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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CHANTAL PHARMACEUTICAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
CHANTAL PHARMACEUTICAL CORPORATION,
:
Plaintiff,
:
- against - : Civ. Action No.
PETER TING, MARGARETTE TING, FRANCIS : COMPLAINT
PHALEN, PAUL LOCIGNO, DONALD WRIGHT, ---------
ROBERT BINDER, BRAD BULLOCH, :
DORAN CAPITAL MANAGEMENT L.P.,
DOUGLAS FRIEDENBERG, WILLIAM T. GIBSON, :
KATHLEEN GIBSON, DAVID JAMES,
RICHARD LOVE, RICK MAHONSKI, :
DIANE MAHONSKI, MH & ASSOCIATES
SECURITIES MANAGEMENT CORPORATION, :
HOWARD MILLER, E.C. MORGAN, LAMONT
ASSET MANAGEMENT SA, ROLLINS :
INTERNATIONAL, LIMITED, MANASSIST
INTERNATIONAL CO., LIMITED and JOHN :
DOES 1 to 100,
:
Defendants.
:
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Plaintiff Chantal Pharmaceutical Corporation, by its
attorneys, Phillips Nizer Benjamin Krim & Ballon LLP, as and for its complaint
herein, alleges as follows:
PARTIES
-------
1. Plaintiff Chantal Pharmaceutical Corporation (the
"Company") is a corporation organized and existing under the laws of the State
of Delaware with its principal place of business in California. The Company is
engaged in the manufacture and sale of skin care lotions and other cosmetic
products. The common stock of the Company is traded on the NASDQ and is
registered for such
<PAGE>
purposes under Section 12 of the Securities Exchange Act of 1934 (the "Exchange
Act"), 15 U.S.C. 781. There are approximately 19 million shares of the Company
common stock issued and outstanding.
2. Defendants, with the exception of ManAssist International
Ltd. and Rollins International Ltd. (collectively, the "Defendant Group"), are
all shareholders or representatives of shareholders of the Company who have
executed or participated in the filing with the Securities and Exchange
Commission ("SEC") of a Schedule 13D Statement filed June 10, 1997. A copy of
the 13D Statement is annexed hereto as Exhibit A. This false and misleading
Statement has been filed as part of the Defendant Group's plan to oust the
current management of the Company.
3. Upon information and belief, defendants Peter Ting ("Ting")
and Margarette Ting are husband and wife who reside in the State of California.
As detailed more fully below, Ting has disseminated false information concerning
the Company as part of a plan to manipulate its stock and to facilitate a
takeover of the Company.
4. Upon information and belief, defendant Francis Phalen
("Phalen") is a resident of the State of California. Phalen is a former
consultant to the Company who was terminated by the Company for cause in or
about April 1997, for, inter alia, circulating false and defamatory information
about the Company and its CEO. Phalen is subject to a consent decree issued at
the instance of the SEC on October 2, 1996 which found him to have violated
Section 17(a) of the Securities Act and Sections 10(b) and
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13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder and
wilfully aided and abetted and caused Aura Systems, Inc. to have violated
Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules
12b-20, 13a-1 and 13a-13 thereunder. The consent decree barred him, inter alia,
until at least October 2, 1999, from the privilege of appearing or practicing
before the SEC as an accountant.
5. Upon information and belief, defendant Paul LoCigno
("LoCigno") is a resident of the State of Virginia. As detailed below, LoCigno
fraudulently induced the Company to enter into or approve a series of agreements
with defendant ManAssist International Co., Ltd., a corporation with which
LoCigno is affiliated, which permit that entity to improperly profit from sales
of the Company's products in Asia and harms the Company's ability to sell its
products there.
6. Upon information and belief, defendant Donald Wright
("Wright") is a resident of the State of Nevada. Wright is a former consultant
of the Company the services of whom were terminated for cause in or about
August, 1996 for improperly disclosing the Company's confidential information.
As detailed more fully below, Wright participated with Ting in the dissemination
of false information concerning the Company as part of a plan to manipulate its
stock and to facilitate a takeover of the Company.
7. In December 1991, Wright entered into two consent decrees,
consenting to the entry of permanent injunctions against
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him for future violations of (1) Sections 5(a) and 5(c) of the Securities Act of
1933 and (2) Section 17(a) of the 1933 Act and Section 10(b) of the Securities
Exchange Act of 1934.
8. Both injunctions were entered against Wright in 1991, one
in the United States District Court for the District of Columbia, and the other
in the United States District Court for the Central District of California, in
connection with separate securities law violations involving two separate
corporations. In the California action, Wright was charged with illegally
selling unregistered stock. In the District of Columbia action, Wright was
charged with arranging to close a public offering of securities by a corporation
of which he was the chairman, by creating the appearance of a sale of a minimum
number of shares that were in fact not sold.
9. Upon information and belief, defendant Doran Capital
Management L.P. ("Doran Capital") is a limited partnership organized and
existing under the laws of the State of New York with its principal place of
business in New York. Doran Capital is a hedge fund which owns stock in the
Company. While Doran Capital's name appears on the Schedule 13D Statement filed
by the Defendant Group, it apparently has not signed that document.
10. Upon information and belief, defendant MH & Associates
Securities Management Corporation ("MH Securities") is a corporation organized
and existing under the laws of the State of California with its principal place
of business in California. MH Securities is a registered investment advisor.
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11. Upon information and belief, defendant Lamont Asset
Management SA ("Lamont Asset") is a corporation domiciled in Zurich,
Switzerland.
12. Upon information and belief, defendants Robert Binder
("Binder), Brad Bulloch ("Bulloch") Douglas Friedenberg ("Friedenberg"), William
T. and Kathleen Gibson (collectively the "Gibsons"), David James ("James"),
Richard Love ("Love"), Rick and Diane Mahonski (collectively the "Mahonskis"),
Howard Miller ("Miller"), E.C. Morgan ("Morgan") together with Ting, Margarette
Ting, Phalen, LoCigno, Wright, Doran Capital, MH Securities and Lamont Asset,
are all members of the Defendant Group and are each responsible for the actions
of all of the other members of that group.
13. Upon information and belief, defendant Rollins
International, Limited ("Rollins") is a corporation owned, in part, by defendant
LoCigno, who is its President. Upon information and belief, from about April
1996 to September 1996, Rollins served as a consultant to the Company.
14. Upon information and belief, ManAssist International Co.,
Ltd. ("ManAssist") is and has been at all times material herein, a wholly owned
subsidiary of Rollins.
15. Upon information and belief, John Does 1 to 100 are
individuals or entities whose identities are currently unknown, but who were
solicited by the Defendant Group for the purpose of voting their shares to oust
the current management of the Company, "and expressed their support for the
[Defendant Group] and their
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objectives of increasing shareholder value" (Defendant Group's Schedule 13D,
Item 4) but who are not otherwise identified in the Schedule 13D, in violation
of Rule 13D under the Exchange Act.
JURISDICTION AND VENUE
----------------------
16. This action arises under Sections 13(d), 14(a) and 20(a)
of the Exchange Act, 15 U.S.C. (S)(S) 78m(d), 78n(a) and 78t, rules and
regulations of the Securities and Exchange Commission promulgated thereunder and
applicable state statutory and common law.
17. Jurisdiction over the action is conferred upon this Court
by section 17 of the Exchange Act, 15 U.S.C., (S) 78 aa, by the provisions of 28
U.S.C. (S)(S) 1331 and 1337, and principles of pendent jurisdiction.
18. Acts and transactions complained of herein have taken
place and are continuing to take place in the Southern District of New York and
the claims arise in this District.
19. The wrongful acts complained of herein were and are being
committed by defendants by the use of the means and instrumentalities of
interstate commerce and the mails.
