<PAGE>
As filed with the Securities and Exchange Commission on June 8, 1998.
Registration No. 333-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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
incorporation or organization) No.)
1410 Broadway
New York, New York 10018
(Address of Principal Executive Offices) (Zip Code)
BERNARD CHAUS, INC.
1998 STOCK OPTION PLAN
(Full title of the plan)
Josephine Chaus
Chairwoman of the Board and Office of the Chairman
Bernard Chaus, Inc.
1410 Broadway
New York, New York 10018
(212) 354-1280
(Name, address and telephone number,
including area code, of agent for service)
Copies to:
Richard A. Goldberg, Esq.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
(212) 758-9500
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed
Title of Maximum Proposed Maximum
Securities Amount Offering Price Per Aggregate Amount of
to be Registered to be Registered(1) Share Offering Price Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 per share 1,375,137 shares $4.3125(2) $5,930,278(2) $1,749.43
===================================================================================================================================
</TABLE>
(1) Pursuant to Rule 416, this Registration Statement also covers such
additional securities as may become issuable to prevent dilution resulting
from stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h). The Proposed Maximum Offering Price Per Share
represents the average of the high and low sale prices reported on the New
York Stock Exchange, Inc. on June 4, 1998.
<PAGE>
EXPLANATORY NOTE
The first part of this Registration Statement has been prepared in
accordance with the requirements of Form S-8 and is intended to be used to
register shares to be issued and sold pursuant to the plan. The Prospectus
filed as part of this Registration Statement has been prepared in accordance
with Part I of Form S-3 and may be used for reofferings or resales of common
stock previously acquired or to be acquired by the participants in the plan who
are deemed control persons of the registrant.
PART I
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
REOFFER PROSPECTUS PREPARED
IN ACCORDANCE WITH PART I OF FORM S-3
BEGINS ON NEXT PAGE
<PAGE>
REOFFER PROSPECTUS
BERNARD CHAUS, INC.
1,375,137 SHARES OF COMMON STOCK
-----------------------
BERNARD CHAUS, INC. 1998 STOCK OPTION PLAN
This Prospectus is being used in connection with the
reoffering by the certain officer and director named herein (the "Selling
Stockholder") of Bernard Chaus, Inc., a New York corporation ("Chaus" or the
"Company"), of shares of common stock, par value $.01 per share (the "Common
Stock"), of the Company previously acquired by the Selling Shareholder pursuant
to the Bernard Chaus, Inc. 1998 Stock Option Plan (the "Plan"). The Company
will not receive any proceeds from the sale of these securities, although the
Company is entitled to receive the exercise price of the options under which
the shares of Common Stock are acquired by the Selling Stockholder. See "Use of
Proceeds."
All expenses of registration incurred in connection with this
offering are being borne by the Company, but all brokerage commissions,
discounts and other expenses incurred by the Selling Stockholder will be borne
by the Selling Stockholder.
The Common Stock is traded on the New York Stock Exchange
under the symbol "CHS." On June 4, 1998, the last reported sales price for the
Common Stock on the NYSE was $4.3125 per share.
SEE "RISK FACTORS," BEGINNING ON PAGE 4, FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is June 8, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza Building,
450 Fifth Street, N.W., Washington, DC 20549, or at the Commission's regional
offices: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New
York 10048. The Common Stock is traded on the NYSE, and the Company's reports,
proxy statements and other information can be inspected at the offices of the
NYSE at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on
Form S-8 (of which this Prospectus is a part) under the Securities Act of 1933,
as amended (the "Securities Act" ), with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Stock, reference is
made to such Registration Statement and exhibits. A copy of the Registration
Statement on file with the Commission may be obtained from the Commission's
principal office in Washington, D.C., upon payment of the fees prescribed by
the Commission.
Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete and, where the contract
or other document has been filed as an exhibit to the Registration Statement,
each such statement is qualified in all respects by reference to the applicable
document filed with the Commission. The Registration Statement of which this
Prospectus forms a part has been filed electronically through the Commission's
Electronic Data Gathering Analysis and Retrieval System and may be obtained
through the Commission's website on the Internet (http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are
hereby incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997, as amended by the Company's Annual
Report on Form 10-K/A filed with the Commission on November
7, 1997.
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1997, December 31, 1997 and March 31,
1998.
3. Proxy Statement, dated November 12, 1997, with respect to the
Annual Meeting of Stockholders held on December 8, 1997.
4. The description of the Company's Common Stock, which is
contained in a registration statement filed under Section 12
of the Exchange Act, including any amendment or report filed
for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part of this Prospectus from the date of filing thereof. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
2
<PAGE>
The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus has
been delivered, upon the written or oral request of any such person, a copy of
any and all of the documents referred to above which have been or may be
incorporated in this Prospectus by reference (other than exhibits). Requests
for such copies should be directed to: Bernard Chaus, Inc., 1410 Broadway, New
York, New York 10018, Attention: Chief Executive Officer, telephone (212)
354-1280.
This Prospectus contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act, and
Section 21E of the Exchange Act, which generally can be identified by the use
of forward-looking terminology such as "may," "will," "expect," "estimate,"
"anticipate," "believe," "target," "plan," "project" or "continue" or the
negatives thereof or other variations thereon or similar terminology. Such
statements appear in a number of places in this Prospectus or the documents
incorporated by reference into this Prospectus and include statements regarding
the intent, belief or current expectations of the Company, its directors or its
officers with respect to, regarding, among other items, (i) anticipated trends
in the Company's business, (ii) future expenditures for capital projects, (iii)
the Company's ability to continue to control costs and maintain quality, (iv)
the Company's business strategies, and (v) the Company's projected financial
information. These forward-looking statements are based largely on the
Company's expectations and are subject to a number of risks and uncertainties,
certain of which are beyond the Company's control. Actual results could differ
materially from these forward-looking statements as a result of the factors
described in "Risk Factors" including, among others, (a) changes in the
Company's markets as a result of economic influences, (b) the Company's history
of losses, or (c) changes in the competitive marketplace, including new
products and pricing changes by the Company's competitors. In light of these
risks and uncertainties, there can be no assurance that the forward-looking
information contained in this Prospectus will in fact transpire. The Company
does not undertake to publicly update or revise its forward-looking statements
even if experience or future changes make it clear that any projected results
expressed or implied therein will not be realized.
