SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
NANTUCKET INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for the
Fiscal Year ended March 2, 1996, as set forth in the pages attached hereto:
Item 10: Directors and Executive Officers of the Registrant
Item 11: Executive Compensation
Item 12: Security Ownership of Certain Beneficial Owners and
Item 13: Certain Relationships and Related Transactions
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
NANTUCKET INDUSTRIES, INC.
(Registrant)
Dated: June 28, 1996 By: /s/ Ronald S. Hoffman
----------------------
Ronald S. Hoffman
Chief Financial Officer
(Chief Accounting Officer)
-1-
The text of Items 10, 11, 12 and 13 comprising Part III of
Registrant's Annual Report on Form 10-K, as amended, for the fiscal year ended
March 2, 1996, which presently consists of an incorporation by reference to
Registrant's definitive proxy statement, is hereby amended to substitute
therefor the full text of such Items as set forth in the pages attached hereto.
-2-
AMENDED ITEMS 10, 11, 12 AND 13
OF THE
ANNUAL REPORT ON FORM 10-K OF
NANTUCKET INDUSTRIES, INC. (the "Company")
FOR ITS FISCAL YEAR ENDED MARCH 2, 1996
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The table below sets forth for each director at March 2, 1996,
such director's name, age and other positions with the Company as at that date.
<TABLE>
<CAPTION>
Director (Age) and Position Year First
- --------------------------- ----------
with the Company Elected Director
---------------- ----------------
Class I - Current Term Expires in 1997
--------------------------------------
<S> <C> <C>
Stephen M. Samberg (51) Chairman of the Board and
Chief Executive Officer 1988
Robert M. Rosen* (51) 1983
Warren D. Cole* (37) 1994
Class II - Current Term Expires in 1998
---------------------------------------
George J. Gold (74) 1966
Joseph Visconti (50) President 1996
Class III - Current Term Expires in 1996
----------------------------------------
Donald D. Gold (70) 1966
Ronald S. Hoffman (53) Chief Financial Officer 1994
and Secretary
Roger A. Williams* (48) 1994
---------------------------
* Member of the Audit and Compensation Committees
</TABLE>
Set forth below is information regarding the principal occupations of each
director during the past five years and other directorships held by each
director in public companies.
-3-
Warren D. Cole has been the Executive Vice President and Chief Financial Officer
of The Macklowe Organization, a large, privately held real estate investment,
development and management company based in New York City.
George J. Gold had been Chairman of the Board, Chief Executive Officer and
Treasurer of the Company, which positions he resigned on March 18, 1994.
Donald D. Gold had been the Secretary of, and since September 1993, Vice
Chairman of the Company, which positions he resigned on March 18, 1994. Until
September 1993, Mr. Gold also served as President of the Company.
Ronald S. Hoffman has been Chief Financial Officer of the Company since July,
1994 and Secretary thereof since October, 1994. Prior to his employment with the
Company, Mr. Hoffman was President of North Country Supply, Inc. and so served
for two years. From 1990 until 1992, Mr. Hoffman was a financial consultant to
clients in financial services and distribution activities. From 1984 until 1990,
he served as Chief Financial Officer of ElectroSound Group, Inc.
Robert M. Rosen has been a partner in the law firm of Lane Altman & Owens LLP,
general counsel to the Company.
Stephen M. Samberg has been Chairman of the Board and Chief Executive Officer of
the Company since March 18, 1994. From September, 1993 until January 1, 1996,
Mr. Samberg also served as President of the Company. He has also been in charge
of the Company's men's underwear sales operations since 1988.
Roger A. Williams has been the Executive Vice President and Chief Financial
Officer of Guess ?, Inc. since March, 1994. From October 1992 to February 1994,
he served as Executive Vice President and Chief Financial Officer of The Donna
Karan Company. From July 1990 to October 1992, he was Executive Vice President -
Operations and Chief Financial Officer of Authentic Fitness Corporation, a
company formed in 1990 to acquire substantially all of the Activewear division
of Warnaco, Inc. Mr. Williams serves as a director pursuant to the Agreement
with the Guess Group as further described under the heading "Certain
Relationships and Related Transactions".
