SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-----------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended December 31, 1995 .
-----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from __________________to __________________.
Commission file number 1-9169
BERNARD CHAUS, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 13-2807386
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
1410 Broadway, New York, New York 10018
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 354-1280
Former name, former address and former fiscal year, if changed since
last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days Yes X No ____.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Date Class Shares Outstanding
---- ----- ------------------
February 14, 1996 Common Stock, $0.01 par value 26,260,941
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) PAGE
Condensed Consolidated Balance Sheets as of
December 31, 1995, June 30, 1995 and
December 31, 1994 ....................................... 3
Condensed Consolidated Statements of Operations
for the Six Months and Quarters ended December 31,
1995 and 1994 ........................................... 4
Condensed Consolidated Statements of Cash Flows
for the Six Months ended December 31, 1995 and 1994 ..... 5
Notes to Condensed Consolidated Financial Statements .... 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 8 - 11
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders ................................................. 12 - 13
Item 6. Exhibits and Reports on Form 8-K ........................ 14
SIGNATURES ....................................................... 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
BERNARD CHAUS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
December 31, June 30, December 31,
1995 1995 (A) 1994
------------ -------- ------------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ..................................... $ 312 $ 418 $ 847
Accounts receivable, net ....................................... 19,401 7,646 9,747
Inventories .................................................... 22,491 16,203 14,983
Prepaid expenses and other current assets ...................... 1,015 1,523 1,413
-------- -------- --------
Total current assets ......................................... 43,219 25,790 26,990
Fixed assets - net .............................................. 2,023 2,392 3,205
Other assets .................................................... 526 478 537
-------- -------- --------
$ 45,768 $ 28,660 $ 30,732
======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Notes payable - banks ......................................... $ 17,077 $ 18,698 $ 11,943
Accounts payable .............................................. 20,940 12,922 9,726
Accrued expenses .............................................. 5,484 5,549 5,076
Accrued restructuring expenses ................................ 811 2,535 2,101
-------- -------- --------
Total current liabilities ................................... 44,312 39,704 28,846
Subordinated promissory notes ................................... 22,306 21,066 19,906
Accrued restructuring expenses .................................. -- 269 1,923
-------- -------- --------
66,618 61,039 50,675
STOCKHOLDERS' DEFICIENCY
Preferred stock, $.01 par value,
authorized shares -- 1,000,000;
outstanding shares -- none
Common stock, $.01 par value;
authorized shares -- 50,000,000; issued
shares -- 26,883,641 at December 31, 1995,
21,073,081 at June 30, 1995 and 20,934,531 at
December 31, 1994 ............................................ 269 211 209
Additional paid-in capital .................................... 65,110 49,353 47,734
Deficit ....................................................... (84,749) (80,463) (66,406)
Less: Treasury stock, at cost --
622,700 shares ............................................... (1,480) (1,480) (1,480)
-------- -------- --------
Total stockholders' deficiency ............................. (20,850) (32,379) (19,943)
-------- -------- --------
$ 45,768 $ 28,660 $ 30,732
======== ======== ========
</TABLE>
(A) The Balance Sheet at June 30, 1995 has been derived from the audited
financial statements at that date.
See accompanying notes to condensed consolidated
financial statements.
3
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED QUARTER ENDED
------------ -------------
December 31, December 31,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales .............................. $ 97,920 $ 111,938 $ 49,035 $ 46,547
Cost of goods sold ..................... 79,300 90,943 41,159 39,241
------------ ------------ ------------ ------------
Gross profit ........................... 18,620 20,995 7,876 7,306
Selling, general and administrative
expenses ............................. 19,677 23,147 9,913 10,947
Restructuring expenses ................. -- 1,200 -- --
Unusual expenses ....................... -- 7,833 -- --
------------ ------------ ------------ ------------
(1,057) (11,185) (2,037) (3,641)
Interest expense ....................... (3,128) (2,528) (1,709) (1,178)
Interest and other income (expense), net 50 8 (58) (27)
------------ ------------ ------------ ------------
Loss before provision for income taxes . (4,135) (13,705) (3,804) (4,846)
Provision for income taxes ............. 151 151 75 75
------------ ------------ ------------ ------------
Net loss ............................... ($4,286) ($13,856) ($3,879) ($4,921)
============ ============ ============ ============
Net loss per share ..................... ($.20) ($.71) ($.17) ($0.24)
============ ============ ============ ============
Weighted average number of common
shares outstanding ................... 21,735,000 19,509,000 23,010,000 20,300,000
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
4
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
------------
December 31,
1995 1994
---- ----
<S> <C> <C>
Operating Activities
Net loss .............................................. ($ 4,286) ($13,856)
Adjustments to reconcile net loss to net
cash (used in) and provided by operating activities:
Depreciation and amortization ....................... 575 672
Provision for losses on accounts receivable ......... 90 165
Non-cash interest expense ........................... 1,440 1,117
Changes in operating assets and liabilities:
Accounts receivable ................................ (11,845) 7,845
Inventories ........................................ (6,288) 10,520
Prepaid expenses and other assets .................. 460 2,194
Accounts payable ................................... 8,018 (4,429)
Accrued expenses ................................... (65) (1,634)
Accrued restructuring expenses ..................... (1,993) (55)
-------- --------
Net cash (used in) provided by operating activities ... (13,894) 2,539
Investing Activities
Purchases of fixed assets ........................... (206) (265)
-------- --------
Net cash used in investing activities ................. (206) (265)
-------- --------
Financing Activities
Net payments on short term bank borrowings .......... (1,621) (9,172)
Net proceeds from issuance of stock ................. 15,423 --
Principal payments on subordinated
promissory notes .................................. -- (250)
Proceeds from the issuance of promissory
notes ............................................. -- 7,527
Net proceeds from the exercise of options ........... 192 --
-------- --------
Net cash provided by (used in) financing activities ... 13,994 (1,895)
(Decrease) increase in cash and cash equivalents ...... (106) 379
Cash and cash equivalents, beginning of period ........ 418 468
-------- --------
Cash and cash equivalents, end of period .............. $ 312 $ 847
======== ========
Cash paid for:
Taxes ........................................ 11 5
Interest ..................................... 1,860 1,196
Supplemental schedule of non-cash financing activities:
Exchange of subordinated notes for
common stock ............................... -- 7,200
Issuance of warrants for credit support
by principal stockholders .................. 200 --
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
5
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Six Months Ended December 31, 1995 and December 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results in the
quarter ended December 31, 1995 are not necessarily indicative of the results
that may be expected for the year ending June 30, 1996 or any other period. For
further information, refer to the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended June 30,
1995.
Net Loss Per Share: Net loss per share has been computed by dividing the
applicable net loss by the weighted average number of common shares outstanding.
Common equivalent shares were not included as their inclusion would have been
antidilutive.
2. INVENTORIES
Inventories (principally finished goods) are stated at the lower of cost, using
the first-in first-out (FIFO) method, or market. Included in inventories is
merchandise in transit of approximately $8.9 million at December 31, 1995, $4.8
million at June 30, 1995 and $6.4 million at December 31, 1994.
3. FINANCIAL AGREEMENTS
An amended and restated financing agreement with BNY Financial Corporation
(BNYF), a wholly owned subsidiary of The Bank of New York, originally entered
into in July 1991, amended and restated effective as of February 21, 1995, and
further amended effective as of September 28, 1995 (the Amended Financing
Agreement), provides the Company with a $60 million credit facility for letters
of credit and direct borrowings, with a sublimit for loans and advances of $40
million. At December 31, 1995, the Company had availability of $10.2 million
including permitted overadvances of $0.2 million as permitted by the Amended
Financing Agreement. The amount of financing available is based upon a formula
incorporating eligible receivables and inventory, cash balances, other
collateral, and permitted overadvances, all as defined in the Amended Financing
Agreement. The Amended Financing Agreement is collateralized by substantially
all of the Company's assets, including accounts receivable and inventory.
Interest on direct borrowings is payable monthly at an annual rate equal to the
higher of (i) The Bank of New York's prime rate (8.50% at December 31, 1995)
plus 0.5% (The Bank of New York prime rate plus 1.5% in the event the Company's
overadvance position exceeds the allowable overadvances) or (ii) the Federal
6
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
Funds Rate in effect plus 1% (Federal Funds Rate plus 2% in the event the
Company's overadvance position exceeds the allowable overadvances). There is a
commitment fee of 0.375% of the unused portion of the line, payable monthly, and
letter of credit fees equal to 0.125% of the outstanding letter of credit
balance, payable monthly. The Amended Financing Agreement required the payment
of a due diligence and facility fee aggregating $0.6 million. In addition, the
Amended Financing Agreement provides for the payment of minimum service charges
of $0.6 million per annum. The Company may terminate the Amended Financing
Agreement upon 90 days' prior written notice at any time, subject to termination
fees. BNYF may terminate after February 21, 1998, upon 60 days' written notice
to the Company.
The Amended Financing Agreement contains covenants relative to minimum levels of
working capital and net worth and a cap on personal property leases. The Company
is also prohibited from declaring or paying dividends, or making other
distributions on its capital stock, with certain exceptions.
4. SUBORDINATED PROMISSORY NOTES
The Company had outstanding at December 31, 1995, $22.3 million of subordinated
promissory notes payable to Josephine Chaus, certain of which were originally
issued on June 30, 1986 and the remainder of which were issued in February and
March 1991 (the Subordinated Notes). The Company has been prohibited from making
payments of principal or interest on the Subordinated Notes since 1993 (with the
exception of principal payments of approximately $0.5 million, $0.3 million and
$0.3 million in November 1993, February 1994 and August 1994, respectively) as a
result of restrictive covenants under the Amended Financing Agreement. In
connection with the public offering (see Note 6), Ms. Chaus extended the
maturity date of the Subordinated Notes (which were to mature on July 1, 1996)
to July 1, 1998.
5. RESTRUCTURING AND UNUSUAL EXPENSES
During the first quarter of fiscal 1995, the Company recorded unusual expenses
of $7.8 million, primarily related to costs associated with the signing of the
Company's new Chief Executive Officer, and $1.2 million in restructuring
expenses related to employee severance.
6. COMMON STOCK OFFERING
On November 22, 1995, pursuant to a Registration Statement on Form S-2 filed on
October 10, 1995, the Company issued 5,750,000 shares of Common Stock at a price
of $3.00 per share in an underwritten public offering. Proceeds from the
offering, net of commissions and other expenses totaling $1.8 million, were
$15.4 million.
7
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Operating results for the quarter ended December 31, 1995 are not necessarily
indicative of the results that may be expected for the year ending June 30, 1996
or any other period.
For the six months ended December 31, 1995, net sales decreased by $14.0 million
or 12.5% compared to the six months ended December 31, 1994. This sales decrease
resulted primarily from unit volume decline and increased sales incentive
discounts, offset somewhat by increased standard selling prices. The increase in
gross profit, as a percentage of net sales, was attributable to a decrease in
promotional allowances and higher standard selling prices, partially offset by
higher sales incentive discounts.