THE COMPANY
The Company designs, arranges for the manufacture of and markets an
extensive range of women's career and casual sportswear which are marketed
principally under the CHAUS(Registered Trademark), CHAUS SPORT(Registered
Trademark) and NAUTICA(Registered Trademark) trademarks. The Company's
products are sold nationwide through department store chains, speciality
retailers and other retail outlets. Beginning in late fiscal 1994, the Company
repositioned its Chaus product line at the high end of the "upper moderate"
through the opening price points of the "better" categories. In September 1995,
the Company entered into a license agreement (the "Nautica License Agreement")
with Nautica Apparel, Inc. ("Nautica"), a leading name in men's apparel,
pursuant to which the Company obtained an exclusive license to design,
contract for the manufacture of and market a new women's apparel line under
the Nautica brand name. The Company commenced sales of products in its licensed
Nautica line in August 1996. The Nautica product line is being positioned in
the "better" to "bridge" categories.
The Company's products currently are divided into two principal
product categories: (i) career sportswear and (ii) weekend casual sportswear.
In late fiscal 1994, the Company shifted its product focus from single,
fashion-driven items to full collections with an emphasis on traditional
styling. With this repositioning, the Company also has enhanced its design and
quality and, by August 1997, the Company had successfully repositioned its
Chaus product line into the opening price points of the "better" category. The
Company's career and weekend casual sportswear are marketed as coordinated
groups of jackets, skirts, pants, blouses, sweaters and related accessories
which, while sold as separates, are coordinated by styles, color schemes and
fabrics and are designed to be merchandised and worn together. The Company
believes that the target consumers for its products are women aged 24 to 64.
The Company produces collections of each of these product lines for
each of its five principal selling seasons: Spring, Summer, Fall I, Fall II and
Holiday. Spring and Fall traditionally have been the Company's major selling
seasons. Beginning in fiscal 1996, the Company combined the Spring I and Spring
II seasons into one Spring season, thus reducing the selling seasons from six
to five.
The Company's principal executive offices are located at 1410 Broadway,
New York, New York 10018, telephone: (212) 354-1280.
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<PAGE>
RISK FACTORS
In addition to the other information included in, or incorporated by
reference into this Prospectus, the following risk factors should be considered
carefully in evaluating the Company and its business before purchasing the
shares of Common Stock offered hereby. An investment in the Common Stock
offered hereby involves a high degree of risk. Purchasers should carefully
consider the following risk factors, as well as all other information set forth
or incorporated in the Prospectus before purchasing any Common Stock offered
hereby. Prospective investors are cautioned that the statements in this
Prospectus that are not descriptions of historical facts may be forward-looking
statements. Such statements are based on many assumptions and are subject to
risks and uncertainties. Actual results could differ materially from the
results discussed in the forward looking statements due to a number of factors,
including, but not limited to, those identified below.
HISTORY OF LOSSES; DECLINING REVENUE BASE
The Company sustained net losses of $27.9 million, $24.4 million and
$16.5 million in fiscal 1995, 1996 and 1997, respectively. In addition, during
such period the Company's revenues declined from $181.7 million in fiscal 1995
to $170.6 million in fiscal 1996 to $160.1 million in fiscal 1997. The Company
also experienced a reduction in the number of individual stores within its
major customer groups in which its products were sold during this period. The
Company believes that the implementation of its restructuring program and other
initiatives it has taken will improve operating results. Although the Company's
sales increased in the first nine months of fiscal 1998 over the prior fiscal
year and it had net earnings for the nine month period of approximately
$3,765,000, no assurance can be given that revenues will continue to increase,
that the number of stores within which the Company's products are sold will
continue to increase or that the Company will be profitable for the full fiscal
year or thereafter.
NEGATIVE CASH FLOW
The Company has had negative cash flow from operations of $4.8
million, $22.7 million, $11.0 million and $20.9 million in fiscal 1995, 1996
and 1997 and the first nine months of fiscal 1998, respectively. The Company's
business plan requires the availability of sufficient cash flow and borrowing
capacity to finance its existing product lines and develop and market its
licensed Nautica product lines. The Company expects to satisfy such
requirements through cash flow from operations, proceeds from its January 1998
rights offering and borrowings under its credit facility. Although there can be
no assurance, the Company believes that if it achieves its projections, the
Company will have sufficient cash flow and credit availability to meet its
needs for the foreseeable future. There can be no assurance that the Company
will achieve its projections.
HIGH BORROWING LEVELS
At March 31, 1998, the Company had short-term debt of $13.7 million
and long-term debt of $13.8 million. The Company debt levels may increase in
the future to the extent it must seek to borrow to meet its working capital
needs.
OBLIGATIONS UNDER NAUTICA LICENSE AGREEMENT; SUCCESS OF NAUTICA PRODUCT LINE
The Company's obligations under the Nautica License Agreement include
meeting minimum sales targets, making minimum royalty and advertising payments
and the requirement that Andrew Grossman continue in his position as Chief
Executive Officer during the Nautica License Agreement's term. There can be no
assurance that the conditions to the continuance of the Nautica License
Agreement will be met or that the Company's licensed Nautica product line will
be successful.
In connection with the Nautica license, Nautica has asserted that the
Company has not complied with and is not in compliance with all of the terms of
the Nautica License Agreement. To date, Nautica has not sought to exercise any
rights or remedies under the Nautica License Agreement. The Company believes
that Nautica's claims are baseless
4
<PAGE>
and without merit. Notwithstanding that the Company believes that it has claims
against Nautica for its failure to perform under the terms of the Nautica
License Agreement and that the claims asserted by Nautica are baseless, the
Company (i) is performing and will continue to perform all of its obligations
under the Nautica License Agreement, and (ii) intends to enforce all of its
rights and remedies under the Nautica License Agreement.
The Company commenced sales of its licensed Nautica products in August
1996. The Company's Nautica product line has experienced intense competition
from other designer labels. To date, the Company's Nautica product line has not
generated the levels of revenues which had been anticipated and there can be no
assurance that such revenues will increase in the foreseeable future, if ever.
APPAREL RETAILING CYCLES
The apparel industry is a cyclical industry heavily dependent on the
overall level of consumer spending, with purchases of apparel and related goods
tending to decline during periods when disposable income is low, but also
declining at other times. A difficult retail environment could result in higher
than normal levels of promotional sales by the Company, thereby reducing the
Company's gross profit margins.