Joseph Visconti became President of the Company effective January 1, 1996. From
July, 1991 through December 31, 1995, Mr. Visconti was President and Chief
Executive Officer of Salant Corp.'s men's and children's apparel division. From
July, 1987 to June, 1991, he was President of the William Carter Company.
All executive officers of the Company are directors.
Executive officers of the Company are elected annually for a term of office
expiring at the Board of Directors meeting immediately following the next
succeeding Annual Meeting of Stockholders, or until their successors are duly
-4-
elected and qualified; however, each of the Company's current executive officers
is employed under a written employment contract (described below).
George J. Gold and Donald D. Gold are brothers. None of the other directors or
executive officers of the Company are related to each other.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- -------------------------------------------------
Based solely on a review of Forms 3 and 4 and amendments
thereto, furnished to the Company during the fiscal year ended March 2, 1996 and
Forms 5 and amendments thereto furnished to the Company with respect to the
fiscal year ended March 2, 1996, no director, officer or beneficial owner of
more than 10% of the Company's equity securities failed to file on a timely
basis reports required by Section 16(a) of the Exchange Act during the fiscal
year ended March 2, 1996 or any previous fiscal year except as follows:
ITEM 11. EXECUTIVE COMPENSATION
----------------------
COMPENSATION OF DIRECTORS
Directors, other than those employed by the Company, are paid
$5,000 annually and an additional $500 for each Board or committee meeting
attended in person.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The law firm of Lane Altman & Owens LLP, of which Robert M.
Rosen, a director of the Company and a member of the Compensation Committee, is
a partner, is general counsel to the Company. Legal fees accrued for
professional services rendered by Lane Altman & Owens LLP to the Company in
fiscal 1996 were in the amount of $167,708.
License fees for the Company's use of certain trademarks of
Guess ?, Inc., of which Roger A. Williams, a director of the Company and a
member of the Compensation Committee, is Chief Financial Officer, were $334,671
in fiscal 1996.
There are no other relationships or transactions involving
members of the Compensation Committee during the fiscal year ended March 2, 1996
required to be reported pursuant to Item 402(j) of Regulation S-K.
-5-
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows compensation information
for the Company's Chief Executive Officers and each of the four other most
highly compensated executive officers of the Company during the fiscal years
ended March 2, 1996, February 25, 1995 and February 26, 1994.
The Summary Compensation Table appears on pages 7 and 8.
OPTION/SAR GRANTS IN FISCAL YEAR ENDED MARCH 2, 1996
See page 9.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED
MARCH 2, 1996 AND FISCAL YEAR-END OPTION/SAR VALUES
See page 10.
LONG-TERM INCENTIVE PLANS - AWARDS IN FISCAL YEAR ENDED
MARCH 2, 1996
No Long Term Incentive Plan Awards were made to the CEO and
other named executives in the fiscal year ended March 2, 1996.
-6-
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
OTHER RESTRICTED ALL
ANNUAL STOCK OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SAR LTIP PAYOUTS COMPENSATION
POSITION YEAR ($) (1) ($) ($) # # ($) ($) (2)
- ----------------------- ------- --------- ------- ------------- ---------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stephen M. Samberg 1996 $522,769 $0 $0 0 0 $0 $4,152
Chairman of the 1995 $500,000 $0 $0 0 75,000(3) $0 $3,522
Board, Chief
Executive
Officer, Treasurer 1994 $803,496(4) $0 $0 0 0 $0 $11,560
and Director
Ronald S. Hoffman 1996 $152,885 $0 $0 0 0 $0 $3,696
Vice President- 1995 $98,007(5) $0 $0 0 30,000(3) $0 $606
Finance, Chief
Financial Officer,
Secretary and 1994 $0 $0 $0 0 0 $0 $0
Director
Raymond L. Wathen 1996 $157,655 $0 $0 0 0 $0 $3,696
President- 1995 $199,334(6) $0 $0 0 37,500(3) $0 $3,522
GUESS?
