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EX-32.2 - EX-32.2 - CHAUS BERNARD INC | y05288exv32w2.htm |
EX-31.2 - EX-31.2 - CHAUS BERNARD INC | y05288exv31w2.htm |
EX-32.1 - EX-32.1 - CHAUS BERNARD INC | y05288exv32w1.htm |
EX-31.1 - EX-31.1 - CHAUS BERNARD INC | y05288exv31w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
EXCHANGE ACT OF 1934
For the fiscal year ended July 2, 2011
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
EXCHANGE ACT OF 1934
For the transition period from to
Commission
file number 1-9169
BERNARD CHAUS, INC.
(Exact name of registrant as specified in its charter)
New York |
13-2807386 | |||
(State or other jurisdiction of |
(I.R.S. Employer Identification No.) | |||
incorporation or organization) |
||||
530 Seventh Avenue, New York, New York |
10018 | |||
(Address of principal executive offices) |
(Zip Code) |
Registrants telephone number, including area code
(212) 354-1280
(212) 354-1280
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
|
Name of each exchange on which registered | |
Common Stock, $0.01 par value
|
None; securities quoted on the Over the Counter Bulletin Board |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. o Yes þ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. o Yes þ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files).
o Yes o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definition of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (check one):
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of
the Exchange Act). o Yes þ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates
of the registrant on December 31, 2010 was $2,610,169.
Indicate the number of shares outstanding of each of the registrants classes of common stock,
as of the latest practicable date.
Date | Class | Shares Outstanding | ||
September 30, 2011 | Common Stock, $0.01 par value | 37,481,373 |
Documents Incorporated by Reference | Location in Form 10-K in which incorporated | |
None.
TABLE OF CONTENTS
Table of Contents
EXPLANATORY NOTE
We are filing this Amendment No. 1 on Form 10-K/A (Form 10-K/A) to amend our Annual
Report on Form 10-K for the fiscal year ended July 2, 2011, as filed with the Securities and
Exchange Commission (SEC) on September 30, 2011 (Original Form 10-K). This amendment is being
filed to amend Part III by setting forth the information required to be disclosed therein and to
amend the cover page of the Original Form 10-K accordingly to remove the reference to documents
incorporated by reference.
This amendment includes new certifications by our Chairwoman of the Board and Chief
Executive Officer and Interim Chief Financial Officer pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002, filed as Exhibits 31.1, 31.2, 32.1 and 32.2 hereto. Each certification
as corrected was true and correct as of the date of the filing of the Original Form 10-K.
Except as described above, we have not modified or updated other disclosures contained in
the Original Form 10-K. Accordingly, this Form 10-K/A does not
reflect events occurring after the date of filing of the Original Form 10-K or modify or update
those disclosures affected by subsequent events. Consequently, all other information not affected
by the corrections described above is unchanged and reflects the disclosures made at the date of
the filing of the Original Form 10-K and should be read in conjunction with our filings with the
SEC subsequent to the filing of the Original Form 10-K, including amendments to those filings, if
any.
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Table of Contents
PART III
Item 10. Directors and Executive Officers of the Registrant.
Executive Officers
Information with respect to the executive officers of the Company is set forth in Part I of
the Original Form 10-K in the section entitled Executive Officers.
Board of Directors
The Board of Directors of the Company currently is composed of the following members:
NAME OF DIRECTOR | AGE | DIRECTOR SINCE | ||||||
Josephine Chaus |
60 | 1977 | ||||||
Philip G. Barach |
81 | 1993 | ||||||
Robert Flug |
64 | 2009 |
Josephine Chaus is a co-founder of the Company and has held various positions with the Company
since its inception. She has been a director of the Company since 1977, Chief Executive Officer
from July 1991 until September 1994 and from December 1998 until present, and Chairwoman of the
Board from July 1, 1991 until present. In addition, she served as President from 1980 to February
1993 and served as a member of the Office of the Chairman from September 1994 until it was
eliminated in December 1998.
Philip G. Barach was appointed a director of the Company on November 26, 1993. He was, from
July 1968 to March 1990, the Chief Executive Officer of U.S. Shoe Corp., a shoe manufacturer,
retail apparel company and retail eyewear company. In addition, Mr. Barach served as Chairman of
the Board of Directors of U.S. Shoe Corp. from March 1990 to March 1993.