CHANGES IN FASHION TRENDS
The Company believes that its success depends in substantial part on
its ability to anticipate, gauge and respond to changing consumer demands and
fashion trends in a timely manner. There can be no assurance, however, that the
Company will be successful in this regard. The Company attempts to minimize the
risk of changing fashion trends and product acceptance by producing a wide
selection of garments during a particular selling season and by closely
monitoring retail sales of its products. However, if the Company misjudges the
market for a number of products or product groups, it may be faced with a
significant amount of unsold finished goods inventory, which could have an
adverse effect on the Company's results of operations.
DEPENDENCE ON MAJOR CUSTOMERS
The Company extends credit to its customers based upon an evaluation
of the customer's financial condition and credit history and generally does not
require collateral. The Company has historically incurred minimal credit
losses. At June 30, 1997 and 1996, approximately 62% and 66%, respectively, of
the Company's accounts receivables were due from department store customers
owned by four single corporate entities. During fiscal 1997, approximately 63%
of the Company's net sales were made to department store customers owned by
four single corporate entities, as compared to 60% in fiscal 1996 and 55% in
fiscal 1995. Sales to Dillard's Department Stores accounted for 33% of net
sales in fiscal 1997, 29% of net sales in fiscal 1996 and 22% of net sales in
fiscal 1995. Sales to nine department store companies owned by The May
Department Stores Company accounted for approximately 16% of the Company's net
sales in fiscal 1997, 10% of net sales in fiscal 1996 and 15% of net sales in
fiscal 1995. Sales to eight department store companies owned by Federated
Department Stores accounted for approximately 8% of net sales in fiscal 1997,
5% of net sales in fiscal 1996 and 11% of net sales in fiscal 1995. Sales to
two department store customers owned by TJX Companies, Inc. accounted for
approximately 6% of net sales in fiscal 1997, 16% of net sales in fiscal 1996
and 7% of net sales in fiscal 1995. The percentages of net sales are based upon
stores owned by the four corporate entities at the end of fiscal 1997. As a
result of the Company's dependence on these customers, they may have the
ability to influence the Company's business decisions. The loss of or
significant decrease in business from any of its major customers would have a
material adverse effect on the Company's financial position and results of
operations.
DEPENDENCE ON FOREIGN SOURCING; LONG LEAD TIMES
During fiscal 1997, the Company's products were manufactured through
third party foreign contractors, principally in South Korea, Hong Kong, Taiwan,
China, Indonesia and elsewhere in the Far East. As a result, the Company may be
adversely affected by political instability resulting in the disruption of
trade from foreign countries in which the Company's manufacturers and suppliers
are located, the imposition of additional regulations relating to
5
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imports or duties, taxes and other charges on imports, any significant
decreases in the value of the dollar against foreign currencies and
restrictions on the transfer of funds. In addition, the Company's import
operations are subject to constraints imposed by bilateral textile agreements
between the United States and a number of foreign countries. These agreements
impose quotas on the amount and type of goods which can be imported into the
United States from these countries. Furthermore, because the Company's foreign
manufacturers are located at significant geographic distances from the Company,
the Company is generally required to allow greater lead time for foreign
orders. In addition, because orders from the Company's customers generally
precede the related shipping period by up to five months and the Company must
make substantial advance commitments to its suppliers (often as many as seven
months prior to the receipt of firm orders for the related merchandise), a lead
time of as long as twelve months may be required between the time the Company
commits to a supplier and the time of shipping. This reduces the Company's
manufacturing flexibility which increases the risks associated with changes in
fashion trends or consumer preferences.
SEASONALITY AND QUARTERLY FLUCTUATIONS
Historically, the Company's sales and operating results fluctuate by
quarter, with the greatest sales occurring in the Company's first and third
fiscal quarters. It is in these quarters that the Company's Fall and Spring
product lines, which traditionally have had the highest volume of net sales,
are shipped to customers, with revenues generally being recognized at the time
of shipment. As a result, the Company experiences significant variability in
its quarterly results and working capital requirements. Moreover, delays in
shipping can cause revenues to be recognized in a later quarter, resulting in
further variability in such quarterly results.
COMPETITION
There is intense competition in the sectors of the apparel industry in
which the Company participates. The Company competes with many other apparel
companies, some of which are larger and have better established brand names and
greater resources than the Company. In some cases, the Company also competes
with private-label brands of its department store customers. The Company
believes that, in order to be successful in its industry, it must be able to
evaluate and respond to changing consumer demand and taste and to remain
competitive in the areas of style, quality and price while operating within the
significant production and delivery constraints of the industry. Furthermore,
the Company's traditional department store customers, which account for a
substantial portion of the Company's business, encounter intense competition
from so-called "off-price" and discount retailers, mass merchandisers and
specialty stores. The Company believes that its ability to increase its present
levels of sales will depend on such customers' ability to maintain their
competitive position.
DEPENDENCE UPON KEY PERSONNEL
The success of the Company is dependent upon the personal efforts and
abilities of Ms. Chaus, its Chairwoman of the Board, and Andrew Grossman, its
Chief Executive Officer. The Company has no employment agreement with Ms.
Chaus, its principal stockholder. The Company has an employment agreement with
Mr. Grossman for a term ending in September 2000, with an extension at the
option of the Company until September 2004, pursuant to which Mr. Grossman has
agreed not to compete with the Company during the term of the agreement or, if
the Company terminates the agreement (with certain exceptions), for a period of
up to two years after such termination depending on the basis for termination.
The Company believes that the loss of the services of either Ms. Chaus or Mr.
Grossman would likely have an adverse effect on the Company. The Company
maintains key man life insurance on the lives of Ms. Chaus and Mr. Grossman in
the amounts of $35.0 million and $25.0 million, respectively. Furthermore, the
Nautica License Agreement is conditioned upon Mr. Grossman continuing as Chief
Executive Officer.
On September 15, 1997, the Company announced the resignation of Wayne
Miller, the Company's Chief Financial Officer. Pending the appointment of a
successor to Mr. Miller, Barton Heminover, the Company's Vice President --
Corporate Controller and Assistant Secretary, together with the Company's
financial advisors, will be responsible for discharging Mr. Miller's duties.
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In addition, the Company believes that its future success depends in
part upon its ability to attract and retain qualified personnel. There can be
no assurance that the Company will be successful in attracting and retaining
such personnel in the future.
CONTROL BY PRINCIPAL STOCKHOLDER
Josephine Chaus, Chairwoman of the Board, member of the Office of the
Chairman and principal stockholder of the Company, owns approximately 69.5% of
the outstanding Common Stock. As a result of her stock ownership, Ms. Chaus
has, and will continue to have, sufficient voting power to determine the
direction and policies of the Company, the election of the directors of the
Company, the outcome of any other matter submitted to a vote of stockholders,
and to prevent or cause a change in control of the Company.