Division and 1996 $234,149(6) $0 $0 0 0 $0 $5,999
Director(13)
George G. Gold(7) 1996 $0 $0 $0 0 0 $0 $356,730(8)
Director 1995 $0 $0 $0 0 0 $0 $353,527(8)
1994 $470,640 $0 $62,249(9) 0 0 $0 $103,847
-7-
Donald D. Gold(10) 1996 $0 $0 $0 0 0 $0 $89,717(8)
Director 1995 $0 $0 $0 0 0 $0 $89,272(8)
1994 $322,822 $0 $29,000(9) 0 0 $0 $69,709
Stephen P. Sussman(11) 1996 $146,769 $0 $0 0 0 $0 $4,087
1995 $144,000 $0 $0 0 22,500(3) $0 $3,744
1994 $148,846 $0 $0 0 0 $0 $3,582
Joseph Visconti 1996 $51,923(12) $0 $0 0 30,000(3) $0 $0
President and 1995 $0 $0 $0 0 0 $0 $0
Director
1994 $0 $0 $0 0 0 $0 $0
</TABLE>
(1) Includes amounts deferred at the election of each of the named executive
officers pursuant to the Company's 401(k) Profit Sharing Plan.
(2) Comprised of 401(k) contibutions and life insurance premiums which benefits
are payable to the estates of the named executive officers, except where
specifically footnoted as pursuant to the Severance Agreement. For fiscal
1996, 401(k) contibutions were: $3,000; Stephen M. Samberg, $3,000; Ronald
S. Hoffman, $3,000;Raymond L. Wathen, $2,935; Stephen P. Sussman. All other
compensation reported for fiscal 1996 hereunder comprised life insurance
premiums.
(3) The options reflected were awarded pursuant to the Company's 1992 Executive
Long-Term Option Plan.
(4) Mr. Samberg's compensation in fiscal 1994 consisted entirely of commissions
based on sales of the Company's mens' undergarments.
(5) Mr. Hoffman was hired July 1, 1994.
(6) Compensation in each of fiscal 1996, 1995, 1nd 1994 included commissions
based on sales of the Company's GUESS? Products.
(7) Chairman of the Board, Chief Executive Officer and Treasurer through March
18, 1994.
(8) Amounts paid pursuant to the Severance Agreement dated as of March 18, 1994
more fully described herein below.
(9) Automobile lease payments and related costs, including both personal and
business portions therof.
(10) Vice Chairman and Secretary through March 18, 1994.
(11) Vice President - Finance through October 10, 1994. Mr. Sussman currently
manages the Company's production and distribution facility in Cartersville,
Georgia.
(12) Mr. Visconti was hired and became a director effective January 1, 1996.
(13) Mr. Walthen resigned as President of the GUESS? Division and as a director
effective January 1, 1996.
-8-
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------------------------------------------
Number of
Securities %of Total
Underlying Options/SARs
Options/ Granted Exercise
SARs in or Base Expiration
Name Granted(#) Fiscal Year Price ($/SH) Date 5%($) 10%($)
- ---- ---------- ----------- ------------ ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Joseph Visconti(1) 30,000(2) 100% $3.00 01/01/06 $366,000 $462,000
</TABLE>
- -------------------
(1) No individual grants of stock options or freestanding SARs were made during
the last completed fiscal year to the CEO or any other named executive
officer other than Joseph Visconti.
(2) Options for the purchase of the Company's common stock, par value $.10.
Twenty percent of such options become exercisable on each of 1/1/97,
1/1/98, 1/1/99, 1/1/00 and 1/1/01.
