<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-7(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Bernard Chaus, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
BERNARD CHAUS, INC.
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------------------
The Annual Meeting of Stockholders of Bernard Chaus, Inc., a New York
corporation (the "Company"), will be held on November 17, 1998 at 2:30 p.m. at
Rihga Royal Hotel, 151 West 54th Street, New York, New York, Winter Garden
Room, mezzanine level, for the following purposes:
1. To elect five directors of the Company to serve until the next
Annual Meeting of Stockholders and until their respective successors have been
elected and qualified.
2. To ratify the appointment of Deloitte & Touche LLP as auditors of
the Company to serve for the fiscal year ending June 30, 1999.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Stockholders of record at the close of business on October 14, 1998
are entitled to notice of and will be entitled to vote at the meeting.
YOU ARE REQUESTED TO FILL IN, DATE AND SIGN THE ENCLOSED PROXY,
WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, AND TO MAIL
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
Stuart S. Levy
Secretary
New York, New York
October 22, 1998
- -------------------------------------------------------------------------------
IMPORTANT: Please sign, date and return your proxy card in the self-addressed,
stamped envelope enclosed for your convenience. No postage is required if
mailed within the United States.
- -------------------------------------------------------------------------------
<PAGE>
BERNARD CHAUS, INC.
-------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 17, 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Bernard Chaus, Inc., a New York
corporation (the "Company"), to be used at the Annual Meeting of Stockholders
which will be held on November 17, 1998 at 2:30 p.m. at the Rihga Royal Hotel,
151 West 54th Street, New York, New York, Winter Garden Room, mezzanine level,
and any adjournments or postponements thereof.
Stockholders who execute proxies retain the right to revoke them at
any time by notice in writing to the Secretary of the Company or by revocation
in person at the meeting; unless so revoked, the shares represented by proxies
will be voted at the meeting in accordance with the directions given therein.
If no directions are given, proxies will be voted (i) FOR the election of the
nominees named below under the caption "Election of Directors-Nominees for
Election", (ii) FOR the ratification of the appointment of Deloitte & Touche
LLP as auditors for the Company's fiscal year ending June 30, 1999, and (iii)
in the discretion of the proxies named on the proxy card with respect to such
other business as may properly come before the meeting and any adjournments or
postponements thereof.
The principal executive offices of the Company are located at 1410
Broadway, New York, New York 10018. The approximate date on which this Proxy
Statement and the enclosed form of proxy were first sent or given to
stockholders was October 22, 1998.
Stockholders of record at the close of business on October 14, 1998
are entitled to notice of and will be entitled to vote at the meeting. On
October 14, 1998, there were outstanding 27,115,907 shares of the Common Stock
of the Company. Each share of Common Stock is entitled to one vote.
<PAGE>
VOTING PROCEDURES
Under the New York Business Corporation Law (the "BCL") and the
Company's By-Laws, the presence, in person or by proxy, of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum of the
stockholders to take action at the Annual Meeting. Abstentions and broker non-
votes are counted as shares present in the determination of whether the shares
of Common Stock represented at the Annual Meeting constitute a quorum. Once a
quorum of the stockholders is established, under the BCL and the Company's
By-Laws, the directors standing for election must be elected by a plurality of
the votes cast. Any other action to be taken must be approved by a majority of
the votes cast. For voting purposes, abstentions and broker non-votes will not
be counted in determining whether the directors standing for election have been
elected or whether any other action has been approved.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table represents information with respect to the persons
who are known to the Company to be the beneficial owners of more than five
percent of the common stock, $.01 par value ("Common Stock"), of the Company as
of September 30, 1998.
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
---------------- ----- --------
Josephine Chaus (1).................... 18,848,415(2) 69.5%
1410 Broadway
New York, NY 10018
- -----------
(1) All shares listed are owned of record and beneficially, with sole
investment and voting power, except that, with respect to 72,936
shares included in such amount, Josephine Chaus shares power to vote
and dispose of such shares with Daniel Rosenbloom which are held by
them as co-trustees for her children.
(2) Because of her stock ownership and positions with the Company,
Josephine Chaus may be deemed a control person of the Company.
2
<PAGE>
The following table presents information as of September 30, 1998 with
respect to the number of shares of Common Stock beneficially owned by each of
the current directors of the Company and each Named Executive Officer (as
defined herein), other than Josephine Chaus whose ownership is shown in the
table above, and all of the directors and executive officers of the Company as
a group. The information below stating amounts beneficially owned and percent
of class owned includes options exercisable within 60 days.
AMOUNT BENEFICIALLY PERCENT
NAME OWNED(1) OF CLASS
---- -------- --------
DIRECTORS:
Philip G. Barach (2)......................... 5,237 *
Andrew Grossman.............................. 712,576 (3) 2.6 3%
S. Lee Kling (4)............................. 15,665 *
Harvey M. Krueger (5)........................ 13,493 *
NAMED EXECUTIVE OFFICERS:
Barton Heminover (6)......................... 1,500 *
All directors and executive officers as a
group (6 persons)............................ 19,596,886 (7) 72.27% (7)
- -----------------------
* Less than one percent.
(1) Except as otherwise indicated below, the persons listed have advised the
Company that they have sole voting and investment power with respect to
the securities listed as owned by them.
(2) Includes options to purchase 1,000 shares of Common Stock granted under
the Bernard Chaus, Inc. 1998 Stock Option Plan, as amended (the "Stock
Option Plan"). Excludes options to purchase 15,000 shares of Common Stock
granted under the Stock Option Plan.
(3) Includes options to purchase 687,569 shares of Common Stock granted
under the Stock Option Plan. Excludes options to purchase 687,568 shares
of Common Stock granted under the Stock Option Plan.
(4) Includes options to purchase 2,000 shares of Common Stock granted under
the Stock Option Plan. Excludes options to purchase 15,000 shares of
Common Stock granted under the Stock Option Plan.
(5) Includes options to purchase 5,000 shares of Common Stock granted under
the Stock Option Plan. Excludes options to purchase 15,000 shares of
Common Stock granted under the Stock Option Plan.
(6) Includes options to purchase 1,500 shares of Common Stock granted under
the Stock Option Plan. Excludes options to purchase 44,908 shares of
Common Stock granted under the Stock Option Plan.
(7) Includes beneficial ownership of Josephine Chaus; also includes options
to purchase an aggregate of 697,069 shares of Common Stock granted under
the Stock Option Plan.
3
<PAGE>
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
Five directors will be elected at the meeting to serve until the next
annual meeting of stockholders and until their respective successors have been
elected and qualified.
EACH PROXY RECEIVED WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED
BELOW UNLESS OTHERWISE SPECIFIED IN THE PROXY. Josephine Chaus possesses the
power to vote more than 50% of the outstanding shares of the Common Stock.
