Company's Quarterly Report on
Form 10-Q filed with the SEC on December 9, 2003 for the
quarterly period ended November 1, 2003, and incorporated herein
by reference.)
4.2 Registration Rights Agreement, dated as of November 18, 2003 by
and among Casual Male Retail Group, Inc. and Thomas Weisel
Partners LLC. (Included as Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q filed with the SEC on December 9,
2003 for the quarterly period ended November 1, 2003, and
incorporated herein by
II-1
reference.)
5.1 Opinion of Kramer Levin Naftalis & Frankel LLP*
12.1 Statement regarding Computation of Ratio of Earnings to Fixed
Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Kramer Levin Naftalis & Frankel LLP*
25.1 Statement of Eligibility of U.S. Bank National Association to
act as trustee under the Indenture under the Trust Indenture Act
of 1939
99.1 Notice of Registration Statement and Selling Securityholder
Questionnaire
* To be filed by amendment.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this 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 this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum aggregate
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b), if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if 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 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-2
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant, pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Canton, Commonwealth of Massachusetts, as of the 6th
day of February, 2004.
CASUAL MALE RETAIL GROUP, INC.
By: /s/ Dennis R. Hernreich
--------------------------------------------
Name: Dennis R. Hernreich
Title: Executive Vice President, Chief
Operating Officer, Chief Financial
Officer and Treasurer (Principal
Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons as of February
6, 2004 in the capacities indicated below.
Signatures
/s/ David A. Levin Director, President and Chief Executive
- ------------------------------- Officer (Principal Executive Officer)
David A. Levin
/s/ Dennis R. Hernreich Executive Vice President, Chief
- ---------------------------- Operating Officer, Chief Financial Officer
Dennis R. Hernreich and Treasurer (Principal Financial Officer)
/s/ Seymour Holtzman Chairman of the Board of Directors
- ---------------------------
Seymour Holtzman
/s/ Stephen M. Duff Director
- ---------------------------
Stephen M. Duff
/s/ George T. Porter, Jr. Director
- ---------------------------
George T. Porter, Jr.
/s/ Joseph Pennacchio Director
- ---------------------------
Joseph Pennacchio
/s/ Alan S. Bernikow Director
- ---------------------------
Alan S. Bernikow
/s/ Jesse H. Choper Director
- ---------------------------
Jesse H. Choper
/s/ Frank J. Husic Director
- ---------------------------
Frank J. Husic
EXHIBIT INDEX
Exhibit Description
------- -----------
4.1 Indenture, dated as of November 18, 2003, by and between
Casual Male Retail Group, Inc. and U.S. Bank National
Association. (Included as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q filed with the SEC on December
9, 2003 for the quarterly period ended November 1, 2003, and
incorporated herein by reference.)
4.2 Registration Rights Agreement, dated as of November 18, 2003
by and among Casual Male Retail Group, Inc. and Thomas Weisel
Partners LLC. (Included as Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q filed with the SEC on December
9, 2003 for the quarterly period ended November 1, 2003, and
incorporated herein by reference.)
5.1 Opinion of Kramer Levin Naftalis & Frankel LLP*
12.1 Statement regarding Computation of Ratio of Earnings to Fixed
Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Kramer Levin Naftalis & Frankel LLP*
25.1 Statement of Eligibility of U.S. Bank National Association to
act as trustee under the Indenture under the Trust Indenture
Act of 1939
99.1 Notice of Registration Statement and Selling Securityholder
Questionnaire
* To be filed by amendment.