<PAGE>
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 ___ Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
X Definitive proxy statement
---
___ Definitive additional materials
___ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
YES Clothing Co.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
YES Clothing Co.
---------------------------------------
(Name of Person 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)
--- or Item 22(a)(2) of Schedule 14A.
___ $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:
Not applicable.
---------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
Not applicable.
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
Not applicable.
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not applicable.
---------------------------------------------------------------
(5) Total fee paid:
Not applicable.
---------------------------------------------------------------
X Fee paid previously with preliminary materials.
___
---------------------------------------------------------------
___ 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:
Not applicable.
---------------------------------------------------------------
(2) Form, schedule or registration statement no.:
Not applicable.
---------------------------------------------------------------
(3) Filing party:
Not applicable.
---------------------------------------------------------------
(4) Date filed:
Not applicable.
---------------------------------------------------------------
<PAGE>
YES CLOTHING CO.
August 23, 1995
Dear Shareholder:
You are cordially invited to attend the annual meeting of holders of
Common Stock of YES Clothing Co. to be held at the Company's offices, 1380 W.
Washington Boulevard, Los Angeles, California 90007, on October 7, 1996, at
10:00 a.m.
At this meeting, Shareholders are being asked to elect four directors
to the Company's Board of Directors, to ratify management's appointment of
independent auditors for the 1997 fiscal year and to amend the Company's Stock
Option Plan. Please give your attention to the Proxy Statement appearing on the
following pages, which describes these matters in detail.
It is important that your shares be represented at the annual meeting
whether or not you are personally able to attend. YOU ARE THEREFORE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE
AS PROMPTLY AS POSSIBLE.
Thank you for your cooperation.
Sincerely,
Guy Anthome
Chairman and Chief
Executive Officer
<PAGE>
YES CLOTHING CO.
1380 WEST WASHINGTON BOULEVARD
LOS ANGELES, CALIFORNIA 90007
NOTICE OF ANNUAL MEETING OF HOLDERS OF COMMON STOCK
To Be Held October 7, 1996
Notice is hereby given that the annual meeting of holders of Common
Stock of YES Clothing Co. (the "Company") will be held at the Company's offices,
1380 W. Washington Boulevard, Los Angeles, California 90007, on October 7, 1996,
at 10:00 a.m., for the following purposes:
(1) Election of Directors by Shareholders.
(2) Ratification of the selection of Moss - Adams as independent auditors
of the Company for the fiscal year ending March 31, 1997.
(3) Amendment to the 1989 Stock Option Plan of the Company increasing to
1,000,000 the number of shares thereunder.
(4) Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed August 16, 1996 as the record date for
determining the shareholders entitled to receive notice of and to vote at the
meeting.
You are cordially invited to attend the meeting. Whether or not you plan
to attend the meeting, you are urged to promptly complete, date and sign the
enclosed proxy and mail it to the Company in the enclosed envelope, which
requires no postage if mailed in the United States. Return of your proxy does
not deprive you of your right to attend the meeting and to vote your shares in
person.
By Order of the Board of Directors,
Jeffrey Busse
Secretary
August 23, 1996
Los Angeles, California
<PAGE>
YES CLOTHING CO.
1380 WEST WASHINGTON BOULEVARD
LOS ANGELES, CALIFORNIA 90007
PROXY STATEMENT
SOLICITATION
This Proxy Statement is furnished to shareholders of YES Clothing Co.
(the "Company" or "YES") in connection with the solicitation of proxies by and
on behalf of the Board of Directors of the Company (the "Board") for use at the
annual meeting of holders of Common Stock scheduled to be held at Company's
offices, 1380 W. Washington Boulevard, Los Angeles, California 90007, on October
7, 1996, at 10:00 a.m., and at any adjournments thereof. The approximate date
on which this Proxy Statement and the accompanying form of proxy are first being
mailed to shareholders is August 23, 1996. The Company's principal executive
offices are located at 1380 West Washington Boulevard, Los Angeles, California
90007.
Proxies, in the form enclosed, are being solicited by the Board for
use at the annual meeting. The persons named as proxies were selected by the
Board and are officers of the Company or its affiliates. Proxies may be revoked
by a shareholder by written notice (including a properly executed and later
dated proxy) to the Secretary of the Company at any time prior to the voting.
In addition, a shareholder of record who attends the annual meeting may vote his
shares personally and revoke his proxy at that time. All shares represented by
valid proxies received pursuant to this solicitation, and not subsequently
revoked, will be voted as provided on the proxy.
The expense of preparing, printing and mailing this Proxy Statement
and the proxies solicited hereby will be borne by the Company. In addition to
the use of the mails, proxies may be solicited by officers, Directors and
regular employees of the Company, without extra remuneration, by personal
interviews, telephone, telegraph or otherwise. The Company will also request
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record and will reimburse such
persons for their reasonable out-of-pocket expenses.
The Board has fixed the close of business on August 16, 1996 as the
record date (the "Record Date") for the determination of shareholders entitled
to receive notice of and to vote at the annual meeting. Only shareholders of
record at the close of business on the Record Date will be entitled to notice of
and to vote at the annual meeting. At the close of business on the Record Date,
the Company had outstanding 7,036,492 shares of Common Stock. The Common Stock
is being asked to vote on the election of four members of the Board, amendment
of the Company's Stock Option Plan, ratification of the appointment of
independent auditors and other business as may properly come before the meeting
or any adjournment thereof. The holders of a majority of the Common Stock
constitute a quorum for those portions of the meeting where action is required
of holders of Common Stock.