-9-
<TABLE>
<CAPTION>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES (1)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END (#) AT FY-END ($)
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE (2)
- ---- ------------ ------------------ ------------- -----------------
<S> <C> <C> <C> <C>
STEPHEN M. SAMBERG 0 $0 0 / 75,000 $0 / $0
RONALD S. HOFFMAN 0 $0 0 / 30,000 $0 / $0
RAYMOND L. WATHEN 0 $0 0 / 37,500 $0 / $0
GEORGE J. GOLD 0 $0 0 / 0 $0 / $0
DONALD D. GOLD 0 $0 0 / 0 $0 / $0
STEPHEN P. SUSSMAN 0 $0 0 / 22,500 $0 / $0
JOSEPH VISCONTI 0 $0 0 / 30,000 $0 / $0
(1) THERE ARE CURRENTLY NO OUTSTANDING STOCK APPRECIATION RIGHTS.
(2) NO OUTSTANDING OPTIONS WERE IN THE MONEY AT THE END OF FISCAL 1996.
</TABLE>
-10-
EMPLOYMENT AND SEVERANCE AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
In fiscal 1989, Messrs. George J. Gold and Donald D. Gold (the
"Golds") each executed new ten-year employment agreements (the "1989
Agreements") which were to expire on February 27, 1999, and provided for base
salaries of approximately $601,000 and $384,000 in fiscal 1994 for George J.
Gold and Donald D. Gold, respectively. Such salaries were voluntarily reduced to
$471,000 and $323,000 during fiscal 1994. Under the 1989 Agreements, the Company
was obligated to transfer to each of the Golds, upon termination of his
employment, ownership of whole life insurance policies on each of their lives,
with cash values in the amount of approximately $526,000 for George G. Gold and
approximately $472,000 for Donald D. Gold, to repay any borrowings by the
Company against such policies, and to provide each of the Golds with a severance
payment in an amount sufficient to pay all tax liabilities incurred by each of
the Golds by virtue of the transfer of ownership of such policies.
As of March 18, 1994, the Golds resigned their positions as
executive officers of the Company and entered into a Severance Agreement with
the Company. The Severance Agreement provides for an annual payment to the Golds
of approximately $400,000, in the aggregate, for each year of the five year term
of the Severance Agreement. The Severance Agreement also provides for the
Company to maintain life and health insurance policies for their benefit and to
continue paying one-half of each of the Golds' share of the annual payments to
his spouse in the event of his death. Pursuant to the Severance Agreement, stock
options for 20,000 and 10,000 shares of Common Stock issued to George and Donald
Gold, respectively, under the 1992 Long-Term Incentive Stock Option Plan, and
bonus awards for maximums of $123,000 and $61,500 made to George and Donald
Gold, respectively, under the 1992 Executive Performance Benefit Plan, were
cancelled. Further, the Golds agreed to relinquish their rights to receive
ownership of the whole life insurance policies on their lives described in the
previous paragraph.
Under the Severance Agreement, the Company is also to provide
certain benefits to the Golds in respect of sales of shares of the Company's
Common Stock ("Shares") by them during the period September 1, 1994 to August
31, 1996 (the "Resale Period"). Such benefits provide, in general and subject to
certain limitations, that, for up to 100,000 Shares in the case of George J.
Gold and 60,000 Shares in the case of Donald D. Gold, the Company will pay to
the Golds for each Share sold by them for less than $5.00 during the Resale
Period, 80% of the lesser of (a) $1.50 and (b) the difference between the sale
price per Share and $5.00. Further, the Company will, in general and subject to
specific limitations, issue on April 1, 1997 warrants for the purchase of up to
100,000 Shares by George J. Gold and up to 60,000 Shares by Donald D. Gold. The
number of such warrants issued to each of the Golds will equal the number of
shares sold by him during the Resale Period, subject to the maximums described
in the preceding sentence. As to each of the Golds, the aggregate exercise price
for the warrants issued to him will equal the aggregate gross proceeds from his
sales of Shares during the Resale Period.