NATURE OF THE CLAIMS
--------------------
20. The Company has scheduled an Annual Meeting to be held on
July 17, 1997 at which, among other things, the Shareholders of the Company will
be asked to reelect the existing members of the Company's Board of Directors.
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21. Defendants have formed a "group" for the purposes of
(S) 13(d)(3) of the 1934 Act for the purpose of taking control of the Company.
The Defendant Group has recently filed a Schedule 13D Statement with the SEC,
and, upon information and belief, has for many months solicited the support of
many Company shareholders for their plan.
22. Both defendants' Schedule 13D Statement, and, upon
information and belief, solicitations they have made to various Company
shareholders, are replete with false and misleading statements and fail to
disclose numerous material and pertinent facts.
23. The 13D Statement and defendants' solicitations do
not include the following facts:
(a) Defendant LoCigno is pursuing control of the
Company to preserve arrangements he and corporations with
which he is affiliated have fraudulently induced the Company
to enter into, pursuant to which these entities improperly
profit from the sale of products of the Company;
(b) Defendants Phalen and Wright have had their
relationships with the Company terminated for cause, including
the dissemination by Phalen of false information concerning
the Company and its CEO and the improper transmission by
Wright of confidential financial information to the detriment
of the Company;
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(c) Defendants Wright and Ting have participated in a
plan to disseminate false information concerning the Company
in an effort to drive down the price of its stock both to
profit therefrom and to facilitate the Defendant Group's
takeover of the Company;
(d) All members of the Defendant Group are acting in
breach of an agreement made pursuant to which they negotiated
for, and endorsed, the recent changes undertaken by management
at the Company and agreed to support the Company's management
and to refrain from taking actions to interfere therewith;
(e) The Defendant Group has informed the public and
the Company's shareholders that they intend to appoint an
individual as the Company's CEO who is unwilling to serve
under these circumstances, in order to give the misleading
appearance of the Defendant Group's capacity to govern the
Company; and
(f) The Defendant Group has failed to identify
all of the members of its Group in its 13D Schedule and
solicitations.
24. In addition, the Defendant Group has conducted extensive
solicitations of the Company's shareholders for the purpose of actively inducing
them to support the Defendant Group's efforts to oust management as part of a
continual plan intended to end in the solicitation of proxies. By doing so,
defendants have
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violated Proxy Rule 14a-3, because they have failed to file a proxy statement as
mandated therein with the SEC.
25. As a result of the foregoing, plaintiff seeks temporary
and permanent injunctive relief and damages as set forth below.
IRREPARABLE INJURY TO THE
COMPANY AND ITS SHAREHOLDERS
----------------------------
26. Upon information and belief, the Company and its
shareholders and the investing public are being irreparably injured by
defendants' unlawful scheme and conduct in that, inter alia:
----- ----
a. The public, including the Company shareholders,
presently are compelled to make investment decisions concerning the Company and
its stock without the benefit of material information that the Defendant Group
is required to provide;
b. By reason of defendants' unlawful conduct there has
been and will continue to be confusion and misunderstanding on the part of the
Company's shareholders and the investing public as to the true intentions of
defendants with respect to the Company and a major disruption in the market for
the Company stock;
c. The widespread confusion and uncertainty created by
defendants' conduct is causing and will continue to cause serious dislocations
in the operation of the Company's business and the market for its securities, as
well as uncertainty among the Company's customers, employees, distributors and
other business relationships.
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FOR A FIRST CLAIM FOR RELIEF
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27. Plaintiff repeats and realleges each and every allegation
set forth in paragraphs 1 to 26 hereof as if fully set forth herein.
28. Upon information and belief, the Defendant Group was
obligated, pursuant to Sections 13(d)(1) and (3) of the 1934 Act, to file a
Schedule 13d Statement long prior to June 10, 1997.
29. On June 10, 1997, the Defendant Group filed a false and
misleading Schedule 13D Statement in violation of Sections 13(d)(1)(a), (c) and
(e) of the 1934 Act, and Regulation Section 240.13d-101 promulgated thereunder,
which 13D Statement both misstated and failed to include material and pertinent
information in, among other things, each of the ways detailed below.
Failure To Disclose LoCigno's Intent To
Oust Management To Preserve Fraudulently
Induced Agreements Harmful to Company
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30. Defendant LoCigno, through corporate entities he owns or
controls, has agreements to receive in excess of $28 on each sale of certain of
the Company's products in Taiwan, China, Hong Kong and Macao (collectively the
"Asian Territories"). LoCigno's claims to these payments is the result of a
series of license and sub-license agreements he fraudulently induced the Company
to enter into, and through a previously "undisclosed agreement" with the
ultimate distributor of the product. In receiving these payments, ManAssist, an
entity owned by Rollins, of which LoCigno is an owner and President, is in
breach of its
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agreements with the Company, and has prevented the Company from maximizing its
sales of its product in the Asian Territories.
31. On or about February 21, 1995, the Company entered into a
Distribution Agreement with Roger Chang, pursuant to which Roger Chang was to
distribute the Companies' products in, among other places, the Asian
Territories.
32. Roger Chang was required under this agreement to "market,
distribute and sell the Products in such parts of the Territory, either itself
or through one or more third party local distributors; provided, however, that
no third party local distributor shall be appointed without the prior written
consent of [the Company] which consent will not unreasonably be withheld by [the
Company]." 2.2(iii).
33. In or about the fall of 1996, LoCigno recommended to the
Company that Michilan International Trade Co., Inc. ("Michilan") be appointed
the local distributor of the Company's products in the Asian Territories.
34. The Company thereafter gave its consent to the appointment
of Michilan as the local distributor of its products in the Asian Territories.
Such consent was based, inter alia, on the misrepresentation made to the Company
----- ----
by LoCigno, Rollins and ManAssist that the compensation LoCigno's company was to
receive for this introduction was set forth in a Sales Agent Distribution
Agreement between ManAssist and Michilan ("Sales Agent Distribution Agreement"),
a copy of which was submitted to the Company prior to its approval of either
Michilan or ManAssist as a distributor of
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its products. Such consent was further based on misrepresentations made to the
Company by LoCigno, Rollins and ManAssist that Michilan would perform
distribution services in accordance with the terms of the Sales Agent
Distribution Agreement, and that Michilan had refused to enter into a direct
agreement either with the Company or Roger Chang, and would only agree to enter
into an agreement with ManAssist.
35. As a result of these misrepresentations, the Company
entered into a Distribution Agreement Sublicense with Roger Chang and ManAssist,
pursuant to which ManAssist was granted the right to distribute the Company
products in the Asian Territories.
36. On or about October 29, 1996, ManAssist entered into the
Sales Agent Distribution Agreement with Michilan. Under this agreement,
ManAssist was to receive $6.32 on each sale of the Company's four piece skin
care kits by Michilan in the Asian Territories. This agreement mirrored the
terms of that previously presented to the Company in connection with its
approval of Michilan as a distributor.
37. Unbeknownst at that time to the Company, however, on
October 29, 1996 ManAssist also entered into a second secret agreement with
Michilan pertaining to its distribution of the Company products in the Asian
Territories (the "Secret Agreement"). Under this agreement, ManAssist was to
receive, in addition to the $6.32 it received under the Sales Agent Distribution
Agreement, another $22 of the sale price of each of the Company's four piece
skin care kits sold by Michilan in Taiwan. By these arrangements,
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LoCigno's companies were entitled to receive virtually as much on these sales as
the Company itself. The Secret Agreement entitled LoCigno's companies to more
than $5,000,000 in the first year of the Michilan distributorship.
38. The Secret Agreement recites that ManAssist is "a Rollins
International, Ltd. Company." The agreement is signed by LoCigno in his capacity
as President of Rollins International. The Schedule 13D statement filed by the
Defendant Group acknowledges that Rollins International is "Mr. LoCigno's firm."