VOTE REQUIRED AND VOTING PROCEDURE
Each holder of Common Stock will be entitled to one vote, in person or
by proxy, for each share standing in its name on the books of the Company as of
the Record Date for the meeting on each of the matters duly presented for vote
at the meeting.
In connection with the solicitation by the Board of proxies for use at
the meeting, the Board has designated Irving B. Kroll and Jeffrey Busse as
proxies. Shares represented by all properly executed proxies will be voted at
the meeting in accordance with the instructions specified thereon. If no
instructions are specified, the shares represented by any properly executed
proxy will be voted FOR the election of the nominees listed below under
"Election of Directors," FOR ratification of the selection of Moss - Adams as
independent auditors of the Company for the fiscal year ending March 31, 1997
and FOR the approval of the amendment of the Company's Stock Option Plan.
-1-
<PAGE>
The Board is not aware of any matters that will come before the
meeting other than as described above. However, if such matters are presented,
the named proxies will, in the absence of instructions to the contrary, vote
such proxies in accordance with the judgment of such named proxies with respect
to any such other matter properly coming before the meeting.
A majority of the outstanding shares of Common Stock must be
represented in person or by proxy at the meeting in order to constitute a quorum
for the transaction of business. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock represented at the meeting in
person or by proxy and entitled to vote thereat is required for the election of
directors and for ratification of the Company's independent auditors.
A proxy submitted by a shareholder may indicate that all or a portion
of the shares of Common Stock represented by such proxy are not being voted by
such shareholder with respect to a particular matter. This could occur, for
example, when a broker is not permitted to vote stock held in street name on
certain matters in the absence of instructions from the beneficial owner of the
stock. The shares subject to any such proxy which are present but are not being
voted with respect to a particular matter (the "non-voted shares") will be
considered shares not present and entitled to vote on such matter, although such
shares may be considered present and entitled to vote for other purposes and
will count for purposes of determining the presence of a quorum.
In the election of directors, the nominees receiving the highest
number of votes of shares represented in person or by proxy at the meeting and
entitled to vote on such matter will be elected directors of the Company.
Accordingly, non-voted shares with respect to the election of directors will not
affect the outcome thereof. The appointment of Moss - Adams as the Company's
auditors for the fiscal year ending March 31, 1997 and for the approval of the
amendment to the Company's Stock Option Plan will be approved only if a majority
of the shares represented in person or by proxy at the meeting and entitled to
vote thereon casts affirmative votes with respect to such matters. Thus, with
respect to such matters, non-voted shares will have the effect of a negative
vote.
The Board has appointed Chemical Mellon Shareholder Services as the
Inspector of Elections for the meeting. The Inspector of Elections will
determine the number of shares of Common Stock represented, in person or by
proxy, at the meeting, whether a quorum exists, the authenticity, validity and
effect of proxies and will receive and count the votes. None of the matters to
be voted on at the meeting will be by ballot unless a shareholder demands
election by ballot at the meeting and before the voting begins.
ACTION TO BE TAKEN UNDER PROXY
All proxies for Shareholders in the accompanying form that are
properly executed and returned will be voted at the meeting and any adjournments
thereof in accordance with any specifications thereon or, if no specifications
are made, will be voted for the election of the four nominees described herein,
approval of the amendment to the Company's 1989 Stock Option Plan, and for the
ratification of the appointment of independent auditors.
The Board knows of no matters, other than those stated above, to be
presented and considered at the meeting. If, however, any other matters
properly come before the meeting or any adjournments thereof, it is the
intention of the persons named in the enclosed proxy to vote such proxy in
accordance with their judgment on any such matters. The persons named in the
enclosed proxy may also, if a quorum is not present, vote such proxy to adjourn
the meeting from time to time.
-2-
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
It is intended that the persons named in the proxy for the
Shareholders will, unless otherwise instructed, vote for the election of the
four nominees listed below to serve as Directors until the next annual meeting
of Shareholders following their election and until their respective successors
are elected and have qualified. If any nominee, for any reason presently
unknown, cannot be a candidate for election, the shares represented by valid
proxies will be voted in favor of the remaining nominees and may be voted for
the election of a substitute nominee recommended by the Board. Each of the
nominees listed below has expressed his intention to serve the entire term for
which election is sought.
NOMINEES FOR ELECTION BY SHAREHOLDERS TERMS
------------------------------------- -----
Guy Anthome Until 1997 Annual Meeting
Jeffrey Busse Until 1997 Annual Meeting
Irving B. Kroll Until 1997 Annual Meeting
Maurice Schoenholz Until 1997 Annual Meeting
The following information with respect to the principal occupation or
employment of each nominee and incumbent Director, the name and principal
business of the corporation or other organization in which such occupation or
employment is carried on, and other affiliations and business experience during
the past five years, has been furnished to the Company by the respective
nominees and incumbent Directors. This information includes a description of
each person's service, if any, with the Company.
INFORMATION CONCERNING CURRENT DIRECTORS AND NOMINEES FOR DIRECTORS
Mr. Anthome, age 58, has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since June 1996 and a Director since May
1995. Mr. Anthome was the President of the Company from June 1995 to August
1995. In addition, from 1990 through the present date, Mr. Anthome has been the
President and director of Gantom, Inc., a privately held apparel company.