-11-
On September 27, 1992, the Company entered into a new sixty-five
(65) month employment agreement with Stephen M. Samberg (the "1992 Agreement"),
which replaced the five-year contract entered into in 1988 between Mr. Samberg
and the Company. Mr. Samberg's compensation during fiscal 1994 was determined
pursuant to the 1992 Agreement. The 1992 Agreement provided for basic
compensation in the form of commissions at the rate of between 1% and 4% of net
sales of men's and boy's fashion underwear, basic underwear, thermal underwear
and swim wear, manufactured or sold by the Company to specified customers, and
either .25% or 1% of sales of certain women's products depending on whether or
not such sales are in excess of specified base sales volumes. As of March 1,
1994, the Company and Mr. Samberg, in connection with Mr. Samberg's election as
Chairman of the Board and Chief Executive Officer, entered into a new employment
agreement (the "1995 Agreement"). Under the 1995 Agreement, Mr. Samberg's annual
base compensation is $500,000 and he is entitled to discretionary bonuses as
determined by the Compensation Committee, in an amount not to exceed $300,000
per year. The 1995 Agreement also provides that Mr. Samberg is eligible for the
Company's other compensatory plans and that the Company will provide health and
disability insurance for Mr. Samberg and reimburse all reasonable business
expenses.
During fiscal 1993, the Company entered into an employment
agreement with Stephen P. Sussman for a term expiring on February 28, 1998,
which provides for base salary of $160,000 during calendar 1992, $180,000 for
calendar 1993 and annual increases of approximately 5% per year for each year
thereafter. Effective April 19, 1993, Mr. Sussman's annual salary was reduced to
$144,000 by mutual agreement. The agreement also requires the Company to provide
health, life and disability insurance and to reimburse all reasonable business
expenses. In the event of the termination of Mr. Sussman's employment by the
Company, other than for good cause, or the expiration of the agreement without
renewal, the Company will be required to retain Mr. Sussman as a consultant
until February 28, 2003 for an annual fee of $40,000, plus benefits comparable
to those paid to officers of the Company.
On July 1, 1994, the Company entered into an employment
agreement with Ronald S. Hoffman which provides for annual salary of $150,000.
The agreement also provides, as additional contingent compensation, for the
grant to Mr. Hoffman under the 1992 Executive Long Term Stock Option Plan of
options to purchase 30,000 shares of Common Stock. The agreement also requires
the Company to provide health and life insurance and to reimburse all reasonable
business expenses.
As of March 1, 1994, the Company entered into an employment
agreement with Raymond L. Wathen for a term of five years. The agreement, as
amended, provides for the following compensation: (a) in the first year the sum
of $150,000 and 2% of the net sales of GUESS? products during that year; (b)
during the period February 26, 1995 through December 31, 1995 the sum of
-12-
$150,000 per annum; and (c) from January 1, 1996 until the end of the Term
$100,000 per annum, plus 1% of the net sales of GUESS? products sold to certain
customers. The agreement also requires the Company to provide health and life
insurance and to reimburse all reasonable business expenses. The agreement may
be terminated early by the Company if certain sales levels of GUESS? products
are not achieved by Mr. Wathen in fiscal years 1997 and 1998. The agreement has
been "informally" terminated at this time.
On January 1, 1996, the Company entered into an employment
agreement with Joseph Visconti which provides for an annual salary of $200,000
plus a bonus for each fiscal year based on increases in sales from those
achieved in fiscal 1996, which bonus in the first fiscal year shall not be less
than $100,000. The agreement also provides for the grant to Mr. Visconti under
the Stock Option Plan of options to purchase 30,000 shares of common stock. The
agreement also requires the Company to provide health and disability insurance
and to reimburse for all reasonable business expenses.
In addition to delineating the duties and responsibilities of
each executive employee, the employee's salary and certain fringe benefits, and
the circumstances under which employment with the Company may be terminated, the
employment agreements for Stephen M. Samberg, Ronald S. Hoffman, Raymond L.