In the quarter ended December 31, 1995, net sales and gross profit as a
percentage of sales both improved over the prior year with net sales of $49.0
million and margin of 16.1% in December 1995 versus net sales of $46.5 million
and margin of 15.7% at December 1994. The increases in net sales, resulting from
increased selling prices and decreased promotional allowances, were offset
somewhat by unit volume decreases and increased sales incentive discounts.
Although improved over the prior year, the quarter ended December 31, 1995 was
effected by deteriorating market conditions which negatively impacted regular
price sales.
Selling, general and administrative expenses for the six months ended December
31, 1995 decreased by $3.5 million (or 15%) as compared with the six months
ended December 31, 1994. Selling, general and administrative expenses as a
percentage of net sales decreased from 20.7% of net sales for the six months
ended December 31, 1994 to 20.1% of net sales for the six months ended
December 31, 1995. This decrease was primarily attributable to the
implementation of cost reduction programs under a corporate restructuring
program. Payroll and related costs accounted for approximately 40% of this
decrease. Other areas with significant decreases included rent, commissions,
professional fees, freight and supplies.
At December 31, 1995, the Company had restructuring reserves of $0.8 million
reflecting a reduction in the reserve balance for the six months of
approximately $2.0 million. Charges to the reserve over the six month period
related to outlet store closings ($0.4 million), consolidation of office and
warehouse space ($1.1 million), and severance related costs ($0.5). The
remaining restructuring reserve balance is related to consolidation of office
and warehouse space ($0.5) and outlet store closings ($0.3). During the first
quarter of fiscal 1995, the Company recorded unusual expenses of $7.8 million,
primarily related to costs associated with the signing of the Company's new
Chief Executive Officer, and $1.2 million in restructuring expenses related to
employee severance.
Interest expense for the six months and for the quarter ended December 31, 1995
increased as compared with the comparable periods of the prior fiscal year,
primarily due to higher average bank borrowings at higher rates and the
recording of a non-cash charge of $0.2 million in the second quarter for
the warrants issued for credit support received from its principal stockholder.
See "- Financial Position, Liquidity and Capital Resources".
8
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
Financial Position, Liquidity and Capital Resources
General
Net cash used in operating activities was $13.9 million for the six months ended
December 31, 1995, as compared to cash provided by operating activities of $2.5
million for the six months ended December 31, 1994. The net cash used in
operating activities for the six months ended December 31, 1995 resulted
primarily from the net loss of $4.3 million inclusive of $2.0 million non-cash
charges, increases in accounts receivable of $11.8 million, increases in
inventory of $6.3 million and decreases in accrued restructuring expenses of
$2.0 million, offset by higher levels of accounts payable of $8.0 million. The
increase in inventory levels from December 31, 1994 to December 31, 1995
resulted from the combination of the Spring I and Spring II seasons into one
Spring season; inventory was produced and received earlier compared to last
year. The increase in receivable levels from December 31, 1994 to December 31,
1995 reflects lower reserves required due to lower promotional allowances and,
to a lesser extent, earlier Spring shipping.
Amended Financing Agreement
The Company and BNY Financial Corporation ("BNYF") entered into a financing
agreement in July 1991, which was amended and restated effective as of February
21, 1995, and further amended effective as of September 28, 1995 (the "Amended
Financing Agreement"). The September 28, 1995 amendment to the Amended Financing
Agreement is sometimes referred to herein as the "September Amendment." The
Amended Financing Agreement provides the Company with a $60 million credit
facility for letters of credit and direct borrowings, with a sublimit for loans
and advances of $40 million. The amount of financing available is based upon a
formula incorporating eligible receivables and inventory, cash balances, other
collateral, and permitted overadvances, all as defined in the Amended Financing
Agreement. At December 31, 1995, the Company had availability of approximately
$10.2 million under the Amended Financing Agreement, including permitted
overadvances up to of $0.2 million. The Amended Financing Agreement is
collateralized by substantially all of the Company's assets, including accounts
receivable and inventory.
Credit Support
Josephine Chaus has arranged for a letter of credit (the "Letter of Credit") in
various amounts since April 1994 in return for which BNYF has increased the
availability under the Amended Financing Agreement. As part of the negotiations
with BNYF in connection with the Amended Financing Agreement, in February 1995
Josephine Chaus increased the Letter of Credit to $10.0 million and extended its
term until October 31, 1995 (the "February Increase/Extension"). In September
1995, Ms. Chaus further extended the term of the Letter of Credit to January 31,
1996 (the "September Extension"). Subsequently, in connection with the September
Amendment, Ms. Chaus provided the Company with an option to further extend the
Letter of Credit to July 31, 1996 (the "July Option"), subject to the
consummation of the Company's public common stock offering (see "-- Nautica
License
9
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
Agreement/Future Financing Requirements"). In January 1996, the Company
exercised the July Option to extend the Letter of Credit to July 31, 1996 (the
"July Extension"). In addition, in February 1995, Ms. Chaus provided a $5.0
million personal guarantee (the "Guarantee"), to be in effect during the Amended
Financing Agreement's three-year term.
In consideration of the February Increase/Extension, the Guarantee and the
September Extension, a special committee consisting of disinterested members of
the Board of Directors of the Company (the "Special Committee") authorized the
issuance, subject to approval of the stockholders of the Company at its November
15, 1995 Annual Meeting of Stockholders, of warrants to purchase an aggregate of
1,580,000 shares of Common Stock at prices ranging between $4.05 and $6.75 per
share. The issuance of such warrants was approved at the 1995 Annual Meeting of
Stockholders. Ms. Chaus received warrant compensation for her provision of the
Guarantee only through October 31, 1995. Thereafter, for each three month period
of the Guarantee, she will receive cash compensation of $50,000. The issuance of
the warrants for the September Extension was recorded in the second quarter of
fiscal 1996 at a value of $0.2 million included as a charge to interest expense
with a corresponding increase to additional paid-in capital. In consideration of
the July Extension, the Special Committee authorized the issuance, subject to
approval of the stockholders of the Company at its 1996 Annual Meeting of
Stockholders and receipt of a letter of a nationally recognized investment
banking firm as to the commercial reasonableness thereof, of warrants to
purchase an aggregate of 682,012 shares of Common Stock at a price of $4.20 per
share.
Issuance of Stock in Exchange for Debt
In September 1994, Josephine Chaus loaned $7.2 million to the Company in
exchange for subordinated promissory notes bearing interest at 12% per annum.
Proceeds of such cash infusion were used for costs and associated expenses
related to the signing of the Company's new Chief Executive Officer. In November
1994, upon the request of the Special Committee, in order to provide additional
equity to the Company, to enhance the Company's balance sheet and to accommodate
BNYF, Josephine Chaus exchanged such subordinated promissory notes, including
accrued interest thereon of $0.2 million, for 1,914,500 shares of the Company's
Common Stock (based upon a purchase price of $3.85 per share).
Subordinated Debt
The Company had outstanding at December 31, 1995, $22.3 million of subordinated
notes payable to Josephine Chaus (the "Subordinated Notes"). In connection with
the Company's public offering (see "--Nautica License Agreement/Future Financing
Requirements"), Josephine Chaus extended the maturity date of the Subordinated
Notes (which were to mature on July 1, 1996) to July 1, 1998. The Company has
been unable to pay principal or interest, with certain exceptions, under the
Subordinated Notes as a result of covenants in the Amended Financing Agreement.
See Notes 3 and 4 to Notes to the Company's Condensed Consolidated Financial
Statements.
10
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
Nautica License Agreement/Future Financing Requirements
In September 1995, the Company entered into a license agreement (the "Nautica
License Agreement") with Nautica Apparel Inc. ("Nautica"), pursuant to which the
Company will arrange for the manufacture of, market, distribute and sell a new
women's career and casual sportswear line under the Nautica name. The Nautica
License Agreement runs through December 31, 1999 and was contingent upon the
Company raising a minimum of $10.0 million in equity capital by December 31,
1995. Additionally, the Company is required to devote at least $7.0 million to
the fulfillment of the Company's obligations under the Nautica License
Agreement, including related capital expenditures. The Company's obligations
also include minimum royalty and advertising payments and the construction of a
separate showroom for the display of the Company's licensed Nautica products.
On November 22, 1995, the Company consummated an underwritten public offering of
5,750,000 shares of Common Stock at a price of $3.00 per share. Net proceeds,
after expenses and commissions of $1.8 million, were $15.4 million. The Company
intends to use approximately $7.0 million of the net proceeds from the offering
to develop and market the Company's licensed Nautica product line, and the
remaining net proceeds to provide working capital to support the growth of the
Company's existing product lines. Pending such uses, the proceeds were used to
reduce the outstanding balance under the Amended Financing Agreement (see Note 3
to Notes to the Company's Condensed Consolidated Financial Statements). Since
it is a revolving credit facility, any amounts repaid will be available to be
reborrowed, subject to the borrowing formula in the Amended Financing Agreement.
At December 31, 1995, the Company had a working capital deficiency of $1.1
million. The Company requires the availability of sufficient cash flow and
borrowing capacity to finance its existing product lines and to develop and
market its licensed Nautica product lines. The Company expects to satisfy such
requirements through cash flow from operations, its line of credit under the
Amended Financing Agreement, and, in the near term, continued credit support
from Josephine Chaus.
The Company will seek to satisfy its operating requirements without utilizing
continued credit support from Ms. Chaus, although there can be no assurance that
it will be successful in doing so. The Company has no understanding with Ms.
Chaus pursuant to which Ms. Chaus would extend the Letter of Credit beyond July
31, 1996. In addition, although BNYF historically has waived compliance with
certain covenants and permitted certain overadvances and has, pursuant to the
September Amendment, agreed to relax such covenants and permit specified levels
of overadvances through June 30, 1996, there can be no assurance that it will
continue to do so in the future. Moreover, growth of the Company's existing
product lines and/or the development of the Company's licensed Nautica product
line could increase the amount of the potential shortfall in borrowing
availability after the current fiscal year.
11
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Stockholders was held on November 15,
1995.
(b) The directors of the Company elected at the Annual Meeting of
Stockholders held on November 15, 1995, were as follows: Josephine Chaus, Andrew
Grossman, S. Lee Kling, Harvey M. Krueger and Philip G. Barach. The term of
office of the directors is until the next Annual Meeting of Stockholders and
until their respective successors have been elected and qualified.
(c) The matters voted upon at the Annual Meeting of Stockholders and the
number of votes cast with respect to each such matter were as follows:
Matter: Approval of the issuance of warrants to Josephine Chaus.
Affirmative Votes Negative Votes Abstain
----------------- -------------- -------
16,368,167 82,169 30,166
Matter: Ratification of loan to Richard Baker.
Affirmative Votes Negative Votes Abstain
----------------- -------------- -------
16,223,670 226,299 30,533
Matter: Approval of Stock Option Plan Amendment.
Affirmative Votes Negative Votes Abstain
----------------- -------------- -------
16,142,099 299,927 38,476
Matter: Amendment to Company's Certificate of Incorporation to eliminate
Preemptive Rights.
Affirmative Votes Negative Votes Abstain
----------------- -------------- -------
16,286,728 150,047 43,727
12
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
Item 4. Continued
Matter: Election of Directors.
