<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 2)*
KRAUSE'S FURNITURE, INC.
------------------------
(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
500760-20-2
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(CUSIP Number)
CHARLES S. KAUFMAN, ESQ.
MORRISON & FOERSTER LLP
555 W. FIFTH STREET
LOS ANGELES, CALIFORNIA 90013
(213) 892-5200
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
MAY 17, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 500760-20-2 SCHEDULE 13D Page 2 of 8
1) Names of Reporting Persons / S.S. or I.R.S. Identification Nos. of above
Persons
John F. Hawley
2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [X]
3) SEC Use Only _______________________________________________________________
4) Source of Funds* OO
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e) [ ]
6) Citizenship or Place of Organization:
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7) Sole Voting Power 20,000
8) Shared Voting Power 1,924,653
9) Sole Dispositive Power 20,000
10) Shared Dispositive Power 1,924,653
11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,944,653
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
13) Percent of Class Represented by Amount in Row (11)
8.6%
14) Type of Reporting Person
IN
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CUSIP No. 500760-20-2 SCHEDULE 13D Page 3 of 8
1) Names of Reporting Persons / S.S. or I.R.S. Identification Nos. of above
Persons
Barbara H. Hawley
2) Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [X]
3) SEC Use Only _______________________________________________________________
4) Source of Funds* OO
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e) [ ]
6) Citizenship or Place of Organization
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7) Sole Voting Power 0
8) Shared Voting Power 1,924,653
9) Sole Dispositive Power 0
10) Shared Dispositive Power 1,924,653
11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,924,653
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
13) Percent of Class Represented by Amount in Row (11)
8.6%
14) Type of Reporting Person
IN
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CUSIP No. 500760-20-2 SCHEDULE 13D Page 4 of 8
This Amendment No. 2 amends the Schedule 13D filed September 10, 1996, as
amended, filed in respect of the common stock, par value $.001 of Krause's
Furniture, Inc.
Unless otherwise expressly set forth herein, the responses contained
herein, including those on the cover page, are as of May 17, 2000. Except as
otherwise expressly set forth below, the information set forth in the initial
filing on Schedule 13D by the reporting persons remains accurate and in effect
as of May 17, 2000.
Item 1. SECURITY AND ISSUER
This statement relates to the common stock, $0.001 par value per share
(the "Common Stock") issuable as of May 17, 2000 upon the conversion of the
Series A Convertible Preferred Stock, $0.001 par value per share (the "Preferred
Stock"), of KRAUSE'S FURNITURE, INC., a Delaware corporation (the "Company").
The principal executive offices of the Company are located at 200 North Berry
Street, Brea, California 92821-3903.
The reporting persons purchased the securities on January 19, 2000
pursuant to the Series A Convertible Preferred Stock Securities Purchase
Agreement, dated as of January 11, 2000, by and among the Issuer, certain of the
reporting persons and the other purchasers party thereto (the "Securities
Purchase Agreement"), a copy of which is attached hereto (by reference) as
Exhibit 1. The Preferred Stock became convertible into shares of common stock on
the authorization of such shares of common stock by the Stockholders of the
Company at its annual meeting on May 17, 2000. The Preferred Stock is
convertible under the terms of the Certificate of Designation of Series A
Convertible Preferred Stock of Krause's Furniture, Inc., as signed and attested
on January 12, 2000 (the "Series A Certificate of Designation"), a copy of which
is attached hereto (by reference) as Exhibit 2.