POTENTIAL CONFLICTS OF INTEREST; RELATED PARTY TRANSACTIONS
Certain conflicts of interest may arise as a result of Ms. Chaus'
position as a director, member of the Office of the Chairman and majority
stockholder of the Company. There have been a number of related party
transactions between Ms. Chaus and the Company, principally involving her
provision of credit support to the Company which ended in January 1998. Such
transactions are negotiated with a special committee made up of the
disinterested members of the Board of Directors of the Company which, where
appropriate, seeks the advice of an independent investment banking firm in
connection with the approval of any such transaction. When stockholder approval
is sought, Ms. Chaus, as majority stockholder, has the ability to approve any
such matter without the affirmative vote of any other stockholder of the
Company.
LITIGATION
The Company is involved as a defendant in certain legal proceedings
incidental to its business. The Company believes that the outcome of these
legal proceedings will not have a material adverse impact on its financial
position or operations.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock is highly volatile.
Factors such as quarterly variations in the Company's results of operations and
changes in general market conditions could cause the market price of the
Company's Common Stock to fluctuate significantly.
CONTINUED LISTING OF THE COMMON STOCK ON THE NYSE
The Company does not currently satisfy certain of the conditions for
continued listing on the NYSE. The Company has submitted a business plan for
the re-attainment of compliance with the continued listing standards of the
NYSE. The NYSE has informed the Company in writing that it will be monitoring
such plan on a quarterly basis and that the Company's ability to maintain its
listing in the NYSE will be dependent upon meeting such plan. Accordingly,
there can be no assurance that the NYSE will not undertake to suspend the
Common Stock from trading, or delist the Common Stock, in the future.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of these
securities, although the Company is entitled to receive the exercise price of
the options under which the shares of Common Stock are acquired by the Selling
Stockholder. If the Selling Stockholder elects to exercise all of his options
under which the shares of Common Stock are acquired after such options become
exercisable, the estimated net proceeds to the Company would be approximately
$4,276,676 (excluding expenses of the offering estimated to be approximately
$50,000). The Company intends to apply
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the net proceeds, if any, received by the Company from the exercise of such
options for working capital and general corporate purposes.
DIVIDEND POLICY
The Company has not declared or paid cash dividends or made
other distributions on its Common Stock since prior to its initial public
offering of Common Stock in 1986. The payment of dividends, if any, in the
future is within the discretion of the Board of Directors and will depend on
the Company's earnings, its capital requirements and financial condition. It is
the present intention of the Board of Directors to retain all earnings, if any,
for use in the Company's business operations and, accordingly, the Board of
Directors does not expect to declare or pay any dividends in the foreseeable
future. In addition, the Company's credit facility prohibits the Company from
declaring dividends or making other distributions on its capital stock.
SELLING STOCKHOLDER
The following table sets forth certain information with respect to the
Selling Stockholder as of May 2, 1998. The Selling Stockholder is the Chief
Executive Officer and a member of the Office of the Chairman of the Company.
The shares of Common Stock set forth therein are being included in the
Registration Statement of which this Prospectus forms a part pursuant to
registration commitments afforded to the Selling Stockholder by contractual
obligations. The Company will not receive any proceeds from the sale of these
securities, although the Company is entitled to receive the exercise price of
the options under which the shares of Common Stock are acquired by the Selling
Stockholder. See "Use of Proceeds."
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP SHARES OF BENEFICIAL OWNERSHIP OF
NAME OF OF SHARES COMMON STOCK SHARES OF COMMON STOCK AFTER
SELLING STOCKHOLDER OF COMMON STOCK OFFERED FOR SALE GIVING EFFECT TO PROPOSED SALE
------------------- --------------- ---------------- ------------------------------
<S> <C> <C> <C>
Andrew Grossman 1,400,144 1,375,137 25,007
--------- --------- ------
TOTAL 1,400,144 1,375,137 25,007
========= ========= ======
</TABLE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholder that there are
no underwriting arrangements with respect to the sale of the above securities
(collectively, the "Selling Stockholder Securities"). Any or all of the Selling
Stockholder Securities may be sold from time to time to purchasers directly by
the Selling Stockholder. Alternatively, the Selling Stockholder may from time
to time offer the Selling Stockholder Securities through underwriters, dealers
or agents who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholder and/or the purchasers
of the Selling Stockholder Securities for whom they may act as agents. The
Selling Stockholder and any such underwriters, dealers or agents that
participate in the distribution of the Selling Stockholder Securities may be
deemed to be underwriters under the Securities Act, and any profit on the sale
of the Selling Stockholder Securities by them and any discounts, commissions or
concessions received by them may be deemed to be underwriting discounts and
commissions under the Securities Act. The Selling Stockholder Securities may be
sold from time to time in one or more transactions at a fixed offering price,
which may be changed, or at varying prices determined at the time of sale or at
negotiated prices. The distribution of the Selling Stockholder Securities by
the Selling Stockholder may be effected in one or more transactions that may
take place on the NYSE, including ordinary brokers' transactions,
privately-negotiated transactions or through sales to one or more
broker-dealers for resale of such shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Usual and customary or specifically negotiated
brokerage fees, discounts and commissions may be paid by the Selling
Stockholder in connection with such sales of securities.
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<PAGE>
In order to comply with certain states securities laws, if applicable,
the Selling Stockholder Securities will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In certain states the
Selling Stockholder Securities may not be sold unless the Selling Stockholder
Securities have been registered or qualified for sale in such state, or unless
an exemption from registration or qualification is available and is obtained.
In addition to sales pursuant to the Registration Statement of which
this Prospectus forms a part, the Selling Stockholder Securities may be sold in
accordance with Rule 144 promulgated under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed
upon for the Company by Shereff, Friedman, Hoffman & Goodman, LLP, New York,
New York.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K for the years ended June 30, 1997 and
1996, and for each of the three years in the period ended June 30, 1997, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and has been so incorporated
in reliance upon such report of such firm given upon their authority as experts
in accounting and auditing.
9
<PAGE>
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
TABLE OF CONTENTS
Page
Additional Information 2
Incorporation of Certain Documents by
Reference 2
The Company 3
Risk Factors 4
Use of Proceeds 7
Dividend Policy 8
Selling Stockholder 8
Plan of Distribution 8
Legal Matters 9
Experts 9
1,375,137 SHARES OF
COMMON STOCK
BERNARD CHAUS, INC.