Mr. Busse, age 43, has been the Chief Financial Officer and a Director
of the Company since May 1995 and Secretary since June 1995. From May 1991
through May 1995, Mr. Busse was Controller of the Company. From April 1988
through May 1991, was the Controller for California Apparel Corporation.
Mr. Kroll, age 66, has been a Director of the Company since March
1995. From 1961 through 1992, Mr. Kroll was a partner of Kenneth Leventhal &
Company, a national accounting firm. From 1992 through the present, Mr. Kroll
has been engaged in consulting and charitable activities.
Mr. Schoenholz, age 73, was elected a Director of the Company in
October 1989. Mr. Schoenholz was employed in a variety of management capacities
by United Factors and its successor, Crocker United Factors, from 1940 to 1978.
Mr. Schoenholz served as Chairman of the Board of Republic Factors Corp. from
1978 until his retirement in 1982 and is currently a consultant to that company.
Mr. Schoenholz is also President of Maurice Schoenholz, Inc. The Company sells
substantially all of its accounts receivable to Republic Factors Corp.
BOARD MEETINGS
During the fiscal year ending March 31, 1996, the Board met ten times.
Messrs. Anthome, Busse, Kroll and Schoenholz and former director Georges
Marciano attended all meetings.
-3-
<PAGE>
STOCK OPTION AND COMPENSATION COMMITTEE
The Stock Option and Compensation Committee of the Board consists of
Messrs. Schoenholz and Kroll. The Stock Option and Compensation Committee,
which determines executive remuneration, met once in the fiscal year ending
March 31, 1996. The report of the Stock Option and Compensation Committee begins
on page 12.
AUDIT COMMITTEE
The Audit Committee of the Board consists of Messrs. Kroll and
Schoenholz. The Committee met two times in the fiscal year ending March 31,
1996. The Audit Committee selects the firm of independent public accountants
that audits the financial statements of the Company, discusses the scope and
results of the audit with the accountants and discusses the Company's financial
accounting and reporting principles and the adequacy of the Company's financial
controls with the accountants and with management.
The Company does not have a standing Nominating Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the current members of the Compensation Committee are
Messrs. Kroll and Schoenholz. None of the members of the Compensation Committee
served as a member of the Compensation Committee or other board committee
performing similar functions of any other entity in 1996.
For many years, the Company has factored its accounts receivable
through Republic Factors for which Mr. Schoenholz served as Chairman of the
Board and is now a consultant.
BOARD FEES
Directors who are not employees of the Company currently receive as
compensation for serving on the Board $6,000 annually. Directors who are
neither employees of the Company nor employees of affiliates received 5,000
stock options on February 16, 1995, which were replaced with 5,000 new options
on July 12, 1995, the day Mr. Marciano contributed capital to the Company.
-4-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth, as of July 26, 1996, certain
information regarding the beneficial ownership of the Company's Common Stock by:
(i) each person known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of the Company's Common Stock, (ii) each of the
Company's Directors, (iii) each of the executive officers of the Company who own
shares of the Company's Common Stock, and (iv) all of the Company's executive
officers and Directors as a group. The following table includes shares
beneficially owned by each named person as well as shares which each such person
has the right to acquire within 60 days of July 26, 1996.
<TABLE>
<CAPTION>
Percent of
Common Stock Common Stock
Beneficial Owner Owned Owned
- ---------------- ------------ ------------
<S> <C> <C>
Guy Anthome (1) 3,514,693 49.90%
Georges Marciano (2) 2,700,000 38.32%
Jeffrey Busse (3) 0 0
Irving B. Kroll (4) 6,000 .09%
Maurice Schoenholz (5) 6,000 .09%
All Officers and Directors
as a group (4 persons) 3,526,693 50.08%
</TABLE>
(1) The address of Mr. Anthome is 1380 West Washington Boulevard, Los Angeles,
California 90007.
(2) The address of Mr. Marciano is 9465 Wilshire Boulevard, Suite 700, Los
Angeles, California 90212. The shares listed above are held by The Georges
Marciano Trust of which Mr. Marciano is the sole trustee.
(3) The address of Mr. Busse is 1380 West Washington Boulevard, Los Angeles,
California 90007. Mr. Busse holds a stock option to purchase 10,000 shares
which will vest, if at all, at the end of the first quarter ending on or
before June 30, 1996 that the Company earns a profit.
(4) The address of Mr. Kroll is 1380 West Washington Boulevard, Los Angeles,
California 90007. Includes a stock option to purchase 5,000 shares which
vested on July 12, 1995.
(5) The address of Mr. Schoenholz is c/o Republic Factors, 1000 Wilshire
Boulevard, Suite 400, Los Angeles, California 90017. Includes a stock
option to purchase 5,000 shares which vested on July 12, 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into certain relationships and transactions
with related parties. Such relationships and transactions include, without
limitation, the following:
-5-
<PAGE>
RELATIONSHIP WITH GEORGES MARCIANO AND AFFILIATES.
Background. George Marciano is the founder and former Chief Executive
Officer and chief designer of Guess?, Inc., the successful apparel manufacturer
and retailer known for its denim and knitwear products. In mid-1993, Mr.
