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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)*
Bernard Chaus, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
162510200
(CUSIP Number)
Josephine Chaus
(Name of Person Filing Statement)
Josephine Chaus
c/o Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attn: Richard A. Goldberg (212) 758-9500
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 26, 1998
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following: [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP No. 162510200 Page 2 of 6 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Josephine Chaus
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES 18,775,489
BENEFICIALLY --------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 72,936
REPORTING --------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 18,775,489
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10 SHARED DISPOSITIVE POWER
72,936
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
18,848,425
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
69.5%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT! SEC 1746 (9-88) 2 OF
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AMENDMENT NO. 5 TO SCHEDULE 13D
This Amendment No. 5 to the Statement on Schedule 13D (as
defined below) amends and restates the Statement on Schedule 13D relating to
the event date of April 5, 1990 (the "Original Schedule 13D"), Amendment No. 1
to the Original Schedule 13D relating to the event date of October 16, 1992
("Amendment No. 1"), Amendment No. 2 to the Original Schedule 13D relating to
the event date of November 22, 1994 ("Amendment No. 2"), Amendment No. 3 to the
Original Schedule 13D relating to the event date of November 15, 1995
("Amendment No. 3"), and Amendment No. 4 to the Original Schedule 13D relating
to the event date of November 14, 1996 ("Amendment No. 4"), reported by
Josephine Chaus (the "Reporting Person") relating to the common stock, par
value $.01 per share (the "Common Stock"), of Bernard Chaus, Inc., a New York
corporation (the "Issuer"). The Original Schedule 13D, Amendment No. 1,
Amendment No. 2, Amendment No. 3 and Amendment No. 4 and this Amendment No. 5
to the Statement on Schedule 13D are collectively referred to herein as the
"Schedule 13D."
The Common Stock share amounts set forth in this Amendment
No. 5 to the Schedule 13D take into account a one-for-ten reverse stock split
which became effective on December 9, 1997.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The response set forth in Item 3 of the Schedule 13D is
hereby amended and supplemented as follows:
As part of the Issuer's restructuring plan, the Reporting
Person agreed, pursuant to the terms of a letter agreement dated December 9,
1997 (the "Commitment Agreement"), to provide the Issuer with credit support by
(i) converting (a) $28.1 million of existing indebtedness (including accrued
interest through January 23, 1998), and (b) $12.5 million of indebtedness to be
owed to the Reporting Person upon her assumption of such amount of senior
secured bank debt owing to BNY Financial Corporation ("BNYF") by the Issuer
(the "Bank Debt") pursuant to a loan made by BNYF to Ms. Chaus (the "BNYF-J
Chaus Loan") ($40.6 million as of January 23, 1998) into 10,510,910 shares of
Common Stock of the Issuer; (ii) committing to subscribe, pursuant to the
Issuer's rights offering for $10.0 million of Common Stock; and (iii)
committing to subscribe for up to an additional $2.5 million of Common Stock,
if and to the extent that the Issuer's other stockholders did not purchase at
least that amount of stock in the Issuer's rights offering.
On October 10, 1997, in substitution for a personal guarantee
in the form of cash collateral in the amount of $12.5 million previously
provided by the Reporting Person, the Reporting Person provided $12.5 million
in cash collateral to secure the Bank Debt. The cash collateral was provided
from the proceeds of the BNYF--J. Chaus Loan. On January 29, 1998, pursuant to
the terms of a cash collateral deposit release letter (the "Release Letter"),
the $12.5 million in cash collateral was released to BNYF and used to retire
$12.5 million of the Bank Debt. As a result of such repayment, the Issuer
became indebted to the Reporting Person for $12.5 million and the Reporting
Person became subrogated to the rights of BNYF with respect to such loan amount
(the "Subrogated Loan") until the Subrogated Loan and approximately $28.1
million of other
3
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subordinated indebtedness was converted into 10,510,910 shares of Common Stock
of the Issuer. Pursuant to the terms of a conversion agreement (the "Conversion
Agreement") dated as of January 29, 1998, the Subrogated Loan and the other
indebtedness was converted by the Reporting Person into 10,510,910 shares of
Common Stock of the Issuer.