Wathen, and Stephen P. Sussman, and the Severance Agreement also contain certain
provisions to take effect in the event of a "Change in Control." A "Change in
Control" generally is defined to include (i) a merger or consolidation involving
the Company pursuant to which less than 75% of the outstanding voting securities
or other beneficial interest of the surviving or resulting corporation or other
entity is held by the stockholders of the Company other than those stockholders
who acquire beneficial ownership of 20% or more of the Company's outstanding
stock after the date of each agreement; (ii) the transfer to another corporation
(other than a wholly owned subsidiary or a corporation which is at least 75%
owned by the Company's stockholders other than those stockholders who acquire
beneficial ownership of 20% or more of the Company's outstanding stock after the
date of each agreement) of substantially all of the assets of the Company; (iii)
the acquisition by any person (other than Guess ?, Inc. and its affiliates) of
the beneficial ownership of 20% or more of the Company's then outstanding
securities or the acquisition by Guess ?, Inc. and its affiliates of the
beneficial ownership of 30% or more of the Company's then outstanding
securities; (iv) a change in the composition of the majority of the Board of
Directors occurring within 24 months of the acquisition by any person of the
beneficial ownership of 10% or more of the Company's then outstanding
securities; or (v) the occurrence of any of the trigger events described in
Sections 11(a)(ii) or 13(a) of the Company's Shareholders Rights Plan.
-13-
In the event of any such Change in Control, certain specified
benefits ("Termination Benefits") are provided for each such executive employee
upon termination of his employment by the Company other than for cause, or in
the event that he leaves the employ of the Company due to one of the following
events: (i) assignment inconsistent with his current status; (ii) distant
transfer; (iii) default by the Company under the employment agreement or other
agreement with the employee; (iv) failure on the part of the Company to provide
the employee with substantially similar plan benefits to those in which he had
been a participant; or (v), in the case of Messrs. Samberg, Wathen, and Hoffman,
inability to effectively discharge his duties due to a Change in Control.
The amount of Termination Benefits payable to Mr. Samberg is
determinable only at the time of termination and is, if such termination is by
the Company or by Mr. Samberg following a default by the Company, in addition to
any other amounts due under his employment agreement. Cash benefits include (x)
three years' base salary (totalling $1,500,000) and (y) three times the average
annual bonus in the preceding three years (or such lesser number of years as
have elapsed since the agreement was made); the sum of (x) and (y) payable in a
lump sum and discounted to present value.
Termination Benefits payable to Mr. Hoffman would comprise three
annual payments of $62,500 and fringe benefits for three years. Termination
Benefits payable to Mr. Sussman would equal a lump sum payment of $150,000 in
addition to any other amounts due under his employment agreement. The maximum
amount of Termination Benefits payable to each of the executives, except Mr.
Hoffman, is limited to an amount which would cause such individual not to
receive "Excess Parachute Payments" for purposes of Section 280G and 4999 of the
Internal Revenue Code.
With respect to the Golds, in the event that, following such a
Change in Control, (a) the Company defaults, in an amount greater than $1,000,
in its obligations to pay money to either of the Golds, such of the Golds, in
addition to all other benefits under the Severance Agreement, shall be entitled
to a lump sum payment of twice the annual payment due him, discounted to its
then-present value; or (b) the Company defaults in any other of its obligations
to either of the Golds, such of the Golds shall be entitled to a lump sum,
discounted to its present value, of the greater of (x) twice the annual payment
due him, or (y) the aggregate of the remaining payments due him under the
Severance Agreement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth as of June 25, 1996 the
beneficial share ownership of each director and executive officer owning Common
Stock, and of all officers and directors as a group.
