SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant: [X]
Filed by a party other than the registrant: [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Nantucket Industries, Inc.
----------------------------------
(Name of Registrant as Specified in Its Charter)
Nantucket Industries, Inc.
----------------------------------
(Name of Person[s] Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it was
determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule, or registration statement no.:
(3) Filing party:
(4) Date filed:
NANTUCKET INDUSTRIES, INC.
105 MADISON AVENUE
NEW YORK, NEW YORK 10016
___________________
FORMAL NOTICE OF SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 7, 1996
___________________
We are pleased to notify you that the Special Meeting in Lieu of Annual
Meeting of Stockholders of NANTUCKET INDUSTRIES, INC., a Delaware corporation,
will be held in the Board of Governors Room, American Stock Exchange, Inc., 86
Trinity Place, New York, New York, on October 7, 1996, commencing at 11:00 a.m.
on that day, and thereafter as it may be from time to time adjourned.
At the meeting, stockholders will consider and take action upon the
following proposals:
1. To set the number of directors constituting the Board of Directors at
nine and to elect those directors who have been nominated for terms
expiring in 1999.
2. To consider and vote on an Amendment to the Company's Certificate of
Incorporation to increase the authorized shares of Common Stock from six
million (6,000,000) shares with $.10 par value to twenty million
(20,000,000) shares with $.10 par value.
3. To consider and vote on a proposed Amendment to the Company's Certificate
of Incorporation to reduce certain voting requirements of the Board of
Directors necessary for approval of a business transaction with Related
Persons.
4. To ratify the appointment of Grant Thornton LLP, independent certified
public accountants, to audit the consolidated financial statements of the
Company and its subsidiaries for fiscal 1997.
5. To transact such other business as may properly be brought before
the meeting and any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on August 16, 1996 as
the record date for the determination of the stockholders entitled to receive
notice of, and to vote at, the meeting. A form of proxy and a return envelope
which requires no postage are enclosed. We urge you to exercise your privilege
as a stockholder of Nantucket Industries, Inc. by voting upon the business to
come before the meeting either by signing and returning the enclosed form of
proxy or by casting your vote in person at the meeting.
By Order of the Board of Directors
RONALD S. HOFFMAN
Secretary
September 5, 1996
NANTUCKET INDUSTRIES, INC.
105 MADISON AVENUE
NEW YORK, NEW YORK 10016
_____________
PROXY STATEMENT
_____________
The form of proxy enclosed with this statement is solicited by the Board of
Directors of NANTUCKET INDUSTRIES, INC., a Delaware corporation (the "Company"),
for use at the Special Meeting in Lieu of Annual Meeting of Stockholders of the
Company (the "Special Meeting") to be held in the Board of Governors Room,
American Stock Exchange Inc., 86 Trinity Place, New York, New York commencing at
11:00 a.m. on October 7, 1996, and at any adjournments thereof. Stockholders of
record at the close of business on August 16, 1996, are entitled to notice of,
and to vote at, the meeting. At the close of business on August 16, 1996, there
were outstanding 3,238,796 shares of Common Stock, par value $.10 ("Common
Stock"), each share being entitled to one vote. This proxy statement and the
accompanying notice and proxy are being mailed to the Company's stockholders on
or about September 9, 1996.
Each of the persons named as proxies in the enclosed form of proxy was
selected by the Board of Directors and is a director of the Company. The proxy,
if signed and returned, may, nevertheless, be revoked by the stockholder at any
time before it is exercised and will not in any way affect the stockholder's
right to attend the meeting and vote in person. Any revocation shall be effected
by filing with the Secretary of the Company at the Company's address set forth
above a written revocation or a duly executed proxy bearing a later date,
neither of which need be notarized. If the enclosed form of proxy is properly
executed and returned in time to be voted at the meeting, the proxies named
therein will vote the shares represented by the proxy in accordance with the
instructions marked thereon. Unmarked proxies will be voted for the election as
directors of the nominees of management and in favor of the ratification of the
appointment of Grant Thornton LLP as auditor and in favor of all other items set
forth herein. This solicitation of proxies is made by the Board of Directors and
all expenses of this solicitation will be paid by the Company.
I. ELECTION OF DIRECTORS
Under the Company's by-laws, the number of directors is to be fixed at not
fewer than three nor more than twelve. Pursuant to a vote of the Board of
Directors, the size of the Board has been set at nine directors, of which three
are to be elected at the meeting. Each of the persons named as proxies in the
enclosed form of proxy has stated that shares represented by the proxies given
will be voted to elect as directors of the Company the nominees of management
hereinafter listed. If any of the nominees should unexpectedly become
unavailable for election, the shares represented by the proxies will be voted
for a substitute nominee or nominees named by the Board of Directors of the
Company or will be voted to fix the number of directors at a lesser number than
nine which will reflect the number of nominees available for election.