The Reporting Person 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 Bank Debt in substitution for
the letter of credit previously provided by her. The July Deposit Letter was
amended on October 10, 1997 to provide that the $10.0 million in cash
collateral was to be held as collateral to secure indebtedness under the
Issuer's new financing agreement with BNYF. On January 23, 1998, such cash
collateral was released by BNYF and the Reporting Person used such amount to
purchase 6,988,635 shares of Common Stock issuable to her (and two trusts to
which the Reporting Person acted as co-trustee) upon the exercise of
subscription rights issued to her, in satisfaction of her purchase commitment
in connection with the Issuer's rights offering. Since the rights offering was
oversubscribed, the Reporting Person's commitment to oversubscribe for up to an
additional $2.5 million of Common Stock was not required to be fulfilled.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The responses set forth in subsections (a) and (b) of Item 5
of the Schedule 13D are hereby amended and restated in their entirety as
follows:
(a) The aggregate number of shares of Common Stock
beneficially owned by the Reporting Person is 18,848,425, or
approximately 69.5% of the outstanding shares of Common Stock, based
on the number of outstanding shares of Common Stock of the Issuer (as
of January 26,1997, which includes the 24,488,180 shares of Common
Stock issued in the Rights Offering).
(b) The Reporting Person has the sole power to vote,
direct the vote or dispose of an aggregate of 18,775,489 shares of
Common Stock beneficially owned by her. The Reporting Person shares
power to vote, direct the vote or dispose of an aggregate of 72,936
shares of Common Stock held by her and Daniel Rosenbloom as
co-trustees for her children.
Mr. Rosenbloom acts as an investment advisor with First
Manhattan Co., an investment advisory firm. His business address, and the
principal address of First Manhattan Co., is 437 Madison Avenue, New York, New
York 10022. During the last five years, Mr. Rosenbloom has not been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors). In addition, during the last five years, Mr. Rosenbloom has not
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding been subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
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ITEM 6. CONTRACTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The response set forth in Item 6 of the Schedule 13D is
hereby amended and supplemented as follows:
The Commitment Agreement referenced in Item 3 is annexed
hereto as Exhibit 1 and incorporated by reference herein. The Deposit Letter
referenced in Item 3 is annexed hereto as Exhibit 2 and incorporated by
reference herein. The Subrogated Subordinated Promissory Note evidencing the
Subrogated Loan referenced in Item 3 is annexed hereto as Exhibit 3 and
incorporated by reference herein. The Conversion Agreement referenced in Item 3
is annexed hereto as Exhibit 4 and incorporated by reference herein.
In connection with the Issuer's restructuring plan, the
Reporting Person agreed in principle to relinquish, for no value, all of her
rights to warrants exercisable for an aggregate of 347,851 shares of Common
Stock. Such warrants constituted all of the Reporting Person's existing
warrants and included (i) the $3.00 Warrants, the $2.25 Warrants, the $4.62
Warrants and the Extension Warrants (also collectively referred to as the "1994
Warrants"); (ii) the February Increase Warrants, the Guarantee Warrants and the
September Extension Warrants (also collectively referred to as the "1995
Warrants"); and (iii) the 1996 Warrants. On January 29, 1998, all of the 1994
Warrants, the 1995 Warrants and the 1996 Warrants were relinquished by the
Reporting Person and canceled by the Issuer.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit 1 Letter Agreement dated December 9, 1997 between the Reporting
Person and the Issuer.
Exhibit 2 Cash Collateral Deposit Release Letter Agreement dated as
of January 29, 1998 Agreement among the Reporting Person, the
Issuer and BNYF.
Exhibit 3 Subrogated Subordinated Promissory Note dated as of January
29, 1998 from the Issuer to the Reporting Person in the
principal amount of $12.5 million.
Exhibit 4 Conversion Agreement dated as of January 29, 1998 between the
Reporting Person and the Issuer.