Marciano sold his 40% interest in Guess?, Inc. back to that company and began to
pursue other investment opportunities in public and private apparel companies.
After considering a number of other companies, Mr. Marciano approached Messrs.
George Randall and Moshe Tsabag, the owners of approximately 80% of the
outstanding common stock of the Company, about an acquisition of their control
position in the Company. The terms of the transaction were agreed upon in late
1994, and Georges Marciano and his affiliates acquired control of the Company by
their purchase for $2.00 per share of 3,030,000 shares of the Company's
outstanding Common Stock on January 31, 1995.
Under prior management, the Company had incurred substantial losses in
its fiscal years ending March 31, 1993, 1994 and 1995. The Company's auditors,
Moss - Adams, informed the Company that as a result of the losses incurred
through March 31, 1995, their opinion on the Company's financial statements
would include a "going concern" qualification. In addition, the Company received
a notice of delisting from the NASD/National Market System ("NASD/NMS") in June
1995 due to the decline in its tangible net worth and the Company's auditors
potential qualified opinion. The Company appealed to the NASD the notice of
delisting. The Company is now traded on the NASD Small Cap Market.
In response to the deteriorating financial condition of the Company,
on June 13 Mr. Marciano suggested to the Company that he would be prepared to
contribute capital to the Company, cancel loans he had previously made to the
Company and become the Company's Chairman and Chief Executive Officer in
exchange for a package of stock, a Warrant and an Executive Stock Option. In
addition, Mr. Marciano suggested that the previously discussed license agreement
for use of the trademarks GM Surf/TM/ and Misfits/R/ would be implemented but
would not require the payment or accrual of royalties until January 31, 1996,
essentially allowing the Company a year's use of the trademarks without payment.
Mr. Marciano's proposals were discussed at a Company board meeting
held on Saturday, June 17, 1995. At that meeting the Company's Board, then
consisting of Messrs. Kroll, Anthome, Schoenholz and Busse, appointed Georges
Marciano to the Board. In addition, Mr. Marciano was appointed Chairman of the
Board and Chief Executive Officer of the Company. Prior to Mr. Marciano's
joining the Board, the Board (and the Compensation Committee which then
consisted of only Messrs. Kroll and Schoenholz, as to the Executive Stock
Option) approved (subject to the receipt of an independent valuation and
fairness opinion) the sale of 3,184,693 shares of Company Common Stock for a
capital contribution of $3,300,000 and the cancellation of indebtedness and
advances of $680,866, and the entry by the Company and Mr. Marciano into an
employment agreement, Executive Stock Option, Warrant Agreement and trademark
license. These are described below.
EMPLOYMENT AGREEMENT-
The Company and Mr. Marciano entered into an employment agreement for
a one year term from June 17, 1995 through June 16, 1996 for Mr. Marciano to
serve, on a nonexclusive basis, as the Company's Chairman of the Board and Chief
Executive Officer. Mr. Marciano received a salary of $1 per year plus the
Executive Stock Option described below. In addition to his base salary of $1
per year, Mr. Marciano was entitled to the full benefit of the Company's
indemnification agreements, reimbursement of his normal and customary business
expenses, and participation in all of the Company's health and life insurance
and other benefits made available to the Company's senior executives.
-6-
<PAGE>
EXECUTIVE STOCK OPTION AGREEMENT-
In connection with execution of the Employment Agreement, the Company
and Mr. Marciano entered into an Executive Stock Option Agreement providing for
the grant of options to acquire up to 2,000,000 shares of the Company's common
stock at $1.25 per share, vesting monthly beginning on July 17, 1995 over the
following four years with each monthly vesting during the first forty-seven
months at 41,667 shares and the last 41,651 shares vesting on June 1, 1999.
WARRANT AGREEMENT-
In connection with Mr. Marciano's capital contribution described
above, the Company granted a Warrant to purchase 2,000,000 shares of Common
Stock at a purchase price of $1.25 per share exercisable at any time up to and
through June 16, 1997. The Warrant, which is transferable subject to securities
law restrictions, provides for customary anti-dilution protection in the event
that stock is issued at below market value prices. The Warrant became effective
after approval by the Company's shareholders on September 20, 1995.
LICENSE AGREEMENT-
The Company also entered into a license agreement with Marble
Sportswear, Inc., a corporation controlled by Mr. Marciano, effective as of
April 1, 1995, for the license for a period of five years through March 31, 2000
of the trade names GM Surf/TM/ and Misfits/R/ for the production of men's and
women's sportswear, casual blouses, casual dresses, casual jackets, jeans,
overalls, casual shirts, shortalls, shorts, casual skirts, sweaters, sweatpants,
sweatshirts, t-shirts, tank tops, casual trousers and casual vests. The
territory licensed is the United States of America and Puerto Rico.
The license agreement called for royalty payments of 7% of the "Net
Sales" of all of the Company's goods bearing the licensed trademarks commencing
with sales of the trademarked goods on or after January 31, 1996. In addition,
the Company is obligated to pay to licensor 2% of the Company's Net Sales
commencing January 31, 1996 as reimbursement for licensor's advertising
expenses.
INDEMNIFICATION AGREEMENT-
In addition, in connection with Mr. Marciano's appointment to the
Board and as the Company's Chief Executive Officer, the Company entered into an
indemnification agreement with Mr. Marciano identical to the indemnification
agreements provided to the other Directors.
