SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[x] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only
[ ] Definitive proxy statement (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive additional materials
BIG SMITH BRANDS, INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[x] No Fee required.
[ ] 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 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
BIG SMITH BRANDS, INC.
7100 WEST CAMINO REAL
SUITE 402
BOCA RATON, FLORIDA 33433
(407) 367-8283
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INFORMATION STATEMENT
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GENERAL INFORMATION
GENERAL
This Information Statement (the "Information Statement") is furnished
to the holders of Common Stock, $0.01 par value per share (the "Common Stock"),
of Big Smith Brands, Inc. (the "Company") in connection with certain actions
taken by a Written Consent of Stockholders in Lieu of Special Meeting dated
December 2, 1997 (the "Written Consent"). WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY. This Information Statement is being
provided pursuant to the requirements of Rule 14c-2 promulgated under Section 14
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to
inform holders of Common Stock entitled to vote or give an authorization or
consent in regard to the actions authorized by the Written Consent, of the
actions having been taken by the Written Consent.
By executing and delivering the Written Consent to the Company,
stockholders holding no less than a majority of the outstanding shares of the
Company's Common Stock (the "Majority Stockholders") authorized the following
action taken by the Board of Directors of the Company (the "Board") on November
21, 1997: (i) the amendment (the "Charter Amendment") of the Company's Amended
and Restated Certificate of Incorporation (the "Certificate of Incorporation")
to decrease the authorized capital stock of the Company to 7,500,000 shares from
10,000,000 shares; (ii) that each three shares of Common Stock of the Company
presently issued and outstanding be changed into one share of Common Stock so as
to effect a one-for-three reverse stock split of said issued and outstanding
shares; (iii) that each holder of record of certificates representing shares of
Common Stock shall be entitled upon surrender of old certificates representing
shares of Common Stock to receive a new certificate(s) representing one share of
Common Stock for each outstanding three shares of Common Stock held by such
holder; and (iv) that any fractional number of shares due to any holder of
record resulting from such reverse stock split shall be rounded up to the next
whole number.
RECORD DATE
On December 2, 1997 (the "Record Date"), there were 3,995,987 shares of
Common Stock outstanding and entitled to one vote upon each of the matters
approved by the Written Consent. On the Record Date, the Majority Stockholders
owned or had the right to vote 2,002,00 shares of Common Stock constituting
approximately 50.1% of the Company's outstanding Common Stock. All of the shares
of Common Stock which the Majority Stockholders owned or had the right to vote
on the Record Date consented to the actions authorized or taken by the Written
Consent. Only stockholders of record of the Company at the close of business on
the Record Date are entitled to receive this Information Statement. This
Information Statement is being mailed to such stockholders of record on or about
December 2, 1997.
<PAGE>
ITEM 1. INFORMATION REQUIRED BY
ITEMS OF SCHEDULE 14A
1. Date, time and place information:
(a) The Written Consent was executed as of December 2, 1997 and
delivered by the Majority Stockholders to the Company's principal executive
offices at 7100 West Camino Real, Suite 402, Boca Raton, Florida 33433.
6. Voting Securities and Principal Holders Thereof:
(a) As of December 2, 1997, there were 3,995,987 outstanding shares of
Common Stock, each entitled to one vote on the matters put to a vote of
stockholders of the Company.
(b) Holders of Common Stock and entitled to vote were calculated, as of
the Record Date, to determine the number of shares constituting a majority of
the outstanding shares of Common Stock (required to approve the Written
Consent).
(d) The following table sets forth, as of December 2, 1997, the number
of shares of Common Stock (and the percentage of the Company's Common Stock)
beneficially owned by (i) each person known (based solely on Schedules 13D or
13G filed with the Securities and Exchange Commission (the "Commission") to the
Company to be the beneficial owner of more than 5% of the Common Stock, (ii)
each Director of the Company, (iii) the Named Executive (as defined in
"Executive Compensation" below), and (iv) all Directors and Executive Officers
of the Company as a group (based upon information furnished by such persons).