-14-
<TABLE>
<CAPTION>
Address of Nature of
Beneficial Beneficial Percent
Owner Ownership of Class (6)
- ----- --------- ------------
<S> <C> <C>
George J. Gold 452,918 (1) 14.06%
209 Sterling Road
Harrison, NY 10528
Donald D. Gold 219,639 (1) 6.82%
2107 River Green Drive
Atlanta, GA 30327
Stephen M. Samberg 263,003 (2)(5) 8.17%
105 Madison Avenue
New York, NY 10016
Robert M. Rosen 9,000 (3) *
101 Federal Street
Boston, MA 02110
Warren D. Cole 28,300 *
142 West 57th Street
New York, NY 10019
Ronald S. Hoffman 234,500 (4)(5) 7.28%
105 Madison Avenue
New York, NY 10016
Roger A. Williams 3,000 *
1444 S. Alameda Street
Los Angeles, CA 90021
Joseph Visconti 0 *
All directors and
officers as a group 1,210,360 (5) 37.58%
(10 persons)
- ---------------------
*Less than 1%
</TABLE>
(1) All such shares are subject to the Nantucket Industries Stock Voting Trust
u/i/d March 22, 1994 (the "Voting Trust").
(2) Includes 20,303 shares which are subject to the Voting Trust.
-15-
(3) 5,000 of such shares are owned by the Lane Altman & Owens LLP Profit
Sharing Trust DTD 11/28/92. Lane Altman & Owens LLP, of which Mr. Rosen is
a partner, is general counsel to the Company.
(4) 2,500 of such shares are owned by Mr. Hoffman's wife. Beneficial ownership
of all such shares is disclaimed by Mr. Hoffman.
(5) Includes 200,000 shares representing the number of shares of Common Stock
into which the shares of Non-Voting Convertible Preferred Stock held by The
Samberg Group, L.L.C. may be converted. Also includes 32,000 shares
representing the number of shares of common stock into which accrued and
unpaid cumulative dividends on such shares of Non- Voting Convertible
Preferred Stock may be converted. Messrs. Samberg, Sussman and Wathen and
Mr. Hoffman's wife, are members thereof, and, as such, would share
dispositive and voting power over such shares. Beneficial ownership of all
such shares is disclaimed by Mr. Hoffman.
(6) Calculated on a diluted basis, assuming the conversion into 232,000 shares
of Common Stock of the Non-Voting Convertible Preferred Stock held by the
Samberg Group, L.L.C.
In addition, each of the following has reported that it is the
beneficial owner of more than 5% of the outstanding Common Stock of the Company.
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of
of Beneficial Percent
Beneficial Owner Ownership of Class (3)
- ---------------- --------- ------------
<S> <C> <C>
Dimensional Fund Advisors, 176,765 (1) 5.49%
Inc.
1229 Ocean Avenue
Santa Monica, CA
The Samberg Group, L.L.C. 232,000 (2) 7.20%
105 Madison Avenue
New York, NY 10016
Guess ?, Inc. 422,835 13.13%
1444 South Alameda St.
Los Angeles, CA 90021
Guess Group (4) 703,500 21.84%
- ------------------------
</TABLE>
-16-
(1) Dimensional Fund Advisors, Inc. is an investment advisor registered under
the Investment Advisors Act of 1940. Of this amount, Dimensional Fund
Advisors, Inc., has reported as of January 31, 1996 that it has sole voting
power of 110,230 shares.
(2) The Samberg Group, L.L.C. owns 5,000 shares of the Company's Non-Voting
Convertible Preferred Stock, which (assuming conversion of such shares and
the accrued and unpaid cumulative dividends thereon) are convertible into
232,000 shares of the Company's Common Stock. Messrs. Samberg, Sussman, and
Wathen and Mr. Hoffman's wife are members of The Samberg Group.
(3) Calculated on a diluted basis, assuming the conversion into 232,000 shares
of Common Stock of the Non-Voting Convertible Preferred Stock held by the
Samberg Group, L.L.C.