Robert Flug was appointed a director of the Company on April 13, 2009. Mr. Flug has worked in
the fashion industry for over 30 years. From 2002 until the end of fiscal year 2009, Mr. Flug
provided consulting services to the Company related to the Companys private label and mass channel
businesses via a consulting arrangement between the Company and an entity of which Mr. Flug is the
principal shareholder. Prior to 2002, Mr. Flug was the owner and Chief Executive Officer of S.L.
Danielle, which was acquired by the Company in 2002. Mr. Flug served as a director of Take-Two
Interactive Software, Inc. from 1998 until 2007 and served as its interim non-executive chairman
from 2006 until 2007.
David Stiffman resigned from the Board of Directors effective February 4, 2011. Mr. Stiffman
was appointed a director of the Company on April 13, 2009. He also served as chief operating
officer of the Company from December 2007 and chief financial officer from December 2009 until the
termination of his employment agreement in February 2011.
Shareholder nominations
During fiscal 2011, there were no changes to the process by which shareholders may recommend
director candidates for consideration by the Nominating and Corporate Governance Committee.
Shareholders may do so by writing to the Companys Interim Chief Financial Officer at the Companys
offices at 530 Seventh Avenue, Eighteenth Floor, New York, New York 10018, giving the candidates
name, contact information, biographical data and qualifications. A written statement from the
candidate should accompany any such recommendation consenting to be named as a candidate and, if
nominated and elected, agreeing to serve as director.
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Audit Committee
During fiscal 2011, the Audit Committee was composed of one director, Philip G. Barach, who
was independent (as independence is defined in the New York Stock Exchange listing standards). The
Board of Directors determined that Mr. Barach was the financial expert for the Audit Committee
during fiscal 2011.
Code of Ethics
The Companys Code of Ethics and Standards of Conduct (the Code of Ethics) was amended and
restated effective May 4, 2004. The Code of Ethics applies to all officers, directors and employees
of the Company, including the chief executive officer and chief financial officer. The Company
will file Form 8-Ks to the extent required by the rules and regulations of the Securities and
Exchange Commission for waivers of, or amendments to, the Code of Ethics. A copy of the Companys
Code of Ethics is available free of charge upon written request to the Interim Chief Financial
Officer, Mr. William Runge, at the Companys offices at 530 Seventh Avenue, Eighteenth Floor, New
York, New York 10018.
Item 11. Executive Compensation.
Elements of Compensation
Base Salary.
The Company pays base salaries to named executive officers at their current levels based on
the Compensation Committees belief that salaries are essential to recruiting and retaining
qualified executives. Base salaries are initially set by the Compensation Committee and may be
incorporated into employment contracts with our named executive officers; however, none of the
Companys named executive officers currently has an employment agreement. Typically, base salary
levels are set based on the applicable named executive officers experience and performance with
previous employers, pay levels for similar positions at other companies in the apparel industry and
negotiations with individual named executive officers. Thereafter, the Compensation Committee
determines whether to increase base salaries for a named executive officer, from year to year,
based on its subjective assessment of the Companys overall performance over the preceding year, as
well as named executive officer performance and experience, length of service, changes in
responsibilities and the level of pay compared to other companies in the apparel industry.
For fiscal 2011, the Compensation Committee determined that no increase in base salary for any
named executive officer was appropriate based on the Companys relative market position and the
Companys market value. In addition, the annual base salary of Josephine Chaus, the Chief
Executive Officer of the Company, was reduced from $600,000 to $475,000 effective September 1,
2010.
Annual Cash Incentive Compensation.
The Company has in effect an Annual and Long-Term Incentive Compensation Plan (the Long-Term
Incentive Plan) in which certain key employees, including the named executive officers, are
eligible to participate. Under the Long-Term Incentive Plan, the Compensation Committee may
establish on an
annual basis corporate-wide objectives based upon net income each year, the attainment of
which may serve as the basis for computing annual bonuses for certain employees, including the
named executive officers. Notwithstanding the foregoing, the Compensation Committee concluded that
for fiscal 2011, each named executive officer was sufficiently compensated and incentivized by such
individuals current base salary and/or previous equity grants. Thus, the Compensation Committee
did not establish performance targets that would lead to the payment of guaranteed incentive
bonuses to the named executive officers upon the attainment of such targets.