Accordingly, the affirmative vote of Josephine Chaus is sufficient to approve
the election of these nominees. Josephine Chaus has advised the Company that
she intends to vote all of her shares in favor of such election.
At this time, the Board of Directors of the Company knows of no reason why
any nominee might be unable to serve. Except as indicated below, there are no
arrangements or understandings between any director and any other person
pursuant to which such person was selected as a director or nominee.
The following table sets forth certain information with respect to the
nominees for director:
NAME OF NOMINEE AGE DIRECTOR SINCE
--------------- --- --------------
Josephine Chaus......................... 47 1977
Andrew Grossman......................... 39 1994
S. Lee Kling............................ 69 1989
Harvey M. Krueger....................... 69 1992
Philip G. Barach........................ 68 1993
Josephine Chaus has been an employee of the Company in various capacities
since its inception. She has been a director of the Company since 1977,
President from 1980 to February 1993, Chief Executive Officer from 1991 through
September 1994, Chairwoman of the Board since 1991 and member of the Office of
the Chairman since September 1994. Members of the two-person Office of the
Chairman preside at all meetings of stockholders and the Board of Directors of
the Company, make such reports concerning the Company as the Board of Directors
shall direct, and have such other powers and perform such other duties as are
from time to time assigned to them by the Board of Directors. In addition, the
Chief Executive Officer reports to both members of the Office of the Chairman
(except in the case of a Chief Executive Officer who also is a member of the
Office of the Chairman, as is the case with Mr. Grossman, in which event the
Chief Executive Officer reports to the other member of the Office of the
Chairman).
Andrew Grossman was appointed a director of the Company on September 13,
1994. He has been employed by the Company as its Chief Executive Officer and
member of the Office of the Chairman (for a description of the role and
responsibilities of the Office of the Chairman, see "- Josephine Chaus" above)
since September 28, 1994, pursuant to an employment agreement. The agreement
provides that Mr.
4
<PAGE>
Grossman shall (a) be nominated to serve as a director of the Company without
additional compensation during each year of the term of his employment
agreement, (b) serve as the Chief Executive Officer and a member of the Office
of the Chairman of the Company, which office also consists of Josephine Chaus
and (c) upon expiration of the term of the agreement, resign as a director of
the Company. In connection with the execution of Mr. Grossman's employment
agreement, Josephine Chaus agreed to vote all her shares of Common Stock at
each annual meeting of stockholders held during the term of the agreement in
favor of his re-election to the Board of Directors of the Company. The term of
the agreement extends until September 1, 2000, although the Company may elect
to extend the term to September 1, 2004 by giving notice to Mr. Grossman on or
before March 1, 2000. See "Executive Compensation--Employment Arrangements."
Prior to September 1994, Mr. Grossman was President from 1991 to 1994 and
Executive Vice President from 1990 to 1991 of Jones Apparel Group, a
manufacturer of women's apparel, and Vice President of Merchandising for Jones
New York from 1987 through 1990. Prior to joining Jones, Mr. Grossman was
employed by Willi Wear Ltd., Herbert Grossman Enterprises, the Ralph Lauren
Womens Wear division of Bidermann Industries, Inc. and the Evan Picone division
of Palm Beach Inc.
S. Lee Kling was elected a director of the Company on February 22, 1989.
He has served since 1991 as Chairman of the Board of Kling Rechter & Company, a
merchant banking company which works in partnership with First Chicago Equity
Capital Corp. and serves as Vice Chairman of Willis Corroon Corp. of Missouri
("Willis Corroon"). See "Certain Transactions." Mr. Kling served as Chairman of
the Board of Landmark Bancshares Corporation, a bank holding company in St.
Louis, Missouri until December 1991 when the company merged with Magna Group,
Inc. He had served in such capacity with Landmark since 1974 and had also
served as Chief Executive Officer of Landmark from 1974 through October 1990
except for the period from May 1978 to January 1979 when he served as Assistant
Special Counselor on Inflation for the White House and Deputy for Ambassador
Robert S. Strauss. Mr. Kling serves on the Boards of Directors of Magna Group,
Inc., a multi-bank holding company; Lewis Galoob Toys, Inc., a toy
manufacturer; E-Systems, Inc., an electronic equipment manufacturer; Falcon
Products, Co., a furniture and fixtures manufacturer; Top Air Manufacturing
Inc., a manufacturer of agricultural equipment; National Beverage Corp., a
beverage manufacturer and Hanover Direct, Inc., a catalog and mail order
company.
Harvey M. Krueger was appointed a director of the Company on January 2,
1992. He has been a Senior Managing Director of Lehman Brothers, Inc. ("Lehman
Brothers"), an investment banking firm, since May 1984. See "Certain
Transactions." From December 1977 to May 1984, he was Managing Director of
Lehman Brothers Kuhn Loeb, Inc. From 1965 to 1977, he was a Partner of Kuhn
Loeb & Co. and in 1977, he served as President and Chief Executive Officer of
Kuhn Loeb & Co.
Philip G. Barach was appointed a director of the Company on November 26,
1993. He was, from July 1968 to March 1990 the Chief Executive Officer of U.S.
Shoe Corp., a shoe manufacturer. In addition, Mr. Barach served as Chairman of
the board of directors of U.S. Shoe Corp. from March 1990 to March 1993. Mr.
Barach currently serves as a director of Union Central Life Insurance Company,
an insurance carrier, and serves as a director of Glimcher Real Estate
Investment Trust, a real estate company, and R.G. Barry, a manufacturer of
thermal comfort products, both of which are public companies.
The Board of Directors of the Company has standing Audit and Compensation
Committees. Messrs. Barach, Kling and Krueger are members of the Audit
Committee and served as members of the Audit Committee during fiscal 1998 and
are members of the Compensation Committee and served as members of the
Compensation Committee during fiscal 1998. None of Messrs. Kling, Krueger or
Barach is an employee of the Company. The Company does not have a standing
Nominating Committee.
5
<PAGE>
The Compensation Committee is charged by the Board of Directors with
administering, reviewing and recommending changes in the Company's incentive
compensation plans for its executives and submitting such plans to the Board of
Directors for approval, allocating bonuses, determining the individuals to whom
stock options are to be granted, the number of shares subject to grant and the
terms of such operations, and recommending to the Board any changes in the
compensation of any employee of the Company whose annual compensation exceeds
$150,000. The Compensation Committee met on five occasions during fiscal 1998.
The Audit Committee has such powers as may be assigned to it by the Board
of Directors from time to time and is charged with recommending annually to the
Board of Directors the independent auditors to be retained by the Company,
reviewing the audit plan with the auditors, reviewing the results of the audit
with the officers of the Company and its auditors and reviewing with the
officers and internal auditors of the Company the scope and nature of the
Company's internal auditing system. The Audit Committee met on five occasions
during fiscal 1998.