Affirmative Votes Abstain
----------------- -------
Josephine Chaus ...... 18,689,648 54,280
Andrew Grossman ...... 18,689,648 54,280
S. Lee Kling ......... 18,685,098 58,830
Harvey M. Krueger..... 18,690,498 53,430
Philip G. Barach...... 18,690,398 53,530
Matter: Ratification of Deloitte & Touche, LLP as auditors of the Company to
serve for the fiscal year ending June 30, 1996.
Affirmative Votes Negative Votes Abstain
----------------- -------------- -------
18,689,590 21,250 33,058
13
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K.
(a) Attached hereto as Exhibits are the following:
<TABLE>
<CAPTION>
<C> <S>
10.68 Employment Agreement dated December 14, 1996
between the Company and Michael Winter.
10.69 Agreement dated November 15, 1995 between the
Company and Josephine Chaus issuing 815,000
warrants to purchase Common Stock of the Company.
10.70 Agreement dated November 15, 1995 between the
Company and Josephine Chaus issuing 535,000
warrants to purchase Common Stock of the Company.
10.71 Agreement dated November 15, 1995 between the
Company and Josephine Chaus issuing 230,000
warrants to purchase Common Stock of the Company.
10.72 Amendment Number 5 to the 1986 Stock Option Plan
as amended (incorporated by reference to the
Company's Proxy Statement for its 1995 Annual
Meeting of Stockholders).
27 Financial Data Schedule.
</TABLE>
(b) The Company filed no reports on Form 8-K during the quarter
ended December 31, 1995.
14
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BERNARD CHAUS, INC.
(Registrant)
Date: February 14, 1996 By: /s/Josephine Chaus
------------------
JOSEPHINE CHAUS
Chairwoman of the Board and
Office of the Chairman
Date: February 14, 1996 By: /s/Andrew Grossman
------------------
ANDREW GROSSMAN
Chief Executive Officer and
Office of the Chairman
Date: February 14, 1996 By: /s/Wayne S. Miller
------------------
WAYNE S. MILLER
Executive Vice President -
Finance and Administration and
Chief Financial Officer
15
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Number Description Page
- -------------- ----------- ----
<C> <S> <C>
10.68 Employment Agreement dated December 14,
1996 between the Company and Michael Winter.
10.69 Agreement dated November 15, 1995 between the
Company and Josephine Chaus issuing 815,000
warrants to purchase Common Stock of the Company.
10.70 Agreement dated November 15, 1995 between the
Company and Josephine Chaus issuing 535,000
warrants to purchase Common Stock of the Company.
10.71 Agreement dated November 15, 1995 between
the Company and Josephine Chaus issuing 230,000
warrants to purchase Common Stock of the Company.
10.72 Amendment Number 5 to the 1986 Stock Option
Plan as amended (incorporated by reference to the
Company's Proxy Statement for its 1995 Annual
Meeting of Stockholders).
27 Financial Data Schedule.
</TABLE>
16
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated the 14th day of December, 1995, by and
between BERNARD CHAUS, INC., a New York corporation (the "Company"), and
MICHAEL WINTER (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee and to
enter into an agreement (the "Agreement") embodying the terms of such
employment; and
WHEREAS, the Employee desires to accept such employment with
the Company and to enter into the Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Company and the
Employee hereby agree as follows:
1. Employment.
The Company hereby agrees to employ the Employee, and the
Employee hereby agrees to accept employment with the Company, for the Term (as
defined in Section 2 below), in the position, and with the duties and
responsibilities set forth in Section 3 below, and upon the other terms and
conditions hereinafter stated.
- 1 -
<PAGE>
2. Term.
The initial term of the Agreement shall commence on January
1, 1996 and shall continue through December 31, 1999; provided, however, that
the Agreement at all times shall be subject to earlier termination in
accordance with the provisions hereof (the "Term").
3. Position, Duties, Responsibilities.
3.1 Appointment as President - Nautica Division.
(a) During the Term, the Employee shall serve,
and the Company shall employ Employee, as President - Nautica Division with
principal supervisory responsibility over the merchandising, marketing and
sales of the Nautica Division of the Company. The Employee shall be
responsible for the duties attendant to such office, and such other duties
and responsibilities with the Company or its subsidiaries or other divisions,
consistent with such office, as may be assigned to the Employee by the Chief
Executive Officer of the Company (the "Chief Executive Officer"). The Employee
shall report directly to the Chief Executive Officer.
(b) During the Term, the Employee shall devote his full working
time, attention and energies, to the best of his ability, experience and
talent, to the business and affairs of the Company, and shall use his best
efforts to promote the best interests of the Company. Without limiting the
generality of the foregoing, the Employee shall perform such duties and
responsibilities as may be assigned to him by the Chief Executive Officer
consistent with the Employee's positions as President - Nautica Division.
Nothing in the Agreement shall preclude the Employee from engaging in
charitable and community affairs, or giving
- 2 -
<PAGE>
attention to his passive personal investments; provided, that such activities,
in the reasonable judgment of the Chief Executive Officer, do not interfere
with the regular performance of the Employee's duties and responsibilities
under the Agreement; provided, further, that without the prior approval of the
Chief Executive Officer, which approval shall not unreasonably be withheld,
(i) no such investment (other than an investment in real estate) may exceed
two percent (2%) of any class or series of equity securities of any entity and
(ii) the Employee may not serve as a member of the board of directors or as a
trustee of any other company, association or entity.
3.2 Place of Performance.
During the Term, the Employee shall perform his services at
the principal place of business of the Company, at which place he shall be
furnished with office facilities suitable to his position and the performance
of his duties and responsibilities. Notwith-standing the foregoing, the
Employee acknowledges that in fulfillment of his duties and responsibilities
hereunder he may be required to travel on behalf of the Company. The Employee
shall be entitled to first class seating on all cross-country and overseas
flights taken by him in carrying out his duties and responsibilities
hereunder, and to business class (or, if unavailable, coach) seating on all
other flights taken by him in carrying out such duties and responsibilities.
3.3 Representation.
In order to induce the Company to enter into the Agreement on the terms
and conditions set forth herein, the Employee hereby represents and warrants
to the Company that his execution of the Agreement and the performance of his
duties and responsibilities
- 3 -
<PAGE>
hereunder will not violate or result in a breach of, or in any manner be
prohibited or restricted by, the terms of any agreement, arrangement,
understanding (written or otherwise), order or decree to which he is a party
or by which he is bound.
4. Compensation.
4.1 Salary.
The Company hereby agrees to pay to the Employee, and the Employee
hereby agrees to accept, as cash compensation for all services rendered during
the term of the Agreement, a base salary (the "Base Salary") at the rate of
$500,000 per annum, payable in equal monthly installments.
4.2 Annual Cash Bonus.
In addition to the Base Salary provided in clause 4.1 above, the Board of
Directors of the Company (the "Board") shall, for each fiscal year during the
Term, consider whether the Employee shall receive a discretionary bonus based
upon his performance. For the period from the commencement of employment
through June 30, 1996, there shall be no numerate targets for the bonus. On or
about the commencement of each fiscal year of the Company during the Term,
beginning with the 1997 fiscal year (i.e., July 1, 1996 to June 30, 1997), the
Compensation Committee of the Board shall establish numerate targets for at
least a portion of the potential bonus amount available to the Employee for
that fiscal year.
- 4 -
<PAGE>
4.3 Stock Options.
On the date of commencement of employment pursuant to this
Agreement, or as soon as practicable thereafter, the Employee shall be awarded
non-incentive stock options ("Stock Options") under the Company's 1986 Stock
Option Plan, as amended (the "Stock Option Plan"), to purchase 500,000 shares
of common stock, par value $.01 per share ("Common Stock"), of the Company
(subject to the vesting provisions described below and the accelerated vesting
provisions described in clauses 9.2(a) and (b) below, but otherwise in
accordance with the terms of the Stock Option Plan). The per share exercise of
each such Stock Option shall be equal to the closing price of the Common Stock
on the date of the award thereof. The aforementioned award of Stock Options
shall vest over a five (5) year period at the rate of 125,000 Stock Options
per year commencing on the first anniversary of the date of the award thereof.
The award shall provide that each vested Stock Option shall be exercisable for
a period of ten (10) years from the date of the award thereof, provided,
however, that in the event of the termination of employment of the Employee
for any reason, the Employee shall have a thirty (30) day period from the date
of such termination within which to exercise any vested Stock Options (taking
into account the accelerated vesting provisions described in clauses 9.2(a)
and (b) below), and any Stock Options that had not vested as of such
termination date shall be forfeited.
- 5 -
<PAGE>
5. Employee Benefits.
5.1 Employee Benefit Programs and Plans.
During the Term, the Employee will be entitled to participate
in all benefit programs and plans now or hereafter made available by the Company
to its senior executive officers generally, which currently include disability
insurance, life insurance and participation in the Company's 401(K) plan. In
addition, during the Term, the Employee and his spouse and children of
minority age will be entitled to receive major medical coverage on the same
terms as is provided by the Company to its other senior executive officers.
5.2 Vacations.
The Employee shall be entitled to four (4) weeks paid vacation
in each year, such vacation to be taken at such time or times as are consistent
with the requirements of the business of the Company and the Nautica Division
and the performance of the Employee's duties and responsibilities hereunder.
Unused vacation time may not be accumulated and carried forward to a
subsequent year.
6. Expense Reimbursement and Perquisites.
6.1 Out-of-Pocket Expenses.
During the Term, the Company shall reimburse the Employee for
all reasonable, out-of-pocket, expenses incurred by him (in accordance with the
policies and procedures established by the Company for its senior executive
officers) in carrying out his duties and responsibilities hereunder; provided,
that the Employee presents appropriately itemized accounts of, and receipts
for, such expenditures.
- 6 -
<PAGE>
6.2 Relocation Expenses.
(a) Subject to the provisions of this subsection (a), the
Company shall reimburse the Employee for his reasonable moving expenses incurred
in connection with the relocation of his residence from Los Angeles, California
to the New York City metropolitan area. The Employee shall be required to
obtain estimates from two moving companies regarding the cost of moving from
Los Angeles, California to the New York City metropolitan area. The Employee
shall select the moving company with the lower of the two estimates. In the
event the estimate of such moving company is in excess of $25,000, the
Employee shall obtain authorization from the Company prior to engaging such
moving company.
(b) The Company shall reimburse the Employee for two round
trip airline tickets (business class) between Los Angeles, California and New
York City for his spouse, in connection with their search for a residence in the
New York City metropolitan area. In addition, the Company shall reimburse the
Employee for one airline ticket (business class) from Los Angeles, California
to New York City for each of himself and his spouse and children in connection
with their relocation to the New York City metropolitan area.
(c) Until the Employee is able to locate a residence in
the New York City metropolitan area, but not beyond May 31, 1996, the Company
shall reimburse the Employee for the rental costs of a temporary residence in
the New York City metropolitan area, in an amount not to exceed $2,500 per
month. During the period prior to the move to the New York City metropolitan
area by the Employee's spouse and children, but not beyond
- 7 -
<PAGE>
May 31, 1996, the Company shall reimburse the Employee for one round trip
airline ticket (business class) per month between Los Angeles, California and
the New York City metropolitan area.