Under the terms of Mr. Stiffmans employment agreement, which terminated upon his resignation
in February 2011, Mr. Stiffman was eligible to earn annual bonus compensation in an amount equal to
10% of the Companys annual profits. Mr. Stiffman received no bonus for fiscal 2011 or 2010. Under
the terms of the Long-Term Incentive Plan, the Compensation Committee retains the discretion to
provide discretionary bonuses to any named executive officer based
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upon the performance of the
Company. The Compensation Committee awarded no discretionary bonuses in fiscal 2011.
Equity Compensation.
The Compensation Committee believes that the use of stock options and, in some cases,
restricted stock, as the principal basis for creating long-term incentives satisfies the objective
of aligning the interests of named executive officers with those of the Companys shareholders,
thereby ensuring that such officers have a continuing stake in our long-term success. No stock
options were granted to named executive officers in fiscal 2011. In addition to options, the
Compensation Committee has at times granted restricted stock to its named executive officers.
Accordingly, the Compensation Committee established the Restricted Stock Inducement Plan under
which a grant was made to Mr. Stiffman in 2008. As of January 2010, Mr. Stiffmans restricted
stock is fully vested. The Compensation Committee did not grant restricted stock to any executive
officer during fiscal 2011.
Perquisites.
The Company believes that the principal purpose of perquisites and personal benefits should be
to provide certain conveniences to named executive officers in order for them to effectively
discharge their responsibilities to the Company. For fiscal 2011, the Company provided
approximately $1,878 per month in automobile lease reimbursements to Ms. Chaus and additionally
reimbursed her approximately $769 per month for parking expenses. The incremental costs to the
Company of providing Ms. Chaus automobile allowance and parking reimbursement are included in the
Summary Compensation Table below and described in the accompanying footnotes.
General Benefits.
The following are standard benefits offered to all eligible Company employees, including named
executive officers.
Retirement Benefits The Company maintains a tax-qualified 401(k) savings plan for all of our
eligible employees, including the named executive officers, known as the Bernard Chaus, Inc.
Employee Savings Plan (the Savings Plan). The Savings Plan is a voluntary contributory plan under
which employees may elect to defer compensation for federal income tax purposes under Section
401(k) of the Code. Employees who have attained age 21 and completed 30 days of service with the
Company are eligible to participate in the Savings Plan (as of the first day of the month following
satisfaction of both conditions) by contributing through payroll deductions up to a maximum 14% of
their base salary on a pre-tax basis up to the annual aggregate contribution limits imposed by law
or regulation. The participating employee is not taxed on
these contributions until they are distributed.
In the past, we have made matching contributions to the Savings Plan on behalf of all eligible
participants in a given plan year. Participants are always 100% vested in their own pre-tax
contributions and will begin vesting in any matching contributions made by the Company on their
behalf beginning with their second year of service with the Company and thereafter at a rate of 20%
per year. Effective on August 1, 2009, the Company stopped its general policy of matching
contributions. During fiscal 2010, the Company matched contributions of Mr. Heminover, previously
chief financial officer and assistant secretary of the Company for July 2009. No
matching contributions were made by the Company during fiscal 2011. Our matching contributions
allocated to the named executive officers under the Savings Plan are shown in the All Other
Compensation column of the Summary Compensation Table below. The Company does not maintain any
other tax-qualified or nonqualified plans that provide for retirement benefits or any supplemental
executive retirement plans.
Medical, Dental, Life Insurance and Disability Coverage Active employee benefits such as
medical, dental, life insurance and disability coverage are available to all eligible employees.
The value of these benefits is not required to be included in the Summary Compensation Table since
these benefits are available on a Company-wide basis to all eligible employees. During fiscal 2011,
the Company also provided coverage to Ms. Chaus under a supplemental executive medical plan (the
Exec-U-Care Plan). Under the Exec-U-Care Plan, participants are reimbursed for any deductibles,
coinsurance payments and other out-of-pocket expenses that the participants would otherwise be
required to pay under the
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Companys medical and health plans. During fiscal 2011, Ms. Chaus
received reimbursements under the Exec-U-Care Plan of $1,660.