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SIGNATURE
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Dated: February 6, 1998
/s/ Josephine Chaus
---------------------------------
Josephine Chaus
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EXHIBIT INDEX
Exhibit Description
Exhibit 1 Letter Agreement dated December 9, 1997 between the Reporting
Person and the Issuer.
Exhibit 2 Cash Collateral Deposit Release Letter Agreement dated as
of January 29, 1998 Agreement among the Reporting Person, the
Issuer and BNYF.
Exhibit 3 Subrogated Subordinated Promissory Note dated as of January
29, 1998 from the Issuer to the Reporting Person in the
principal amount of $12.5 million.
Exhibit 4 Conversion Agreement dated as of January 29, 1998 between the
Reporting Person and the Issuer.
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JOSEPHINE CHAUS
C/O BERNARD CHAUS, INC.
1410 BROADWAY
NEW YORK, NEW YORK 10018
December 9, 1997
Bernard Chaus, Inc.
1410 Broadway
New York, New York 10018
Re: Subscription Agreement
Ladies and Gentlemen:
This letter sets forth our agreement regarding the exercise
of subscription rights in the rights offering (the "Rights Offering") described
in the Registration Statement (File No. 333-39041) filed with the Securities
and Exchange Commission on October 30, 1997, as amended by Amendment No. 1
thereto filed with the Securities and Exchange Commission on December 9, 1997
(as such may be amended or supplemented after the date of this letter, the
"Registration Statement"). This letter constitutes the "Purchase Agreement"
specified in the Registration Statement.
I hereby agree to subscribe for and purchase for $10.0
million at the consummation of the Rights Offering all of the 6,988,935 shares
of common stock, par value $.01 per share ("Common Stock"), of Bernard Chaus,
Inc., a New York corporation (the "Company"), issuable to me upon exercise of
the nontransferable subscription rights distributed to me in the rights
offering described in the Registration Statement (the "Rights Offering"). The
$10.0 million purchase price shall be satisfied out of the $10.0 million in
cash collateral currently held by BNY Financial Corporation under the terms of
the July Deposit Letter (as such term is defined in the Registration
Statement). I also agree that, in the event that at least 1,747,160 shares of
Common Stock (the "Standby Commitment Shares") are not purchased by the holders
of the subscription rights distributed in the Rights Offering, other than by me
(or purchases by the other directors of the Company in the Rights Offering in
excess of $100,000), pursuant to the Basic Subscription Privilege or the
Oversubscription Privilege (as such terms are defined in the Registration
Statement), I will purchase the unsubscribed portion of such Standby Commitment
Shares at the Subscription Price (as such term is defined in the Registration
Statement), for an aggregate purchase price of up to $2.5 million.
As part of the Company's restructuring plan, I also agree to
convert, immediately prior to the closing of the Rights Offering, approximately
$40.6 million of indebtedness owed to me, consisting of approximately $28.1
million of existing subordinated indebtedness (including accrued interest
through January 23, 1998) and $12.5 million of indebtedness which will be owed
to me by
<PAGE>
the Company pursuant to the Subrogated Loan (as such term is defined in the
Registration Statement), into 10,510,910 shares of Common Stock.
The share amounts in this letter give effect to the
one-for-ten reverse stock split to be effective on the close of business today.
The actions to be taken by me as described in this letter are
subject only to the condition that there not be any litigation or governmental
action challenging or seeking to enjoin the Rights Offering which, in the sole
judgment of the Company, makes it inadvisable to proceed with the Rights
Offering.
Sincerely,
/s/ Josephine Chaus
Josephine Chaus
Agreed to and accepted as of
this 9th day of December, 1997:
BERNARD CHAUS, INC.