Copies of all of the foregoing agreements are attached as Exhibits to
the Company's annual report on Form 10-K for the fiscal year ended March 31,
1995 filed with the Securities And Exchange Commission on July 14, 1995.
LETTERS OF CREDIT-
Mr. Marciano and his affiliates have provided, from time to time,
letters of credit to the Company's factor, Republic Factors Corp., to support
overdrafts in the Company's favor. On June 4, 1996, as part of the Sale
Transaction, Mr. Marciano advanced the Company $3,000,000 to pay off three
$1,000,000 letters of credit issued to Republic Factors Corp. on behalf of the
Company.
BEVERLY HILLS STORE-
Mr. Marciano currently operates a retail store in Beverly Hills under
the name "Georges Marciano Boutique". Mr. Marciano sells at his Beverly Hills
store, among other items, goods produced by the Company. Those goods are
provided to Mr. Marciano's store at the same price and terms as the Company
sells goods to other retailers.
-7-
<PAGE>
PARK CITY OUTLET-
Prior to acquiring control of the Company in January, 1995, Mr.
Marciano operated an outlet store in Park City, Utah. As of April 1, 1995, Mr.
Marciano assigned to the Company the lease for the Park City outlet store (at no
profit to Mr. Marciano). The Company reimbursed Mr. Marciano for the cost of
tenant improvements and inventory in that store by means of a promissory note.
This note was subsequently converted to Common Stock and the Company has assumed
the operation of the outlet store under the name "YES Outlet."
SALE TRANSACTION-
On June 4, 1996, Georges Marciano and affiliates sold to Guy Anthome
3,514,693 shares of common stock at a purchase price of $0.01 per share. Mr.
Marciano resigned as a director and Chairman of the Board, agreed to cancel the
Option and Warrant described above, terminated the License Agreement between the
Company and Marble Sportswear described above, and paid off liabilities
associated with letters of credit issued on behalf of the Company in favor of
Republic Factors. The Company and Mr. Marciano exchanged mutual releases and
the Company agreed to indemnify Mr. Marciano against liabilities and continue to
provide Directors' and Officers' insurance for two years. Copies of the
agreement reflecting the Sale Transaction were attached to the Schedule 13D
filed by Mr. Marciano on June 6, 1996.
OTHER EMPLOYMENT AGREEMENTS-
The Company has also entered into oral employment agreements with
Messrs. Anthome and Busse described in EXECUTIVE COMPENSATION AND OTHER
REMUNERATION - EMPLOYMENT AND CONSULTING AGREEMENTS.
OTHER AGREEMENTS-
Jeffrey H. Kapor, a Director of the Company until May 16, 1995, is a
partner in the law firm of Katz, Hoyt, Siegel & Kapor, which has rendered legal
services to the Company since its inception. The Company paid such law firm
approximately $93,000 for legal services during fiscal 1995.
Maurice Schoenholz, a Director of the Company, is currently a
consultant to Republic Factors Corp., the Company's sole factor.
On January 31, 1995, pursuant to an agreement previously entered into
between the Company and each of the Company's then outside directors prior to
the date Mr. Marciano acquired control of the Company, each outside director
agreed to cancel all of their stock options in consideration of certain payments
made to them by the Company. Funds to provide for the cancellation payments
were loaned to the Company by Mr. Marciano and on July 12, 1995 were converted
to additional shares of Common Stock. Director Alexander Menke cancelled
options to acquire 55,165 shares of Common Stock at prices ranging from $2 per
share to $5 per share and received a payment of $75,165 from the Company.
Director Jeffrey Kapor cancelled options to acquire 50,082 shares of Common
Stock at prices ranging from $2 per share to $3 per share and received a payment
of $75,092 from the Company. Director Maurice Schoenholz cancelled options to
acquire 45,000 shares of Common Stock at prices ranging from $2 per share to $5
per share and received a payment of $65,000 from the Company. Director Leslie
Bell cancelled options to acquire 45,000 shares of Common Stock at prices
ranging from $2 per share to $8.75 per share and received a payment of $65,000
from the Company. Former Director Bruce Emmeluth cancelled options to acquire
25,000 shares of Common Stock at prices of $2 per share and received a payment
of $50,000 from the Company.
-8-
<PAGE>
In addition, current Directors Maurice Schoenholz and Irving B. Kroll
received options to purchase 5,000 shares of Common Stock each at $6 per share
on February 14, 1995. These options were subsequently cancelled and replaced by
options to purchase 5,000 shares each at a price of $3.375, the closing price of
the Company's Common Stock on July 12, 1995, the day Mr. Marciano made his
capital contribution to the Company.
The Company has entered into indemnification agreements with each of
its Directors and officers pursuant to which the Company has agreed to indemnify
such individuals to the fullest extent permitted by California law.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") and the National Association of Securities
Dealers, Inc. initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Officers, directors
and greater than ten-percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the year ended March 31, 1996, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten-
percent beneficial owners were complied with.
MANAGEMENT
The following table sets forth certain information with respect to the
Directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------- --- --------------------------------------------------
<S> <C> <C>
Guy Anthome 58 Chairman, CEO and Director
Jeffrey Busse 43 Corporate Secretary, Chief Financial Officer
and Director
Irving B. Kroll 66 Director
Maurice Schoenholz 73 Director
</TABLE>
Directors are currently elected for terms of one year each.