The Company's Board of Directors is divided into three classes, the terms of
office of which expire in successive years as follows: Class I (current term
expires in 1997), Class II (current term expires in 1998) and Class III (current
term expiring at the special meeting). The directors who will stand for election
by the stockholders will be the Class III directors, whose terms of office will
not continue after the date of the meeting. Each of the nominees listed below
has indicated his willingness to serve if elected, and the Board of Directors
does not anticipate that any of them will become unavailable for election.
Messrs. Gold, Hoffman and Williams were previously elected directors of the
Company at meetings of stockholders and Mr. Klein was elected by the Board of
Directors.
The table below sets forth for each nominee for election as a director, and
for each director whose term of office will continue after the Special Meeting,
such person's name, age and other positions with the Company at the date of this
proxy statement, and the year such person was first elected as a director:
<TABLE>
<CAPTION>
YEAR FIRST
DIRECTOR (AGE) AND POSITION ELECTED
WITH THE COMPANY DIRECTOR
--------------------------- ----------
<S> <C>
CLASS I -- CURRENT TERM EXPIRES IN 1997
- ---------------------------------------
Stephen M. Samberg (51).......................................... 1988
Chairman of the Board and Chief Executive Officer
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) ............................................ 1996
PRESIDENT
KENNETH KLEIN (58) .............................................. 1996
CLASS III -- NOMINEES FOR TERMS EXPIRING IN 1999
- ------------------------------------------------
DONALD D. GOLD (70) ............................................. 1966
ROGER A. WILLIAMS* (48) ......................................... 1994
RONALD S. HOFFMAN (53) .......................................... 1994
CHIEF FINANCIAL OFFICER AND SECRETARY
</TABLE>
________
* Member of the Audit and Compensation Committees
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.
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.
KENNETH KLEIN has been President and a director of National Capital Benefits
Corp. a financial services company since 1994. From January 1992 to March 1994
Mr. Klein was the President of Viatical Funding Company, a financial services
company. From January 1988 to January 1992, Mr. Klein was the Senior Vice
President, Chief Operating Officer and General Counsel of Amivest Corporation, a
New York Stock Exchange, Inc. Member Firm and an NASD Registered Investment
Advisor. Mr. Klein serves as a director pursuant to the Purchase Agreement with
NAN Investors, L.P. as further described under the heading "Certain
Relationships and Related Transactions."
2
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 and Chief Executive Officer of the
Company since March 18, 1994. From September 1993 until December 31, 1995, Mr.
Samberg also served as President of the Company.
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. From February 1988 through June 1990, Mr. Williams served as
Senior Vice President and Chief Financial Officer 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 1995 through December 31, 1995, Mr. Visconti was President and Chief
Executive Officer of Salant Corp.'s Men's and Children's Apparel Division. From
June 1987 to June 1991, Mr. Visconti 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
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.
The Board of Directors held three meetings during the fiscal year ended
March 2, 1996, including regularly scheduled and special meetings, and took
action by written consent on eight other occasions. The Board of Directors of
the Company does not have a nominating committee. The Company has established an
Audit Committee which approves the scope of, and reviews with the accountants
the results of, the annual audit and otherwise reviews and monitors the
Company's audit program. The Audit Committee held two meetings during the fiscal
year ended March 2, 1996. The Compensation Committee, which reviews the cash
compensation and employment arrangements of the Company's executive officers and
administers the Company's 1992 Executive Long Term Stock Option Plan, held one
meeting during fiscal 1996 and took action by written consent on two occasions.
No director attended less than 75%, in the aggregate, of the Board meetings and
meetings of committees on which he served which were held while he was a
director or committee member, respectively.
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.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company has
furnished the following report on executive compensation:
3
OVERVIEW
During fiscal year 1996, the Compensation Committee (the "Committee")
consisted of Robert M. Rosen, Roger A. Williams and Warren D. Cole, each of
whom, while serving on the Committee, was a Director of the Company who was not
also an executive officer of the Company and who was not eligible for selection
as a person to whom stock options or bonus awards might have been granted under
the 1992 Plans (described below) or any other discretionary plan of the Company
entitling participants to acquire stock or stock options of the Company. As of
the date of this proxy statement, Messrs. Rosen, Williams and Cole are members
of the Committee.
The Committee is responsible for reviewing the cash compensation and
employment arrangements of the Company's executive officers and for
administering the Company's 1992 Long-Term Executive Stock Option Plan and 1992
Executive Performance Benefit Plan.
At the direction of the entire Board of Directors, the Committee has made
compensation decisions intended to place increased emphasis on performance-based
compensation. A key strategy has been a reduction in fixed salaries and greater
use of awards under the stock option and bonus plans described below.