(4) The Guess Group comprises Guess ?, Inc. ("Guess?") and those other
Reporting Persons set forth in the Schedule 13D dated August 26, 1994
reporting the group's purchase from the Company on August 19, 1994 of
490,000 shares of Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The Company, the Golds, Messrs. Samberg, Sussman, Wathen, Robert
Polen (an employee of the Company), and The Samberg Group, L.L.C., a limited
liability company organized in Delaware, entered into a Management Agreement as
of March 1, 1994, pursuant to which the Company on March 22, 1994 sold 5,000
shares of Non-Voting Convertible Preferred Stock to The Samberg Group for
$1,000,000. Such preferred stock is convertible into shares of the Company's
Common Stock at the rate of $5.00 per share. Messrs. Samberg, Sussman, Wathen
and Polen and Mr. Hoffman's wife are each members of The Samberg Group.
The Management Agreement also provides that The Samberg Group,
Messrs. Samberg, Sussman, Wathen and Polen and the Golds will deposit all their
Common Stock into a voting trust. The voting of the shares deposited in said
voting trust is controlled by the terms of the trust instrument. Pursuant to the
trust instrument, such shares: (a) were voted in favor of Messrs. Gold and
Wathen at the Special Meeting in lieu of Annual Meeting of Stockholders held
August 2, 1995; (b) were voted in favor of Messrs. Samberg, Rosen and Cole at
the Special Meeting in lieu of Annual Meeting of Stockholders held October 10,
1994; and (c) will be voted in favor of Donald D. Gold or his designated
replacement at the next Annual Meeting of Stockholders. Mr. Rosen serves as the
trustee of said voting trust.
The Management Agreement further provides for the cancellation
of all outstanding stock options and incentive awards granted prior to the date
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thereof to the Golds and Messrs. Samberg, Sussman, Wathen and Polen and the
issuance of stock options for 150,000 shares of Common Stock in the aggregate to
Messrs. Samberg, Sussman, Wathen and Polen upon terms and conditions determined
by the Compensation Committee.
Pursuant to the Management Agreement, the Severance Agreement
described above was entered into by the Golds and the Company, the 1995
Agreement described above was entered into by Mr. Samberg and the Company, and
Mr. Wathen's employment agreement, described above, was entered into by Mr.
Wathen and the Company.
On August 19, 1994, the Guess Group bought 490,000 shares of
Common Stock pursuant to a Common Stock Purchase Agreement dated August 18, 1994
by and among the Company, the Guess Group and the Samberg Group (the
"Agreement"). Consideration paid was $6.00 in cash per share of Common Stock.
All shares sold were previously held by the Company as treasury stock.
The Agreement provides the Guess Group with certain registration
rights and, with respect to the issuance of additional stock by the Company,
certain rights to purchase additional shares. The Agreement also provides
certain restrictions on the ability of the Guess Group to acquire additional
voting stock of the Company, to dispose of its Common Stock and to engage in
control transactions or proxy solicitations with respect to the Company.
The Guess Group has designated Roger A. Williams, the Executive
Vice President and Chief Financial Officer of Guess?, to serve as a director of
the Company, and he has been so elected. The Agreement requires the Company and
the Samberg Group to each use its best efforts to cause one individual
designated collectively by the Guess Group to be elected a director of the
Company at future annual meetings of the Company so long as the Guess Group and
their affiliates beneficially own in the aggregate at least the lesser of
490,000 shares of Common Stock or 15% of the outstanding Common Stock.
As a condition to the Agreement, the Company amended its Share
Rights Agreement so that the Guess Group's acquisition of Common Stock would not
trigger any defensive measures thereunder. Provisions were made in each
executive officer's employment agreement and the Severance Agreement so that
such acquisition would not be a "Change in Control" under those agreements.
The Company is licensed by Guess? to manufacture and sell
certain garments under the Guess? trademarks. Effective May 31, 1996, the
license was extended through the period ended May 31, 1999. The license is
subject to early termination if certain sales volume tests are not met. The
license fees payable to Guess? for such rights are equal to seven percent of net
sales of the licensed products, subject to yearly minimums. In fiscal 1996, such
license fees were in the amount of $334,671.
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Additional relationships and related transactions are described
above, under the caption "Compensation Committee Interlocks and Insider
Participation."
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