39. Had the Secret Agreement been disclosed to the Company at
the time its consent to permit Michilan and ManAssist to serve as its
distributor was sought, the Company would not have agreed to grant that consent.
40. The Secret Agreement has hindered sales of the Company's
products in the Asian Territory. Michilan has informed the Company that the size
of the payments made and to be made to LoCigno and his companies prevent
Michilan from making an adequate amount on its sale of the Company products, to
permit the maximization of the market in the Asian territories.
41. Upon information and belief, LoCigno has informed Michilan
that if it does not pay ManAssist the money called for in the Secret Agreement,
and, in addition, provide LoCigno with personal amenities including an
apartment, he will prevent Michilan from receiving the Company's products. Upon
information and belief, he has informed Michilan that he will take such action
if it fails to pay the amounts called for under the Secret Agreement
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by the time of any reorder it makes. Upon information and belief, LoCigno
informed Michilan that he will have the ability to so act because after June 17,
1997 (the date set at that time for the Company's Annual Meeting) he will be
running the Company.
42. LoCigno's improper acts and the Secret Agreement
have prevented Michilan from ordering the Company's products since
mid-March 1997.
43. Upon information and belief, LoCigno has been a major
factor in the organization of the Defendant Group in its attempts to oust
current management to preserve these improper arrangements.
44. The Secret Agreement, and the aforementioned acts, also
constitute a breach of ManAssist's distributorship contract with the Company,
which, inter alia, obligates ManAssist to "use its best efforts to actively sell
and promote sales of Products in the Territory...".
45. None of the foregoing was disclosed in the Schedule 13D
Statement filed by the Defendant Group, which includes defendant LoCigno. Upon
information and belief, none of the foregoing has been disclosed to the
Company's shareholders during their solicitation by the defendants.
Failure To Disclose Phalen Is A Terminated Former
Consultant And Misleading Disclosure Of His Consent Decree
- ----------------------------------------------------------
46. The Schedule 13D Statement filed by the Defendant Group
misleadingly fails to describe the Consent Decree entered against Phalen on or
about October 2, 1996. Under the terms of the
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Consent Decree, until at least October 2, 1999 and "pursuant to Rule
102(c)(i)iii) of the [SEC's] Rules of Practice" "Phalen... is denied the
privilege of appearing or practicing before the [SEC] as an accountant." Only
after such date may Phalen apply for permission to resume practicing before the
SEC as an accountant. In addition, pursuant to the Consent Decree, Phalen shall
"cease and desist from committing or causing any violation and any further
violation of Section 17(a) of the Securities Act and Section 10(b) and 13(b)(5)
of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder and from
causing any violation and any future violation of Sections 13(a), 13(b)(2)(A)
and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13
thereunder...".
47. On or about October 2, 1996, Phalen consented to the entry
of findings that "Phalen violated Section 17(a) of the Securities Act and
Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and
13b2-2 thereunder and wilfully aided and abetted and caused Aura's violations of
Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules
12b-20, 13a-1 and 13a-13 thereunder."
48. These findings related to a period of time in which Phalen
served as Chief Financial Officer and Senior Vice-President of Aura Systems,
Inc. ("Aura"). The summary of these findings states as follows:
During its 1993 and 1994 fiscal years Aura filed annual and
quarterly reports that described, in false or misleading
terms, its success in developing new commercial markets for
products using its proprietary
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electromagnetic technology. Until the early 1990's, Aura
depended on military sales for substantially all of its
revenue. Faced with declining military demand in the early
1990's, Aura made a strategic decision to develop new,
commercial applications for its technology. As described
herein, in 1993 and 1994, Aura reported materially increased
revenues from nonmilitary sales, which it cited as evidence
that its strategy was succeeding. The increases in nonmilitary
revenues, however, resulted largely from two transactions that
did not involve Aura's products or technologies. In the first
transaction Aura purchased and resold computer monitors under
circumstances the Respondents understood would generate little
or no profit. In fiscal years 1993 and 1994 that accounted for
22% and 30%, respectively, of Aura's revenues. Aura did not
disclose the circumstances of the transactions, and made false
or misleading statements that its financial results evidences
its success in developing commercial markets for its products.
In the second transaction, Aura entered into a sham agreement
with a dry wall installation contractor which it used as the
basis for improperly recognizing $1.1 million in revenue
during its third quarter for fiscal 1994.
49. None of these details are provided in the Schedule 13D
Statement filed by the Defendant Group. The Schedule 13D also fails to state
that Phalen was terminated by the Company, or the reasons for his termination.
50. Phalen joined the Company on or about August 14, 1996
pursuant to an agreement under which he would be paid $200,000 per annum and
--- -----
receive certain stock options. Under the terms of this agreement, Phalen agreed
to consult in connection with the Company's International Operations.
51. On or about April 1, 1997, the Company terminated Phalen's
employment for cause. The reasons for Phalen's
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termination included, among other things, poor job performance, poor
interactions with Company representatives and third-parties, including
distributors, doing business with the Company, and various misrepresentations
made by Phalen when he joined the Company about his ability to perform for it,
which proved false in light of the Consent Decree. Phalen, while consulting for
the Company, knowingly made false statements concerning both the Company and
Chantal Burnison, its CEO, to Company shareholders to the Company's injury.
52. Neither the nature of the claims giving rise to the
Consent Decree, nor Phalen's termination for cause or the reasons therefor, have
been disclosed by the Defendant Group in its Schedule 13D Statement, nor, upon
information and belief, have they been disclosed to the shareholders whom the
Defendant Group, and particularly Phalen, have wrongfully solicited.
Failure to Disclose That Donald Wright Is
A Former Chantal Consultant Terminated For
Cause Who Has Sought To Drive Down Price
Of Chantal Stock
- ------------------------------------------
53. The Schedule 13D also fails to inform that Wright was
terminated by the Company, or the reasons for his termination.
54. Defendant Wright was employed by the Company as a
consultant at various times from July 1993 to August 1996. In or about August
1996, the Company terminated this relationship for cause. Wright obtained
confidential financial information from the Company to assist in performing
certain financial services for the Company. Notwithstanding his knowledge of the
confidential nature
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of this information, and without the consent of the Company, Wright revealed
this information to a third party, unrelated to his duties. This unauthorized
revelation damaged the Company's relationship with business associates.
55. Upon information and belief, Wright was also involved in a
scheme to utilize false information to lower the price of the Company's stock,
which scheme was aided and abetted by defendant Ting. This conduct with respect
to the Company's stock has not been disclosed by the Defendant Group in their
13D filing.
56. Upon information and belief, defendant Ting obtained false
information about the Company and its CEO Chantal Burnison, which he
disseminated to shareholders of the Company and others.
The price of the Company's stock thereafter declined.
57. Upon information and belief, Ting and Wright
thereafter discussed the falsity of the information previously disseminated,
with Wright noting the usefulness of that dissemination in connection with his
effort to drive the stock price down to $1, in order to facilitate future stock
profits and the takeover of the Company.
58. None of the foregoing is disclosed in the Schedule 13D
Statement the Defendant Group filed with the SEC, nor, upon information and
belief, has it been disclosed to the shareholders of the Company that the
Defendant Group has solicited.
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Failure to Disclose Defendant Group's Agreement
With The Company To Support Management At The
Upcoming Next Annual Meeting, Which It Has Breached
- ---------------------------------------------------
59. On or about June 3, 1997, Ting, on behalf of himself and a
number of shareholders of the Company, including the Defendant Group, reached an
agreement with the Company pursuant to which these shareholders (inclusive of
the Defendant Group) were to refrain from filing a Schedule 13D Statement
expressing hostility to the Company's management and to support the Company's
management at its next Annual Meeting scheduled at that time for June 17, 1997.