Specific compensation arrangements between the Company and most of its
senior executives, including the Company's Chief Executive Officer and its three
other most highly compensated executive officers (the "Named Executives"), are
set forth in written employment agreements with terms described below under the
caption "Employment Agreements and Change in Control Arrangements." These
agreements consist of the following key elements: annual payments of base salary
and/or commissions and discretionary awards of stock options and deferred cash
bonuses which are generally subject to forfeiture upon departure from the
Company.
BASE SALARIES
The maximum annual compensation for the Chief Executive Officer was set in
1994 at an amount approximating his annual compensation for each of the previous
three years, which consisted entirely of commissions. In recognition of his
duties as Chairman and Chief Executive Officer, the Committee believed that a
base salary supplemented by a discretionary bonus was the most appropriate
compensation mechanism. Based on this belief, his annual compensation was set as
a fixed base amount equal to $500,000 (representing approximately 60% of his
average annual compensation during the three years prior to 1994) and a
discretionary annual bonus equal to a maximum of $300,000 (representing
approximately 40% of his average annual compensation during such three years).
The Compensation Committee did not grant any bonus to the Chief Executive
Officer during fiscal 1996.
Other executive salaries are set at a level commensurate with that paid by
similar companies to similarly situated executives. In general, it is the policy
of the Company to provide executives with stock options and long term
performance-based incentives as a portion of their total compensation packages.
Further, in the case of executives whose performance is directly linked to
certain product lines, such executives' salaries are linked in whole or part to
the performance of that product line.
STOCK OPTIONS
In fiscal year 1993, the Company adopted the 1992 Executive Long-Term Stock
Option Plan pursuant to which employees, officers, directors and consultants of
the Company may be granted options to purchase the Company's Common Stock. The
plan is intended to give participants the opportunity to obtain a proprietary
interest in the Company and a direct stake in its continuing performance, and,
therefore, to more closely align the interests of the participants with the
interests of the Company and its stockholders. The plan is also intended to
provide participants with an incentive for continued employment with the
Company.
During fiscal 1996, an award was made under this Plan with an exercise price
of $3.00 per share to Joseph Visconti in connection with his employment
arrangements with the Company. The number of options awarded to such executive
was determined by the Committee based upon its evaluation of the expected effect
on the Company's long-term performance of such executive's efforts and continued
employment.
4
BONUS AWARDS
In fiscal year 1993, the Company adopted the 1992 Executive Performance
Benefit Plan pursuant to which executives and key employees of the Company may
earn deferred compensation for achievement of individual or Company-wide sales,
earnings or other performance targets as the Committee selects. The amount of
each award is determined by the Committee after consideration of the executive's
or employee's total compensation, responsibilities and performance, as well as
the Company's business plan and prospects.
In fiscal year 1996, no awards were made under this Plan.
By the Compensation Committee
Robert M. Rosen
Warren D. Cole
Roger A. Williams
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 for professional services
rendered by Lane Altman & Owens LLP to the Company accrued 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 $334,671 in fiscal
1996.
There are no other relationships or transactions involving members of the
Compensation Committee during the fiscal year ended March 2, 1996 required to be
reported pursuant to Item 402(j) of Regulation S-K.
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows compensation information for each of
the Company's Chief Executive Officers who served as such during the fiscal year
ended March 2, 1996 and each of the four other most highly compensated executive
officers of the Company during the fiscal years ended March 2, 1996, February
25, 1995 and February 26, 1994.
The Summary Compensation Table appears on page 6.
OPTION/SAR GRANTS IN FISCAL YEAR ENDED MARCH 2, 1996
See page 7.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED MARCH 2, 1996 AND
FISCAL YEAR-END OPTION/SAR VALUES
See page 7.
LONG-TERM INCENTIVE PLANS -- AWARDS IN FISCAL YEAR ENDED MARCH 2, 1996
No Long Term Incentive Plan Awards were made to the CEO and other named
executives in the fiscal year ended March 2, 1996.
5
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
OTHER RESTRICTED ALL
ANNUAL STOCK OPTIONS/ LTIP OTHER
FISCAL SALARY BONUS COMPENSATION AWARDS SAR PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(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 Board, 1995 $ 500,000 $0 $ 0 0 75,000(3) $0 $ 3,522
Chief Executive Officer, 1994 $ 803,496(4) $0 $ 0 0 0 $0 $ 11,560
Treasurer 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 1994 $ 0 $0 $ 0 0 0 $0 $ 0
Financial Officer,
Secretary and Director
Raymond L. Wathen 1996 $ 157,655 $0 $ 0 0 0 $0 $ 3,696
President -- GUESS? 1995 $ 199,334(6) $0 $ 0 0 37,500(3) $0 $ 3,522
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
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 Director 1995 $ 0 $0 $ 0 0 0 $0 $ 0
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) contributions 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) contributions were: Stephen M. Samberg,
$3,000; Ronald S. Hoffman, $3,000; Raymond L. Wathen, $3,000; Stephen P.
Sussman, $2,935. All other compensation reported for fiscal 1996 hereunder
comprised life insurance premiums.