6.3 Automobile.
During the Term, the Company shall reimburse the Employee for the
cost of leasing an automobile selected by the Employee and purchasing
insurance for the automobile and for the reasonable cost of a garage for, and
maintenance on, the automobile; provided, that the Company shall not be
required to reimburse the Employee in excess of $1,250 per month to lease such
automobile and for the related expenses enumerated above. The Employee shall
be entitled to account to the Company for the portion of the foregoing
expenses that constitute business-related expenses; and, to the extent
consistent with the rules and regulations promulgated by the Internal Revenue
Service, such portion of the foregoing expenses that constitute
business-related expenses shall not be subject to withholding taxes.
7. Death or Disability of Employee.
7.1 Death.
In the event of the death of the Employee during the Term, the
Agreement automatically shall be terminated. Base Salary shall be paid to the
Employee's designated beneficiary, or, in the absence of such designation, to
the estate or other legal representative of the Employee for the month in
which death occurs. The Employee shall be entitled to other death benefits in
accordance with the terms of the Company's benefit programs and plans.
- 8 -
<PAGE>
7.2 Disability.
In the event of the Disability (as herein defined) of the Employee
during the Term, the Agreement automatically shall be terminated. Base Salary
shall be paid to the Employee for the month in which Disability occurs and for a
period of six (6) months thereafter (less any Disability compensation which
the Employee receives in accordance with the Company's benefit programs and
plans). The Employee shall be entitled to other Disability compensation in
accordance with the Company's benefit programs and plans. "Disability," for
purposes of the Agreement, shall mean that the Employee has failed as a result
of his illness, physical or mental disability or other incapacity, for a
period of ninety (90) consecutive days or two hundred seventy (270) days
during the Term to render the services provided in the Agreement, or has been
adjudicated an incompetent.
8. Termination by the Company for Due Cause.
Nothing herein shall prevent the Company from terminating the
Employee's employment for Due Cause (as herein defined). Upon such
termination, the Employee shall continue to receive salary only for the period
ending with the date of such termination, and the obligation of the Company to
make any further payments (or to provide any benefits specified herein) to the
Employee shall thereupon cease and terminate. The term "Due Cause", as used
herein, shall mean (a) the Employee's willful misconduct or gross negligence
in the performance of his duties on behalf of the Company, or the Employee's
material dishonesty in the performance of his duties on behalf of the Company,
(b) the material breach of any provision of the Agreement by the Employee
(including, without
- 9 -
<PAGE>
limitation, the breach of his representation in clause 3.3 above) or (c) the
entering of a plea of guilty or nolo contendere to, or the Employee's
conviction of, a felony or other crime involving moral turpitude, dishonesty,
theft or unethical business conduct. Termination of employment pursuant to
this Section 8 shall be made by delivery to the Employee of a copy of a letter
from the Chief Executive Officer setting forth the particulars of the conduct
which provides the basis for a termination of the Employee for Due Cause.
9. Termination Other than for Due Cause.
9.1 Termination.
The Agreement may be terminated (a) by the Company (in
addition to termination pursuant to Sections 7 or 8) at any time and for any
reason, (b) by the Employee for Good Reason (as defined below), or (c) upon the
expiration of the Term. "Good Reason" shall mean the Company shall have breached
the provisions of clause 3.1(a) of the Agreement (except that the termination of
the Employee's employment by the Company for Due Cause or as a result of death
or Disability of the Employee or by the Employee other than for Good Reason
shall not be deemed a breach by the Company of the provisions of clause 3.1(a)
of the Agreement).
9.2 Severance and Non-Competition Payments.
(a) If the Agreement is terminated (i) by the Company
other than as a result of death or Disability of the Employee or for Due Cause
(and other than in connection with a change in control (as herein defined) of
the Company) or (ii) by the Employee for Good Reason (other than in connection
with a change in control of the Company), then the Company
- 10 -
<PAGE>
shall pay the Employee a severance and non-competition payment equal to the
Base Salary in effect at the time of termination for a period equal to the
lesser of (x) the remainder of the Term and (y) twelve (12) months; provided,
however, that if more then two (2) years is remaining in the Term at the time
of termination, such payment shall be for a period equal to fifty percent
(50%) of the remainder of the Term. Such severance and non-competition payment
shall be paid in equal monthly installments over such twelve (12) month or
other period, as the case may be, commencing on the first day of the month
following termination. In addition, all Stock Options which otherwise would
have vested at the anniversary of the Agreement immediately following such
termination shall be deemed to have vested on the date of such termination.
(b) In the event that, following a change in control of the Company,
the Agreement is terminated (i) by the Company other than as a result of death
or Disability of the Employee or for Due Cause or (ii) by the Employee For
Good Reason, then the Company shall pay the Employee a severance and
non-competition payment equal to the Base Salary in effect at the time of
termination for a period equal to the lesser of (x) twenty-four (24) months
and (y) the remainder of the Term. Such severance and non-competition payment
shall be paid in equal monthly installments over such twenty-four (24) month
or lesser period, as the case may be, commencing on the first day of the month
following termination. In addition, all Stock Options which have not yet
vested shall be deemed to have vested on the date of such termination. A
"change in control" of the Company shall be deemed to have occurred if (x) any
person or group shall have acquired beneficial ownership (as such terms are
defined under
- 11 -
<PAGE>
the rules and regulations adopted under the Securities Exchange Act of 1934,
as amended) of a percentage of voting securities of the Company which exceeds
the percentage of voting securities beneficially owned by Josephine Chaus (the
principal stockholder of the Company), at the time of acquisition by such
person or group, and (y) in connection with such acquisition, there shall have
occurred a change in the constituency of a majority of the Board.
(c) The Employee shall not be required to mitigate the amount of any
severance and non-competition payment provided for under the Agreement by
seeking other employment (which may include self-employment) or otherwise.
After the termination of the Agreement, however, any severance and
non-competition payments due to the Employee from the Company hereunder shall
be reduced by an amount equal to 50% of all amounts received by the Employee
in connection with any other employment (including self-employment).
10. Confidential Information.
(a) The Employee agrees not to use, disclose or make accessible to
any other person, firm, partnership, corporation or any other entity any
Confidential Information (as herein defined) pertaining to the business of the
Company except (i) while employed by the Company, in the business of and for
the benefit of the Company or (ii) when required to do so by a court of
competent jurisdiction, by any governmental agency having supervisory
authority over the business of the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to order
the Company to divulge, disclose or make accessible such information. For
purposes of the Agreement, "Confidential Information" shall mean non-public
information concerning the Company's
- 12 -
<PAGE>
financial data, statistical data, strategic business plans, product
development (or other proprietary product data), customer and supplier
information, information relating to governmental relations, discoveries,
practices, processes, methods, trade secrets, marketing plans and other
non-public, proprietary and confidential information of the Company, that, in
any case, is not otherwise generally available to the public and has not been
disclosed by the Company to others not subject to confidentiality agreements.
In the event that the Employee's employment is terminated hereunder for any
reason, he immediately shall return to the Company all Confidential
Information in his possession.
(b) The Employee and the Company agree that this covenant
regarding confidential information is a reasonable covenant under the
circumstances, and further agree that if, in the opinion of any court of
competent jurisdiction, such covenant is not reasonable in any respect, such
court shall have the right, power and authority to excise or modify such
provision or provisions of this covenant as to the court shall appear not
reasonable and to enforce the remainder of the covenant as so amended. The
Employee agrees that any breach of the covenant contained in this Section 10
would irreparably injure the Company. Accordingly, the Employee agrees that
the Company, in addition to pursuing any other remedies it may have in law or
in equity, may obtain an injunction against the Employee from any court having
jurisdiction over the matter, restraining any further violation of this
Section 10.
(c) The provisions of this Section 10 shall survive the
termination of the Agreement.
- 13 -
<PAGE>
11. Non-Competition; Non-Solicitation.
(a) The Employee agrees that during the Term and for a period of
twelve (12) months thereafter (herein referred to as the "Non-Competition
Period"), without the prior written consent of the Company: (I) he shall not,
directly or indirectly, either as principal, manager, agent, consultant,
officer, director, greater than two percent (2%) holder of any class or series
of equity securities, partner, investor, lender or employee or in any other
capacity, carry on, be engaged in or have any financial interest in or
otherwise be connected with, any entity which is now or at the time, engaged
in any business activity competitive (directly or indirectly) with the
business of the Company including, for these purposes, any business in which,
at the termination of his employment, there was a bona fide intention on the
part of the Company to engage in the future; and (ii) he shall not, on behalf
of any such competing entity, directly or indirectly, have any dealings or
contact with any suppliers or customers of the Company. All severance and
non-competition payments pursuant to Section 9 shall be in consideration of
the Employee's agreement not to compete with the Company; it being understood,
however, that the Employee will have no obligations under this Section 11(a)
if following the termination of his employment for any reason the Employee is
not receiving or is not entitled to severance and non-competition payments
under Section 9.
(b) During the Term and during the Non-Competition Period, the
Employee agrees that, without the prior written consent of the Company (and
other than on behalf of the Company), the Employee shall not, on his own
behalf or on behalf of any person or entity, directly or indirectly, hire or
solicit the employment of any employee who has been
- 14 -
<PAGE>
employed by the Company at any time during the one (1) year period immediately
preceding such date of hiring or solicitation by the Employee. The restrictive
covenant contained in this Section 11(b) shall not apply to the hiring by the
Employee of his personal assistant.
(c) The Employee and the Company agree that the covenants of
non-competition and non-solicitation are reasonable covenants under the
circumstances, and further agree that if, in the opinion of any court of
competent jurisdiction such covenants are not reasonable in any respect, such
court shall have the right, power and authority to excise or modify such
provision or provisions of these covenants as to the court shall appear not
reasonable and to enforce the remainder of these covenants as so amended. The
Employee agrees that any breach of the covenants contained in this Section 11
would irreparably injure the Company. Accordingly, the Employee agrees that
the Company, in addition to pursuing any other remedies it may have in law or
in equity, may obtain an injunction against the Employee from any court having
jurisdiction over the matter restraining any further violation of this Section
11.
(d) The provisions of this Section 11 shall survive the
termination of the Agreement.
12. Notices.
All notices, request, demands or other communications required or
permitted under the Agreement shall be in writing and shall be deemed duly to
have been given when mailed by registered or certified mail, return receipt
requested, postage prepaid, sent by facsimile (followed by telephonic
confirmation of receipt) or personally delivered by
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<PAGE>
hand or overnight courier to the address stated below or to such changed
address as the addressee may have given by similar notice.
To the Company: Bernard Chaus, Inc.
1410 Broadway
New York, New York 10018
Attention: Chairwoman of the Board
With a copy to: Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Martin Nussbaum, Esq.
To the Employee: Mr. Michael Winter
c/o Bernard Chaus, Inc.
1410 Broadway
New York, New York 10018
With a copy to: Hansen, Jacobson, Teller & Hoberman
450 N. Roxbury Drive, 8th Floor
Beverly Hills, California 90210-4222
Attention: Craig A. Jacobson, Esq.