During fiscal 1998, the Board of Directors of the Company met on five
occasions. While serving as a director, each of the directors attended at least
75% of the meetings of the Board of Directors and of the meetings held by all
committees of the Board on which he or she served during fiscal 1998.
COMPLIANCE WITH SECTION 16(A) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and
persons who own beneficially more than ten percent of the Common Stock to file
with the Securities and Exchange Commission initial reports of beneficial
ownership and reports of changes in beneficial ownership of the Common Stock.
Officers, directors and persons owning more than ten percent of the Common
Stock are required to furnish the Company with copies of all such reports. To
the Company's knowledge, based solely on a review of copies of such reports
furnished to the Company, the Company believes that during fiscal 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
persons owning beneficially more than ten percent of the Common Stock were
complied with, except that the following persons filed late reports during
fiscal 1998:
Andrew Grossman inadvertently filed one late Form 4 relating to the
acquisition of one subscription right in the Company's January 1998 rights
offering and the exercise of such right into seven shares of Common Stock.
Philip Barach inadvertently filed one late Form 4 relating to the
acquisition of 500 subscription rights in the Company's January 1998 rights
offering and the exercise of such rights into 3,737 shares of Common Stock and
one late Form 5 relating to the February 1998 cancellation and regrant of stock
options to purchase 1,000 shares of Common Stock and the grant of stock options
to purchase 10,000 shares of Common Stock.
Lynn Buechner inadvertently filed one late Form 3 at a time when she owned
no securities in the Company.
Barton Heminover inadvertently filed one late Form 5 relating to the
February 1998 cancellation and regrant of stock options to purchase 3,000
shares of Common Stock and the grant of stock options to purchase 43,408 shares
of Common Stock.
6
<PAGE>
S. Lee Kling inadvertently filed one late Form 5 relating to the February
1998 cancellation and regrant of stock options to purchase 2,000 shares of
Common Stock and the grant of stock options to purchase 10,000 shares of Common
Stock.
Harvey Krueger inadvertently filed one late Form 5 relating to the
February 1998 cancellation and regrant of stock options to purchase 5,000
shares of Common Stock and the grant of stock options to purchase 10,000 shares
of Common Stock.
Judith Leech inadvertently filed one late Form 4 relating to the
acquisition of 333 subscription rights in the Company's January 1998 rights
offering and the exercise of such rights into 1,821 shares of Common Stock.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all cash compensation paid or accrued by
the Company for fiscal 1998, fiscal 1997 and fiscal 1996 with respect to (a)
Josephine Chaus, a member of the Office of the Chairman, (b) Andrew Grossman,
the Company's Chief Executive Officer and a member of the Office of the
Chairman and (c) the other most highly compensated executive officer of the
Company whose compensation exceeded $100,000 (collectively, the "Named
Executive Officers"), for services rendered by such persons in all capacities
to the Company.
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------------------------------ ------------
NUMBER OF
SECURITIES
NAME AND PRINCIPAL POSITION UNDERLYING ALL OTHER
HELD DURING FISCAL 1998 YEAR SALARY BONUS OPTIONS COMPENSATION
- ----------------------------- ------ ------ ----- -------- ------------
<S> <C> <C> <C> <C> <C>
Andrew Grossman
Chief Executive Officer and 1998 $1,000,000 $215,550 1,375,137 $ 2,782(1)
Member, Office of the Chairman 1997 $1,000,000 -- -- $ 3,014(1)
1996 $1,000,000 -- 150,000 $11,097(1)
Josephine Chaus
Chairwoman of the Board and 1998 $ 390,000 -- -- --
Member, Office of the Chairman 1997 $ 390,000 -- -- --
1996 $ 390,000 -- -- --
Barton Heminover
Vice President - Corporate 1998 $ 135,000 -- 46,408(3) $ 2,700(4)
Controller and Assistant Secretary 1997 $ 129,808 -- 3,000 --
1996 --(2) -- -- --
</TABLE>
(1) Consists of health insurance premiums paid by the Company.
(2) Mr. Heminover's employment with the Company commenced in July 1996.
(3) Includes options to purchase 3,000 shares of Common Stock issued upon
cancellation of options to purchase 3,000 shares of Common Stock
granted during fiscal 1997.
(4) Consists of 401(k) plan matching contribution paid by the Company.
8
<PAGE>
OPTION GRANTS TABLE
The following table sets forth information with respect to the Named
Executive Officers concerning the grant of stock options during the fiscal year
ended June 30, 1998. The Company did not have during such fiscal year, and
currently does not have, any plans providing for the grant of stock
appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
----------------------------------------------------------- ------------------------------
% OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE
GRANTED IN OR BASE EXPIRATION
NAME (#)(1) FISCAL YEAR PRICE DATE 5% 10%
---- -------- ----------- ------- ------ ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew Grossman 1,375,137 53.33% $3.11 2/22/2008 $2,689,579 $6,815,920
Josephine Chaus -- -- -- -- -- --
Barton Heminover 46,408 1.80% $3.11 (3) $90,768 $230,023
</TABLE>
(1) All options were granted under the Stock Option Plan.
(2) Potential pre-tax realizable value is based on the assumption that the
stock appreciates from the market value on the date of grant at the annual
rates of appreciation shown on the table over the option term (ten years).
This is a theoretical value. The actual realized value depends upon the
market value of the Company's stock at the exercise date.
(3) Options to purchase 43,408 shares of Common Stock expire on February 22,
2008; options to purchase 3,000 shares of Common Stock expire on July 17,
2006.
9
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information with respect to the exercise of
stock options during fiscal 1998 by the Named Executive Officers and the value
of unexercised options at fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF VALUE OF VALUE OF
SECURITIES SECURITIES UNEXERCISED UNEXERCISED
UNDERLYING UNDERLYING IN-THE-MONEY IN-THE-MONEY
UNEXERCISED UNEXERCISED OPTIONS AT OPTIONS AT
OPTIONS AT OPTIONS AT JUNE 30, JUNE 30,
SHARES JUNE 30, 1998 JUNE 30, 1998 1998(1) 1998(1)
ACQUIRED VALUE ------------- ------------- --------- -------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew Grossman -- -- 687,569 687,568 -- --
Josephine Chaus -- -- -- -- -- --
Barton Heminover -- -- 750 45,658 -- --
</TABLE>
(1) The value is based on the excess of the market price of the Company's
Common Stock at the end of fiscal 1998 over the option price of the
unexercised options.