Item 2. IDENTITY AND BACKGROUND
Item 2(a) is hereby amended to add the following:
(a) The persons filing this Amendment No. 2 are John F. Hawley ("John
Hawley") and Barbara H. Hawley ("Barbara Hawley") (together, the "Hawley
Trustees"), in their capacities as co-trustees of the several trusts (the
"Hawley Trusts") as follows:
Allison Booth Hawley Trust I
Caitlin Hale Hawley Trust I
Maureen Erin Hawley Trust I
Shannon Follen Hawley Trust I
Hawley Family Trust
Allison Booth Hawley Trust II
Caitlin Hale Hawley Trust II
Maureen Erin Hawley Trust II
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CUSIP No. 500760-20-2 SCHEDULE 13D Page 5 of 8
Shannon Follen Hawley Trust II
This statement is also being filed by John Hawley acting in his
individual capacity as to shares of Common Stock owned by him
through a self-directed individual retirement account.
Item 2(b) -(f):
No change.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is hereby amended to add the following:
On January 19, 2000, the Hawley Trusts acquired 12,500 shares of
Preferred Stock. The aggregate purchase price for the 12,500 shares of Preferred
Stock acquired by the Hawley Trusts as reported herein is $625,000, which funds
were derived from the investment corpus of the various Hawley Trusts in
proportion to the number of shares acquired.
Item 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended to add the following:
The Hawley Trusts have acquired the shares of Common Stock subject of
this Amendment No. 2 for investment purposes. Except as set forth in the
original 13D filing and in Item 6, the reporting person herein has no plans or
proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company; except that the
Amended and Restated Registration Rights Agreement, dated as of January 14,
2000, by and among the Issuer, certain of the reporting persons and the other
stockholders party thereto (the "Amended and Restated Registration Rights
Agreement"), a copy of which is attached hereto (by reference) as Exhibit 3,
provides that the Company will use its best efforts to register under the
Securities Act of 1933 all of the 568,181 shares held by the Hawley Trustees
within 180 days following the closing. A registration statement on Form S-3
relating to those shares and other shares of Preferred Stock has been filed by
the company and was declared effective on May 23, 2000. In addition, the Amended
and Restated Stockholders Agreement, dated as of January 14, 2000, by and among
the Issuer, certain of the reporting persons and the other stockholders party
thereto (the "Amended and Restated Stockholders Agreement"), a copy of which is
attached hereto (by reference) as Exhibit 4, provides for rights of first
refusal on the sale of certain shares of Common Stock by various persons,
including the reporting persons hereunder, and provides for certain tag-along
rights on certain substantial sales of Common Stock by principal shareholders of
the Company. The tag-along rights do not apply to sales by the reporting persons
hereunder.
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Company or
any of its subsidiaries;
(d) Any change in the present directors or management of the Company,
including any plans or proposals to change the number or term of directors or to
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CUSIP No. 500760-20-2 SCHEDULE 13D Page 6 of 8
fill any existing vacancies on the board of directors, except that, as part of
the transactions described herein and pursuant to the Amended and Restated
Stockholders Agreement, certain shareholders of the Company owning in excess of
50% of the outstanding shares of Common Stock who had previously agreed to cause
certain designees, including Philip M. Hawley ("Mr. Hawley") and the designees
of General Electric Capital Corporation ("GECC") and the Permal Group, to be
elected to the Company's Board of Directors, have in addition agreed that two
designees of TH Lee.Putnam Internet Partners L.P. and TH Lee.Putnam Parallel
Partners, L.P. (collectively, "TH Li") will be elected to the board of
directors, and an additional director designated by GECC and TH Li will be
elected to the board of directors. The designees under the Amended and Restated
Stockholders Agreement will constitute all of the Company's directors for the
foreseeable future.
(e) Any material change in the present capitalization or dividend policy
of the Company, except for the substantial change in the Company's
capitalization resulting from the transactions described herein;
(f) Any other material change in the Company's business or corporate
structure;
(g) Changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person, other than the agreements described
herein, including the Stockholders Agreement;
(h) Causing a class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or
(j) Any actions similar to any of those enumerated above.
Item 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5(a) is hereby amended to read as follows:
(a) The reporting persons beneficially own, in the aggregate 1,944,653
shares of Common Stock, representing approximately 8.6% of the outstanding
shares of Common Stock of the Company. Barbara Hawley specifically disclaims
any beneficial ownership interest in the 20,000 shares of Common Stock held
by John Hawley through a self-directed individual retirement account, which
are included in line 11 of page two above.