60. Under the terms of this agreement, the Company agreed to
hire Polly Bergen as Chief Operating Officer of the Company, add
well-credentialed members to the Company's Board of Directors having extensive
experience in sales and marketing, and take steps to accelerate the termination
of a distribution agreement to which the Company was a party. In exchange, Ting
agreed that he would not put his name on a hostile Schedule 13D Statement, and
that he and the shareholders he represented, including the Defendant Group,
would support management in connection with the next Annual Meeting.
61. The Company fully complied with this agreement within
hours. Nonetheless, Ting has filed a Schedule 13D statement, as has the
Defendant Group, and Ting has announced his continuing opposition to the present
management of the Company. In addition to constituting a breach of the Defendant
Group's agreement with the Company, the Agreement and its breach have not
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been disclosed in the Schedule 13D filed by the Defendant Group, nor, upon
information and belief, has it been disclosed by the Defendant Group in their
solicitation of shareholders of the Company.
Defendants Have Misled The Public By The
Improper Use Of Georgette Mosbacher's Name
And Reputation In Connection With Their Plan
- --------------------------------------------
62. Defendants, as an alternative to current management, have
informed shareholders in their Schedule 13D Statement of defendants' intention
that Georgette Mosbacher ("Mosbacher") will become the Chief Executive Officer
of the Company. They concededly have reached no agreement with her to serve in
that capacity. Defendants' use of Mosbacher's name in this filing is inherently
misleading.
63. Mosbacher has refused to become associated with the
Company if her involvement comes as the result of an acrimonious fight among the
Company's shareholders, which is the current circumstance the Company faces.
64. Nonetheless, in the Schedule 13D Statement filed by
the Defendant Group, the Defendants misleadingly state:
It is the intention of the Reporting Persons that Ms.
Georgette Mosbacher will agree to serve as a director-nominee
and to become the chief executive officer of the Company
following the installation of a new Board of
Directors....Certain of the Reporting Persons or their
representatives have had preliminary discussions with a
representative of Ms. Mosbacher, as well as with counsel for
the Company, about this possibility. No agreements have been
reached and no assurance
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can be given that an agreement along these lines will be
reached with Ms. Mosbacher.
65. Defendants' misleading statements concerning Mosbacher
have been reported in the press as a result of their efforts. Mosbacher's
arrival has been trumpeted as recently as June 16, 1997. An article that
appeared in Barron's on that date falsely states "Georgette Mosbacher, head of
Mosbacher Enterprises, a New York management consultant, is to announce today
her willingness to be Chantal's boss - if the dissidents elect a new board."
66. These statements are inaccurate and mislead the
shareholders of the Company and the investing public into believing the
Defendant Group has an alternative to current management when in fact they do
not. No mention is made in the Schedule 13D Statement, or the press reports
defendants have caused, of Mosbacher's refusal to become CEO of the Company if
her involvement is part of an acrimonious fight between the company's
shareholders.
Defendants Have Failed To Identify In Their
13D All Members Of The Defendant's Group
- ----------------------------------------
67. Pursuant to Section 13(d) of the 1934 Act, and the
regulations promulgated thereunder, the Defendant Group is obligated to disclose
the identity of all members of their "group" as that term is defined in Section
13(d)(3) of the 1934 Act. In addition, as to each such member, defendants are
obligated to supply the information specified in Section 13(d) of the 1934 Act
and Regulation 240.13d-101 promulgated thereunder.
-21-
<PAGE>
68. In violation of their obligations, the Defendant Group has
failed to identify the members of their "group" as that term is defined in
Section 13(d)(3) identified in the caption as John Does 1 to 100.
69. Defendant Lamont Asset is in fact a member of that group,
having taken steps, in concert therewith, and at their behest.
70. The Defendant Group has admitted that there are additional
members of their "group" in the Schedule 13D Statement at issue. There
defendants state:
The Reporting Persons have had discussions with or are aware
of other shareholders of the Company who have expressed their
support for the Reporting Persons and their objectives of
increasing shareholder value, but who prefer not to join with
the Reporting Persons in making this filing.
71. By failing to disclose the identity and other required
information concerning John Does 1 to 100, the Defendant Group, and John Does 1
to 100, have violated Section 13(d) of the 1934 Act, and the rules and
regulations promulgated thereunder.
72. The above-stated misrepresentations and omissions of facts
and circumstances are material to any evaluation by the Company shareholders and
members of the investing public with respect to their investment decisions
concerning the retention, sale or purchase of the Company stock, or their
decision on how to vote the same at the upcoming Annual Meeting of the Company.
-22-
<PAGE>
73. By virtue of the foregoing, the defendants have violated
and are continuing to violate Section 13(D) of the Exchange Act and the rules
and regulations promulgated thereunder.
74. Plaintiff has no adequate remedy at law.
FOR A SECOND CLAIM FOR RELIEF
-----------------------------
75. Plaintiff repeats and realleges each and every allegation
set forth in paragraphs 1 to 74 hereof as if fully set forth herein.
76. Upon information and belief, numerous members of the
Defendant Group have solicited each of the other members of the group to obtain
their support for Defendant Group's efforts to oust management. This
solicitation includes the admitted solicitation of John Does 1 to 100, as
alleged above.
77. In addition, upon information and belief, Phalen, on
behalf of the Defendant Group, has been actively soliciting other shareholders
of the Company, and those who represent them, to support the Defendant Group's
efforts to oust management and install a new slate of directors. This is equally
true of Defendant Ting, who has stated in discussions with the Company and
others that he speaks on behalf of approximately 40% of the Company's shares.
78. Upon information and belief, defendants intend to take
whatever steps are necessary to oust existing management, including voting
proxies or consents from shareholders of the
-23-
<PAGE>
Company against the existing Board of Directors, and in favor of an opposition
slate nominated by defendants.
79. Defendants solicitations to shareholders of the Company,
as alleged above, for the purpose of actively inducing them to support the
Defendant Group's efforts to oust management constitutes part of a continuous
plan intended to end in the solicitation of proxies, consents or authorizations
and to prepare the way for the success of that plan.
80. Upon information and belief, defendants' solicitation
campaign is ongoing.
81. At the time of the proxy solicitations set forth above,
the defendants have failed, and have continued to fail, to furnish shareholders
of the Company with a written proxy statement containing the information
specified in Schedule 14A as required by Proxy Rule 14a-3 (Regulation 240.14a-3)
and failed and have continued to fail, to comply with the requirements of Rule
14a-6 (Regulation 240.14a-6) that soliciting materials be filed with the SEC in
advance of their being first sent or given to shareholders.
82. In addition, as specified above, in furtherance of their
solicitation campaign, the Defendant Group has made numerous false and
misleading statements, and failed to disclose to shareholders of the Company
numerous material facts, all in violation of Rule 14a-9's (Regulation 240.14a-9)
prohibition against making false or misleading statements, with respect to
material facts or omitting to state any material fact necessary in order to make
the statements therein not false or misleading.
-24-
<PAGE>
83. By reason of the foregoing, the defendants have violated
Section 14(a) of the Exchange Act and the rules and regulations promulgated
thereunder, including Rules 14a-3, 14a-6 and 14a-9.
84. Plaintiff has no adequate remedy at law.
FOR A THIRD CLAIM FOR RELIEF
----------------------------
85. Plaintiff repeats and realleges each and every allegation
set forth in paragraphs 1 to 84 hereof as if fully set forth herein.
86. By virtue of the wrongful conduct of defendants, the
Company has suffered damages and is being subjected to the likelihood of further
substantial damages in an amount not presently determinable, but which shall be
determined by the Court. In addition, by reason of defendants' flagrant and
fraudulent disregard of their obligations, plaintiff is also entitled to
punitive damages in the amount of $50,000,000.
FOR A FOURTH CLAIM FOR RELIEF
-----------------------------
87. Plaintiff repeats and realleges each and every allegation
of paragraphs 1 through 86 hereof as if fully set forth herein.
88. The Company and its management performed all of their
obligations under the agreement with defendant Ting and the Defendant Group.