EMPLOYMENT ARRANGEMENTS
Andrew Grossman. On September 1, 1994, the Company entered into a
five-year employment agreement with Andrew Grossman, Chief Executive Officer
and Member of the Office of the Chairman of the Company, with an option to
extend the term of Mr. Grossman's agreement for an additional five years. On
September 13, 1995, the Company exercised the option to extend his employment
agreement. The Company paid Mr. Grossman a sign-on bonus of $6.2 million,
portions of which must be paid back to the Company if Mr. Grossman's employment
is terminated for cause (as defined in the employment agreement) or if he
leaves the Company without Good Reason (as defined in the employment
agreement). The sign-on bonus was nondeductible by the Company for tax
purposes. In addition, in connection with the initial term of Mr. Grossman's
employment agreement, Mr. Grossman was granted options (the "Initial Options")
to purchase an aggregate of 150,000 shares of Common Stock and, on September
14, 1995, in connection with the extension of Mr. Grossman's employment
agreement, Mr. Grossman was granted options (the "Additional Options") to
purchase an additional 150,000 shares of Common Stock. The Initial Options were
granted at an exercise price of $22.50 per share and vested at a rate of 20%
per year, commencing on September 1, 1994. The Additional Options were granted
at an exercise price of $56.25 and vested at a rate of 20% per year, commencing
on September 1, 1998.
As of January 1, 1998, the Company amended the employment agreement. Under
the amended employment agreement, the term of the agreement was modified to
extend through September 1, 2000, and the Company was provided with an election
to extend the term to September 1, 2004 by giving notice to Mr. Grossman on or
before March 1, 2000. In connection with the execution of the January 1, 1998
amendment, on February 23, 1998, Mr. Grossman was granted options (the "New
Options") to purchase 1,375,137 shares of Common Stock under the Stock Option
Plan and the Initial Options and the Additional Options were canceled. The New
Options were granted at an exercise price of $3.11 per share. The New Options
vest as follows: 50% of the New Options vested upon their grant, and 25% of the
New Options vest on each of March 1, 1999 and March 1, 2000. If the Company
elects to extend the term of Mr. Grossman's employment
10
<PAGE>
agreement to September 1, 2004, the Company has agreed to grant Mr. Grossman
options to purchase additional shares of Common Stock equal to three percent
(3%) of the then outstanding shares of Common Stock on a fully diluted basis.
The additional options would be granted at an exercise price equal to the then
closing sales price per share of the Common Stock on the date that notice of
extension of the term is given to Mr. Grossman. The additional options would
vest at a rate of 33 1/3% per year, commencing on the first anniversary of the
date of grant.
Under the employment agreement, Mr. Grossman receives an annual salary of
$1.0 million and is entitled to an annual bonus (the "Bonus Plan") consisting
of five percent (5%) of the Company's Annual Net Profits for the fiscal year
ended June 30, 1998 and two and one-half percent (2.5%) of the Company's Annual
Net Profits for each fiscal year thereafter during the term (such amount, the
"Net Profit Participation"). Mr. Grossman is the sole participant in the Bonus
Plan. "Annual Net Profits" are defined in the agreement as net income of the
Company for any fiscal year as reflected on the audited financial statements of
the Company for such fiscal year prepared in accordance with generally accepted
accounting principles applied consistent with past practices and certified by
the Company's independent public accountants. A bonus of $215,550 was payable
for fiscal 1998.
If the employment agreement is terminated by the Company other than for
cause or the death or disability of Mr. Grossman (or by Mr. Grossman if the
Company shall be in material breach of its obligations), the Company is
required to pay Mr. Grossman his annual salary (in monthly installments) and
the Net Profit Participation that he would have received had the agreement not
been terminated, less any compensation and bonuses received by Mr. Grossman
from other employers. If Mr. Grossman terminates the employment agreement prior
to its second anniversary for other than the Company's material breach, then
the Company is required to pay Mr. Grossman an annual salary for a two-year
period provided he, among other things, adheres to certain non-solicitation,
non-compete and confidentiality provisions contained in the employment
agreement.
The employment agreement also provides that if Mr. Grossman's employment
is terminated (with certain exceptions) after a change in control (as described
below), Mr. Grossman is to receive a lump sum payment equal to the aggregate
annual salary (discounted to present value) that he would have received had his
employment agreement not been terminated. A "change in control" is defined to
include certain mergers or asset sales; the failure to stand for re-election of
a majority of the existing Board of Directors; and the acquisition by any
person or group of stock resulting in beneficial ownership of at least the
number of shares collectively owned at such time by Josephine Chaus and/or
members of her immediate family, affiliates or certain other related parties.
In the event of such change in control or the termination of Mr. Grossman's
employment for certain specified reasons, any unvested portion of the options
shall vest immediately and shall remain exercisable for a period of six months
after such date, unless the options are earlier terminated pursuant to the
terms of the employment agreement.
Josephine Chaus. The Company's employment agreement with Josephine Chaus,
Chairwoman of the Board, commenced on July 1, 1992 and expired on June 30,
1994. Since such date, she has been employed on the same terms, although
without a written agreement. The annual base salary was $390,000 until July 1,
1998. On May 28, 1998, the Compensation Committee increased Ms. Chaus' salary
to $525,000 per year, effective July 1, 1998.
11
<PAGE>
Stuart S. Levy. On July 22, 1998, the Company entered into a employment
letter agreement with Stuart S. Levy, Chief Financial Officer and Secretary of
the Company. Under the employment letter agreement, Mr. Levy receives an annual
salary of $300,000 and is entitled to an annual bonus in the sole discretion of
the Board of Directors. In addition, in connection with the execution of Mr.
Levy's employment letter agreement, Mr. Levy was granted options, effective
September 8, 1998, to purchase an aggregate of 40,000 shares of Common Stock.
The options were granted at an exercise price of $2.58 per share and vest at a
rate of 25% per year, commencing on September 8, 1999.
If the employment letter agreement is terminated by the Company other than
for cause (including a termination resulting from a change in control), the
Company is required to pay Mr. Levy his annual salary for a one-year period.
Such obligation will be terminated upon Mr. Levy's acceptance of a position as
an employee or consultant with another entity.
Lynn Buechner. On October 27, 1997, the Company entered into a three-year
employment agreement with Lynn Buechner, President of the Company's Nautica
Women's Division, which is to be automatically extended for additional one year
periods unless either party thereto specifies otherwise. Ms. Buechner is not an
executive officer of the Company. The Company paid Ms. Buechner a sign-on bonus
of $150,000, portions of which must be paid back to the Company if Ms.
Buechner's employment is terminated for cause (as defined in the employment
agreement), if she leaves the Company without Good Reason (as defined in the
employment agreement), or if she breaches any of the unauthorized disclosure,
non-competition or non- solicitation covenants in the employment agreement. In
addition, in connection with the execution of Ms. Buechner's employment
agreement, Ms. Buechner was granted options, effective February 23, 1998, to
purchase an aggregate of 128,617 shares of Common Stock. The options were
granted at an exercise price of $3.11 per share and vest at a rate of 20% per
year, commencing on February 23, 1999.