Other Paid Time-Off Benefits We also provide vacation and other paid holidays to all employees,
including the named executive officers, which are comparable to those provided at other companies
in the apparel industry.
Summary Executive Officer Compensation Table
Name and | Stock | All Other | ||||||||||||||||||
Principal | Salary | Awards | Compensation | |||||||||||||||||
Position | Year | ($) | ($)(1) | ($) | Total ($) | |||||||||||||||
Josephine Chaus |
2011 | 497,889 | | 33,431 | (2) | 531,320 | ||||||||||||||
Chairwoman of the
Board and Chief
Executive Officer |
2010 | 600,000 | 32,088 | (2) | 632,088 | |||||||||||||||
William P. Runge
Interim Chief
Financial Officer |
2011 | 54,385 | (5) | | | 54,385 | ||||||||||||||
David Stiffman |
2011 | 307,692 | (3) | | 191,026 | (3) | 498,718 | |||||||||||||
Chief
Operating/Chief
Financial Officer |
2010 | 500,000 | (3) | 14,750 | | 514,750 | ||||||||||||||
Barton Heminover
Chief Financial
Officer and
Assistant Secretary |
2010 | 128,057 | (4) | | 50,023 | (4) | 178,080 |
(1) | Represents the compensation costs recognized for financial statement reporting purposes for the fair value of restricted stock awarded in fiscal 2008 in accordance with Financial Accounting Standards Boards Accounting Standards Codification (ASC) Topic 718 Compensation-Stock Compensation, rather than an amount paid to or realized by Mr. Stiffman. | |
(2) | As described in the Elements of Compensation section above, the Company provides personal benefits to Ms. Chaus in the form of automobile lease reimbursements, parking reimbursements and enhanced executive health coverage. For fiscal 2011, Ms. Chaus received $22,538 in automobile lease reimbursements, $9,233 in reimbursement for parking expenses and $1,660 in reimbursements under the Exec-u-Care Plan. For fiscal year 2010, Ms. Chaus received $22,536 in automobile lease reimbursements, $9,240 in reimbursement for parking expenses and $312 in reimbursements under the Exec-u-Care Plan. | |
(3) | Mr. Stiffmans employment with the Company terminated in February 2011. This represents salary received for fiscal 2011 prior to termination of employment. In addition, in fiscal 2011, Mr. Stiffman received severance |
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payments totaling $191,026 pursuant to the terms of his employment agreement. These severance amounts are reflected in the All Other Compensation column in the above table. | ||
(4) | Mr. Heminovers employment with the Company terminated in January 2010. This represents salary received for fiscal 2010 prior to termination of employment. For fiscal 2010, Mr. Heminover received $4,928 in an automobile allowance, and the Company made a contribution of $152 to Mr. Heminovers account in the Companys Savings Plan. In addition, in fiscal 2010, $44,943 of severance was paid to Mr. Heminover. Mr. Heminovers severance payment, automobile reimbursement and the Companys Savings Plan contribution are reflected in the All Other Compensation column in the above table. | |
(5) | Represents Mr. Runges compensation beginning in February 2011 when he was appointed Interim Chief Financial Officer. |
Potential Payments upon Termination or Change in Control
All employees of the Company, including the named executive officers, are eligible to receive
severance in the event of an involuntary termination of employment. With respect to the current
named executive officers, such severance is purely discretionary and, if awarded by the Company, is
typically calculated as one week of base salary for each six months of such executives employment
with the
Company prior to the date of termination.
Other than the severance to which Mr. Stiffman was entitled under the terms of his employment
agreement with the Company, which terminated upon his resignation in February 2011, the Company has
no contractual commitments to named executive officers to pay severance benefits.