89. Defendants have violated their contractual obligations to
the Company and its management by opposing the
-25-
<PAGE>
current management of the Company and said defendants are continuing to pursue a
wrongful plan to oust the current management in violation of defendants' express
agreement.
90. The Company has no adequate remedy at law.
91. The Company is entitled to a decree of specific
performance directing and compelling defendants to honor their contractual
commitment to refrain from opposing the Company's current management at the
upcoming shareholders meeting to be held on July 17, 1997 and restraining them
from voting their stock or soliciting or exercising proxies to vote stock of the
Company in opposition to its current management in violation of defendants'
agreement.
FOR A FIFTH
CLAIM FOR RELIEF
----------------
92. Plaintiff repeats and realleges each and every allegation
of paragraphs 1 to 91 hereof as if fully set forth herein.
93. Defendants LoCigno, ManAssist and Rollins solicited and
secured the Company's approval of the appointment of Michilan as distributor of
the Company's products in the Asian Territories and its approval of the Sales
Agent Distribution Agreement between ManAssist and Michilan based upon the false
representation that the said Sales Agent Distribution Agreement was the only
agreement between ManAssist and Michilan, that the compensation payable to
ManAssist by Michilan thereunder was its sole compensation from Michilan and
that Michilan would sign a distributorship solely
-26-
<PAGE>
through ManAssist and would not sign an agreement directly with either Chang or
the Company.
94. In fact, Michilan had not refused to sign directly with
Chang and the Company and in fact, ManAssist and Rollins had a concealed side
agreement with Michilan -- the above described Secret Agreement -- requiring
Michilan to pay ManAssist substantial additional compensation which was unknown
to the Company when its approval was solicited.
95. As a result of the Secret Agreement, LoCigno, ManAssist
and Rollins siphoned off substantial secret profits from the distribution of the
company's products through Michilan.
96. Said Secret Agreement breached ManAssist's and Rollins'
fiduciary obligations to the Company.
97. By virtue of the Secret Agreement with Michilan,
ManAssist, Rollins and LoCigno substantially reduced or eliminated Michilan's
prospect of profit on sales of the Company's products, thereby substantially
reducing Michilan's orders of the Company's products, with a consequent
reduction or elimination of moneys payable to and profits earned by the Company
on such sales, thereby wrongfully depressing the Company's earnings and damaging
the reputation of its management and the value of its stock.
98. But for the fraudulent concealment of the Secret Agreement
by defendants LoCigno, ManAssist and Rollins, the Company would not have
consented to the Sales Agent Distribution Agreement between ManAssist and
Michilan and would not have permitted the Secret Agreement.
-27-
<PAGE>
99. The Company's consent to the Sales Agent Distribution
Agreement and LoCigno, Rollins and ManAssist's use of such position to extract
the consequent Secret Agreement were induced by fraud practiced upon the Company
by defendants LoCigno, Rollins and ManAssist, who have been unjustly enriched
thereby.
100. By virtue of the foregoing, the Sales Agent Distribution
Agreement and the Secret Agreement should be rescinded and defendants ManAssist,
Rollins and LoCigno enjoined and restrained from acting or collecting any monies
thereunder and to disgorge and pay over to the Company all monies received by
said defendants under said Agreements.
WHEREFORE, plaintiff demands judgment:
1. On the first and second claims for relief, temporarily and
permanently enjoining defendants, their directors, officers, employees, agents
and affiliates and all persons cooperating with defendants or acting in concert
with them, from
(a) voting of their stock in opposition to the current
management of Chantal Corp. at the meeting of shareholders on
July 17, 1997;
(b) making any false or misleading public statements
regarding the Company or its stock;
(c) filing or disseminating any false or misleading
Schedule 13D statements or other documents related to the
Company or its securities;
(d) soliciting or arranging for the solicitation of any
stockholders of the Company to become members of any
-28-
<PAGE>
group or to vote their stock or to grant proxies to vote their
stock in opposition to the Company's current management at the
July 17, 1997 stockholders meeting;
(e) taking or attempting to take any further steps in
furtherance of their wrongful scheme;
2. On the Third Claim for Relief, awarding compensatory
damages in favor of the Company and against the defendants, jointly and
severally, together with punitive damages in the sum of $50,000,000;
3. On the Fourth Claim for Relief, requiring defendants to
specifically perform their agreement to refrain from opposing the current
management of the Company at the Stockholders meeting on July 17, 1997 and from
voting their stock against current management or inducing others to do so;
4. On the Fifth Claim for Relief, rescinding the Sales Agent
Distribution Agreement and the Undisclosed Agreement between ManAssist and
Michilan and requiring defendants ManAssist, Rollins and LoCigno to pay over to
the Company all monies received by them from Michilan under said agreements;
5. Awarding to plaintiff Company the costs, disbursements and
counsel fees of this action, together with
-29-
<PAGE>
interest and such other and further relief in favor of the Company as the
circumstances require.
Dated: New York, New York
June 18, 1997
PHILLIPS NIZER BENJAMIN
KRIM & BALLON LLP
By: /s/ Stuart A. Summit
_________________________________
Stuart A. Summit (SS. #2403)
A Member of the Firm
Attorneys for Plaintiff
Office and P.O. Address
666 Fifth Avenue
New York, New York 10103-0084
Tel. No: (212) 977-9700
Of Counsel
Michael J. Silverberg
Martin H. Samson
-30-
<PAGE>
EXHIBIT A
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Chantal Pharmaceutical Corporation
----------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class of Securities)
0001593001
----------
(CUSIP Number)
Peter Ting
3319 Greenmeadow Drive
Danville, California 94506
Telephone: (510) 736-4807
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copy to:
Jeffrey W. Tindell, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3380
June 4, 1997
-------------------------------------------------------
(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: [_]
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Robert J. Binder
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 120,400
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 120,400
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
-----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
120,400
-----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
-----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
-----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Brad Bulloch
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 37,500
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 37,500
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
-----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
37,500
-----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
-----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
-----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Doran Capital Management, L.P.
----------------------------------------------------------------
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 BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 127,500
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 127,500
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
-----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
127,500
-----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
-----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
-----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
-----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Douglas S. Friedenberg
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 40,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 40,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
-----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
40,000
-----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
-----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
-----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IA
-----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
William T. Gibson
Kathleen P. Gibson
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 40,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 40,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
-----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
40,000
-----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
-----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
-----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
David James
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 31,100
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 31,100
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
31,100
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Paul R. Locigno
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 14,500
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 14,500
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
14,500
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Richard J. Love
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 100,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 100,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
100,000
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IA
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Rick Mahonski
Diane Mahonski
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 29,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 29,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
29,000
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Patrick J. McInnis
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 28,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 28,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
28,000
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
MH & Associates Securities Management Corporation
----------------------------------------------------------------
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 BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
California
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 128,200
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 128,200
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
128,200
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IA
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Howard Miller
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 40,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 40,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
40,000
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
EC Morgan
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
California
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 100,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 100,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
100,000
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Francis Phalen
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
[x]
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 105,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 105,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
105,000
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Peter Ting
Margerette Ting
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 225,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 225,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
225,000
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.2%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
----------------------------------------------------------------
<PAGE>
13D
CUSIP No. 0001593001
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Donald W. Wright
----------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
----------------------------------------------------------------
3. SEC USE ONLY
----------------------------------------------------------------
4. SOURCE OF FUNDS
PF
----------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
( )
----------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
----------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 100,000
BENEFICIALLY -----------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -----------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 100,000
-----------------------------------------------
10. SHARED DISPOSITIVE POWER
----------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
100,000
----------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
( )
----------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6%
----------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
----------------------------------------------------------------
<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this statement
relates is the Common Stock, par value $.01 per share (the
"Common Stock"), of Chantal Pharmaceutical Corporation, a
Delaware corporation (the "Company"), which has its principal
executive offices at 12121 Wilshire Boulevard, Suite 1120, Los
Angeles, California 90025.