Communications delivered by hand or overnight courier or by facsimile shall be
deemed received on the date of delivery and communications sent by registered
or certified mail shall be deemed received three (3) business days after the
sending thereof.
13. Entire Agreement.
The Agreement contains the entire agreement between the parties hereto
with respect to the matters contemplated herein and supersedes all prior
agreements or understandings among the parties related to such matters.
- 16 -
<PAGE>
14. Binding Effect; Assignment.
The Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns and upon the Employee and his
successors and assigns. "Successors and assigns" shall mean, in the case of
the Company, any successor pursuant to a merger, consolidation, or sale or a
transfer of all or substantially all of the assets of the Company and, in the
case of the Employee, his heirs and/or legal representatives as determined by
will or by operation of law. Neither the Agreement nor any rights hereunder
shall be assignable or otherwise subject to hypothecation by the Employee
(except by will or by operation of law). The Company may assign the Agreement
and all of its rights hereunder to any of its successors and assigns.
15. Amendment or Modification; Non-Waiver.
No provision of the Agreement may be amended or waived unless
agreed to in writing, signed by the parties hereto. The waiver of, or failure
to take action with regard to, any breach of any term or condition of the
Agreement shall not be deemed to constitute a continuing waiver or a waiver of
any other breach of the same or any other term or condition.
16. Beneficiaries; References.
The Employee shall be entitled to select (and change, to the extent
permitted under any applicable law) a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Employee's death,
and may change such election by giving the Company written notice thereof. In
the event of the Employee's death,
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<PAGE>
Disability or a judicial determination of his incompetence, reference in the
Agreement to the Employee shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
17. Survivorship.
The respective rights and obligations of the parties hereunder shall
survive any termination of the Agreement to the extent necessary to the
intended preservation of such rights and obligations. The provisions of this
Section 17 are in addition to the survivorship provisions of any other section
of the Agreement.
18. Governing Law.
The validity, interpretation, construction, performance and
enforcement of the Agreement shall be governed by the laws of the State of New
York, without reference to rules relating to conflict of law.
19. Severability.
If any provision of the Agreement shall be determined to be invalid
or unenforceable (in whole or in part) for any reason, the remaining provisions
of the Agreement shall be unaffected thereby and shall remain in full force
and effect to the fullest extent permitted by law. The provisions of this
Section 19 are in addition to the severability provisions of any other section
of the Agreement.
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<PAGE>
20. Withholding.
The Company shall withhold from any payments due to the Employee
hereunder, all taxes, FICA or other amounts required to be withheld pursuant
to any applicable law.
21. Headings.
The headings contained in the Agreement are intended solely for
convenience of reference and shall not affect in any way the meaning or
interpretation of the
Agreement.
22. Counterparts.
The Agreement may be executed in one or more counterparts, each of
which for all purposes shall be deemed to be an original, and all of which
when taken together shall constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed the
Agreement as of the day and year first above written.
BERNARD CHAUS, INC.
By: \s\ Andrew Grossman
----------------------
Name: Andrew Grossman
Title: Chief Executive Officer
\s\ Michael Winter
-----------------------
Michael Winter
- 20 -
<PAGE>
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THIS WARRANT AGREEMENT AND
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE APPLICABLE,
THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on November 15, 2000
WARRANT TO PURCHASE COMMON STOCK
OF
BERNARD CHAUS, INC.
WARRANT dated and effective as of November 15, 1995, by and
between BERNARD CHAUS, INC. (the "Company"), a New York corporation with
offices at 1410 Broadway, New York, New York 10018 and JOSEPHINE CHAUS (the
"Warrantholder"), an individual residing at 128 East 73rd Street, New York,
New York 10021.
FOR VALUE RECEIVED, the Company hereby certifies that the
Warrantholder is entitled to purchase from the Company, at any time or from
time to time commencing November 15, 1995, and prior to 5:00 P.M., Eastern
Standard Time, on November 15, 2000, 815,000 fully paid and nonassessable
shares of Common Stock, par value $0.01 per share, of the Company, at $4.05
per share for an aggregate purchase price of $3,300,750. Hereinafter, (i) said
Common Stock, together with any other equity securities which may be issued by
the Company with respect thereto or in substitution therefor, is referred to
as the "Common Stock," (ii) the shares of the Common Stock purchasable
hereunder are referred to as the "Warrant Shares," (iii) the aggregate
purchase price payable hereunder for the Warrant Shares is referred to as the
"Aggregate Warrant Price," (iv) the price payable hereunder for each of the
Warrant Shares is referred to as the "Per Share Warrant Price," and (v) this
Warrant, and all warrants hereafter issued in exchange or substitution for
this Warrant are referred to as the "Warrant." The number of Warrant Shares
for which
-1-
<PAGE>
this Warrant is exercisable is subject to adjustment as hereinafter provided.
1. This Warrant may be exercised, in whole at any time or in
part from time to time, commencing November 15, 1995, and prior to 5:00 P.M.,
Eastern Standard Time, on November 15, 2000, by the Warrantholder by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the address of the Company set forth on the first page hereof,
evidencing proper payment of the Aggregate Warrant Price, or the proportionate
part thereof if this Warrant is exercised in part.
2. The issuance of this Warrant was approved by, and the Per
Share Warrant Price of $4.05 was determined by, the Special Committee of the
Company's Board of Directors on May 18, 1995 (the "Committee Approval Date"),
subject to approval of the Company's shareholders. The Company's shareholders
approved the issuance of this Warrant on November 15, 1995. The Per Share
Warrant Price represents a 20% premium over the closing price of the Common
Stock on the New York Stock Exchange on the date immediately preceding the
Committee Approval Date.
3. In no event shall this Warrant be converted, and this
Warrant shall no longer be exercisable, at any time after five years from the
date hereof. Any conversion of this Warrant may be either in whole at any time
or in part at any time or from time to time.
4. Neither the Warrantholder nor the Warrantholder's legal
representatives, legatees, distributees, or, successors or assigns shall be or
be deemed to be the holder of any shares of the Common Stock covered by this
Warrant unless and until certificates for such shares have been issued. Upon
payment of the purchase price thereof, shares issued upon conversion of this
Warrant shall be validly issued, fully paid and nonassessable.
5. In order to exercise this Warrant, the Warrantholder
shall give a signed written notice of intent to exercise this Warrant to the
Treasurer of the Company specifying the number of shares of the Common Stock
with respect to which this Warrant is being exercised, and accompanied by
payment to the Company of the full amount of the Aggregate Warrant Price for
the number of shares of Common Stock so specified. If permitted under
applicable securities laws, all or any portion of such payment may be made
through a "cashless exercise" arrangement with a broker designated by the
Warrantholder by delivery of shares of Common Stock having a fair market value
(as hereinafter determined) on the date of delivery equal to the portion of
the Aggregate Warrant Price so paid; provided, that in connection therewith,
the Warrantholder shall, as applicable, certify to the Company that such
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delivery will not result in "short-swing" profit to the Warrantholder under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder ("Section 16").
For the purposes hereof, the fair market value of a share of the
Common Stock on any date shall be equal to the closing sale price of a share
of the Common Stock as published by the national securities exchange on which
the shares of the Common Stock are primarily traded on such date or, if there
is no such sale of the Common Stock on such date, the average of the bid and
asked price on such exchange at the close of trading on such date or, if the
shares of the Common Stock are not listed on a national securities exchange on
such date, the average of the bid and asked prices in the over the counter
market on such date or, if the Common Stock is not traded on a national
securities exchange or the over-the-counter market, the fair market value of a
share of the Common Stock on such date as shall be determined in good faith by
the Company.
6. (a) In the event of the death of the Warrantholder, an
additional condition of exercising the Warrant shall be the delivery to the
Company of such tax waivers and other documents as the Company shall
reasonably determine. The executors, administrators, legal representatives,
distributees and legatees of the Warrantholder are, after the death of the
Warrantholder, referred to as the Warrantholder with respect to this Warrant.
(b) The Warrantholder shall, as an additional condition of
converting this Warrant, make appropriate arrangements with the Company for
the payment of all federal, state or local withholding taxes applicable as a
result of the exercise of this Warrant. If permitted under applicable
securities laws, all or any portion of such payment may be made through a
"cashless exercise" arrangement with a broker designated by the Warrantholder
by delivery of shares of Common Stock having a fair market value (as
determined pursuant to paragraph 5 hereof) on the date of delivery equal to
the portion of such taxes so paid; provided, that, as applicable, in
connection therewith the Warrantholder shall certify to the Company that such
delivery will not result in "short-swing" profit to the Warrantholder under
Section 16.
The Company covenants and agrees that it will pay, when due and
payable, any and all Federal and state stamp, original issue or similar taxes
that may be payable in respect of the issue of any Warrant Shares or
certificates therefor.
7. The Company agrees that, prior to the expiration of this
Warrant, the Company will at all times have authorized and in reserve, and
will keep available, solely for issuance or delivery upon the exercise of this
Warrant, the shares of the Common Stock as from time to time shall be
receivable upon the exercise of this Warrant.
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<PAGE>
8. (a) Neither this Warrant nor the Warrant Shares issuable
upon the exercise hereof have been registered under the Securities Act of
1933, as amended (the "Act"), or under any state securities laws and unless so
registered may not be transferred, sold, pledged, hypothecated or otherwise
disposed of (any of the foregoing, a "transfer") unless an exemption from such
registration is available. In the event the Warrantholder desires to transfer
this Warrant or any of the Warrant Shares issued, the Warrantholder must give
the Company prior written notice of such proposed transfer including the name
and address of the proposed transferee. Such transfer may be made only (i)
upon publication by the Securities and Exchange Commission (the "Commission")
of a ruling, interpretation, opinion or "no action letter" based upon facts
presented to said Commission, or (ii) upon receipt by the Company of an
opinion of counsel to the Company to the effect that (A) the proposed transfer
will not violate the provisions of the Act or the rules and regulations
promulgated thereunder or (B) the Warrant or Warrant Shares to be transferred
have been registered under the Act and there is in effect a current prospectus
meeting the requirements of subsection 10(a) of the Act, which is being or
will be delivered to the transferee at or prior to the time of delivery of the
certificates evidencing the Warrant or Warrant Shares to be transferred. Upon
request of the Warrantholder, the Company will use its reasonable efforts to
register the Warrants under the Act, at the Company's expense. Any transferee
of this Warrant or the Warrant Shares issuable upon the exercise hereof is
referred to as the Warrantholder with respect to this Warrant.
(b) Prior to any such proposed transfer, and as a condition
thereto, if such transfer is not made pursuant to an effective registration
statement under the Act, the Warrantholder will, if requested by the Company,
deliver to the Company (i) an investment covenant signed by the proposed
transferee, (ii) an agreement by such transferee to the restrictive investment
legend set forth herein on the certificate or certificates representing the
shares acquired by such transferee, (iii) an agreement by such transferee that
the Company may place a "stop transfer order" with its transfer agent or
registrar, and (iv) an agreement by the transferee to indemnify the Company to
the same extent as set forth in subparagraph (c) below.