Under the employment agreement, Ms. Buechner receives an annual salary of
$400,000 and is entitled to an annual bonus in an amount equal to the greater
of (i) two percent (2%) of "Net Sales" (as hereinafter defined) in excess of a
target amount of the Company's Nautica Women's Division for each fiscal year of
the Company and (ii) $100,000 ("Buechner Net Profit Participation"). For fiscal
1998, the Buechner Net Profit Participation shall be calculated on a pro rated
basis. A bonus of $67,123 was payable for fiscal 1998. Each year of the initial
three-year term, commencing with the first day of the second year, Ms.
Buechner's annual salary shall be increased by $25,000. "Net Sales" for any
fiscal year shall mean the Company's Nautica Women's Division sales at standard
after discounts, allowances and returns. If the Company's license agreement
with Nautica Apparel, Inc. is terminated, materially amended, expires or is not
renewed, Ms. Buechner shall be employed by the Company in such executive
positions with a division of the Company of reasonably comparable status and
responsibilities as may be determined by the Board of Directors, and Ms.
Buechner and the Company will establish a bonus arrangement for Ms. Buechner's
behalf that is substantially equivalent on an economic basis as the Buechner
Net Profit Participation set forth above. If the employment agreement is
terminated by the Company other than for cause (including a failure by the
Company to extend the employment agreement), the Company is required to pay Ms.
Buechner her annual salary for the longer of the remainder of the term and for
a one-year period, plus medical and dental benefits for such period. If the
employment agreement is terminated by the Company due to the death or
disability of Ms. Buechner, the Company is only required to pay Ms. Buechner
her annual salary for a one-year period, plus medical and dental benefits for
such period.
12
<PAGE>
STOCK OPTION PLAN
The Company has in effect the Stock Option Plan. As of June 30, 1998,
options to purchase an aggregate of 2,616,407 shares had been granted and were
outstanding under the Stock Option Plan at an exercise price of $3.11 per
share. All options granted during the past three fiscal years were granted at
an exercise price at least equal to the market price of the Common Stock on the
date of the grant of such options. On October 14, 1998, the closing sales price
of the Common Stock on the New York Stock Exchange was $2.31. For a description
of options owned by the Named Executive Officers as of June 30, 1998 and
options received by such Named Executive Officers during the fiscal year ended
June 30, 1998, see "Executive Compensation" above. As of June 30, 1998, the
current executive officers as a group had received options to purchase an
aggregate of 1,550,162 shares pursuant to the Stock Option Plan, and the
current non-employee directors as a group had received options to purchase
38,000 shares pursuant to the Stock Option Plan.
13
<PAGE>
DIRECTORS' COMPENSATION
During the first part of fiscal 1998, directors who were not employees of
the Company received a fee of $8,000 per annum, plus a cash fee of $1,000 for
each Board of Directors or Committee meeting attended. Effective as of January
1, 1998, the Compensation Committee of the Board of Directors of the Company
increased the compensation of non-employee directors to an annual fee of
$20,000 for serving on the Board of Directors, plus a cash fee of $1,500 per
meeting day.
In addition to annual fees, pursuant to the Bernard Chaus, Inc. 1986 Stock
Option Plan, non-employee directors were granted a one time option to acquire
1,000 shares of Common Stock, exercisable up to 50% one year after the grant
and 50% two years after the grant, provided the director was duly elected or
re-elected, as the case may be, in the interim. The per share exercise price of
any non-incentive stock option was not less than 85% of the fair market value
of the Common Stock on the date of the grant. On February 11, 1998, each
non-employee director was granted an option to purchase 10,000 shares of Common
Stock with an exercise price of $3.11 per share, exercisable up to 25% on each
of the first four anniversaries after the grant. In addition, pursuant to the
Stock Option Plan, each non-employee director is granted options to purchase
5,000 shares of Common Stock annually on July 1 based on the market price of
the Common Stock on the date of grant, exercisable up to 25% on each of the
first four anniversaries after the grant.
The Company has purchased and will maintain a $50,000 term life insurance
policy on behalf of each director with the benefits to be paid to each
director's designated beneficiary.
COMPENSATION COMMITTEE INTERLOCKS
Philip Barach, S. Lee Kling and Harvey M. Krueger are members of the
Compensation Committee of the Board of Directors of the Company, and served as
members of the Compensation Committee during fiscal 1998. Mr. Krueger, who also
is a member of the Company's Audit Committee, is a Senior Managing Director of
Lehman Brothers, which provided certain advisory services to the Company during
fiscal 1998 for which it received fees aggregating $250,000 in fiscal 1998. In
addition, Lehman Brothers served as managing underwriter to the Company in
connection with an underwritten public offering of 575,000 shares of Common
Stock (including 75,000 shares of Common Stock to cover over-allotments), which
public offering was consummated in November 1995. Mr. Kling, who also is a
member of the Company's Audit Committee, serves as Vice Chairman of an
insurance broker, Willis Corroon, from which the Company obtains various
insurance policies (i.e., travel, directors and officers liability, and life
insurance). A son of Mr. Kling also is employed by Willis Corroon. The total
aggregate premium payments paid to Willis Corroon in respect of such insurance
during fiscal 1998 were approximately $285,000.
14
<PAGE>
COMPENSATION COMMITTEE REPORT
Committee. The Compensation Committee establishes and reviews the
Company's arrangements and programs for compensating its executive officers,
including the Named Executive Officers. The Compensation Committee is composed
of Philip Barach, S. Lee Kling and Harvey M. Krueger, none of whom are either
officers or employees of the Company.
Background, Objectives and Philosophy. The Compensation Committee's
objective is to establish an over-all compensation program that rewards
executives as the Company's net income reaches certain targeted levels and,
through the grant of options, as the market price of the Company's Common Stock
increases.
The Compensation Committee believes that there are three principal
components which should be included in a compensation program:
1) base salary;
2) annual cash incentives; and
3) stock option incentives.
Under this approach, the attainment of yearly earnings and other
short-term targets is compensated through yearly bonuses under an Incentive
Award Plan (the "Incentive Award Plan") and long-term performance of the
Company is rewarded through the grant of stock options pursuant to the Stock
Option Plan. Unless otherwise provided by the Committee at the time an option
is granted, options granted under the Stock Option Plan vest ratably over a
four-year period. This approach is consistent with the Committee's view that
incentive programs should be based upon performance and that awards of stock
options should ally the economic interests of the Company's officers and other
key employees with those of the Company's stockholders.
Compensation Program Components.
Base Salary. Base salaries are set at levels that are competitive within
the apparel industry. An annual salary adjustment within each applicable
position/salary level is determined by evaluating the performance of the
individual, including the achievement of numerate and non-numerate objectives,
in the context of the financial results of the Company.