Director Compensation
During fiscal 2011, directors who were not employees or consultants of the Company received an
annual fee of $40,000 for serving on the Board of Directors, plus a cash fee of $1,500 per
in-person meeting day (and substantial telephonic meeting). Prior to fiscal year 2008, pursuant to
the 1998 Stock Option Plan, an automatic annual grant of 10,000 options was made to each of our
non-employee directors of the Company on July 1st of each year. The exercise price of
any such option was equal to the market price of the Common Stock on the date of grant and the
option becomes exercisable as to 25% of the total grant on each of the first four anniversaries
after the grant.
Summary Director Compensation Table
Fees | ||||||||||||
Earned | ||||||||||||
or | ||||||||||||
Paid in | ||||||||||||
Cash | Option Awards | |||||||||||
Name | ($) | ($)(1) | Total ($) | |||||||||
Philip G. Barach |
46,000 | 1,966 | 47,966 | |||||||||
Robert Flug |
46,000 | | 46,000 |
(1) | Amounts in the Option Awards column represent the compensation cost recognized by the Company in fiscal year 2011 related to outstanding option awards in accordance with ASC 718. The valuation of such options was determined using a Black-Scholes valuation model. See Note 9, under the heading Stock-Based Compensation, to the Companys audited financial statements as filed in the Companys Original Form 10-K, which sets forth the material assumptions used in determining the compensation cost to the Company with respect to such awards under the 1998 Stock Option Plan. As of July 2, 2011, each director held options to purchase the number of shares of common stock of the Company set forth in the supplemental table below: |
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Director | Number of shares subject to outstanding options | |||
Philip G. Barach |
50,000 |
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders
matters.
Summary Equity Compensation Plans Table
Number of securities | ||||||||||||
Number of securities | remaining available for | |||||||||||
to be issued upon | Weighted-average | future issuance under equity | ||||||||||
exercise of | exercise price of | compensation plans | ||||||||||
outstanding options, | outstanding options, | (excluding securities | ||||||||||
Plan Category | warrants and rights | warrants and rights | reflected in column (a)) | |||||||||
Equity compensation
plans approved by
security holders
(1) |
640,420 | $ | 0.56 | 0 | ||||||||
Equity compensation |
0 | N/A | 0 | |||||||||
plans not approved
by security holders |
||||||||||||
Total |
640,420 | $ | 0.56 | 0 |
(1) | Prior to fiscal year 2008, pursuant to the 1998 Stock Option Plan, an automatic annual grant of 10,000 options was made to each of our non-employee directors of the Company on July 1st of each year. The exercise price of any such option was equal to the market price of the Common Stock on the date of grant and the option becomes exercisable as to 25% of the total grant on each of the first four anniversaries after the grant. |
Security Ownership of Certain Beneficial Owners and Management
The following table represents information with respect to the persons who are known to the
Company to be the beneficial owners of more than five percent of the Common Stock as of September
30, 2011.
Name and address of beneficial owner | Amount beneficially owned | Percent of class | ||||||
Josephine
Chaus 530 Seventh Avenue New York, New York 10018 |
16,837,308 | (1) | 44.9 | % | ||||
Barry J. Berkowitz 3497 Sweetgrass Avenue Simi Valley, CA 93065 |
4,688,591 | (2) | 12.5 | % | ||||
Camuto Consulting Inc. 411 West Putnam Avenue Greenwich, CT 06830 |
3,000,000 | 8.0 | % | |||||
Oceanroc Investments Limited P.O. Box 957 Offshore Incorporations Center Road Toan Tortola, British Virgin Islands |
3,000,000 | 8.0 | % |
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(1) | All shares listed are owned of record and beneficially, with sole investment and voting power, except that, with respect to 61,136 shares of Common Stock included in such amount, Josephine Chaus shares the power to dispose of such shares with Daniel Rosenbloom which are held by them as co-trustees for her children (but does not have the power to vote such shares). With respect to 683 shares of Common Stock included in such amount, such shares are owned by Ms. Chaus child, and Ms. Chaus is the custodian and, in such capacity, has the power to vote and dispose of them. | |
The shares beneficially owned by Ms. Chaus do not include an aggregate of 2,000,000 shares of Common Stock owned by certain trusts for the benefit of Ms. Chaus children or 683 shares of Common Stock owned by one of her children. She does not have any power to vote, direct the vote or dispose of these shares of Common Stock and disclaims beneficial ownership of these shares of Common Stock. | ||
Because of her stock ownership and positions with the Company, Josephine Chaus may be deemed a control person of the Company. | ||
(2) | Information based solely on a Schedule 13G filed with the Securities and Exchange Commission by Barry Berkowitz on October 13, 2010. Mr. Berkowitz indicated in such Schedule 13G that he shares voting and dispositive power with respect to 187,014 of the shares. |
The following table presents information as of September 30, 2011, with respect to the number
of shares of Common Stock beneficially owned by each of the directors of the Company and each named
executive officer, other than Josephine Chaus whose ownership is shown in the table above, and all
of the directors and executive officers of the Company as a group (including Josephine Chaus). The
information below, stating amounts beneficially owned and percent of class owned, includes options
exercisable within 60 days of September 30, 2011. Unless otherwise noted, the address of each
person listed below is c/o Bernard Chaus, Inc., 530 Seventh Avenue, New York, New York 10018.