/s/ Andrew Grossman
- -----------------------
Andrew Grossman
Chief Executive Officer
<PAGE>
CASH COLLATERAL DEPOSIT RELEASE LETTER
As of January 26, 1998
BNY Financial Corporation
1290 Avenue of the Americas
New York, New York
Attention: Andrew Rogow
Gentlemen:
Reference is made to (a) the Second Restated and Amended
Financing Agreement dated as of October 10, 1997 (as the same has been and may
be further amended, modified, supplemented and restated from time to time, the
"Financing Agreement") between BNY Financial Corporation ("Lender") and Bernard
Chaus, Inc. ("Borrower"), (b) that certain $12,500,000 Promissory Note dated as
of October 10, 1997 (as the same has been and may be further amended, modified,
supplemented and restated from time to time, the "Note") executed by the
undersigned in favor of Lender and (c) that certain Cash Collateral Deposit
Letter from the undersigned to Lender dated as of October 10, 1997 (as the same
has been and may be further amended, modified, supplemented and restated from
time to time, the "Deposit Letter"). All capitalized terms used herein which
are not defined shall have the meanings given to them in the Financing
Agreement.
The Collateral Deposit is hereby released to Lender in
accordance with the Deposit Letter and shall be applied as provided in Section
12.3 of the Financing Agreement. The parties acknowledge that the undersigned
shall become subrogated to the rights of Lender with respect to such loan
amount (which will be reflected in a Subrogated Subordinated Promissory Note
dated as of the date hereof from Borrower to the undersigned) until such
Subrogated Subordinated Promissory Note is exchanged for equity.
Very truly yours,
/s/ JOSEPHINE CHAUS
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JOSEPHINE CHAUS
Receipt of the Collateral Deposit is hereby acknowledged as of this 26th day of
January, 1998:
BNY FINANCIAL CORPORATION
By: /s/ Andrew Rogow
----------------------------
Title: Senior Vice President
<PAGE>
Subrogation of the amount equal to the Collateral Deposit by means of a
Subrogated Subordinated Promissory Note is hereby acknowledged as of this 26th
day of January, 1998:
BERNARD CHAUS, INC.
By: /s/ Andrew Grossman
------------------------
Andrew Grossman
Chief Executive Officer
<PAGE>
SUBROGATED SUBORDINATED PROMISSORY NOTE
$12,500,000 New York, New York
As of January 26, 1998
FOR VALUE RECEIVED, Bernard Chaus, Inc. (herein collectively
with all successors called the "Maker"), with an address at 1410 Broadway, New
York, New York, hereby promises to pay to the order of Josephine Chaus (the
"Payee"), with an address at 128 East 73rd Street, New York, New York, the
principal sum of Twelve Million Five Hundred Thousand Dollars ($12,500,000),
plus interest thereon at the rate set forth below at such times as are
specified below.
Interest shall accrue on the outstanding principal amount of
this Subrogated Subordinated Promissory Note (this "Note") and on overdue
interest at the rate of 12% per annum, based on a year of 360 days, comprised
of twelve 30-day months, for the number of days actually elapsed, until the
date on which the last payment of principal and interest under this Note shall
have been paid. All principal, accrued interest and any other amounts due
hereunder shall be due and payable on July 1, 1998 (the "Maturity Date").
This Note may be prepaid, in whole or in part, at any time or
from time to time, without premium or penalty. Any prepayments of this Note
shall be applied first to the payment of all interest accrued on this Note as
of the date of the payment, and then to the outstanding and unpaid principal
amount of this Note.
All payments or prepayments of principal and interest and
other sums due pursuant to this Note shall be made in immediately available
funds by wire transfer to an account or accounts designated in writing by Payee
or by certified or bank cashier's check made payable to the order of Payee at
such place in the United States of America as Payee shall have designated to
Maker, in any case not later than 5:00 p.m. New York time on the date on which
such payment becomes due.
The payment of all obligations on this Note is subordinated
in right of payment to the prior payment in full of all obligations of Maker to
BNY Financial Corporation or its successors or assigns pursuant to the Second
Restated and Amended Financing Agreement dated as of October 10, 1997 (the
"Senior Indebtedness"). Payee is hereby subrogated to all rights of any holders
of Senior Indebtedness to receive any further payments or distributions
applicable to the Senior Indebtedness until this Note shall have been paid in
full, and such payments or distributions received by Payee by reason of such
subrogation, of cash, securities or other property which otherwise would be
paid or distributed to the holders of Senior Indebtedness, shall between Maker
and its creditors other than holders of Senior Indebtedness, on the one hand,
and Payee on the other hand, be deemed to be a payment by Maker on account of
the Senior Indebtedness and not on account of this Note.