PROSPECTUS
JUNE 8, 1998
<PAGE>
PART II
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents, which have been filed by Bernard Chaus,
Inc., a New York corporation (the "Registrant"), with the Securities and
Exchange Commission (the "Commission"), are incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the period ended
June 30, 1997, as amended by the Registrant's Annual Report on Form 10-K/A
filed with the Commission on November 7, 1997.
(b) The Registrant's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1997, December 31, 1997 and March 31, 1998.
(c) The description of the Registrant's common stock, par value $.01
per share ("Common Stock"), which is contained in a registration statement
filed under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including any amendment or report filed for the purpose of
updating such description.
In addition, all documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the time of filing of such documents.
Any statement contained in the documents incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this registration statement to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this registration statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interest of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Sections 722 and 726 of the New York Business Corporation Law (the
"BCL") grant the Registrant broad powers to indemnify and insure its directors
and officers against liabilities they may incur in such capacities. In
accordance therewith, the Registrant's Restated Certificate of Incorporation,
as amended (the "Charter"), and By-Laws provide for the fullest indemnification
of an officer or a director of the Company under the BCL. The Charter also
eliminates personal liability for any breach of directors' duty to the
Registrant and its stockholders, provided that such breach does not result from
(a)(i) an act or omission in bad faith, (ii) intentional misconduct or (iii) a
knowing violation of law, (b) a transaction from which a director derived a
personal benefit or financial gain to
II-1
<PAGE>
which the director was not entitled, or (c) the approval of dividends, stock
repurchases, asset distributions or loans to directors in violation of the BCL.
The Registrant has entered into agreements with its directors and
certain of its officers that require the Registrant to indemnify such persons
against expenses, including attorneys' fees, judgments, fines, settlements and
other amounts incurred directly or indirectly in connection with any
proceeding, whether actual or threatened, to which any such person may be made
a party by reason of the fact that such person served as a director or officer
of the Registrant or any of its affiliated enterprises, provided that such
indemnification is consistent with the BCL. The agreements also require the
Registrant to carry directors' and officers' liability insurance for as long as
such person serves in a capacity that exposes such person to liability unless
and until the Registrant's Board of Directors decides that the cost of the
insurance does not justify the benefit. The Company has purchased such
directors' and officers' liability insurance covering certain liabilities which
may be incurred by its directors and officers in the performance of their
services for the Registrant.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
The following exhibits are filed as part of this registration
statement:
4.1 Bernard Chaus, Inc. 1998 Stock Option Plan.
5.1 Opinion of Shereff, Friedman, Hoffman & Goodman, LLP.
23.1 Consent of Deloitte & Touche, LLP.
23.2 Consent of Shereff, Friedman, Hoffman & Goodman, LLP
(included in Exhibit 5.1).
24 Power of Attorney (included in signature page to this
registration statement).
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the change in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
II-2
<PAGE>
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or S-8 and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on this 27th day
of May, 1998.
BERNARD CHAUS, INC.
By: /s/ Josephine Chaus
------------------------
Josephine Chaus
Chairwoman of the Board and Office of the Chairman
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned whose
signature appears below constitutes and appoints Josephine Chaus and Barton
Heminover, and each of them (with full power of each of them to act alone), his
true and lawful attorneys-in-fact, with full power of substitution and
resubstitution for him and on his behalf, and in his name, place and stead, in
any all capacities to execute and sign any and all amendments or post-effective
amendments to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Commission, hereby ratifying and confirming all that said attorneys-in-fact or
any of them or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof and the Registrant hereby confers like
authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Josephine Chaus Chairwoman of the Board and Office of
- ------------------------- the Chairman May 27, 1998
Josephine Chaus
/s/ Andrew Grossman Chief Executive Officer and Office of
- ------------------------- the Chairman May 27, 1998
Andrew Grossman
/s/ Harvey M. Krueger Director
- -------------------------
Harvey M. Krueger May 27, 1998
/s/ S. Lee Kling Director
- -------------------------
S. Lee Kling May 27, 1998
/s/ Philip G. Barach Director
- -------------------------
Philip G. Barach May 27, 1998
/s/ Barton Heminover Vice President - Corporate Controller
- ------------------------- (principal accounting officer) May 27, 1998
Barton Heminover
<PAGE>
BERNARD CHAUS, INC.
FORM S-8
REGISTRATION STATEMENT
EXHIBIT INDEX
EXHIBIT
4.1 Bernard Chaus, Inc. 1998 Stock Option Plan.
5.1 Opinion of Shereff, Friedman, Hoffman & Goodman, LLP.
23.1 Consent of Deloitte & Touche, LLP.
</TABLE>
<PAGE>
BERNARD CHAUS, INC.
1998 STOCK OPTION PLAN
1. PURPOSE.
The purpose of this Plan is to strengthen Bernard Chaus, Inc. (the
"Company") by providing an incentive to its employees, officers, consultants
and directors and thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to employees, officers, consultants
and directors of the Company and its Subsidiaries an added long-term incentive
for high levels of performance and unusual efforts through the grant of
Incentive Stock Options and Nonqualified Stock Options (as each term is herein
defined).
2. DEFINITIONS.
For purposes of the Plan:
2.1 "Affiliate" means any entity, directly or indirectly, controlled
by, controlling or under common control with the Company or any corporation or
other entity acquiring, directly or indirectly, all or substantially all the
assets and business of the Company, whether by operation of law or otherwise.
2.2 "Agreement" means the written agreement between the Company and an
Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of
a reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or otherwise.