(3) The options reflected were awarded pursuant to the company's 1992
Executive Long-Term Option Plan.
(4) Mr. Samberg's compensation in fiscal 1994 consisted entirely of
commissions based on sales of the Company's mens' undergarments.
(5) Mr. Hoffman was hired July 1, 1994.
(6) Compensation in each of fiscal 1996, 1995 and 1994 included
commissions based on sales of the Company's GUESS? Products.
(7) Chairman of the Board, Chief Executive Officer and Treasurer through March
18, 1994.
(8) Amounts paid pursuant to the Severance Agreement dated as of March 18,
1994 more fully described herein below.
(9) Automobile lease payments and related costs, including both personal and
business portions thereof.
(10) Vice Chairman and Secretary through March 18, 1994.
(11) Vice President -- Finance through October 10, 1994. Mr. Sussman
currently manages the Company's production and distribution facility
in Cartersville, Georgia.
(12) Mr. Visconti was hired and became a director effective January 1,
1996.
(13) Mr. Wathen resigned as President of the GUESS? Division and as a
director effective January 1, 1996.
6
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------- ---------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED IN OR BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE ($/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 $.10.
Twenty percent of such options become exercisable on each of 1/1/97,
1/1/98, 1/1/99, 1/1/00 and 1/1/01.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED NUMBER OF
IN-THE-MONEY SECURITIES
OPTIONS/SARS SHARES AT UNDERLYING UNEXERCISED
FY-END ($) ACQUIRED OPTIONS/SARS AT
ON EXERCISABLE/EXERCISE(#) VALUE FY-END(#)EXERCISABLE/
NAME UNEXERCISABLE(2) REALIZED($) UNEXERCISABLE
---- ---------------- ----------- -------------
<S> <C> <C> <C>
Stephen M. Samberg 0
$0/$0 $0 15,000/60,000
Ronald S. Hoffman 0
$0/$0 $0 6,000/24,000
Raymond L. Wathen 0
$0/$0 $0 7,500/30,000
George J. Gold 0
$0/$0 $0 0/0
Donald D. Gold 0
$0/$0 $0 0/0
Stephen P. Sussman 0
$0/$0 $0 4,500/18,000
Joseph Visconti 0
$0/$0 $0 0/30,000
</TABLE>
- ----------
(1) There are currently no outstanding stock appreciation rights.
(2) No outstanding options were in the money at the end of fiscal 1996.
7
PERFORMANCE GRAPH
PERFORMANCE GRAPH
In previous years, the Company has presented a graph comparing its
performance (as measured by total return on common stock) to an index of all
companies classified under the Standard Industrial Classification Manual ("SIC")
as manufacturers of men's and boys' furnishings and work clothes (including
underwear). This index was changed in fiscal 1995 to a graph comparing its
performance to that of two indices -- companies classified under the SIC as
manufacturers of men's and boys' underwear and as manufacturers of women's,
misses', children's, and infants' undergarments. The Company has decided for
fiscal 1996 to present a graph comparing its performance to that of one index
consisting of a peer group of six companies classified under the SIC Code 2322
as manufacturers of men's and boys' underwear and nightwear and one manufacturer
of women's and misses' undergarments under the SIC Code 234. The Company
believes that this peer group of manufacturers better represents the potential
of the Company and provides a more useful comparison for the stockholders of the
Company.
In order to allow comparisons to last year's performance graph, the Company
presents both graphs this year. Above each graph is a description of the indices
used in each graph. Each graph also shows the performance of the American Stock
Exchange market index.
PERFORMANCE GRAPH (OLD INDEX)
The performance graph immediately below shows changes over the past
five-year period in the value of $100 invested in (1) the Company's Common
Stock; (2) the American Stock Exchange market index; (3) an industry peer group
of two manufacturers of men's and boys' underwear and nightwear (SIC Code 2322)
consisting of the Company and Munsingwear, Inc.; and (4) an industry peer group
of two manufacturers of women's, misses', children's, and infants' undergarments
(SIC Code 234), namely: Kleinert's Inc. and Wacoal Company.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
FISCAL YEAR ENDING
------------------
COMPANY 1991 1992 1993 1994 1995 1996
- ------- ---- ---- ---- ---- ---- ----
NANTUCKET INDUSTRIES 100 300.00 328.57 125.00 157.14 78.57
INDUSTRY INDEX 100 289.66 327.81 155.25 200.76 227.09
BROAD MARKET 100 112.33 107.13 124.79 114.48 138.61
THE INDUSTRY INDEX CHOSEN WAS:
SIC CODE 2322 - MEN'S & BOYS' UNDERWEAR & NIGHTWEAR
THE BROAD MARKET INDEX CHOSEN WAS:
AMERICAN STOCK EXCHANGE
THE CURRENT COMPOSITION OF THE INDUSTRY INDEX IS AS FOLLOWS:
MUNSINGWEAR INC.