Annual Cash Incentives. Cash incentive awards are based on performance as
measured by the Company's net income. The Compensation Committee believes that
net income is an appropriate measure of performance because it promotes the
achievement of corporate-wide goals. The Company has in effect the Incentive
Award Plan in which key employees, other than Josephine Chaus, are eligible to
participate. Generally, the Compensation Committee establishes corporate-wide
objectives for net earnings each year, the attainment of which serve as the
basis for computing annual bonuses. No earnings targets were fixed for fiscal
1998. In the past, individual bonuses for key employees under the Incentive
Award Plan have been recommended by management to the Compensation Committee
which, in turn, makes the final determination. A portion of each executive's
bonus has also been dependent on the achievement of written
15
<PAGE>
numerate objectives which are jointly established in advance by each such
executive and the Chief Executive Officer. The Compensation Committee may
determine to establish earnings targets for future fiscal years.
Stock Option Plan. The Compensation Committee believes that the use of
stock options as the principal basis for creating long-term incentives
satisfies the objective of aligning the interests of executive management with
those of the Company's stockholders. The Company has in effect the Stock Option
Plan pursuant to which the Compensation Committee may grant executives, other
than Josephine Chaus, options to purchase Common Stock of the Company. The
Company utilizes vesting periods to encourage key executives to continue in the
employ of the Company. Unless otherwise provided by the Compensation Committee
at the time an option is granted, options granted under the Stock Option Plan
vest ratably over a four-year period. Levels of participation in the Stock
Option Plan generally vary on the basis of the recipient's position in the
Company. In connection with the Company's restructuring program, as an
incentive to employees, the Company offered all employees holding options the
right to exchange such options for new options at a lower exercise price.
Compensation of the Chief Executive Officer. Josephine Chaus served as
Chief Executive Officer of the Company until Andrew Grossman was hired in
September 1994. Since such time she has served as Chairwoman of the Board and
member of the Office of the Chairman of the Company. As Josephine Chaus is a
controlling stockholder of the Company, the Compensation Committee did not
believe there was a need for bonus compensation or stock incentives. As a
result, Josephine Chaus did not participate in the Company's bonus program or
the Stock Option Plan. The annual base salary provided for in her employment
agreement with the Company, which expired in June 1994, was $390,000 or such
larger amount as the Compensation Committee shall determine. Although Ms.
Chaus's employment agreement is no longer in effect, the Company continues to
compensate her at the same rate. During fiscal 1998, Ms. Chaus's annual base
salary was not increased above the $390,000 level. For fiscal 1999, Ms. Chaus's
annual salary was increased to $525,000. In making this decision, the
Compensation Committee took into account cash compensation levels for chief
executive officers of similarly situated companies, the successful operations
of the Company during fiscal 1998 and the fact that Ms. Chaus had not received
any increases in compensation over the past several years.
Andrew Grossman has served as the Chief Executive Officer of the Company
since September 1994. For fiscal 1998, Mr. Grossman was compensated pursuant to
the terms of his employment agreement which provides for an annual salary of
$1.0 million and an annual bonus of 5% of the Annual Net Profits of the
Company. A bonus of $215,550 was payable for fiscal 1998. As of January 1,
1998, the Company amended the employment agreement. Under the amended
employment agreement, for fiscal 1999, Mr. Grossman will receive an annual
salary of $1.0 million and an annual bonus of 2.5% of the Annual Net Profits of
the Company. In connection with the execution of the January 1, 1998 amendment,
on February 23, 1998, Mr. Grossman was granted options to purchase 1,375,137
shares of Common Stock under the Stock Option Plan at an exercise price of
$3.11 per share and Mr. Grossman's previous options were canceled. The options
vest as follows: 50% of the options vested upon their grant, and 25% of the
options vest on each of March 1, 1999 and March 1, 2000.
COMPENSATION COMMITTEE
Philip Barach
S. Lee Kling
Harvey M. Krueger
16
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares the total cumulative return
(assuming dividends are reinvested) on the Company's Common Stock during the
five fiscal years ended June 30, 1998 with the cumulative return on the
Standard & Poor's 500 Index and the Standard & Poor's Textiles (Apparel) Index,
assuming investment of $100 in each of the above at their closing stock prices
on June 30, 1993.
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF
EDGAR FILING.]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG BERNARD CHAUS, INC., THE S&P 500 INDEX
AND THE S&P TEXTILES (APPAREL) INDEX
CUMULATIVE TOTAL RETURN
-----------------------------------------------
6/93 6/94 6/95 6/96 6/97 6/98
------- ------ ------ ------ ------ ------
BERNARD CHAUS, INC. 100.00 53.57 142.86 92.86 30.36 9.82
S & P 500 100.00 101.41 127.84 161.09 216.99 282.43
S & P TEXTILES 100.00 87.43 91.24 114.01 125.80 145.54
(APPAREL)
* $100 INVESTED ON 6/30/93 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
17
<PAGE>
CERTAIN TRANSACTIONS
JOSEPHINE CHAUS
Subordinated Debt. The Company had outstanding at June 30, 1997, $26.4
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"). In connection
with the Company's November 1995 public offering, Josephine Chaus extended the
maturity date of the Subordinated Notes (which were to mature on July 1, 1996)
to July 1, 1998. In connection with the Company's January 1998 rights offering
(the "Rights Offering"), pursuant to the terms of a conversion agreement dated
as of January 29, 1998, the Subordinated Notes, together with the Subrogated
Loan (as defined below), were converted by Ms. Chaus into 10,510,910 shares of
Common Stock.
Credit Support. During fiscal 1994, the Company required availability
under its working capital credit line with BNY Financial Corporation ("BNYF")
in excess of the amount available under its borrowing base formula. To assist
the Company, Ms. Chaus provided credit support in the form of a letter of
credit (the "Letter of Credit"). In return for the Letter of Credit, BNYF
increased the Company's borrowing availability by various amounts as the amount
and expiration date of the Letter of Credit were increased and extended,
respectively. In return for such credit support, a special committee composed
of disinterested outside members of the Board of Directors of the Company (the
"Special Committee"), issued to Ms. Chaus warrants (the "1994 Warrants") to
purchase an aggregate of 1,216,500 shares of Common Stock of the Company,
exercisable through November 22, 1999, at prices ranging between $2.25 and
$4.62 per share.