The Hawley Trustees hold the shares of Common Stock for the Hawley Trusts, and
John Hawley holds shares of Common Stock, in the amounts as follows:
<TABLE>
<CAPTION>
Shares of
Common Stock
Purchased
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<S> <C> <C>
John F. Hawley and Barbara H. Hawley,
as Trustees for the Trusts (the "Hawley Trustees")
and in the amount below 1,924,653
Allison Booth Hawley Trust I 279,004
Caitlin Hale Hawley Trust I 279,004
Maureen Erin Hawley Trust I 279,004
</TABLE>
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CUSIP No. 500760-20-2 SCHEDULE 13D Page 7 of 8
<TABLE>
<S> <C> <C>
Shannon Follen Hawley Trust I 279,004
Hawley Family Trust 658,636
Allison Booth Hawley Trust II 37,500
Caitlin Hale Hawley Trust II 37,500
Maureen Erin Hawley Trust II 37,500
Shannon Follen Hawley Trust II 37,500
John F. Hawley individual retirement account 20,000
=========
TOTAL: 1,944,653
</TABLE>
The Hawley Trustees disclaim membership in a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934.
Item 5(b) is hereby amended to read as follows:
(b) Each of the Hawley Trustees, with the other Hawley Trustee, has shared
voting power and power of disposition over the 1,924,653 shares of Common
Stock owned by them as trustees for the Hawley Trusts. The shares held of
record by the Hawley Trustees are for limited purposes subject to the
Amended and Restated Registration Rights Agreement and the Amended and
Restated Stockholders Agreement attached hereto as Exhibits 3 and 4,
respectively. Barbara Hawley specifically disclaims any beneficial ownership
interest in the 20,000 shares of Common Stock held by John Hawley through a
self-directed individual retirement account, which are included in line 11
of page two above.
Item 5(c) is hereby amended to add the following:
(c) On January 19, 2000, the reporting persons acquired 12,500 shares of
Preferred Stock, convertible as of May 17, 2000 into 568,181 shares of
Common Stock, for cash at a purchase price equal to $50 per share of
Preferred Stock. Such shares were acquired from the Company in a private
placement.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Reference is made to the Securities Purchase Agreement, the Amended and
Restated Registration Rights Agreement and the Amended and Restated
Stockholders Agreement, copies of which are attached hereto (by reference)
as Exhibits 1, 3 and 4, and which are hereby incorporated by reference
herein.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1: Series A Convertible Preferred Stock Securities Purchase
Agreement dated as of January 11, 2000, incorporated by
reference to Exhibit 10.15 to the Report of the Company on
Form 8-K filed with the commission on February 4, 2000.
Exhibit 2: Certificate of Designation of Series A Convertible
Preferred Stock of Krause's Furniture, Inc., incorporated by
reference to Exhibit 4.6 to the Report of the Company on Form
8-K filed with the commission on February 4, 2000.
Exhibit 3: Amended and Restated Registration Rights Agreement dated
January 14, 2000, incorporated by reference to Exhibit 10.16
to the Report of the Company on Form 8-K
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CUSIP No. 500760-20-2 SCHEDULE 13D Page 8 of 8
filed with the commission on February 4, 2000.
Exhibit 4: Amended and Restated Stockholders Agreement dated as of
January 14, 2000, incorporated by reference to Exhibit 10.17
to the Report of the Company on Form 8-K filed with the
commission on February 4, 2000.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: June 1, 2000 /s/ John F. Hawley
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JOHN F. HAWLEY, Trustee
Dated: June 1, 2000 /s/ Barbara H. Hawley
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BARBARA H. HAWLEY, Trustee
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is signed
on behalf of a person by his authorized representative (other than an executive
officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement; provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT
CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