Item 2. Identity and Background.
This statement is filed by the following persons: Robert J.
Binder, Brad Bulloch, Doran Capital Management, L.P. ("Doran"),
Douglas S. Friedenberg, Kathleen and William Gibson, David James,
Paul R. Locigno, Richard J. Love, Rick and Diane Mahonski,
Patrick J. McInnis, MH & Associates Securities Management
Corporation (MH&A"), Howard Miller, E.C. Morgan, Francis T.
Phalen, Peter and Margarette Ting and Donald W. Wright (sometimes
collectively referred to as the "Reporting Persons").
The persons making this filing are doing so because of the
possibility that they may be deemed to constitute a "group" for
purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Act"). The filing of this Schedule 13D
does not constitute an admission by any of the persons making
this filing that such persons are a group, and such persons deny
that they should be deemed to be such a group.
The names, residence or business addresses, and present
principal occupation or employment, and the name, principal
business and address of any corporation or other organization in
which each such employment is conducted, of the persons filing
this statement is set forth in Appendix A attached hereto and
incorporated by reference. Except as set forth in Appendix A,
all Reporting Persons are citizens of the United States.
Except as set forth below, during the last five years, none
of the Reporting Persons filing this statement has been (i)
convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Francis T. Phalen was the subject of an administrative
proceeding before the Securities and Exchange Commission (the
"Commission") entitled In the Matter of Aura Systems Inc., Zvi
Kurtzman, Francis T. Phalen, CPA, Joseph Bevacqua, CPA,
Respondents (October 2, 1996; File No. 3-9138). Pursuant to an
offer of settlement Mr. Phalen, without admitting or denying the
findings set forth therein, consented to a Commission finding
that he willfully violated Section 17(a) of the Securities Act of
1933, as amended, and Section 10(b) and 13(b)(5) of the Act and
Rules 10b-5, 13b2-1 and 13b2-2 thereunder and willfully aided and
abetted and caused Aura Systems' violations of Sections 13(a),
13(b)(2)(A) and 13(b)(2)(B) of the Act and Rules 12b-20, 13a-1
and 13a-13 thereunder. The related order of the Commission
provided that Mr. Phalen was to cease and desist from committing
or causing any violation and future violation of certain
specified securities laws and rules and further restricted Mr.
Phalen from practicing as an accountant for a period of three
years, at which time he will be able to apply to the Commission
for reinstatement upon certain undertakings to the Commission.
<PAGE>
Information with respect to each person filing this
statement is given solely by the respective filing person, and no
filing person has responsibility for the accuracy or completeness
of information supplied by another filing person.
Item 3. Source and Amount of Funds or Other Consideration.
The aggregate purchase price for the shares of Common Stock
acquired by each Reporting Person and by all such persons in the
aggregate, is set forth in the following table:
Aggregate Purchase
Purchaser Price
--------- ------------------
Binder $ 553,186
Bulloch $ 164,775
Doran $ 547,000
Friedenberg $ 196,000
Gibson $ 177,312
James $ 156,182
Locigno $ 18,670
Love $ 504,951
Mahonski $ 101,500
McInnis $ 119,560
MH&A $ 892,131
Miller $ 90,000
Morgan $ 475,000
Phalen $ 67,030
Ting $1,058,275
Wright $ 146,452
----------
TOTAL $5,268,024
==========
In all cases, except as otherwise disclosed herein, the
source of funds utilized for the purchase of shares came from
personal funds. In the case of Doran, the shares are subject to
a standard margin account maintained with Furman Selz LLC.
Item 4. Purpose of Transaction.
The Reporting Persons acquired the shares of Common Stock
which they respectively own (See Item 5 below) for the purpose of
making a significant investment in the Company.
The Reporting Persons share a common concern over the
deteriorating performance of the Company and, in turn, over the
declining price of the shares of the Company's Common Stock. The
Reporting Persons have discussed among themselves or with
representatives of the Reporting Persons their concerns and
suggestions about taking constructive actions in an effort to
seek to correct these circumstances.
<PAGE>
Certain of the Reporting Persons have a more intimate
knowledge of the Company and its management. Mr. Locigno's firm,
Rollins International, Limited was a consultant to the Company
from April 1996 until September 1996 in the areas of marketing
and public relations. Mr. Phalen was engaged under contract to
the Company as a consultant for the ten months from September
1995 until June 1996. He joined the Company as its Managing
Director - International Operations on August 26, 1996 until
April 2, 1997. Mr. Wright served as a consultant to the Company
for the calendar year 1994 and subsequently from time to time,
upon the request of the Company until August, 1996.
The Company filed preliminary proxy materials with the
Securities and Exchange Commission in May 1997 for the purpose,
among other things, of electing directors. The scheduling of a
Special Meeting of Stockholders for this purpose by the Company
was the result of a court order, although the court had ordered
the holding of an "annual" meeting. The Reporting Persons
understand that the Company has not held an annual meeting of
stockholders since 1992. The Reporting Persons or their
representatives reviewed the Company's preliminary proxy
materials and believe that a change in the Board of Directors and
senior management of the Company is necessary to pursue their
objective of creating value for stockholders generally.
Certain of the Reporting Persons or their representatives
have contacted counsel for the Company in an effort to solicit
the Company's support for a change in the Board of Directors.
The Reporting Persons have been informally informed that the
Company would give appropriate consideration to a change in the
Board of Directors and in senior management if the new nominees
were suitable and were believed to be acting in the best
interests of the shareholders of the Company.
It is the intention of the Reporting Persons that Ms.
Georgette Mosbacher will agree to serve as a director-nominee and
to become the chief executive officer of the Company following
the installation of a new Board of Directors. Ms. Mosbacher is
presently the Chairman and Chief Executive Officer of Mosbacher
Enterprises, Inc., an international entrepreneurial and
management consulting business based in New York City. Certain
of the Reporting Persons or their representatives have had
preliminary discussions with a representative of Ms. Mosbacher,
as well as with counsel for the Company, about this possibility.
No agreements have been reached and no assurance can be given
that an agreement along these lines will be reached with Ms.
Mosbacher.
The Reporting Persons are discussing and considering
appropriate nominees to suggest as prospective Board members and
anticipate discussions with the Company and its representatives
shortly. It is likely that nominees suggested by the Reporting
Persons will include individuals who are not Reporting Persons.
While the Reporting Persons believe it would be in the best
interests of the stockholders of the Company for any change to be
agreed upon and completed in conjunction with the upcoming
Special Meeting, there can be no assurance that such change can
be accomplished within that timeframe. In the event that the
Company is unwilling to assist the Reporting Persons in their
endeavor or time will not permit the objectives of the Reporting
Persons to be accomplished quickly, the Reporting Persons intend
to continue to thereafter seek a change in the Board of
Directors, including through the possible solicitation of written
consents to remove and replace some or all of the directors of
the Company.
<PAGE>
The Reporting Persons have had discussions with or are aware
of other shareholders of the Company who have expressed their
support for the Reporting Persons and their objectives of
increasing shareholder value, but who prefer not to join with the
Reporting Persons in making this filing.
Depending on market conditions and other factors, the
Reporting Persons presently intend to continue to hold their
shares of Common Stock as an investment. Each of the Reporting
Persons reserves the right to purchase or otherwise acquire
additional shares of Common Stock and, further, each reserves the
right and ability to sell or otherwise dispose of shares of
Common Stock at any time.