The obligations of Maker under this Note are absolute and
unconditional, and are not subject to any counterclaim, set-off, deduction or
defense that Maker may have against Payee. If Holder is required to resort to
legal action to collect any sums due under this Note, Maker promises to pay all
costs and expenses (including, but not limited to, all legal and accounting
expenses) incurred in connection with such action. Maker waives presentment for
payment, demand, notice of non-payment, protest and notice of protest. No delay
on the part of Holder in exercising any right
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hereunder shall operate as a waiver of such right under this Note. This Note
shall be construed in accordance with, and governed by, the laws of the State
of New York as applied to contracts made and to be performed entirely in the
State of New York without regard to principles of conflicts of law.
BERNARD CHAUS, INC.
By: /s/ Andrew Grossman
----------------------------------------
Andrew Grossman, Chief Executive Officer
<PAGE>
CONVERSION AGREEMENT
This CONVERSION AGREEMENT is made and entered into as of this
26th day of January, 1998 by and between Bernard Chaus, Inc., a New York
corporation (the "Company"), and Josephine Chaus, with an address at 128 East
73rd Street, New York, New York ("J.Chaus").
WHEREAS, the Company is indebted to J.Chaus for approximately
$28.1 million under 12% Subordinated Promissory Notes issued to J.Chaus in June
1986, February 1991 and March 1997, including approximately $11.6 million in
accrued and unpaid interest on an income tax basis as of the date hereof
(collectively, the "Old Notes"), and the Company has never taken nor does it
intend to take any tax deduction for any or all of such accrued or unpaid
interest; and
WHEREAS, BNY Financial Corporation ("Lender"), in negotiating
the terms of its Second Restated and Amended Financing Agreement dated as of
October 10, 1997, required J.Chaus to place $12.5 million in a cash collateral
account with Lender in order to guarantee the obligations of the Company under
such financing agreement; and
WHEREAS, at the conclusion of the Company's rights offering,
J.Chaus released the $12.5 million to Lender and the Company issued $12.5
million in aggregate principal amount of a Subrogated Subordinated Promissory
Note to J.Chaus which is subrogated to the rights of Lender with respect to
such amount until such Subrogated Subordinated Promissory Note is exchanged for
equity (the "New Note"; collectively with the Old Notes, the "Notes"); and
WHEREAS, in October 1997, the Company and J.Chaus negotiated
a settlement pursuant to which J.Chaus agreed to convert the aggregate
principal amount of the Notes into an aggregate of 10,510,910 shares of common
stock, par value $.01 per share ("Common Stock"), of the Company; and
WHEREAS, in connection with the settlement, J.Chaus agreed to
forgive the payment of interest on the Notes; and
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, each intending to be legally bound, do hereby
agree as follows:
1. Conversion of Notes into Common Stock. Effective as of the
date hereof, the aggregate principal amount of the Notes shall have been
converted into an aggregate of 10,510,910 shares of Common Stock of the Company
and the payment of interest on the Notes shall have been forgiven by J.Chaus.
Effective as of the date hereof, the Notes shall be canceled and of no further
force and effect. Simultaneously with the execution of this Agreement, J.Chaus
shall deliver each of the Notes, each marked "Canceled", to the Company.
2. Issuance of Stock Certificate. The Company shall use its
commercially reasonable best efforts to cause the Company's transfer agent to
promptly issue to J.Chaus a stock certificate evidencing 10,510,910 shares of
Common Stock of the Company.
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3. Governing Law. This Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of New York,
without giving effect to the principles of conflict of laws thereof.
4 Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties with respect to their subject matter
and supersedes any and all prior understandings, negotiations or agreements
among the parties hereto, both written and oral, with respect to such subject
matter.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
BERNARD CHAUS, INC.
By: /s/ Andrew Grossman
-----------------------
Andrew Grossman
Chief Executive Officer
/s/ JOSEPHINE CHAUS
-----------------------
JOSEPHINE CHAUS