2.5 A "Change in Control" shall mean the occurrence during the term of
the Plan of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) immediately
after which such Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) or
more of the then outstanding Shares or the combined voting power of the
Company's then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred, Shares or Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a
1
<PAGE>
majority of its voting power or its voting equity securities or equity interest
is owned, directly or indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or its Subsidiaries, (iii) any
Person in connection with a "Non-Control Transaction" (as hereinafter defined),
or (iv) a trust or private foundation or other estate planning vehicle
established by a shareholder of the Company, of voting securities of the
Company from such shareholder and/or the acquisition by the heirs, executors or
administrators of a shareholder of the Company of voting securities of the
Company from such shareholder;
(b) The individuals who, as of the close of business on the
Rights Offering Effective Date are members of the Board (the "Incumbent
Board"), cease for any reason to constitute at least two-thirds of the members
of the Board; provided, however, that if the election, or nomination for
election by the Company's common stockholders, of any new director was approved
by a vote of at least two-thirds of the Incumbent Board, such new director
shall, for purposes of this Plan, be considered as a member of the Incumbent
Board; provided further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as described in
Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or
into the Company or in which securities of the Company are
issued, unless such merger, consolidation or reorganization
is a "Non-Control Transaction." A "Non-Control Transaction"
shall mean a merger, consolidation or reorganization with or
into the Company or in which securities of the Company are
issued where:
(A) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own
directly or indirectly immediately following such merger,
consolidation or reorganization, at least fifty percent
(50%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as
their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or
reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities of
the Surviving Corporation, and
(C) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
merger, consolidation or reorganization, was maintained
by the Company or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of more than
fifty percent
2
<PAGE>
(50%) or more of the then outstanding Voting Securities
or Shares, has Beneficial Ownership of more than fifty
percent (50%) or more of the combined voting power of the
Surviving Corporation's then outstanding voting
securities or its common stock.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) The sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
Shares or Voting Securities as a result of the acquisition of Shares or Voting
Securities by the Company which, by reducing the number of Shares or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Shares or Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Shares or Voting Securities which increases the percentage of
the then outstanding Shares or Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
2.6 "Code" means the Internal Revenue Code of 1986, as amended.
2.7 "Committee" means a committee, as described in Section 3.1,
appointed by the Board from time to time to administer the Plan and to perform
the functions set forth herein.
2.8 "Company" means Bernard Chaus, Inc.
2.9 "Disability" means:
(a) in the case of an Optionee whose employment with the
Company or a Subsidiary is subject to the terms of an employment agreement
between such Optionee and the Company or Subsidiary, which employment agreement
includes a definition of "Disability", the term "Disability" as used in this
Plan or any Agreement shall have the meaning set forth in such employment
agreement during the period that such employment agreement remains in effect;
and
(b) in all other cases, the term "Disability" as used in this
Plan or any Agreement shall mean a physical or mental infirmity which impairs
the Optionee's ability to perform substantially his or her duties for a period
of one hundred eighty (180) consecutive days.
2.10 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.11 "Eligible Individual" means any officer or employee of the
Company or a Subsidiary, or any director, consultant or advisor who is
receiving cash compensation from the Company or a Subsidiary, designated by the
Committee as eligible to receive Options subject to the conditions set forth
herein;
3
<PAGE>
provided, however, that only employees of the Company or any Subsidiary may
receive Incentive Stock Options under this Plan.
2.12 "Employee Option" means an Option granted pursuant to Section 5.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.14 "Fair Market Value" on any date means the closing sales prices of
the Shares on such date on the principal national securities exchange on which
such Shares are listed or admitted to trading, or, if such Shares are not so
listed or admitted to trading, the average of the per Share closing bid price
and per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System or such other
market in which such prices are regularly quoted, or, if there have been no
published bid or asked quotations with respect to Shares on such date, the Fair
Market Value shall be the value established by the Board in good faith and, in
the case of an Incentive Stock Option, in accordance with Section 422 of the
Code.
2.15 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.16 "Nonemployee Director" means a director of the Company who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
2.17 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.18 "Option" means a Nonqualified Stock Option, an Incentive Stock
Option, or any or all of them.
2.19 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.20 "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.21 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.22 "Plan" means the Bernard Chaus, Inc. 1998 Stock Incentive Plan,
as amended and restated from time to time.
2.23 "Pooling Transaction" means an acquisition of the Company in a
transaction which is intended to be treated as a "pooling of interests" under
generally accepted accounting principles.
2.24 "Shares" means the common stock, par value $.01 per share, of the
Company.
2.25 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
4
<PAGE>
2.26 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of
the Code applies.
2.27 "Ten-Percent Stockholder" means an Eligible Individual, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.
3. ADMINISTRATION.
3.1 The Plan shall be administered by the Committee, which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A quorum shall consist
of not fewer than two members of the Committee and a majority of a quorum may
authorize any action. Any decision or determination reduced to writing and
signed by a majority of all of the members of the Committee shall be as fully
effective as if made by a majority vote at a meeting duly called and held. The
Committee shall consist of at least two (2) directors of the Company; provided,
however, that (A) each member shall be a Nonemployee Director and (B) to the
extent necessary for any Option intended to qualify as performance-based
compensation under Section 162(m) of the Code to so qualify, each member of the
Committee shall be an Outside Director. No member of the Committee shall be
liable for any action, failure to act, determination or interpretation made in
good faith with respect to this Plan or any transaction hereunder, except for
liability arising from his or her own willful misfeasance, gross negligence or
reckless disregard of his or her duties. The Company hereby agrees to indemnify
each member of the Committee for all costs and expenses and, to the extent
permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind
arising in connection with any actions in administering this Plan or in
authorizing or denying authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Employee
Options shall be granted under the Plan and the number of such Employee Options
to be granted and to prescribe the terms and conditions (which need not be
identical) of each such Employee Option, including the purchase price per Share
subject to each Employee Option, and make any amendment or modification to any
Agreement consistent with the terms of the Plan;
(b) to construe and interpret the Plan and the Options
granted hereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary or
advisable so that the Plan complies with applicable law including Rule 16b-3
under the Exchange Act and the Code to the extent applicable, and otherwise to
make the Plan fully effective. All decisions and determinations by the
Committee in the exercise of this power shall be final, binding and conclusive
upon the Company, the Subsidiaries, the Optionees, and all other persons having
any interest therein;
5
<PAGE>
(c) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(d) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(e) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
4. STOCK SUBJECT TO THE PLAN.
4.1 The maximum number of Shares that may be made the subject of
Options granted under the Plan shall be ten percent (10%) of the issued and
outstanding Shares at the close of business on the Rights Offering Effective
Date (which shall be between 2,187,443 and 2,711,591 Shares); provided,
however, that the maximum number of Shares that an Eligible Individual may be
granted in respect of Options may not exceed 2,200,000 Shares. Upon a Change in
Capitalization, the maximum number of Shares referred to in the first sentence
of this Section 4.1 shall be adjusted in number and kind pursuant to Section
12. The Company shall reserve for the purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be determined by the
Board.
4.2 Upon the granting of an Option, the number of Shares available
under Section 4.1 for the granting of further Options shall be reduced as
follows: In connection with the granting of an Option, the number of Shares
shall be reduced by the number of Shares in respect of which the Option is
granted or denominated.