FISCAL YEAR ENDING
------------------
COMPANY 1991 1992 1993 1994 1995 1996
- ------- ---- ---- ---- ---- ---- ----
NANTUCKET INDUSTRIES 100 300.00 328.57 125.00 157.14 78.57
INDUSTRY INDEX 100 126.05 179.96 242.99 390.88 327.97
BROAD MARKET 100 112.33 107.13 124.79 114.48 138.61
THE PEER GROUP CHOSEN WAS:
SIC CODE 234 - WOMEN'S, CHILDREN'S, & INFANTS' UNDERGARMENTS
THE BROAD MARKET INDEX CHOSEN WAS:
AMERICAN STOCK EXCHANGE
THE PEER GROUP IS MADE UP OF THE FOLLOWING SECURITIES:
KLEINERT'S INC.
WACOAL CP
8
PERFORMANCE GRAPH (NEW INDEX)
The performance graph immediately below shows changes over the past
five-year period in the value of $100 invested in (1) the Company's Common
Stock; (2) the American Stock Exchange market index; and (3) an industry peer
group of six manufacturers of men's and boys' underwear and nightwear, namely:
Fruit of The Loom, Inc., Hampton Industries, Inc., Nautica Enterprises, Inc.,
Oneita Industries, Inc., Sara Lee Corp., and VF Corp. and one manufacturer of
women's and misses' undergarments, Wacoal CP. Investments in this industry group
are based upon the same time periods as the Company. Fiscal year end values are
based on share price appreciation plus dividends, with dividends reinvested on
the date they were paid.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
FISCAL YEAR ENDING
------------------
COMPANY 1991 1992 1993 1994 1995 1996
- ------- ---- ---- ---- ---- ---- ----
NANTUCKET INDUSTRIES 100 300.00 328.57 125.00 157.14 78.57
PEER INDEX 100 166.76 193.06 154.12 177.42 221.04
BROAD MARKET 100 112.33 107.13 124.79 114.48 138.61
THE PEER GROUP CHOSEN WAS:
Customer Selected Stock List
THE BROAD MARKET INDEX CHOSEN WAS:
AMERICAN STOCK EXCHANGE
THE PEER GROUP IS MADE UP OF THE FOLLOWING SECURITIES:
FRUIT OF THE LOOM INC
HAMPTON INDUSTRIES INC
NANTUCKET INDUSTRIES
NAUTICA ENTERPRISES INC
ONEITA INDUSTRIES INC
SARA LEE CORP
VF CORP
WACOAL CP
9
EMPLOYMENT AND SEVERANCE AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
As of March 18, 1994, Messrs. George J. Gold and Donald D. Gold (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 pay them an amount equal to
their life and health insurance benefits 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. From October 1995 through May 1996, the Golds sold a total of 69,800
Shares at prices less than $5.00 and the Company paid to the Golds a total of
$33,906 as required under the Severance Agreement. 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.
As of March 1, 1994, the Company and Stephen M. Samberg, in connection with
his election as Chairman of the Board and Chief Executive Officer, entered into
a new employment agreement (the "1994 Agreement"). Mr. Samberg's current annual
base compensation is $518,000 and he is entitled to discretionary bonuses as
determined by the Compensation Committee, in an amount not to exceed $300,000
per year. The 1994 Agreement 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. Mr. Sussman's
current base salary is $ 144,000. The agreement 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 a one (1) year employment
agreement (extended through June 30, 1997) with Ronald S. Hoffman which provides
for an annual salary of $150,000. As additional contingent compensation, Mr.
Hoffman was granted options to purchase 30,000 shares of Common Stock under the
1992 Executive Long Term Stock Option Plan. The agreement requires the Company
to provide health and life insurance and to reimburse all reasonable business
expenses.
As of 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
10
$100,000. Mr. Visconti was granted options to purchase 30,000 shares of Common
Stock under the Stock Option Plan. The agreement requires the Company to provide
health and disability insurance and to reimburse 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, Joseph
Visconti, 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 of the
beneficial ownership of 35% 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.
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, Visconti 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 (totaling $1,554,000) 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. Mr. Samberg, after an event giving rise to
Termination Benefits, would also have rights (a) for seven months thereafter, to
exercise or be compensated for any stock options or stock appreciation rights;
and (b) to the immediate vesting of any unvested equity or deferred compensation
rights.