The Company's Bylaws allow the Board to fix the number of Board
members between five and ten Directors. The number has been fixed, at present,
at six, but the Board can increase the number to ten at any time without
shareholder consent. There are currently two vacancies on the Board.
Guy Anthome. See "Information Concerning Current Directors and
Nominees for Directors."
Jeffrey Busse. See "Information Concerning Current Directors and
Nominees for Directors."
Irving B. Kroll. See "Information Concerning Current Directors and
Nominees for Directors."
Maurice Schoenholz. See "Information Concerning Current Directors
and Nominees for Directors."
The Company maintains a Stock Option and Compensation Committee
comprised of Messrs. Kroll and Schoenholz and an Audit Committee comprised of
Messrs. Kroll and Schoenholz.
-9-
<PAGE>
Directors who are not employees of the Company currently receive as
compensation for serving on the Board $6,000 annually. In addition, they may
receive a grant of options per year as determined at the discretion of the
Board.
The Company entered into oral employment agreements with Messrs.
Anthome and Busse. See "Executive Compensation."
EXECUTIVE COMPENSATION AND OTHER REMUNERATION
The following table sets forth all cash and non-cash compensation paid
to each of the named executive officers with respect to services rendered during
each of the last three fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------- ------------------------------
FYE Common Stock All Other
March Underlying Compensation
Name and Principal Position 31, Salary Bonus Options (2)
- --------------------------- ----- ------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
Georges Marciano (1) 1996 $ 1 $-0- 2,000,000 (3) $-0-
Chairman of the Board, Chief 1995 -0- -0- -0- -0-
Executive Officer and Director 1994 -0- -0- -0- -0-
Guy Anthome 1996 35,000 -0- 50,000 (4) -0-
President (June to August 1995) 1995 -0- -0- -0- -0-
Asst. Secretary and Director 1994 -0- -0- -0- -0-
Daniel V. Goodstein (1) 1996 55,000 -0- -0- -0-
Executive Vice President, 1995 178,000 -0- -0- -0-
Chief Financial Officer, 1994 176,000 -0- -0- -0-
Secretary and Director
Jeffrey Busse 1996 75,000 -0- 10,000 -0-
Chief Financial Officer, 1995 -0- -0- -0- -0-
Secretary and Director 1994 -0- -0- -0- -0-
</TABLE>
(1) No longer with the Company
(2) These amounts represent the Company's contributions to the Company's
Pension Plan
(3) Cancelled on June 4, 1996
(4) Cancelled on August 2, 1995
STOCK OPTIONS
In September 1989, the Board adopted, and the Company's shareholders
approved, the YES Clothing Co. 1989 Stock Option Plan (the "Plan"). The
shareholders approved an amendment to the Plan in 1991 increasing the maximum
number of shares of Common Stock available for issuance under the Plan to
400,000. The Plan provides for the grant of both incentive and nonqualified
stock options to the Company's Directors, officers, employees and consultants.
-10-
<PAGE>
The Plan is administered by a committee of two members of the Board (the
"Option Committee"). The Option Committee determines, subject to the
limitations of the Plan and applicable law, the option recipients, the number of
shares subject to options, the options exercise price and other option terms,
including vesting schedules. Options may be granted under the Plan for terms of
up to ten years and one week. The exercise price for incentive stock options
must not be less than the fair market value of the Common Stock on the date of
grant. The exercise price may be paid in cash or in such other lawful
consideration as the Option Committee may determine. No option may be granted
under the Plan after September 11, 1999. Eighty thousand options were granted
under the Plan in fiscal 1996.
The following table sets forth certain information regarding the Chief
Executive Officer and the other Named Executives identified in the Summary
Compensation Table.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
-----------------------------------------
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
- -------------------------------------------------------------------------------------------- ---------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
% of Total
Options/nted
Options/ SARs Granted
SARs to Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#)(1) Year (2) ($/Share)(3) Date 5%($)(3) 10%($) (3)
- ----------------------- --------- ------------ ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Georges Marciano 2,000,000(4) 96.2% $1.25 6/17/05 1,580,000 3,980,000
Guy Anthome 50,000(5) 2.4% $2.12 6/15/05 66,500 169,000
Jeffrey Busse 10,000 0.5% $2.12 6/15/05 13,300 33,800
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total of 2,080,000 granted.
(2) The closing price of the Company's Common Stock on the Nasdaq Stock
Market's SmallCap Market on March 31, 1996 was $1.25.
(3) Based upon the number of shares of the Company's Common Stock outstanding
as of March 31, 1996, a 5% and 10% increase in the annual rates of stock
price appreciation over the option term would result in an aggregate
increase of $5,558,828 and $14,002,619, respectively, in the value of the
Common Stock held by all the Company's Common Stockholders (assuming no
exercise of warrants or stock options).
(4) Cancelled June 4, 1996.
(5) Cancelled August 2, 1995.
The following table sets forth certain information regarding option
exercises and option values for the Chief Executive Officer and the other Named
Executives identified in the Summary Compensation Table.