Other than as described above, none of the Reporting Persons
has any present plans or proposals which relate to or would
result in: (i) the acquisition by any person of additional
securities of the Company, or the disposition of securities of
the Company; (ii) an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, involving the Company or
any of its subsidiaries; (iii) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries; (iv)
any change in the present Board of Directors or management of the
Company, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the Board;
(v) any material change in the present capitalization or dividend
policy of the Company; (vi) any other material change in the
Company's business or corporate structure; (vii) changes in the
Company's charter, by-laws, or other instruments corresponding
thereto or other actions which may impede the acquisition of
control of the Company by any person; (viii) 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 interdealer quotation system of a registered national
securities association; (ix) a class of equity securities of the
Company becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Act; or (x) any action
similar to any of those enumerated above. Item 4 disclosure
provisions regarding any plans or proposals to make any changes
in a company's investment policy for which a vote is required by
Section 13 of the Investment Company Act of 1940 are
inapplicable.
Item 5. Interest in Securities of the Issuer.
Set forth in the table below is the number of shares of
Common Stock beneficially owned by each person making this filing
and by all such persons in the aggregate, together with the
percentage of the shares of Common Stock which are beneficially
owned by each such person and all such persons in the aggregate:
<PAGE>
Number of Shares of Percentage of
Common Stock Common Stock
Beneficially Beneficially
Person Owned Owned*
------ ------------------ -------------
Binder 120,400 0.67%
Bulloch 37,500 0.21%
Doran 127,500 0.70%
Friedenberg 40,000 0.22%
Gibson 40,000 0.22%
James 31,100 0.17%
Locigno 14,500 0.08%
Love 100,000 0.55%
Mahonski 29,000 0.16%
McInnis 28,000 0.15%
MH&A 128,200 0.70%
Miller 40,000 0.22%
Morgan 100,000 0.55%
Phalen 105,000 0.58%
Ting 225,000 1.24%
Wright 100,000 0.55%
--------- ----
Total 1,226,200 6.96%
========= =====
----------------
* The number of shares of Common Stock deemed to be
outstanding as of May 16, 1997 is 18,190,516, according to
the preliminary proxy statement filed by the Company with
the Securities and Exchange Commission in May 1997. In
addition, the same document reports that as of May 16, 1997
there were outstanding 500,000 shares of Series C Stock (as
defined herein). All shares of Common Stock and Series C
Stock represent voting securities.
Except for 40,000, 80,000 and 100,000 shares of Common
Stock purchased by Messrs. Friedenberg, Phalen and Morgan,
respectively, in a private placement directly from the Company in
1994 or as otherwise set forth herein, all purchases of Common
Stock were made in open-market brokerage transactions. Appendix
B sets forth for each person making this filing and for all such
persons in the aggregate the number of shares of Common Stock
purchased and sold in the past 60 days, the dates of such
transactions and the purchase or sale price per share.
<PAGE>
Except as set forth below, each person making this
filing has the sole power to vote and dispose of the shares of
Common Stock owned of record by such person. No other person
making this filing shares with any other person the power to
direct the voting or disposition of the shares of Common Stock
deemed to be owned beneficially by such person.
With respect to the shares reported by Dr. Binder,
3,000 are owned personally, 7,400 are owned in a custodian
account for his son and 110,000 shares are owned by a pension
plan account for his benefit. Dr. Binder has sole voting and
dispositive power with respect to all of such holdings. The
shares held by Mr. Bulloch are held in his individual retirement
account. With respect to the shares reported by Mr. Locigno,
10,000 shares are held in an individual retirement account.
With respect to the shares reported by Mr. and Mrs.
Gibson, 15,000 shares are held jointly (shared voting and
dispositive power), 20,000 are held in an individual retirement
account for Mr. Gibson (sole voting and dispositive power) and
5,000 shares are held by Mr. Gibson (sole voting and dispositive
power). The 5,000 shares held by Mr. Gibson include 1,667 shares
of the Company's Series C Voting Convertible Preferred Stock, par
value $.10 per share ("Series C Stock").
With respect to the shares of Common Stock reported by
Mr. Friedenberg, such holding includes 13,333 shares of Series C
Stock. All shares of Common Stock and Series C Stock reported by
Mr. Friedenberg are held in private investment accounts over
which Mr. Friedenberg has the power to vote and dispose of such
shares.
With respect to the shares of Common Stock reported by
Mr. Love, all of such shares are held by Mr. Love under
investment advisory contracts with two clients pursuant to which
Mr. Love has the power to vote and dispose of such shares. With
respect to the shares of Common Stock reported by Mr. Morgan,
such holding includes 33,333 shares of Series C Stock. All
shares of Common Stock and Series C Stock reported by Mr. Morgan
are held in a hedge fund limited partnership pursuant to which
Mr. Morgan has the power to vote and dispose of such shares.
With respect to the shares reported by Mr. and Mrs.
Ting, 162,000 shares are beneficially owned by them jointly
(shared voting and dispositive power), 60,000 shares are
beneficially owned by Mr. Ting (sole voting and dispositive
power), and 3,000 shares are beneficially owned by Mrs. Ting
(sole voting and dispositive power). The shares of Common Stock
reported by Mr. and Mrs. Mahonski are owned jointly, with shared
voting and dispositive power over all of such shares.
<PAGE>
With respect to the shares reported by MH&A, MH&A is a
registered investment advisor that manages client funds on a
discretionary basis. Client and MH&A funds were used to purchase
the shares reported by MH&A, with MH&A possessing the sole voting
and dispositive power with respect to all such shares. The
shares of Common Stock reported by Mr. Friedenberg are owned by
Firebird Capital, a financial advisory firm, in investment
accounts for the benefit of clients with Mr. Friedenberg
possessing the sole voting and dispositive power with respect to
all such shares.
With respect to the shares reported by Mr. Wright,
70,000 shares result from direct purchases of shares from the
Company pursuant to the exercise of options to purchase Common
Stock. Mr. Wright also owns an option to acquire 100,000 shares
of Chantal Skin Care Corp., a subsidiary of the Company. Mr.
Phalen holds options to acquire 50,000 shares of Chantal Skin
Care Corp.
The shares of Common Stock reported by Mr. Miller are
owned by Mr. Miller and his wife as trustees for the benefit of
The Miller Trust. Mr. and Mrs. Miller have shared voting and
dispositive power over all of such shares. The shares of Common
Stock reported by Mr. McInnis are owned by The Patrick J. McInnis
Living Trust and Mr. McInnis is the sole trustee possessing sole
voting and dispositive power.
Except for the foregoing, none of the persons referred
to in this Item 5 beneficially owns any shares of Common Stock or
has or knows any other person who has the right to receive or the
power to direct the receipt of dividends from, or the proceeds
from the sale of, any shares of Common Stock owned beneficially
by any of the persons filing this Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
The persons making this filing have a general
understanding among themselves whereby they will consult with
each other before purchasing or disposing of any shares of Common
Stock. Except for such understanding none of the persons filing
this statement has any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect
to any securities of the Company, including but not limited to
any agreements concerning (i) transfer or voting of any
securities of the Company, (ii) finder's fees, (iii) joint
ventures, (iv) loan or option arrangements, (v) puts or calls,
(vi) guarantees of profits, (vi) division of profits or loss or
(viii) the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Joint Filing Agreement.
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person or
entity whose signature appears below constitutes and appoints
Peter Ting and Paul Locigno, and each of them, his or its true
and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or it and in his or its
name, place and stead, in any and all capacities, to sign any and
all amendments to this Statement on Schedule 13D and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully
to all intents and purposes as he or it might or could do in
person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their or his substitute or
substitutes may lawfully do or cause to be done by virtue
thereof.
After reasonable inquiry and to the best knowledge and
belief of each person or entity set forth below, each such person
or entity certifies that the information set forth in this
Statement is true, complete and correct.
Signature Date
/s/ Robert J. Binder June 7, 1997
--------------------------
Robert J. Binder
/s/ Brad Bulloch June 8, 1997
--------------------------
Brad Bulloch
Doran Capital Management, L.P.