(c) The Warrantholder acknowledges that the Warrantholder
understands the meaning and legal consequences of this paragraph 8, and the
Warrantholder hereby agrees to indemnify and hold harmless the Company, its
representatives and each officer and director thereof from and against any and
all loss, damage or liability (including all attorneys' fees and costs
incurred in enforcing this indemnity provision) due to or arising out of (i)
the inaccuracy of any representation or the breach of any warranty of the
Warrantholder contained in, or any other breach by the Warrantholder of, this
Warrant, (ii) any transfer of the Warrant or any of the
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Warrant Shares in violation of the Act, the Exchange Act, or the rules and
regulations promulgated under either such act, or (iii) any untrue statement
or omission to state any material fact in connection with the investment
representations or with respect to the facts and representations supplied by
the Warrantholder to counsel to the Company upon which its opinion as to a
proposed transfer shall have been based.
(d) Upon surrender of this Warrant to the Company or at the
office of its transfer agent, with assignment documentation duly executed and
funds sufficient to pay any transfer tax, and upon compliance with the
foregoing provisions, the Company shall, without charge, execute and deliver a
new Warrant in the name of the transferee named in such instrument of
transfer, and this Warrant shall promptly be cancelled. Any transfer of this
Warrant attempted contrary to the provisions of this Warrant, or any levy of
execution, attachment or other process attempted upon the Warrant, shall be
null and void and without effect.
(e) Unless the Warrant Shares have been registered under the
Act, upon exercise of any part of the Warrant and the issuance of any of the
Warrant Shares, the Company shall instruct its transfer agent to enter stop
transfer orders with respect to such Warrant Shares, and all certificates
representing Warrant Shares shall bear on the face thereof substantially the
following legend, insofar as is consistent with New York law:
"The shares of common stock represented by this certificate have not
been registered under the Securities Act of 1933, as amended, and may
not be sold, offered for sale, assigned, transferred or otherwise
disposed of unless registered pursuant to the provisions of that Act
or an opinion of counsel to the Company is obtained stating that such
disposition is in compliance with an available exemption from such
registration."
9. In the event that a dividend shall be declared upon the
Common Stock payable in shares of the Common Stock, the Warrant Shares shall
be adjusted by adding to each such share the number of shares which would be
distributable thereon if such shares had been outstanding on the date fixed
for determining the shareholders entitled to receive such stock dividend. In
the event that the outstanding shares of the Common Stock shall be changed
into or exchanged for a different number or kind of shares of stock and/or
other securities of the Company or of another corporation or cash or other
property, whether through reorganization, recapitalization, extraordinary
dividend, stock split-up, combination of shares, sale of assets, spin off or
merger or consolidation in which the Company is the surviving corporation,
then, there shall be substituted for each Warrant Share the number and kind of
shares of stock and/or other securities, cash or other property into which
each outstanding share of the Common Stock shall be so changed or for which
each such share shall be
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<PAGE>
exchanged. In the event that there shall be any change, other than as
specified in this paragraph 9, in the number or kind of outstanding shares of
the Common Stock, or of any stock or other securities into which the Common
Stock shall have been changed, or for which it shall have been exchanged, then
the Board of Directors of Company shall, in its reasonable discretion,
equitably adjust this Warrant with respect to the number or kind of Warrant
Shares and the Warrant Price, such adjustment to be made by the Company and
notice thereof shall be delivered to the Warrantholder within 30 calendar days
thereafter, accompanied by a certificate of the Chief Financial Officer of the
Company setting forth such adjustment, the method of calculation of such
adjustment and the facts upon which such adjustment was based, all in
reasonable detail. In the case of any such substitution or adjustment as
provided for in this paragraph 9, the Warrant Price for each Warrant Share
shall be the Warrant Price for all shares of stock or other securities which
shall have been substituted for such Warrant Share or to which such shares
shall have been adjusted in accordance with the provisions in this paragraph
9. No adjustment or substitution provided for in this paragraph 9 shall
require the Company to sell a fractional share hereunder. Notwithstanding the
foregoing, the issuance by the Company of additional shares of Common Stock
(or securities convertible into shares of Common Stock), for fair
consideration (which need not be cash), as determined by the Board of
Directors of the Company in good faith, shall not give rise to any equitable
adjustment of this Warrant pursuant to this paragraph 9.
10. The existence of this Warrant shall not affect in any
way the right or power of the Company or its shareholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding whether of a similar character or otherwise.
11. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation of this Warrant if mutilated, the Company shall
execute and deliver to the Warrantholder a new Warrant of like date, tenor and
denomination.
13. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt
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<PAGE>
requested, or delivered against receipt to the party to whom it is to be given
at the address of such party set forth in the preamble to this Warrant (or to
such other address as the party shall have furnished in writing in accordance
with the provisions of this paragraph 13). Notice to the estate of the
Warrantholder shall be sufficient if addressed to the Warrantholder as
provided in this paragraph 13. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof.
14. The provisions of this Warrant shall be binding upon and
inure to the benefit of the Warrantholder and the Warrantholder's heirs,
personal representatives, successors and assigns under this Warrant.
15. This Warrant does not create, and shall not be construed
as creating, any rights enforceable by any person not a party to this Warrant
(except as expressly provided in this Warrant).
IN WITNESS WHEREOF, BERNARD CHAUS, INC. has caused this
Warrant to be signed by a duly authorized officer the day and year first above
written.
ATTEST: BERNARD CHAUS, INC.
\s\ Karen A. Maloney By: \s\ Wayne S. Miller
- ----------------------- ---------------------------
Karen A. Maloney Name: Wayne S. Miller
Vice President - Corporate Title: Executive Vice President -
Controller Finance and Administration,
Chief Financial Officer and
Secretary
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<PAGE>
SUBSCRIPTION
The undersigned, ____________________________ , pursuant to
the provisions of the foregoing Warrant, hereby agrees to subscribe for the
purchase of _________ shares of the Common Stock of BERNARD CHAUS, INC. covered
by said Warrant, and makes payment therefor in full at the price per share
provided by said Warrant.
Dated ____________ Signature__________________
Address __________________
__________________
ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby sells,
assigns and transfers unto _______________________________________ the
foregoing Warrant and all rights evidenced thereby, and does irrevocably
constitute and appoint _______________________, attorney, to transfer said
Warrant on the books of BERNARD CHAUS, INC.
Dated ______________________ Signature__________________________
Address____________________________
____________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby sells,
assigns and transfers unto _______________________ the right to purchase
_____________________ shares of the Common Stock of BERNARD CHAUS, INC. by the
foregoing Warrant, and a proportionate part of said Warrant and the rights
evidenced hereby, and does irrevocably constitute and appoint
__________________________, attorney, to transfer that part of said Warrant on
the books of BERNARD CHAUS, INC.
Dated___________________ Signature_________________________
Address___________________________
___________________________
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<PAGE>
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THIS WARRANT AGREEMENT AND
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE APPLICABLE,
THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on November 15, 2000
WARRANT TO PURCHASE COMMON STOCK
OF
BERNARD CHAUS, INC.
WARRANT dated and effective as of November 15, 1995, by and
between BERNARD CHAUS, INC. (the "Company"), a New York corporation with
offices at 1410 Broadway, New York, New York 10018 and JOSEPHINE CHAUS (the
"Warrantholder"), an individual residing at 128 East 73rd Street, New York,
New York 10021.
FOR VALUE RECEIVED, the Company hereby certifies that the
Warrantholder is entitled to purchase from the Company, at any time or from
time to time commencing November 15, 1995, and prior to 5:00 P.M., Eastern
Standard Time, on November 15, 2000, 535,000 fully paid and nonassessable
shares of Common Stock, par value $0.01 per share, of the Company, at $4.05
per share for an aggregate purchase price of $2,166,750. Hereinafter, (i) said
Common Stock, together with any other equity securities which may be issued by
the Company with respect thereto or in substitution therefor, is referred to
as the "Common Stock," (ii) the shares of the Common Stock purchasable
hereunder are referred to as the "Warrant Shares," (iii) the aggregate
purchase price payable hereunder for the Warrant Shares is referred to as the
"Aggregate Warrant Price," (iv) the price payable hereunder for each of the
Warrant Shares is referred to as the "Per Share Warrant Price," and (v) this
Warrant, and all warrants hereafter issued in exchange or substitution for
this Warrant are referred to as the "Warrant." The number of Warrant Shares
for which
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<PAGE>
this Warrant is exercisable is subject to adjustment as hereinafter provided.
1. This Warrant may be exercised, in whole at any time or in
part from time to time, commencing November 15, 1995, and prior to 5:00 P.M.,
Eastern Standard Time, on November 15, 2000, by the Warrantholder by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the address of the Company set forth on the first page hereof,
evidencing proper payment of the Aggregate Warrant Price, or the proportionate
part thereof if this Warrant is exercised in part.
2. The issuance of this Warrant was approved by, and the Per
Share Warrant Price of $4.05 was determined by, the Special Committee of the
Company's Board of Directors on May 18, 1995 (the "Committee Approval Date"),
subject to approval of the Company's shareholders. The Company's shareholders
approved the issuance of this Warrant on November 15, 1995. The Per Share
Warrant Price represents a 20% premium over the closing price of the Common
Stock on the New York Stock Exchange on the date immediately preceding the
Committee Approval Date.
3. In no event shall this Warrant be converted, and this
Warrant shall no longer be exercisable, at any time after five years from the
date hereof. Any conversion of this Warrant may be either in whole at any time
or in part at any time or from time to time.
4. Neither the Warrantholder nor the Warrantholder's legal
representatives, legatees, distributees or successors or assigns shall be or
be deemed to be the holder of any shares of the Common Stock covered by this
Warrant unless and until certificates for such shares have been issued. Upon
payment of the purchase price thereof, shares issued upon conversion of this
Warrant shall be validly issued, fully paid and nonassessable.
5. In order to exercise this Warrant, the Warrantholder
shall give a signed written notice of intent to exercise this Warrant to the
Treasurer of the Company specifying the number of shares of the Common Stock
with respect to which this Warrant is being exercised, and accompanied by
payment to the Company of the full amount of the Aggregate Warrant Price for
the number of shares of Common Stock so specified. If permitted under
applicable securities laws, all or any portion of such payment may be made
through a "cashless exercise" arrangement with a broker designated by the
Warrantholder by delivery of shares of Common Stock having a fair market value
(as hereinafter determined) on the date of delivery equal to the portion of
the Aggregate Warrant Price so paid; provided, that in connection therewith,
the Warrantholder shall, as applicable, certify to the Company that such
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<PAGE>
delivery will not result in "short-swing" profit to the Warrantholder under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder ("Section 16").
For the purposes hereof, the fair market value of a share of the
Common Stock on any date shall be equal to the closing sale price of a share
of the Common Stock as published by the national securities exchange on which
the shares of the Common Stock are primarily traded on such date or, if there
is no such sale of the Common Stock on such date, the average of the bid and
asked price on such exchange at the close of trading on such date or, if the
shares of the Common Stock are not listed on a national securities exchange on
such date, the average of the bid and asked prices in the over the counter
market on such date or, if the Common Stock is not traded on a national
securities exchange or the over-the-counter market, the fair market value of a
share of the Common Stock on such date as shall be determined in good faith by
the Company.