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.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of August 16, 1996 the beneficial share
ownership of each director and executive officer owning Common Stock, and of all
officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
------------------------------------ -------------------- -------------------
<S> <C> <C>
George J. Gold 452,918(2) 13.98%
209 Sterling Road
Harrison, NY 10528
Donald D. Gold 219,639(2) 6.78%
3670 Paces Ferry Road
Atlanta, GA 30327
Stephen M. Samberg 278,003(3)(6) 7.97%
105 Madison Avenue
New York, NY 10016
Robert M. Rosen 9,000(4) *
101 Federal Street
Boston, MA 02110
Warren D. Cole 28,300 *
142 West 57th Street
New York, NY 10019
Ronald S. Hoffman 240,500(5)(6) 6.92%
105 Madison Avenue
New York, NY 10016
Roger A. Williams 3,000 *
1444 S. Alameda Street
Los Angeles, CA 90021
Joseph Visconti 0 *
105 Madison Avenue
New York, NY 10016
Kenneth Klein 0 *
275 Madison Avenue
Suite 2400
New York, NY 10016
All directors and officers as a group
(9 persons) 1,231,560(6) 35.65%
</TABLE>
- -----------
* Less than 1%.
(1) Pursuant to the rules of the Securities and Exchange Commission, shares of
Common Stock which an individual or member of a group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are deemed to
be outstanding for the purpose of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person shown in the table.
Accordingly, where applicable, each individual or group member's rights to
acquire shares pursuant to the exercise of options or warrants are noted
below.
(2) All such shares are subject to the Nantucket Industries Stock Voting Trust
u/i/d March 22, 1994 (the "Voting Trust").
(3) Includes 20,303 shares which are subject to the Voting Trust and 15,000
shares that may be issued to Mr. Samberg pursuant to immediately exercisable
stock options.
(4) 5,000 of such shares are owned by the Lane & Altman Profit Sharing Trust DTD
11/28/92. Lane Altman & Owens LLP, of which Mr. Rosen is a partner, is
general counsel to the Company.
12
(5) 2,500 of such shares are owned by Mr. Hoffman's wife. Beneficial ownership
of all such shares is disclaimed by Mr. Hoffman. Includes 6,000 shares that
may be issued to Mr. Hoffman pursuant to immediately exercisable stock
options.
(6) Includes 232,000 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 (which amount includes accrued and
unpaid cumulative dividends). Messrs. Samberg and Sussman 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.
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 NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
------------------------------------ -------------------- ----------------
<S> <C> <C>
Dimensional Fund Advisors, Inc. 176,765(2) 5.46%
1229 Ocean Avenue
Santa Monica, CA
The Samberg Group, L.L.C. 232,000(3) 6.68%(5)
105 Madison Avenue
New York, NY 10016
GUESS?, Inc. 422,835 13.06%
1444 South Alameda Street
Los Angeles, CA 90021
Guess Group(4) 670,500 20.70%
NAN Investors, L.P. 555,000 15.66%(6)
c/o Fundamental Capital Corp.
291 Ocean Avenue
Lawrence, NY 11559
</TABLE>
- -----------
(1) Pursuant to the rules of the Securities and Exchange Commission, shares of
Common Stock which an individual or member of a group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are deemed to
be outstanding for the purpose of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person shown in the table.
Accordingly, where applicable, each individual or group member's rights to
acquire shares pursuant to the exercise of options or warrants are noted
below.
(2) 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, 1995 that it has sole voting
power of 110,230 shares.
(3) The Samberg Group, L.L.C. owns 5,000 shares of the Company's Non-Voting
Convertible Preferred Stock, which is 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.
(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.
(5) In accordance with Rule 13d-3(d)of the 1934 Act, assumes the conversion into
232,000 shares of Common Stock of the Non-Voting Convertible Preferred Stock
held by the Samberg Group, L.L.C.
(6) In accordance with Rule 13d-3(d) of the 1934 Act, assumes the conversion of
the 12.5% Convertible Subordinated Debentures in the original principal
amount of $1,168,150 into 305,000 shares of Common Stock. NAN investors,
L.P. also owns a 12.5% Convertible Subordinated Debenture in the original
principal amount of $1,591,850 which is convertible after June 15, 1997 into
318,370 shares of Common Stock. These securities were purchased on August
15, 1996 by NAN Investors L.P. A Schedule 13D dated August 22, 1996 was
filed reporting the transaction. See "Certain Relationships and Related
Transactions."
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, the Golds, Messrs. Samberg, Sussman, Raymond L. Wathen (head of
the Company's GUESS? Sales Division), 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 and
accrued and unpaid cumulative dividends on such preferred stock are 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) will be voted in favor of Donald D. Gold at the
Special Meeting; (b) were voted in favor of Messrs. George Gold and Wathen at
the Special Meeting in lieu of Annual Meeting of Stockholders held August 12,
1995; and (c) will be voted in favor of Messrs. Samberg, Rosen & Cole or their
designated replacements 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 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.
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 "Guess 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 Guess 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 Guess 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 Guess Agreement, the Company amended its 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
though the period ended May 31, 1999. The license is subject to early
termination if certain sales volume tests are not met. The license fee 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.