-11-
<PAGE>
AGGREGATE OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
------------------------------------------------------
AND FISCAL YEAR-END OPTION/SAR VALUES
-------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End (#) at FY-End ($)
Acquired on Value Exercisable Exercisable/
Name Exercise (#) Realized Unexercisable Unexercisabe
- ---------------- ------------ -------- ------------- -------------
<S> <C> <C> <C> <C>
375,000 (E) 0 (E)
Georges Marciano -0- --- 1,625,000 (U) 0 (U)
-0- (E) 0 (E)
Guy Anthome -0- --- -0- (U) 0 (U)
-0- (E) 0 (E)
Jeffrey Busse -0- --- 10,000 (U) 0 (U)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Mr. Marciano's and Mr. Anthome's options have been cancelled.
EMPLOYMENT AND CONSULTING AGREEMENTS
Mr. Anthome and Mr. Busse are employed by the Company on an at will
basis. Mr. Anthome receives $150,000 per year plus reimbursement of his business
expenses during the term of his employment. Mr. Busse receives $75,000 per year
plus reimbursement of his business expenses. Mr. Anthome and Mr. Busse received
options to acquire 50,000 shares and 10,000 shares of Company Common Stock on
June 15, 1995. Mr. Anthome's options were cancelled in August 1995.
REPORT OF THE COMPENSATION COMMITTEE
The following report of the Compensation Committee and the performance
graphs in the next section shall not be deemed to be "soliciting material" or to
be "filed" with the SEC or subject to Regulations 14A or 14C of the SEC or to
the liabilities of Section 18 of the Securities Exchange Act of 1934 (the
"Exchange Act") and shall not be deemed incorporated by reference into any
filing under the Securities Act of 1933, as amended (the "Securities Act"), or
the Exchange Act, notwithstanding any general incorporation by reference of this
Proxy Statement into any other document.
INTRODUCTION
The Company's Compensation Committee was established in 1990 and is
now composed of Messrs. Kroll and Schoenholz. The Committee reviews the
compensation of each member of senior management and assesses the effectiveness
of the Company's compensation policies. The Committee also reviews with the
full Board all aspects of compensation of the Company's executives.
The Compensation Committee is responsible for administering total
compensation programs which are designed to enable the Company to:
. Hire, reward, motivate and retain the highest quality managers
possible;
. Match the Company's compensation plans to its business strategies, as
well as the external business environment;
. Emphasize the relationship between pay and performance by placing a
significant portion of compensation at risk and subject to the
achievement of financial goals and objectives;
-12-
<PAGE>
. Maximize profitability through growth and efficiency, balancing
appropriately the short-term and long-term goals of the Company; and
. Align the interests of managers with those of stockholders through the
use of equity-based incentive awards to link a significant portion of
compensation to stockholder value.
Because the Company has undergone substantial management changes and
is still in transition, the Company has not entered into any long term
compensation arrangements with its employees. It has, however, granted to Mr.
Busse options to acquire 10,000 shares of Company Common Stock to align his
interests and incentives with the interests of the Company's shareholders. These
options vest only if the Company reports net income in any fiscal quarter on or
before the quarter ending June 30, 1996.
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code generally limits to
$1,000,000 the tax deductible compensation paid to the Chief Executive Officer
and the four highest-paid executive officers who are employed as executive
officers on the last day of the year. However, the limitation does not apply to
performance-based compensation provided certain conditions are satisfied.
The Company's policy is generally to preserve the Federal income tax
deductibility of compensation paid to the extent feasible. Notwithstanding the
Company's general policy to preserve the Federal income tax deductibility of
compensation payments, under certain circumstances, elements of annual
compensation, such as the value of stock options, may cause an executive
officer's income to exceed deductible limits. In addition, the Committee retains
the authority to authorize other payments, including salary and bonuses, that
may not be deductible, if that is in the best interests of the Company and its
stockholders.
PERFORMANCE GRAPHS
Set forth below is a graph comparing the yearly percentage change in
the cumulative total return of the Common Stock with the cumulative total return
of the NASDAQ Composite Stock Index and with that of a peer group over the five-
year period ending March 31, 1996. It is assumed in the graphs that $100 was
invested in the Common Stock, in the stock of the companies in the NASDAQ
Composite Stock Index, and in the stocks of the peer group companies just prior
to the commencement of the period (March 1991 through March 1996, in the graph)
and that all dividends received within a quarter were reinvested in that
quarter. The peer group companies include more than 40 publicly traded apparel
companies.
-13-
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG YES CLOTHING, NASDAQ COMPOSITE AND PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period YES NASDAQ
(Fiscal Year Covered) Clothing Composite Peer Group
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 3/91 $100.00 $100.00 $100.00
FYE 3/92 $ 88.24 $127.47 $131.53
FYE 3/93 $ 52.94 $146.48 $130.46
FYE 3/94 $ 31.62 $158.14 $141.39
FYE 3/95 $200.00 $176.27 $119.96
FYE 3/96 $ 29.41 $239.27 $160.69
</TABLE>
THE BOARD RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR THIS PROPOSAL.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board recommends that Shareholders vote for the approval of the
appointment of Moss - Adams as the Company's independent auditors for the
current fiscal year. Moss - Adams served as the Company's independent auditors
for the fiscal year ended March 31, 1996. Representatives of Moss - Adams are
expected to be present at the meeting with the opportunity to make a statement
if they desire to do so and to respond to appropriate questions.
Moss - Adams replaced the Company's former auditors after Mr. Marciano
gained control of the Company. There were no disagreements between the Company
and the Company's former auditors. The Board has been advised that Moss - Adams
is independent with respect to the Company within the meaning of the Securities
Act and the applicable published rules and regulations thereunder.