Percent of Shares | ||||||||
of Common | ||||||||
Number of Shares | Stock | |||||||
Name | Beneficially Owned(1) | Outstanding | ||||||
Directors: |
||||||||
Philip G. Barach(2) |
50,000 | * | ||||||
Robert Flug(3) |
143,579 | * | ||||||
David Stiffman(4) |
100,000 | * | ||||||
All directors and executive officers as a group (5 persons)(5) |
17,130,887 | 45.6 | % |
* | Less than one percent. | |
(1) | Except as otherwise indicated below, the persons listed have advised the Company that they have sole voting and investment power with respect to the securities listed as owned by them. | |
(2) | Includes options to purchase 50,000 shares of Common Stock granted under the 1998 Stock Option Plan, as amended (the 1998 Stock Option Plan). | |
(3) | Includes 100,000 shares of Common Stock held in the name of an entity of which Mr. Flug is the principal |
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shareholder; 33,579 shares of Common Stock held by R.F. Co. Pension Plan, for which Mr. Flug has sole voting and investment power; and 10,000 shares of Common Stock held by the Robert Flug Living Trust. | ||
(4) | Represents 100,000 fully vested shares of restricted Common Stock granted under the 2007 Restricted Stock Inducement Plan. | |
(5) | Includes beneficial ownership of Josephine Chaus (see table above) and options to purchase an aggregate of 50,000 shares of Common Stock granted under the 1998 Stock Option Plan. Also includes beneficial ownership of David Stiffman, who resigned as a director and executive officer of the Company in February 2011. |
Changes in Control
As reported in the Original Form 10-K and the Form 8-K filed by the Company on September 20,
2011, on September 15, 2011, the Company received a cash merger proposal from Camuto Consulting
Inc. (Camuto) pursuant to which shareholders other than members of the Chaus family, China Ting
Group Holdings Limited (CTG, the parent company of Oceanroc Investments Limited) and Camuto would
receive $0.13 per share. The proposal is subject to a number of conditions including, among other
things, the negotiation and execution of definitive agreements, the approval of the transaction by
Chaus Board and shareholders, the receipt of a fairness opinion, the approval of the transaction
by the Boards of Camuto and CTG, the conversion of certain amounts owed by Chaus to CTG into term
loans and the entry by Chaus into a new financing agreement with CIT Group/Commercial Services,
Inc. on terms satisfactory to all parties. The proposal from Camuto must be approved by 2/3 of the
Companys shareholders and is currently being considered by the Companys independent directors,
assisted by legal and financial advisers.
Item 13. Certain Relationships and Related Transactions.
As described above in the section entitled Changes in Control in item 12, on
September 15, 2011, the Company received a cash merger proposal from Camuto, the beneficial owner
of 3,000,000 shares of Common Stock of the Company. The proposal received from Camuto is only a
proposal and has not yet been fully considered by the Board of Directors of the Company nor
approved by the shareholders of the Company. There is no assurance that any transactions or
agreements contemplated by the Camuto proposal will take place or be entered into by the Company.
On November 18, 2010, the Company entered into a trademark license agreement (the Camuto
License Agreement) with Camuto, the beneficial owner of 3,000,000 shares of Common Stock of the
Company. Pursuant to the Camuto License Agreement, the Company is required to pay certain
royalties on net sales and has agreed to guaranteed minimum yearly royalty and advertising amounts.