4.3 Whenever any outstanding Option or portion thereof expires, is
canceled or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option, the
Shares allocable to the expired, canceled or otherwise terminated portion of
the Option may again be the subject of Options granted hereunder.
5. OPTION GRANTS FOR ELIGIBLE INDIVIDUALS.
5.1 AUTHORITY OF COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, and the terms and conditions of
the grant to such Eligible Individuals shall be set forth in an Agreement.
5.2 PURCHASE PRICE. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Employee Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder). Subject to Section 5.5, the Committee
shall have the authority to change the purchase price for Shares under an
Employee Option subsequent to its grant.
6
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5.3 MAXIMUM DURATION. Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof, but in no event shall the term as so extended exceed
the maximum term provided for in the preceding sentence.
5.4 VESTING. Subject to Section 6.4, each Employee Option shall become
exercisable in such installments (which need not be equal) and at such times as
may be designated by the Committee and set forth in the Agreement. To the
extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than
the date the Employee Option expires. The Committee may accelerate the
exercisability of any Employee Option or portion thereof at any time.
5.5 MODIFICATION. No modification of an Employee Option shall
adversely alter or impair any rights or obligations under the Employee Option
without the Optionee's consent.
6. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.
6.1 NON-TRANSFERABILITY. Unless set forth in the Agreement evidencing
the Option (other than an Incentive Stock Option) at the time of grant or at
any time thereafter, an Option granted hereunder shall not be transferable by
the Optionee to whom granted except by will or the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 promulgated under the Exchange Act), and an Option may be exercised
during the lifetime of such Optionee only by the Optionee or his or her
guardian or legal representative. The terms of such Option shall be final,
binding and conclusive upon the beneficiaries, executors, administrators, heirs
and successors of the Optionee.
6.2 METHOD OF EXERCISE. The exercise of an Option shall be made only
by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid, as determined by the Committee in its discretion, in either of
the following forms (or any combination thereof): (i) cash and/or (ii) the
transfer of Shares to the Company upon such terms and conditions as determined
by the Committee. In addition, Employee Options may be exercised through a
registered broker-dealer pursuant to such cashless exercise procedures which
are, from time to time, deemed acceptable by the Committee, and the Committee
may authorize that the purchase price payable upon exercise of an Employee
Option may be paid by having Shares withheld that otherwise would be acquired
upon such exercise. Any Shares transferred to the Company (or withheld upon
exercise) as payment of the purchase price under an Option shall be valued at
their Fair Market Value on the day preceding the date of exercise of such
Option. The Optionee shall deliver the Agreement evidencing the Option to the
Secretary of the Company who shall endorse thereon a notation of such exercise
and return such Agreement to the Optionee. No fractional Shares (or cash in
lieu thereof) shall be issued upon exercise of an Option and the number of
Shares that may be purchased upon exercise shall be rounded to the nearest
number of whole Shares.
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6.3 RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.
6.4 EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control,
all Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable. In the event an Optionee's employment with
the Company terminates following a Change in Control, each Option held by the
Optionee that was exercisable as of the date of termination of the Optionee's
employment shall remain exercisable for a period ending not before the earlier
of (A) the first anniversary of the termination of the Optionee's employment or
(B) the expiration of the stated term of the Option; but in no event shall the
exercise period exceed the maximum term provided in Section 5.3.
7. EFFECT OF A TERMINATION OF EMPLOYMENT.
The Agreement evidencing the grant of each Option shall set forth the
terms and conditions applicable to such Option upon a termination or change in
the status of the employment of the Optionee by the Company, a Subsidiary or a
Division (including a termination or change by reason of the sale of a
Subsidiary or a Division), which shall be as the Committee may, in its
discretion, determine at the time the Option is granted or thereafter.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares or other stock or securities with respect to
which Options may be granted under the Plan, (ii) the maximum number and class
of Shares or other stock or securities with respect to which Options may be
granted to any Eligible Individual during any fiscal year during the term of
the Plan, and (iii) subject to the provisions of Section 162(m) of the Code,
the number and class of Shares or other stock or securities which are subject
to outstanding Options granted under the Plan and the purchase price therefor,
if applicable.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, an Optionee
shall be entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities, such new, additional or different
shares shall thereupon be subject to all of the conditions, and restrictions
which were applicable to the Shares subject to the Option, as the case may be,
prior to such Change in Capitalization.
9. EFFECT OF CERTAIN TRANSACTIONS.
Subject to Section 8.4 or as otherwise provided in an Agreement or
otherwise by the Committee, in the event of (i) the liquidation or dissolution
of the Company or (ii) a merger or consolidation of the
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Company (a "Transaction"), the Plan and the Options issued hereunder shall
continue in effect in accordance with their respective terms, except that
following a Transaction each Optionee shall be entitled to receive in respect
of each Share subject to any outstanding Options, as the case may be, upon
exercise of any Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Options prior to such Transaction.
10. INTERPRETATION.
The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
(a) Unless otherwise expressly stated in the relevant
Agreement, each Employee Option granted under the Plan is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C) of
the Code. The Committee shall not be entitled to exercise any discretion
otherwise authorized hereunder with respect to such Options if the ability to
exercise such discretion or the exercise of such discretion itself would cause
the compensation attributable to such Options to fail to qualify as
performance-based compensation.
11. POOLING TRANSACTIONS.
Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee shall take such actions, if
any, as are specifically recommended by an independent accounting firm retained
by the Company to the extent reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including but not limited to (i)
deferring the vesting, exercise, payment, settlement or lapsing of restrictions
with respect to any Option, (ii) providing that the payment or settlement in
respect of any Option be made in the form of cash, Shares or securities of a
successor or acquirer of the Company, or a combination of the foregoing, and
(iii) providing for the extension of the term of any Option to the extent
necessary to accommodate the foregoing, but not beyond the maximum term
permitted for any Option.
12. TERMINATION AND AMENDMENT OF THE PLAN.
The Plan shall terminate on the day preceding the tenth anniversary of
the date of its adoption by the Board and no Option may be granted thereafter.
Subject to Section 11, the Board may sooner terminate the Plan and the Board
may at any time and from time to time amend, modify or suspend the Plan;
provided, however, that:
(a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options theretofore granted
under the Plan, except with the consent of the Optionee, nor shall any
amendment, modification, suspension or termination deprive any Optionee of any
Shares which he or she may have acquired through or as a result of the Plan;
and
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(b) to the extent necessary under applicable law, no
amendment shall be effective unless approved by the stockholders of the Company
in accordance with applicable law.