In February 1995, Ms. Chaus increased the Letter of Credit to $10.0
million and extended its term to October 31, 1995 (the "February 1995
Increase/Extension"). In addition, in February 1995, Ms. Chaus also provided a
$5.0 million personal guarantee (the "$5.0 Million Guarantee") to the Company
with respect to the BNYF credit facility. In September 1995, Ms. Chaus further
extended the term of the Letter of Credit to January 31, 1996 (the "September
1995 Extension"). In consideration of the February 1995 Increase/Extension, the
$5.0 Million Guarantee and the September Extension, the Special Committee
approved the issuance to Ms. Chaus of warrants (the "1995 Warrants") to
purchase an aggregate of 1,580,000 shares of Common Stock at prices ranging
between $4.05 and $6.75 per share.
During fiscal 1996, the Company required additional availability under the
BNYF credit facility. To further assist the Company, Ms. Chaus provided
additional credit support in the form of an option to further extend the Letter
of Credit's expiration date to July 31, 1996 (the "July 1996 Option"). In
January 1996, the Company exercised the July 1996 Option to extend the Letter
of Credit to July 31, 1996 (the "July 1996 Extension"). In consideration for
her provision of the July 1996 Extension, the Special Committee approved the
issuance to Ms. Chaus of warrants (the "1996 Warrants") to purchase an
aggregate of 682,012 shares of Common Stock at an exercise price of $4.20 per
share.
In connection with a May 1996 amendment to the BNYF credit facility, Ms.
Chaus extended the Letter of Credit to January 31, 1997 (the "January 1997
Extension") and additionally provided a collateralized increase of $5.0 million
in the $5.0 Million Guarantee to $10.0 million (the "$10.0 Million Guarantee").
In connection with the January 1997 Extension, the Special Committee approved
the payment of cash compensation to Ms. Chaus of $100,000 for each three month
period of the Letter of
18
<PAGE>
Credit as extended from July 31, 1996 to January 31, 1997. For her provision of
the $10.0 Million Guarantee, the Special Committee approved an increase in the
amount of cash compensation payable to Ms. Chaus for her guaranty to $100,000
for each three month period of the $10.0 Million Guarantee.
In connection with a September 1996 amendment to the BNYF credit facility,
Ms. Chaus extended the Letter of Credit to July 31, 1997 (the "July 1997
Extension"), increased the amount of the $10.0 Million Guarantee to $12.5
Million (the "$12.5 Million Guarantee") and fully collateralized the $12.5
Million Guarantee. In connection with the July 1997 Extension, the Special
Committee approved the payment of cash compensation to Ms. Chaus of $100,000
for each additional three month period of the Letter of Credit as extended from
January 31, 1997 to July 31, 1997. For her provision of the $12.5 Million
Guarantee, the Special Committee approved an increase in the amount of cash
compensation payable to Ms. Chaus for her guaranty to $125,000 for each three
month period of the $12.5 Million Guarantee. Such increased amount was paid to
Ms. Chaus through January 29, 1998 (on a pro-rated basis).
Restructuring of Credit Support Provided by Ms. Chaus. Ms. Chaus
previously entered into a deposit letter dated July 23, 1997 (the "July Deposit
Letter") pursuant to which she provided $10.0 million in cash collateral to
secure the BNYF credit facility in substitution for the Letter of Credit. The
July Deposit Letter was amended on October 10, 1997 to provide that the $10.0
million in cash collateral would be held as collateral to secure indebtedness
under a new BNYF credit facility. On January 23, 1998, in connection with the
Rights Offering, such collateral was released and used by Ms. Chaus to purchase
shares of Common Stock issuable to her upon the exercise of the rights, in
satisfaction of her agreement to exercise her full $10.0 million subscription
(the "Purchase Commitment") in connection with the Rights Offering. The Company
used the proceeds from the Purchase Commitment to retire $10.0 million of the
new BNYF credit facility.
On October 10, 1997, in substitution for the $12.5 Million Guarantee, she
entered into a deposit letter dated July 23, 1997 (the "October Deposit
Letter") pursuant to which she provided $12.5 million in cash collateral to
secure the new BNYF credit facility. The cash collateral was provided from the
proceeds of a loan made by BNYF to Ms. Chaus. In connection with the Rights
Offering, on January 29, 1998, pursuant to the terms of a cash collateral
deposit release letter, the $12.5 million in cash collateral was released and
used to retire $12.5 million of the new BNYF credit facility. As a result of
such repayment, the Company became indebted to Ms. Chaus for $12.5 million, and
Ms. Chaus subrogated to the rights of BNYF with respect to such loan amount
(the "Subrogated Loan"). In connection with the Rights Offering, pursuant to
the terms of a conversion agreement dated as of January 29, 1998, the
Subordinated Notes and the Subrogated Loan were converted by Ms. Chaus into
10,510,910 shares of Common Stock.
In connection with the Rights Offering and the Company's restructuring
program, Ms. Chaus relinquished, for no value, all of her rights in and to the
1994 Warrants, the 1995 Warrants and the 1996 Warrants.
HARVEY KRUEGER
Harvey Krueger, a director of the Company and member of its Audit and
Compensation Committees, is a Senior Managing Director of Lehman Brothers,
which provided certain advisory services to the Company during fiscal 1998 for
which it received fees of $250,000 in fiscal 1998. In addition, Lehman
19
<PAGE>
Brothers served as managing underwriter by the Company in connection with the
Company's public offering which was consummated in November 1995.
S. LEE KLING
S. Lee Kling, a director of the Company and member of its Audit and
Compensation Committees, serves as Vice Chairman of an insurance broker, Willis
Corroon, from which the Company obtains various insurance policies (i.e.,
travel, directors and officers liability, and life insurance). In addition, a
son of Mr. Kling is employed by Willis Corroon. The total aggregate premium
payments paid to Willis Corroon in respect of such insurance during fiscal 1998
were approximately $285,000.
SELECTION OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee,
has appointed Deloitte & Touche LLP, independent auditors, as the Company's
auditors for the fiscal year ending June 30, 1999. Deloitte & Touche has served
as the Company's independent auditors since June 10, 1994. Although stockholder
ratification of the selection of Deloitte & Touche LLP is not required, the
Board considers it desirable for stockholders to pass upon the selection of
auditors.
It is expected that one or more representatives of Deloitte & Touche LLP
will be present at the meeting and will have the opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions of stockholders.
The Board of Directors recommends a vote for the ratification of the
appointment of the auditors. Each proxy received will be voted for the
ratification of the appointment of the auditors unless otherwise specified in
the proxy.
Josephine Chaus possesses the power to vote more than 50% of the
outstanding shares of the Common Stock. Accordingly, the affirmative vote of
Josephine Chaus is sufficient to ratify the appointment of the auditors.
Josephine Chaus has advised the Company that she intends to vote all of her
shares in favor of such ratification of the appointment.
PROPOSALS FOR NEXT YEAR'S MEETING
Any proposal by a stockholder who intends to be present at the next Annual
Meeting of Stockholders must be received by the Company at its offices at 800
Secaucus Road, Secaucus, New Jersey 07094 for inclusion in its proxy statement
and form of proxy relating to that Annual Meeting no later than June 24, 1999.