In addition, it is obligated to expend a minimum amount each quarter on marketing. These minimum
royalty, advertising and marketing expenses total $7,960,000 over the course of the initial term of
the Camuto License Agreement, which term expires on December 31, 2015. As shipments of Camuto
licensed products began in June 2011, the Company incurred royalty and marketing fees owed to
Camuto for fiscal 2011, which fees total less than $120,000.
We are currently in negotiations with CTG (the parent company of Oceanroc Investments Limited,
which owns 3,000,000 shares of Common Stock of the Company) to convert approximately $12 million of
debt owed by the Company to CTG for goods and services from accounts payable into two
interest-bearing term loans with initial terms of two years and five years.
Mr. Barach
is an independent director of the company, as independence is defined in the New York Stock
Exchange listing standards.
Item 14. Principal Accounting Fees and Services.
Mayer Hoffman McCann CPAs (the New York practice of Mayer Hoffman McCann P.C.)
(MHM) serves as the principal accounting firm designated to audit the Companys consolidated
financial statements.
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The aggregate fees billed by MHM to the Company for fiscal 2011 and fiscal 2010 were as
follows:
Fiscal 2011 | Fiscal 2010 | |||||||
Audit Fees(a) |
$ | 165,000 | $ | 190,000 | ||||
Audit-Related Fees(c)(d) |
$ | 25,000 | $ | 25,000 | ||||
Total Audit and Audit-Related Fees |
$ | 190,000 | $ | 215,000 | ||||
Tax Fees(b)(d) |
$ | 25,000 | $ | 35,362 | ||||
All Other Fees |
$ | 0 | $ | 0 | ||||
Total Fees |
$ | 215,000 | $ | 250,362 | ||||
(a) | Represents fees billed in connection with the audit of the Companys consolidated financial statements for fiscal 2011 and fiscal 2010 included in its annual reports on Form 10-K and reviews of the Companys interim consolidated financial statements included in its quarterly reports on Form 10-Q for fiscal 2011 and fiscal 2010. | |
(b) | Represents fees billed in connection with tax services for fiscal 2011 and fiscal 2010. Tax services include professional services provided for tax compliance and tax planning. | |
(c) | Represents fees billed in connection with the audits of the Companys employee benefit plans for fiscal 2011 and fiscal 2010. | |
(d) | The Audit Committee believes that MHMs provision of these services is compatible with maintaining MHMs independence. |
The charter of the Audit Committee provides that the Audit Committee approves the fees and
other significant compensation to be paid to the independent auditors. The Audit Committee and the
Board of Directors have further agreed that all services to be provided by MHM should be approved
in advance by the Audit Committee (or its designee). Prior to any such approval, it is expected
that the Audit Committee (or its designee) would review a budget for any such services, which
budget would likely include a description of, and a budgeted amount for, particular categories of
non-audit services that are anticipated at the time the budget is submitted, and that the Audit
Committee (or its designee) would periodically monitor the services rendered by and actual fees
paid to the independent auditors to ensure that such services are within the parameters approved by
the Audit Committee (or its designee). For fiscal 2011, one hundred percent (100%) of the fees set
forth in the table above for MHM were approved by the Audit Committee in accordance with applicable
regulations.
PART IV
Item 15. Exhibits, Financial Statement Schedule
*31.1
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Josephine Chaus. | |
*31.2
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for William P. Runge. | |
*32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Josephine Chaus. |
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*32.2
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for William P. Runge. |
* | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
BERNARD CHAUS, INC. | ||||||
By: | /s/ Josephine Chaus
|
|||||
Chairwoman of the Board and | ||||||
Chief Executive Officer | ||||||
Date: October 31, 2011 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
SIGNATURE | TITLE | DATE | ||
/s/ Josephine Chaus
|
Chairwoman of the Board and Chief Executive Officer | October 31, 2011 | ||
/s/ William P. Runge
|
Interim Chief Financial Officer | October 31, 2011 | ||
/s/ Philip G. Barach
|
Director | October 31, 2011 | ||
/s/ Robert Flug
|
Director | October 31, 2011 |
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