6. (a) In the event of the death of the Warrantholder, an
additional condition of exercising the Warrant shall be the delivery to the
Company of such tax waivers and other documents as the Company shall
reasonably determine. The executors, administrators, legal representatives,
distributees and legatees of the Warrantholder are, after the death of the
Warrantholder, referred to as the Warrantholder with respect to this Warrant.
(b) The Warrantholder shall, as an additional condition of
converting this Warrant, make appropriate arrangements with the Company for
the payment of all federal, state or local withholding taxes applicable as a
result of the exercise of this Warrant. If permitted under applicable
securities laws, all or any portion of such payment may be made through a
"cashless exercise" arrangement with a broker designated by the Warrantholder
by delivery of shares of Common Stock having a fair market value (as
determined pursuant to paragraph 5 hereof) on the date of delivery equal to
the portion of such taxes so paid; provided, that, as applicable, in
connection therewith the Warrantholder shall certify to the Company that such
delivery will not result in "short-swing" profit to the Warrantholder under
Section 16.
The Company covenants and agrees that it will pay, when due and
payable, any and all Federal and state stamp, original issue or similar taxes
that may be payable in respect of the issue of any Warrant Shares or
certificates therefor.
7. The Company agrees that, prior to the expiration of this
Warrant, the Company will at all times have authorized and in reserve, and
will keep available, solely for issuance or delivery upon the exercise of this
Warrant, the shares of the Common Stock as from time to time shall be
receivable upon the exercise of this Warrant.
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<PAGE>
8. (a) Neither this Warrant nor the Warrant Shares issuable
upon the exercise hereof have been registered under the Securities Act of
1933, as amended (the "Act"), or under any state securities laws and unless so
registered may not be transferred, sold, pledged, hypothecated or otherwise
disposed of (any of the foregoing, a "transfer") unless an exemption from such
registration is available. In the event the Warrantholder desires to transfer
this Warrant or any of the Warrant Shares issued, the Warrantholder must give
the Company prior written notice of such proposed transfer including the name
and address of the proposed transferee. Such transfer may be made only (i)
upon publication by the Securities and Exchange Commission (the "Commission")
of a ruling, interpretation, opinion or "no action letter" based upon facts
presented to said Commission, or (ii) upon receipt by the Company of an
opinion of counsel to the Company to the effect that (A) the proposed transfer
will not violate the provisions of the Act or the rules and regulations
promulgated thereunder or (B) the Warrant or Warrant Shares to be transferred
have been registered under the Act and there is in effect a current prospectus
meeting the requirements of subsection 10(a) of the Act, which is being or
will be delivered to the transferee at or prior to the time of delivery of the
certificates evidencing the Warrant or Warrant Shares to be transferred. Upon
request of the Warrantholder, the Company will use its reasonable efforts to
register the Warrants under the Act, at the Company's expense. Any transferee
of this Warrant or the Warrant Shares issuable upon the exercise hereof is
referred to as the Warrantholder with respect to this Warrant.
(b) Prior to any such proposed transfer, and as a condition
thereto, if such transfer is not made pursuant to an effective registration
statement under the Act, the Warrantholder will, if requested by the Company,
deliver to the Company (i) an investment covenant signed by the proposed
transferee, (ii) an agreement by such transferee to the restrictive investment
legend set forth herein on the certificate or certificates representing the
shares acquired by such transferee, (iii) an agreement by such transferee that
the Company may place a "stop transfer order" with its transfer agent or
registrar, and (iv) an agreement by the transferee to indemnify the Company to
the same extent as set forth in subparagraph (c) below.
(c) The Warrantholder acknowledges that the Warrantholder
understands the meaning and legal consequences of this paragraph 8, and the
Warrantholder hereby agrees to indemnify and hold harmless the Company, its
representatives and each officer and director thereof from and against any and
all loss, damage or liability (including all attorneys' fees and costs
incurred in enforcing this indemnity provision) due to or arising out of (i)
the inaccuracy of any representation or the breach of any warranty of the
Warrantholder contained in, or any other breach by the Warrantholder of, this
Warrant, (ii) any transfer of the Warrant or any of the
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<PAGE>
Warrant Shares in violation of the Act, the Exchange Act, or the rules and
regulations promulgated under either such act, or (iii) any untrue statement
or omission to state any material fact in connection with the investment
representations or with respect to the facts and representations supplied by
the Warrantholder to counsel to the Company upon which its opinion as to a
proposed transfer shall have been based.
(d) Upon surrender of this Warrant to the Company or at the
office of its transfer agent, with assignment documentation duly executed and
funds sufficient to pay any transfer tax, and upon compliance with the
foregoing provisions, the Company shall, without charge, execute and deliver a
new Warrant in the name of the transferee named in such instrument of
transfer, and this Warrant shall promptly be cancelled. Any transfer of this
Warrant attempted contrary to the provisions of this Warrant, or any levy of
execution, attachment or other process attempted upon the Warrant, shall be
null and void and without effect.
(e) Unless the Warrant Shares have been registered under the
Act, upon exercise of any part of the Warrant and the issuance of any of the
Warrant Shares, the Company shall instruct its transfer agent to enter stop
transfer orders with respect to such Warrant Shares, and all certificates
representing Warrant Shares shall bear on the face thereof substantially the
following legend, insofar as is consistent with New York law:
"The shares of common stock represented by this certificate have not
been registered under the Securities Act of 1933, as amended, and may
not be sold, offered for sale, assigned, transferred or otherwise
disposed of unless registered pursuant to the provisions of that Act
or an opinion of counsel to the Company is obtained stating that such
disposition is in compliance with an available exemption from such
registration."
9. In the event that a dividend shall be declared upon the
Common Stock payable in shares of the Common Stock, the Warrant Shares shall
be adjusted by adding to each such share the number of shares which would be
distributable thereon if such shares had been outstanding on the date fixed
for determining the shareholders entitled to receive such stock dividend. In
the event that the outstanding shares of the Common Stock shall be changed
into or exchanged for a different number or kind of shares of stock and/or
other securities of the Company or of another corporation or cash or other
property, whether through reorganization, recapitalization, extraordinary
dividend, stock split-up, combination of shares, sale of assets, spin off or
merger or consolidation in which the Company is the surviving corporation,
then, there shall be substituted for each Warrant Share the number and kind of
shares of stock and/or other securities, cash or other property into which
each outstanding share of the Common Stock shall be so changed or for which
each such share shall be
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<PAGE>
exchanged. In the event that there shall be any change, other than as
specified in this paragraph 9, in the number or kind of outstanding shares of
the Common Stock, or of any stock or other securities into which the Common
Stock shall have been changed, or for which it shall have been exchanged, then
the Board of Directors of Company shall, in its reasonable discretion,
equitably adjust this Warrant with respect to the number or kind of Warrant
Shares and the Warrant Price, such adjustment to be made by the Company and
notice thereof shall be delivered to the Warrantholder within 30 calendar days
thereafter, accompanied by a certificate of the Chief Financial Officer of the
Company setting forth such adjustment, the method of calculation of such
adjustment and the facts upon which such adjustment was based, all in
reasonable detail. In the case of any such substitution or adjustment as
provided for in this paragraph 9, the Warrant Price for each Warrant Share
shall be the Warrant Price for all shares of stock or other securities which
shall have been substituted for such Warrant Share or to which such shares
shall have been adjusted in accordance with the provisions in this paragraph
9. No adjustment or substitution provided for in this paragraph 9 shall
require the Company to sell a fractional share hereunder. Notwithstanding the
foregoing, the issuance by the Company of additional shares of Common Stock
(or securities convertible into shares of Common Stock), for fair
consideration (which need not be cash), as determined by the Board of
Directors of the Company in good faith, shall not give rise to any equitable
adjustment of this Warrant pursuant to this paragraph 9.
10. The existence of this Warrant shall not affect in any
way the right or power of the Company or its shareholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding whether of a similar character or otherwise.
11. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation of this Warrant if mutilated, the Company shall
execute and deliver to the Warrantholder a new Warrant of like date, tenor and
denomination.
13. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt
-6-
<PAGE>
requested, or delivered against receipt to the party to whom it is to be given
at the address of such party set forth in the preamble to this Warrant (or to
such other address as the party shall have furnished in writing in accordance
with the provisions of this paragraph 13). Notice to the estate of the
Warrantholder shall be sufficient if addressed to the Warrantholder as
provided in this paragraph 13. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof.
14. The provisions of this Warrant shall be binding upon and
inure to the benefit of the Warrantholder and the Warrantholder's heirs,
personal representatives, successors and assigns under this Warrant.
15. This Warrant does not create, and shall not be construed
as creating, any rights enforceable by any person not a party to this Warrant
(except as expressly provided in this Warrant).
IN WITNESS WHEREOF, BERNARD CHAUS, INC. has caused this
Warrant to be signed by a duly authorized officer the day and year first above
written.
ATTEST: BERNARD CHAUS, INC.
\s\ Karen A. Maloney By: \s\ Wayne S. Miller
- ------------------------------ -----------------------
Karen A. Maloney Name: Wayne S. Miller
Vice President - Corporate Title: Executive Vice President -
Controller Finance and Administration,
Chief Financial Officer and
Secretary
-7-
<PAGE>
SUBSCRIPTION
The undersigned, _______________, pursuant to the provisions
of the foregoing Warrant, hereby agrees to subscribe for the purchase of
_________ shares of the Common Stock of BERNARD CHAUS, INC. covered by said
Warrant, and makes
payment therefor in full at the price per share provided by said Warrant.
Dated ____________ Signature ________________________
Address ________________________
ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby sells,
assigns and transfers unto _______________________________________ the
foregoing Warrant and all rights evidenced thereby, and does irrevocably
constitute and appoint _______________________, attorney, to transfer said
Warrant on the books of BERNARD CHAUS, INC.
Dated ______________________ Signature_________________________
Address___________________________
___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby sells,
assigns and transfers unto _______________________ the right to purchase
_____________________ shares of the Common Stock of BERNARD CHAUS, INC. by the
foregoing Warrant, and a proportionate part of said Warrant and the rights
evidenced hereby, and does irrevocably constitute and appoint
__________________________, attorney, to transfer that part of said Warrant on
the books of BERNARD CHAUS, INC.
Dated___________________ Signature_________________________
Address___________________________
___________________________
-8-
<PAGE>
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THIS WARRANT AGREEMENT AND
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE APPLICABLE,
THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on November 15, 2000.
WARRANT TO PURCHASE COMMON STOCK
OF
BERNARD CHAUS, INC.
WARRANT dated and effective as of November 15, 1995, by and
between BERNARD CHAUS, INC. (the "Company"), a New York corporation with
offices at 1410 Broadway, New York, New York 10018 and JOSEPHINE CHAUS (the
"Warrantholder"), an individual residing at 128 East 73rd Street, New York,
New York 10021.