On August 15, 1996, pursuant to a Common Stock and Convertible Subordinated
Debenture Purchase Agreement dated as of August 13, 1996 (the "Purchase
Agreement") between the Company and NAN Investors, L.P. (the "Investor"), the
Company sold to the Investor 250,000 shares of
14
Common Stock for an aggregate purchase price of $740,000, and two (2) 12.5%
convertible subordinated debentures of the Company in the original principal
amounts of $1,168,150 and $1,591,850, respectively, which debentures are
convertible into 305,000 and 318,370 additional shares ("Conversion Shares") of
Common Stock. All shares sold and all Conversion Shares to be issued are
authorized and unissued shares of Common Stock reserved for issuance pursuant to
the Purchase Agreement. The debentures mature on August 15, 2001.
The Purchase Agreement provides the Investor with certain registration
rights. It also requires the Company and The Samberg Group to each use its best
efforts to cause Kenneth Klein to be elected as a director of the Company at
future annual meetings of the Company so long as the Investor and its affiliates
beneficially own in the aggregate at least the lesser of 250,000 shares of
Common Stock or 7% of the outstanding Common Stock. The Company has been advised
that Mr. Klein is not an affiliate of the Investor.
As a condition to the Purchase Agreement, the Board of Directors approved
for recommendation to the shareholders of the Company the Amendments to the
Company's Certificate of Incorporation described in Section II and III below.
Provisions were made in each executive officer's employment agreement and the
Severance Agreement so that the investor's acquisition would not be a "Change in
Control" under those agreements. Additional relationships and related
transactions are described above, under the caption "Compensation Committee
Interlocks and Insider Participation."
VOTING REQUIRED, RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The three candidates receiving the highest numbers of "for" votes shall be
elected to the Company's Board of Directors. An abstention shall have the same
effect as a vote withheld for the election of directors, and, pursuant to
Delaware law, a broker non-vote will not be treated as voting in person or by
proxy on any proposal. The affirmative vote of a majority of the shares
represented, in person or by proxy, and voting at the Special Meeting (which
shares voting affirmatively also constitute at least a majority of the required
quorum) is required to set the number of directors constituting the Board of
Directors at nine.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" SETTING THE NUMBER OF
DIRECTORS CONSTITUTING THE BOARD OF DIRECTORS AT NINE AND THE ELECTION OF THE
NOMINEES AS CLASS III DIRECTORS.
II. RATIFICATION AND APPROVAL TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
At a meeting held on August 9, 1996, the Board of Directors approved an
Amendment to the Company's Certificate of Incorporation, increasing the
authorized Common Stock from six million (6,000,000) shares of Common Stock with
$.10 par value to twenty million (20,000,000) shares of Common Stock with $.10
par value. The Company has no other formal plans, arrangements, understandings
or definitive commitments for the issuance of any additional common stock. There
are no pre-emptive rights authorized by the Certificate of Incorporation. The
Company believes that this number of shares will be sufficient for future
financings, for hiring additional personnel as needed for the Company's growth
and for potential mergers and acquisitions or for other similar transactions.
The issuance of additional shares of Common Stock will result in dilution to the
Company's then existing Stockholders.
Approval of the Amendment to the Certificate of Incorporation requires an
affirmative vote by the holders of a majority of the stock present in person or
represented by proxy and entitled to vote thereon at a meeting of the
stockholders (assuming a quorum exists.) Management intends to cast properly
executed proxies in favor of the increase of the common shares and the grant of
the authority to the Board of Directors for future issuances of such stock.
Proxies solicited by management will be voted in favor of this proposal unless a
contrary vote or authority withheld is specified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION AND
APPROVAL OF THE INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK.
15
III. RATIFICATION AND APPROVAL OF CHANGES TO ARTICLE
FOURTEENTH OF THE CERTIFICATE OF INCORPORATION
At a meeting held on August 9, 1996, the Board of Directors approved an
Amendment to the Company's Certificate of Incorporation (a) deleting the words
"two thirds vote" in clause (i) of Paragraph 1 of Article Fourteenth and
inserting in place thereof the words "majority vote"; and (b) striking out
subparagraph (viii) of Article Fourteenth which now reads as follows:
"(viii) The term "Continuing Director" shall mean a director who either
was a member of the Board of Directors of the Corporation at or prior to the
time such Related Person became a Related Person or who subsequently became
a director of the Corporation and whose election, or nomination for election
by the Corporation's Stockholders, was approved by a vote of at least
three-fourths of the Continuing Directors then on the Board."
and inserting in place thereof:
"(viii) The term "Continuing Director" shall mean a director who (1) was
a member of the Board of Directors of the Corporation at or prior to the
time such Related Person became a Related Person, or (2) subsequently became
a director of the Corporation and whose election, or nomination for election
by the Corporation's Stockholders, was approved by a vote of at least a
majority of the Continuing Directors then on the Board."