A majority vote of the shares entitled to vote represented at the
meeting is necessary for approval.
THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL NO. 3
APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1989 STOCK OPTION PLAN
The Board recommends that shareholders vote for the approval of an
amendment to the Company's 1989 Stock Option Plan (the "Plan") increasing to
1,000,000 the number of shares which may be issued thereunder. The Plan was
adopted by the Board of Directors and approved by the Shareholders in September
1989. In 1991, the
-14-
<PAGE>
Shareholders approved an amendment to the Plan increasing the maximum number of
shares available for issuance under the Plan to 400,000.
In order to have a sufficient number of shares available for grant
under the Plan, the Board of Directors on July 23, 1996 approved an amendment
increasing from 400,000 to 1,000,000 the number of shares of Common Stock
issueable thereunder. Immediately prior to the approval of the amendment, there
were 20,000 shares reserved for issuance upon exercise of outstanding options,
leaving 380,000 share available for future grants. Accordingly, subject to
shareholder approval, the first sentence of Section 5 of the Plan was amended in
its entirety to read as follows:
"The aggregate number of shares of Common Stock which may be purchased
pursuant to the exercise of options granted under the Plan shall not
exceed 1,000,000 subject to adjustment as provided in Section 10
hereof."
A majority vote of the shares entitled to vote represented at the
meeting is necessary for approval.
THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
SHAREHOLDER PROPOSALS
Shareholders are advised that any shareholder proposals intended for
consideration at the 1997 Annual Meeting of Shareholders must be received by the
Company at its principal executive offices on or before May 23, 1997 in order to
be included in the proxy materials for the 1997 Annual Meeting. It is
recommended that shareholders submitting proposals direct them to the Secretary
of the Company and utilize certified mail-- return receipt requested.
OTHER MATTERS
The Board is not aware of any other matter that may properly come
before the meeting. If any matter not mentioned in this Proxy Statement is
brought before the meeting, the persons named in the enclosed form of proxy will
have discretionary authority to vote all proxies with respect thereto in
accordance with their judgment.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K, exclusive of
exhibits, accompanies this proxy statement. Additional copies and copies of the
exhibits to the Form 10-K will be mailed without charge to any shareholder
entitled to vote at the meeting, upon written request to: Jeffrey Busse, YES
Clothing Co., 1380 West Washington Boulevard, Los Angeles, California 90007.
By Order of the Board of Directors,
Jeffrey Busse
Secretary
August 23, 1996
Los Angeles, California
SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION
WILL BE APPRECIATED.
<PAGE>
YES CLOTHING CO.
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 7, 1996
The undersigned Shareholder of YES Clothing Co. (the "Company") hereby
nominates, constitutes and appoints Irving B. Kroll and Jeffrey Busse, and each
of them, the agent and proxy of the undersigned, each with full power of
substitution, to vote all shares of Common Stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at the Company's offices, 1380 W. Washington Boulevard, Los
Angeles, California 90007, on October 7, 1996, at 10:00 a.m., and at any and all
adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally present thereat, as follows:
1. THE ELECTION OF DIRECTORS. Electing Guy Anthome, Irving B.
Kroll, Maurice Schoenholz and Jeffrey Busse to serve on the Board of Directors
of the Company until the next annual meeting following their election and until
their successors are elected and have qualified.
AUTHORITY GIVEN [_] AUTHORITY WITHHELD [_]
(INSTRUCTION: TO GRANT AUTHORITY TO VOTE FOR ALL OF THE NOMINEES NAMED
ABOVE CHECK THE "AUTHORITY GIVEN" BOX; TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL
NOMINEE CHECK THE "AUTHORITY GIVEN" BOX AND CROSS OUT THE NAME OF THE INDIVIDUAL
ABOVE; TO WITHHOLD AUTHORITY FOR ALL NOMINEES CHECK THE "AUTHORITY WITHHELD"
BOX.)
2. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS. Approving
the selection of Moss - Adams to serve as independent auditors of the Company
for the fiscal year ending March 31, 1997.
FOR [_] AGAINST [_] ABSTAIN [_]
3. APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1989 STOCK OPTION
PLAN INCREASING TO 1,000,000 THE NUMBER OF SHARES THAT CAN BE ISSUED THEREUNDER.
FOR [_] AGAINST [_] ABSTAIN [_]
4. OTHER BUSINESS. To transact such other business as may properly
come before the meeting or any adjournments thereof.
FOR [_] AGAINST [_] ABSTAIN [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON
PROPOSAL 1 AND A VOTE OF "FOR" ON PROPOSALS 2 AND 3. THIS PROXY CONFERS
AUTHORITY TO AND SHALL BE VOTED IN ACCORDANCE WITH SUCH RECOMMENDATIONS OF THE
BOARD OF DIRECTORS UNLESS A CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE
PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS. IN ALL OTHER
MATTERS, IF ANY ARE PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN
ACCORDANCE WITH THE JUDGMENT OF THE PROXYHOLDERS.
PLEASE SIGN AND DATE BELOW
DATED: _________________________
I DO _____ DO NOT _____ EXPECT TO ATTEND THE MEETING.
BY: ____________________________
TITLE:___________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, AND MAY
BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE OR
BY APPEARING AND VOTING IN PERSON AT THE MEETING.