FOR VALUE RECEIVED, the Company hereby certifies that the
Warrantholder is entitled to purchase from the Company, at any time or from
time to time commencing November 15, 1995, and prior to 5:00 P.M., Eastern
Standard Time, on November 15, 2000, 230,000 fully paid and nonassessable
shares of Common Stock, par value $0.01 per share, of the Company, at $6.75
per share for an aggregate purchase price of $1,552,500. Hereinafter, (i) said
Common Stock, together with any other equity securities which may be issued by
the Company with respect thereto or in substitution therefor, is referred to
as the "Common Stock," (ii) the shares of the Common Stock purchasable
hereunder are referred to as the "Warrant Shares," (iii) the aggregate
purchase price payable hereunder for the Warrant Shares is referred to as the
"Aggregate Warrant Price," (iv) the price payable hereunder for each of the
Warrant Shares is referred to as the "Per Share Warrant Price," and (v) this
Warrant, and all warrants hereafter issued in exchange or substitution for
this Warrant are referred to as the "Warrant." The number of Warrant Shares
for which
-1-
<PAGE>
this Warrant is exercisable is subject to adjustment as hereinafter provided.
1. This Warrant may be exercised, in whole at any time or in
part from time to time, commencing November 15, 1995, and prior to 5:00 P.M.,
Eastern Standard Time, on November 15, 2000, by the Warrantholder by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the address of the Company set forth on the first page hereof,
evidencing proper payment of the Aggregate Warrant Price, or the proportionate
part thereof if this Warrant is exercised in part.
2. The issuance of this Warrant was approved by, and the Per
Share Warrant Price of $6.75 was determined by, the Special Committee of the
Company's Board of Directors on September 14, 1995 (the "Committee Approval
Date"), subject to approval of the Company's shareholders. The Company's
shareholders approved the issuance of this Warrant on November 15, 1995. The
Per Share Warrant Price represents a 20% premium over the average closing
price of the Common Stock on the New York Stock Exchange on the Committee
Approval Date.
3. In no event shall this Warrant be converted, and this
Warrant shall no longer be exercisable, at any time after five years from the
date hereof. Any conversion of this Warrant may be either in whole at any time
or in part at any time or from time to time.
4. Neither the Warrantholder nor the Warrantholder's legal
representatives, legatees or distributees shall be or be deemed to be the
holder of any shares of the Common Stock covered by this Warrant unless and
until certificates for such shares have been issued. Upon payment of the
purchase price thereof, shares issued upon conversion of this Warrant shall be
validly issued, fully paid and nonassessable.
5. In order to exercise this Warrant, the Warrantholder
shall give a signed written notice of intent to exercise this Warrant to the
Treasurer of the Company specifying the number of shares of the Common Stock
with respect to which this Warrant is being exercised, and accompanied by
payment to the Company of the full amount of the Aggregate Warrant Price for
the number of shares of Common Stock so specified. If permitted under
applicable securities laws, all or any portion of such payment may be made
through a "cashless exercise" arrangement with a broker designated by the
Warrantholder by delivery of shares of Common Stock having a fair market value
(as hereinafter determined) on the date of delivery equal to the portion of
the Aggregate Warrant Price so paid; provided, that in connection therewith,
the Warrantholder shall certify to the Company that such delivery will not
result in "short-swing" profit to her under Section 16 of the Securities
Exchange Act
-2-
<PAGE>
of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder ("Section 16").
For the purposes hereof, the fair market value of a share of the
Common Stock on any date shall be equal to the closing sale price of a share
of the Common Stock as published by the national securities exchange on which
the shares of the Common Stock are primarily traded on such date or, if there
is no such sale of the Common Stock on such date, the average of the bid and
asked price on such exchange at the close of trading on such date or, if the
shares of the Common Stock are not listed on a national securities exchange on
such date, the average of the bid and asked prices in the over the counter
market on such date or, if the Common Stock is not traded on a national
securities exchange or the over the counter market, the fair market value of a
share of the Common Stock on such date as shall be determined in good faith by
the Company.
6. (a) Unless the shares to be issued upon the exercise of
the Warrant shall be registered under the Securities Act of 1933, as amended
(the "Act"), prior to the issuance thereof (which the Company shall use its
best efforts to do at its expense at the Warrantholder's request), the
Warrantholder shall, as a condition to the Company's obligation to issue such
shares, give a representation in writing that she is acquiring such shares for
her own account as an investment and not with a view to, or for sale in
connection with, the distribution of such shares.
(b) In the event of the death of the Warrantholder, an additional
condition of exercising the Warrant shall be the delivery to the Company of
such tax waivers and other documents as the Company shall reasonably
determine. The executors, administrators, legal representatives, distributees
and legatees of the Warrantholder are, after the death of the Warrantholder,
referred to as the Warrantholder with respect to this Warrant.
(c) The Warrantholder shall, as an additional condition of
converting this Warrant, make appropriate arrangements with the Company for
the payment of all federal, state or local withholding taxes applicable as a
result of the exercise of this Warrant. If permitted under applicable
securities laws, all or any portion of such payment may be made through a
"cashless exercise" arrangement with a broker designated by the Warrantholder
by delivery of shares of Common Stock having a fair market value (as
determined pursuant to paragraph 5 hereof) on the date of delivery equal to
the portion of such taxes so paid; provided, that in connection therewith the
Warrantholder shall certify to the Company that such delivery will not result
in "short-swing" profit to her under Section 16.
The Company covenants and agrees that it will pay, when due and
payable, any and all Federal and state stamp, original issue or similar taxes
that may be payable in respect of the issue of any Warrant Shares or
certificates therefor.
-3-
<PAGE>
7. The Company agrees that, prior to the expiration of this
Warrant, the Company will at all times have authorized and in reserve, and
will keep available, solely for issuance or delivery upon the exercise of this
Warrant, the shares of the Common Stock as from time to time shall be
receivable upon the exercise of this Warrant.
8. In the event that a dividend shall be declared upon the
Common Stock payable in shares of the Common Stock, the Warrant Shares shall
be adjusted by adding to each such share the number of shares which would be
distributable thereon if such shares had been outstanding on the date fixed
for determining the shareholders entitled to receive such stock dividend. In
the event that the outstanding shares of the Common Stock shall be changed
into or exchanged for a different number or kind of shares of stock and/or
other securities of the Company or of another corporation or cash or other
property, whether through reorganization, recapitalization, extraordinary
dividend, stock split-up, combination of shares, sale of assets, spin off or
merger or consolidation in which the Company is the surviving corporation,
then, there shall be substituted for each Warrant Share the number and kind of
shares of stock and/or other securities, cash or other property into which
each outstanding share of the Common Stock shall be so changed or for which
each such share shall be exchanged. In the event that there shall be any
change, other than as specified in this paragraph 8, in the number or kind of
outstanding shares of the Common Stock, or of any stock or other securities
into which the Common Stock shall have been changed, or for which it shall
have been exchanged, then, the Board of Directors of Company shall, in its
reasonable discretion, equitably adjust this Warrant with respect to the
number or kind of Warrant Shares and the Warrant Price, such adjustment to be
made by the Company and notice thereof shall be delivered to the Warrantholder
within 30 calendar days thereafter, accompanied by a certificate of the Chief
Financial Officer of the Company setting forth such adjustment, the method of
calculation of such adjustment and the facts upon which such adjustment was
based, all in reasonable detail. In the case of any such substitution or
adjustment as provided for in this paragraph 8, the Warrant Price for each
Warrant Share shall be the Warrant Price for all shares of stock or other
securities which shall have been substituted for such Warrant Share or to
which such shares shall have been adjusted in accordance with the provisions
in this paragraph 8. No adjustment or substitution provided for in this
paragraph 8 shall require the Company to sell a fractional share hereunder.
Notwithstanding the foregoing, the issuance by the Company of additional
shares of Common Stock (or securities convertible into shares of Common
Stock), for fair consideration (which need not be cash), as determined by the
Board of Directors of the Company in good faith, shall not give rise to any
equitable adjustment of this Warrant pursuant to this paragraph 8.
-4-
<PAGE>
9. The existence of this Warrant shall not affect in any way
the right or power of the Company or its shareholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding
whether of a similar character or otherwise.
10. This Warrant shall be governed by and construed
in accordance with the internal laws of the State of New York.
11. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation of this Warrant if mutilated, the Company shall
execute and deliver to the Warrantholder a new Warrant of like date, tenor and
denomination.
12. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be mailed by certified
mail, return receipt requested, or delivered against receipt to the party to
whom it is to be given at the address of such party set forth in the preamble
to this Warrant (or to such other address as the party shall have furnished in
writing in accordance with the provisions of this paragraph 12). Notice to the
estate of the Warrantholder shall be sufficient if addressed to the
Warrantholder as provided in this paragraph 12. Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
13. Except as may be permitted by Rule 16b-3 promulgated
under the Exchange Act for transfers to a trust or similar estate planning
vehicle, this Warrant is not transferable otherwise than by will or the laws
of descent and distribution and may be exercised, during the lifetime of the
Warrantholder, only by her or, in the event of her disability, her duly
appointed guardian or conservator. The Warrantholder's rights shall not be
subject to commutation, encumbrance, or the claims of the Warrantholder's
creditors, and any attempt to do any of the foregoing shall be void. The
provisions of this Warrant shall be binding upon and inure to the benefit of
the Warrantholder and her heirs and personal representatives under this
Warrant.
14. This Warrant does not create, and shall not be construed
as creating, any rights enforceable by any person not a party to this Warrant
(except as expressly provided in this Warrant).
-5-
<PAGE>
IN WITNESS WHEREOF, BERNARD CHAUS, INC. has caused this
Warrant to be signed by a duly authorized officer the day and year first above
written.
ATTEST: BERNARD CHAUS, INC.
\s\ Karen A. Maloney By: \s\ Wayne S. Miller
- ------------------------------ -----------------------
Karen A. Maloney Name: Wayne S. Miller
Vice President - Corporate Title: Executive Vice President -
Controller Finance and Administration,
Chief Financial Officer and
Secretary
-6-
<PAGE>
SUBSCRIPTION
The undersigned, ________________, pursuant to the provisions
of the foregoing Warrant, hereby agrees to subscribe for the purchase of
_________ shares of the Common Stock of BERNARD CHAUS, INC. covered by said
Warrant, and makes payment therefor in full at the price per share provided by
said Warrant.
Dated ____________ Signature ______________________
Address ______________________
______________________
-7-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000793983
<NAME> Bernard Chaus, Inc.
<MULTIPLIER> 1,000
<CURRENCY> US dollar
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 312
<SECURITIES> 0
<RECEIVABLES> 25,496
<ALLOWANCES> 6,095
<INVENTORY> 22,491
<CURRENT-ASSETS> 43,219
<PP&E> 2,246
<DEPRECIATION> 223
<TOTAL-ASSETS> 45,768
<CURRENT-LIABILITIES> 44,312
<BONDS> 0
<COMMON> 269
0
0
<OTHER-SE> (21,119)
<TOTAL-LIABILITY-AND-EQUITY> 45,768
<SALES> 49,035
<TOTAL-REVENUES> 49,035
<CGS> 41,159
<TOTAL-COSTS> 51,072
<OTHER-EXPENSES> 58
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,709
<INCOME-PRETAX> (3,804)
<INCOME-TAX> 75
<INCOME-CONTINUING> (3,879)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,879)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