Such proposals should be sent to the Secretary of the Company by certified
mail, return receipt requested. A proxy will confer discretionary authority to
management of the Company to vote on any matter other than matters for which
the Company received notice by a stockholder prior to August 8, 1999; provided,
however, that if the 1999 Annual Meeting of Stockholders is held prior to
October 18, 1999, the Company will notify the stockholders of a revised date
for submitting notice to the Company.
20
<PAGE>
MISCELLANEOUS
The Board of Directors of the Company does not intend to present, and does
not have any reason to believe that others intend to present, any matter of
business at the meeting other than as set forth in the accompanying Notice of
Annual Meeting of Stockholders. However, if other matters properly come before
the meeting, it is the intention of the persons named in the enclosed form of
proxy to vote any proxies in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material which may be
sent to stockholders in connection with this solicitation. The Board of
Directors may use the services of the Company's directors, officers and other
regular employees to solicit proxies. The Company may reimburse persons holding
shares in their names or in the names of nominees for their expenses in sending
proxies and proxy material to their principals.
Copies of the 1998 Annual Report to Stockholders, including financial
statements for the fiscal year ended June 30, 1998, are being mailed to the
stockholders prior to or simultaneously with this Proxy Statement.
THE COMPANY WILL PROVIDE A COPY OF ITS ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION (FORM 10-K) FOR THE FISCAL YEAR ENDED JUNE 30, 1998 TO EACH
STOCKHOLDER WITHOUT CHARGE (OTHER THAN A REASONABLE CHARGE FOR ANY EXHIBIT
REQUESTED) UPON WRITTEN REQUEST TO:
Bernard Chaus, Inc.
800 Secaucus Road
Secaucus, New Jersey 07094
Attention: Stuart S. Levy
Chief Financial Officer and
Secretary
21
<PAGE>
[front]
PROXY COMMON STOCK
BERNARD CHAUS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE CORPORATION FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 17, 1998
The undersigned hereby constitutes and appoints Josephine Chaus and Stuart
S. Levy, and each of them, with full power of substitution, attorneys and
proxies to represent and to vote all of the shares of Common Stock which the
undersigned would be entitled to vote, with all powers the undersigned would
possess if personally present, at the Annual Meeting of the Stockholders of
BERNARD CHAUS, INC., to be held on November 17, 1998 at 2:30 p.m. at the Rihga
Royal Hotel, 151 West 54th Street, New York, New York, Winter Garden Room,
mezzanine level, and at any adjournment or postponement thereof, on all matters
coming before said meeting.
IF NO DIRECTIONS ARE GIVEN, PROXIES WILL BE VOTED (I) FOR THE ELECTION OF
THE NOMINEES NAMED UNDER THE CAPTION "TO ELECT DIRECTORS," (II) FOR THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS AUDITORS FOR THE
COMPANY'S FISCAL YEAR ENDING JUNE 30, 1999, AND (III) IN THE DISCRETION OF THE
PROXIES NAMED ON THE PROXY CARD WITH RESPECT TO SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
The undersigned acknowledges receipt of the accompanying Proxy Statement
dated October 22, 1998.
<PAGE>
[back]
1. TO ELECT DIRECTORS.
Nominees: Philip G. Barach, Josephine Chaus, Andrew Grossman, S. Lee
Kling and Harvey M. Krueger. (Mark only one of the following boxes.)
[ ] VOTE FOR all nominees listed to the right, except
vote withheld as to the following nominees (if
any):
[ ] VOTE WITHHELD from all nominees.
2. To ratify the appointment of Deloitte & Touche LLP as the
Company's auditors for the Company's fiscal year ending
June 30, 1999:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. At their discretion, upon any other business which may
properly come before the meeting or any adjournment
thereof.
Date:_____________________________, 1998
----------------------------------------
----------------------------------------
Signature of Stockholder(s)
(When signing as attorney, trustee,
executor, administrator, guardian,
corporate officer, etc., please give
full title. If more than one trustee,
all should sign. Joint owners must each
sign.)
PLEASE DATE AND SIGN EXACTLY AS NAME
APPEARS ABOVE.
I plan [ ] I do not plan [ ]
to attend the 1998 Annual Meeting of
Stockholders.
<PAGE>
[front]
PROXY COMMON STOCK
BERNARD CHAUS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE CORPORATION FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 17, 1998
The undersigned hereby directs CHASE MANHATTAN BANK, Corporate
Trustee under the Bernard Chaus, Inc. Corporate Trust which was established to
aid in the execution of the Bernard Chaus, Inc. Employee Savings Plan (the
"Plan") to vote all of the undersigned's pro rata share of Bernard Chaus, Inc.
Common Stock held by the Corporate Trustee under the Plan, at the Annual
Meeting of the Stockholders of BERNARD CHAUS, INC. to be held on November 17,
1998 at 2:30 p.m. at the Rihga Royal Hotel, 151 West 54th Street, New York, New
York, Winter Garden Room, mezzanine level, and at any adjournment or
postponement thereof, on all matters coming before said meeting.
IF NO DIRECTIONS ARE GIVEN, PROXIES WILL BE VOTED (I) FOR THE ELECTION OF
THE NOMINEES NAMED UNDER THE CAPTION "TO ELECT DIRECTORS," (II) FOR THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS AUDITORS FOR THE
COMPANY'S FISCAL YEAR ENDING JUNE 30, 1999, AND (III) IN THE DISCRETION OF THE
PROXIES NAMED ON THE PROXY CARD WITH RESPECT TO SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
The undersigned acknowledges receipt of the accompanying Proxy Statement
dated October 22, 1998.
<PAGE>
[back]
1. TO ELECT DIRECTORS.
Nominees: Philip G. Barach, Josephine Chaus, Andrew
Grossman, S. Lee Kling and Harvey M. Krueger. (Mark only
one of the following boxes.)
[ ] VOTE FOR all nominees listed to the right, except
vote withheld as to the following nominees (if
any):
[ ] VOTE WITHHELD from all nominees.
2. To ratify the appointment of Deloitte & Touche LLP as the
Company's auditors for the Company's fiscal year ending
June 30, 1999:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. At their discretion, upon any other business which may
properly come before the meeting or any adjournment
thereof.
Date:____________________________, 1998
----------------------------------------
----------------------------------------
Signature of Stockholder(s)
(When signing as attorney, trustee,
executor, administrator, guardian,
corporate officer, etc., please give
full title. If more than one trustee,
all should sign. Joint owners must each
sign.)
PLEASE DATE AND SIGN EXACTLY AS NAME
APPEARS ABOVE.
I plan [ ] I do not plan [ ]
to attend the 1998 Annual Meeting of
Stockholders.