These changes to the Certificate of Incorporation provide for a reduction in
certain voting requirements of the Board of Directors necessary for approval of
a business transaction with Related Persons from two-thirds to a majority, and
for a change in the definition of the term "Continuing Director." Such changes
are intended to increase the flexibility of the Board of Directors in
authorizing business transactions with significant stockholders.
Approval of the Amendment to the Certificate of Incorporation requires an
affirmative vote by the holders of a majority of the stock present in person or
represented by proxy and entitled to vote thereon at a meeting of the
stockholders (assuming a quorum exists.) Proxies solicited by management will be
voted in favor of this proposal unless a contrary vote or authority withheld is
specified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATIONS AND
APPROVAL OF THE CHANGES TO THE CERTIFICATE OF INCORPORATION.
IV. SELECTION OF AUDITORS
The Board of Directors, acting upon the recommendation of the Audit
Committee, has appointed, subject to ratification by the stockholders, the firm
of Grant Thornton LLP, independent certified public accountants, to audit the
consolidated financial statements of the Company and its subsidiaries for fiscal
1997. Representatives of Grant Thornton, the Company's independent certified
public accountants, are expected to be present at the meeting with the
opportunity to make a statement if they desire to do so and to answer questions
from stockholders which are submitted in writing prior to the commencement of
the meeting.
The affirmative vote of a majority of the shares represented, in person or
by proxy, and voting at the Special Meeting (which shares voting affirmatively
also constitute at least a majority of the required quorum) is required to
ratify the Board of Directors' selection. If the stockholders reject the
nomination the Board of Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS OF THE COMPANY
FOR FISCAL 1997.
16
V. STOCKHOLDER PROPOSALS AND OTHER MATTERS
Stockholder proposals intended for inclusion in the proxy material relating
to the 1997 meeting of stockholders must be received by the Company at its
principal offices not later than March 1, 1997.
STOCKHOLDERS OR BENEFICIAL OWNERS OF THE COMPANY'S COMMON STOCK MAY OBTAIN A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 2,
1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. A COPY OF THAT
REPORT, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, MAY BE
OBTAINED WITHOUT CHARGE BY DIRECTING A REQUEST THEREFOR TO RONALD S. HOFFMAN,
CHIEF FINANCIAL OFFICER, NANTUCKET INDUSTRIES, INC., 105 MADISON AVENUE, NEW
YORK, NEW YORK 10016.
The Board of Directors has no knowledge of any other matters which may come
before the meeting and does not intend to present any other matter. If any such
other matter should properly be brought before the meeting or any adjournment or
adjournments thereof, however, the persons named as proxies will have
discretionary authority to vote the shares represented by the accompanying proxy
in accordance with their own judgment.
September 5, 1996
17
NANTUCKET INDUSTRIES, INC.
PROXY BALLOT
Proxy for the Special Meeting in Lieu of
Annual Meeting of Stockholders, October 7, 1996
This Proxy is Solicited on Behalf of this Board of Directors.
The undersigned hereby appoints ROBERT M. ROSEN and STEPHEN M. SAMBERG as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below all the shares of common stock
of Nantucket Industries, Inc. held of record by the undersigned on August 16,
1996, at the Special Meeting in Lieu of Annual Meeting of Stockholders to be
held in the Board of Governors Room, American Stock Exchange Inc., 86 Trinity
Place, New York, New York on October 7, 1996 at 11:00 a.m., and at any
adjournment thereof.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, the signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________ __________________________
__________________________ __________________________
__________________________ __________________________NNICM
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE With- For All
For hold Except
1.) To set the number of directors [ ] [ ] [ ]
constituting the Board of Directors at
nine and to elect as directors the
following persons
Donald D. Gold, Ronald S. Hoffman and Roger A. Williams
It you do not wish your shares voted "FOR" a particular nominee
mark the "For All Except" box and strike a line through that
nominee's name. Your share will be voted for the remaining
nominee.
For Against Abstain
2.) To ratify and approve the increase in the [ ] [ ] [ ]
authorized shares of Common Stock from
6,000,000 Shares with $.10 par value to
20,000,000 shares with $ .10 par value.
For Against Abstain
3.) To ratify and approve the changes to Article [ ] [ ] [ ]
Fourteenth of the Company's Certificate of
Incorporation.
For Against Abstain
4.) To ratify the appointment of Grant Thrornton [ ] [ ] [ ]
LLP, certified public accountants, to audit the
consolidated financial statements of the company
and its subsidiaries for fiscal 1997.
5.) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Mark box at right if comments or address change have been
noted on the reverse side of this card. [ ]
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
NANTUCKET INDUSTRIES, INC.
Dear Shareholder
Please take note the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the Proxy Ballot to indicate how your shares should be
voted. Then sign and date the Ballot, detach it and return it in the enclosed
postage paid envelope.
Your proxy must be received prior to the Special Meeting in Lieu of Annual
Meeting of Shareholders, on October 7, 1996, in order to be voted at the
Meeting.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Nantucket Industries, Inc.