By________________________ June __, 1997
/s/ Douglas S. Friedenberg June 10, 1997
--------------------------
Douglas S. Friedenberg
/s/ Kathleen Gibson June 7, 1997
--------------------------
Kathleen Gibson
/s/ William Gibson June 7, 1997
--------------------------
William Gibson
<PAGE>
/s/ David James June 9, 1997
--------------------------
David James
/s/ Paul R. Locigno June 7, 1997
--------------------------
Paul Robert Locigno
/s/ Richard J. Love June 9, 1997
--------------------------
Richard J. Love
/s/ Rick Mahonski June 7, 1997
--------------------------
Rick Mahonski
/s/ Diane Mahonski June 7, 1997
--------------------------
Diane Mahonski
/s/ Patrick J. McInnis June 9, 1997
--------------------------
Patrick J. McInnis
/s/ Howard Miller June 9, 1997
--------------------------
Howard Miller
MH & Associates Securities
Management Corporation
By /s/ John Z. Heilman June 6, 1997
------------------------
John Z. Heilman
/s/ E.C. Morgan June 9, 1997
--------------------------
E.C. Morgan
/s/ Francis T. Phalen June 6, 1997
--------------------------
Francis T. Phalen
/s/ Peter Ting June 6, 1997
--------------------------
Peter Ting
/s/ Margarette Ting June 6, 1997
--------------------------
Margarette Ting
/s/ Donald W. Wright June 5, 1997
--------------------------
Donald W. Wright
<PAGE>
Exhibit 1
JOINT FILING AGREEMENT
Each of the undersigned does hereby agree that the
Schedule 13D filed herewith and any amendments thereto relating
to the acquisition of shares of Common Stock, par value $.01 per
share, of Chantal Pharmaceutical Corporation, a Delaware
corporation, is filed jointly on behalf of each such person.
Signature Date
/s/ Robert Binder June 7, 1997
--------------------------
Robert Binder
/s/ Brad Bulloch June 8, 1997
---------------------------
Brad Bulloch
Doran Capital Management, L.P.
By /s/ Barbara Doran June 6, 1997
------------------------
/s/ Douglas S. Friedenberg June 10, 1997
---------------------------
Douglas S. Friedenberg
/s/ Kathleen Gibson June 7, 1997
---------------------------
Kathleen Gibson
/s/ William Gibson June 7, 1997
---------------------------
William Gibson
/s/ David James June 9, 1997
---------------------------
David James
/s/ Paul R. Locigno June 7, 1997
---------------------------
Paul Robert Locigno
/s/ Richard J. Love June 9, 1997
---------------------------
Richard J. Love
/s/ Howard Miller June 9, 1997
---------------------------
Howard Miller
/s/ Rick Mahonski June 7, 1997
---------------------------
Rick Mahonski
/s/ Diane Mahonski June 7, 1997
---------------------------
Diane Mahonski
/s/ Patrick J. McInnis June 9, 1997
---------------------------
Patrick J. McInnis
MH & Associates Securities
Management Corporation
By /s/ John Z. Heilman June 6, 1997
-------------------------
John Z. Heilman
/s/ E.C. Morgan June 9, 1997
---------------------------
E.C. Morgan
/s/ Francis T. Phalen June 6, 1997
---------------------------
Francis T. Phalen
/s/ Peter Ting June 6, 1997
---------------------------
Peter Ting
/s/ Margarette Ting June 6, 1997
---------------------------
Margarette Ting
/s/ Donald W.Wright June 5, 1997
---------------------------
Donald W. Wright
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and
belief of each person or entity set forth below, each such person
or entity certifies that the information set forth in this
Statement is true, complete and correct.
Signature Date
Doran Capital Management, L.P.
By: /s/ Barbara Doran June 6, 1997
--------------------------
Appendix A
1. Robert J. Binder
(a) Business Address Bay Imaging Consultants
Medical Group
2125 Ygnacio Valley Road
Suite 200-K
Walnut Creek, Ca 94598
(b) Principal Occupation Radiologist
2. Brad Bulloch
(a) Residence Address 69979 Meadow View Road
Sisters, Oregon 97759
(b) Principal Occupation Investor
3. Doran Capital Management, L.P.
(a) Business Address 237 Park Avenue
Suite 900
NY, NY 10017
(b) Principal Occupation Hedge fund
4. Douglas S. Friedenberg
(a) Business Address Firebird Capital
1775 Broadway, Suite 1410
NY, NY 10019
(b) Principal Occupation President
Firebird Capital
(financial advisory)
5. Kathleen P. and William T. Gibson
(a) Residence Address 109 La Plata
Santa Barbara, Ca 93109
(b) Principal Occupation Senior Investment Analyst
Cruttenden Roth
809 Presicio Ave
Santa Barbara, Ca 93101
6. David James
(a) Business Address P.O. Box 3372
Falls Church, Va 22043
(b) Principal Occupation Public Relations
<PAGE>
7. Paul R. Locigno
(a) Business Address Rollins International,
Limited
510 King Street
Suite 302
Alexandria, Va 22314
(b) Principal Occupation Business Consultant
8. Richard J. Love
(a) Business Address RJL Capital Management
804 Anacpia Street
Santa Barbara, Ca 93101
(b) Principal Occupation Investment Advisory
Services
9. Rick and Diane Mahonski
(a) Residence Address 543 Clinton
S Williamsport, Pa
17701-7501
(b) Principal Occupation Goldsmith
10. Patrick J. McInnis
(a) Residence Address 227 East 60th St
NY, NY 10022-1443
(b) Principal Occupation [Co-Owner]
David Duncan Antiques
227 East 60th Street
NY, NY 10022-1433
11. MH & Associates Securities Management Corporation
(a) Business Address 21031 Ventura Blvd.
Suite 307
Woodland Hills, Ca 91364
(b) Principal Employment see above
(registered investment
advisor)
12. Howard Miller
(a) Residence Address 13 Edgewater Road
Belvedere, Ca 94920
(b) Principal Occupation Retired
13. E.C. Morgan
(a) Residence Address 2106 Jackson Street, #8
San Francisco, Ca 94115
(b) Principal Occupation Morgan Capital Management
1 Embarcadero Center
Suite 2830
San Francisco, Ca 94111
(Hedge fund manager)
14. Francis T. Phalen
(a) Residence Address 19620 Superior St
Northridge, Ca 91324
(b) Principal Occupation Business Consultant
15. Peter and Margarette Ting
(a) Residence Address 3319 Greenmeadow Drive
Danville, Ca 94506
(b) Principal Occupation Investor
16. Donald W. Wright
(a) Residence Address 1680 Greenfield Drive
Reno, Nevada 89509
(b) Principal Occupation Business Consultant
<PAGE>
Appendix B
PURCHASES OF COMMON STOCK WITHIN PAST 60 DAYS*
Purchase
Stock Date of Price Per No. of Shares
Purchaser Purchase Share Purchased
--------- -------- --------- -------------
Doran 5/8/97 $1.02 20,000
James 5/6/97 $1.0625 2,000
5/15/97 $1.125 2,000
5/16/97 $1.0312 500
5/20/97 $.9687 2,000
5/22/97 $.9062 2,000
5/23/97 $.8593 2,000
Locigno 6/2/97 $.8125 10,000
MH&A 4/22/97 $1.43 3,000
Phalen 5/6/97 $1.08 2,500
5/6/97 $1.09 7,500
5/23/97 $1.21 10,000
5/28/97 $.84 5,000
Ting 5/30/97 $1.03 8,400
Total $76,900
=======
SALES OF COMMON STOCK WITHIN PAST 60 DAYS*
NO. OF
STOCK DATE OF SALE PRICE SHARES
SELLER SALE PER SHARE SOLD
------ ------- ---------- ------
Ting 6/2/97 $.97 1,400
________________________
* All transactions were made in open-market brokerage
transactions.