13. OTHER ARRANGEMENTS.
The adoption of the Plan by the Board shall not be construed as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.
14. LIMITATION OF LIABILITY.
As illustrative of the limitations of liability of the Company, but
not intended to be exhaustive thereof, nothing in the Plan shall be construed
to:
(i) give any person any right to be granted an
Option other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with
respect to Shares except as specifically provided in the
Plan;
(iii) limit in any way the right of the Company or
any Subsidiary to terminate the employment of any person at
any time; or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person
at any particular rate of compensation or for any particular
period of time.
15. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
15.1 Except as to matters of federal law, the Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of New York without giving effect to conflicts of
laws principles thereof.
15.2 The obligation of the Company to sell or deliver Shares with
respect to Options granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
15.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock
Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.
15.4 Each Option is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental
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regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option or the issuance of Shares, no Options shall be
granted or payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
15.5 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Committee may require any individual receiving Shares pursuant
to an Option granted under the Plan, as a condition precedent to receipt of
such Shares, to represent and warrant to the Company in writing that the Shares
acquired by such individual are acquired without a view to any distribution
thereof and will not be sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an exemption applicable
under the Securities Act or the rules and regulations promulgated thereunder.
The certificates evidencing any of such Shares shall be appropriately legended
to reflect their status as restricted securities as aforesaid.
16. MISCELLANEOUS.
16.1 MULTIPLE AGREEMENTS. The terms of each Option may differ from
other Options granted under the Plan at the same time, or at some other time.
The Committee may also grant more than one Option to a given Eligible
Individual during the term of the Plan, either in addition to, or in
substitution for, one or more Options previously granted to that Eligible
Individual.
16.2 WITHHOLDING OF TAXES.
(a) At such times as an Optionee recognizes taxable income in
connection with the receipt of Shares or otherwise hereunder (a "Taxable
Event"), the Optionee shall pay to the Company an amount equal to the federal,
state and local income taxes and other amounts as may be required by law to be
withheld by the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance, or release from escrow, of such Shares or
otherwise. The Company shall have the right to deduct from any payment of cash
to an Optionee an amount equal to the Withholding Taxes in satisfaction of the
obligation to pay Withholding Taxes. In satisfaction of the obligation to pay
Withholding Taxes to the Company, the Optionee may make a written election (the
"Tax Election"), which may be accepted or rejected in the discretion of the
Committee, to have withheld a portion of the Shares then issuable to him or her
having an aggregate Fair Market Value equal to the Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive
Stock Option within the two-year period commencing on the day after the date of
the grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal
executive office.
16.3 EFFECTIVE DATE. The effective date of this Plan shall be the
effective date of the Company's rights offering as contemplated by the Form S-3
Registration Statement under the Securities Act of 1933, as amended, which was
filed by the Company with the Securities and Exchange Commission on October 30,
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1997 (the "Rights Offering Effective Date"), subject only to the approval by
the affirmative vote of the holders of a majority of the securities of the
Company present, or represented, and entitled to vote at a meeting of
stockholders duly held in accordance with the applicable laws of the State of
New York within twelve (12) months of the adoption of the Plan by the Board.
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June 5, 1998
Bernard Chaus, Inc
1410 Broadway
New York, New York 10018
Ladies and Gentlemen:
On the date hereof, Bernard Chaus, Inc., a New York
corporation (the "Company"), intends to transmit for filing with the Securities
and Exchange Commission a Registration Statement on Form S-8 (the "Registration
Statement") relating to the reoffer and resale by the selling stockholder named
in the Registration Statement of 1,375,137 shares (the "Shares") of common
stock, par value $.01 per share, of the Company ("Common Stock"), that may be
issued from time to time upon the exercise of options granted pursuant to the
Bernard Chaus, Inc. 1998 Stock Option Plan (the "1998 Plan"). This opinion is
an exhibit to the Registration Statement.
We have at times acted as counsel to the Company with respect
to certain corporate and securities matters and, in such capacity, we are
familiar with the various corporate and other proceedings taken by or on behalf
of the Company with respect to the proposed reoffer and resale of the Shares as
contemplated by the Registration Statement. However, we are not general counsel
to the Company and would not ordinarily be familiar with or aware of matters
relating to the Company unless they are brought to our attention by
representatives of the Company. We have examined copies of the Company's
Certificate of Incorporation, its by-laws as presently in effect, minutes of
meetings of its directors, stockholders and committees and such other documents
and instruments relating to the Company and the proposed offering of the Shares
as we have deem necessary under the circumstances, in each case signed,
certified or otherwise proven to our satisfaction to be genuine. In our
examination of all such agreements, documents, certificates and instruments, we
have assumed the genuineness of all signatures and the authenticity of all
agreements, documents, certificates and instruments submitted to us as
originals and the conformity with the originals of all agreements, instruments,
documents and certificates submitted to us as copies. Insofar as this opinion
relates to securities to be issued in the future, we have assumed that all
applicable laws, rules and regulations in effect at the time of such issuance
are the same as such laws, rules and regulations in effect as of the date
hereof.
Based on the foregoing, and subject to and in reliance on the
accuracy and completeness of the information relevant thereto provided to us,
it is our opinion that the Shares to be issued upon the exercise of options
granted pursuant to the 1998 Plan have been duly authorized and (subject to the
effectiveness of the Registration Statement and compliance with applicable
state securities laws), when issued in accordance with the terms of the 1998
Plan and any option
<PAGE>
Bernard Chaus, Inc.
June 5, 1998
Page 2
agreements executed pursuant thereto, will be legally and validly issued, fully
paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and as an exhibit to any filing made by the
Company under the securities or "Blue Sky" laws of any state.
This opinion is furnished to you in connection with the
filing of the Registration Statement, and is not to be used, circulated, quoted
or otherwise relied upon for any other purpose, except as expressly provided in
the preceding paragraph, without our express written consent, and no party
other than you is entitled to rely on it. This opinion is rendered to you as of
the date hereof and we undertake no obligation to advise you of any change,
whether legal or factual, after the date hereof.
Very truly yours,
SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP
SFH&G, LLP:RAG:GA:AMF
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Bernard Chaus, Inc. on Form S-8 of our report dated September 19, 1997 (October
10, 1997 as to Note 6), appearing in the Annual Report on Form 10-K of Bernard
Chaus, Inc. for the year ended June 30, 1997.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE, LLP
New York, New York
June 4, 1998