Under the rules of the Commission, a person is deemed to be a beneficial owner
of a security if such person has or shares the power to vote or direct the
voting of such security or the power to dispose of or to direct the disposition
of such security. In general, a person is also deemed to be a beneficial owner
of any securities of which that person has the right to acquire beneficial
ownership within 60 days. Accordingly, more than one person may be deemed to be
a beneficial owner of the same securities.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE (%)
NAME AND ADDRESS BENEFICIALLY OWNED OF COMMON STOCK
- ---------------- ------------------ ---------------
<S> <C> <C>
S. Peter Lebowitz.............................. 1,509,000 37.8%
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Wilora Company Limited (1)..................... 6,316,282 61.6%
Baanestrasse 75
Post Fach 6302, Zng Switzerland
Theresa Lebowitz and Michael S. Nelson,
Esq., as trustees(2)........................... 474,000 11.9%
c/o Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
Glen Freeman(3)................................ 15,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Theodore Listerman(3).......................... 25,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Jack Schultz (3)(4)............................ 17,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Julian Shaps(3)................................ 15,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
All directors and officers as a group (10 1,581,000 39.0%
persons)(1)(5).................................
</TABLE>
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* Indicates beneficial ownership of less than one (1%) percent.
(1) Includes 6,250,295 shares issuable upon conversion of $1,670,000 in
aggregate principal amount of 6% Convertible Debentures ("Debentures")
of the Company assuming conversion as of November 20, 1997. Such
Debentures are convertible into Common Stock of the Company at a
conversion ratio of one share for the lesser of (i) $2.80 or (ii)
67.5% of the Market Price (as defined in the Debentures) of the Common
Stock on the conversion date. The Offshore Securities Subscription
Agreement pursuant to which the Debentures were purchased provides
that Wilora Company Limited ("Wilora") may not, except upon the
maturity of the Debentures, convert the Debentures into a number of
shares such that upon such conversion, the number of shares
beneficially owned by Wilora and its affiliates (excluding those which
may be deemed beneficially owned through the ownership of the
unconverted portion of the Debenture), would exceed 4.9% of the
outstanding shares of Common Stock. Pursuant to SEC rules, the shares
issuable upon such conversion are deemed outstanding solely for
purposes of calculating the Percentage of Common Stock Beneficially
owned by the holder of the Debentures, but are not treated as
outstanding for purposes of determining the Percentage of Common Stock
Beneficially Owned by any other listed Person.
(2) Represents shares held in trust for the benefit of Barbara Lynn Van
Achte, Karen Sue Hart and Wendy Ann Lebowitz, with respect to which
Mrs. Lebowitz and Mr. Nelson, a partner at the law firm of Kramer,
Levin, Naftalis & Frankel, serve as trustees. Under the Trust
Agreement, Mrs. Lebowitz and Mr. Nelson share voting and dispositive
power, subject only to the beneficiaries' right to withdraw the shares
under certain circumstances. Mrs. Lebowitz is the wife, and the three
trust beneficiaries are the daughters, of Mr. Lebowitz.
(3) Includes 15,000 shares issuable upon exercise of options exercisable
within 60 days.
(4) Includes 2,000 shares issuable upon exercise of warrants exercisable
within 60 days.
(5) Includes options and warrants to purchase 62,000 shares exercisable
within 60 days.
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<PAGE>
8. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth compensation earned by or paid to S.
Peter Lebowitz, the Chief Executive Officer of the Company "Named Executive").
The Company awarded or paid such compensation to the Named Executive for
services rendered in all capacities during the applicable fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
================================================================================================================================
Annual Compensation Long Term Compensation
- --------------------------------------------------------------------------------------------------------------------------------
Other Annual
Name and Fiscal Salary Bonus Compensation Awards Options All Other
Principal Position Year ($) ($) ($)(1) (#) Compensation ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
S. Peter Lebowitz-Chief 1996 $300,000 - $9,973 - -
Executive Officer 1995 $250,000 - $8,700 175,000 (2) -
1994 $300,000 - $6,600 50,000 (3) -
================================================================================================================================
</TABLE>
(1) Represents the valuation of certain club membership dues and automobile
lease payments of approximately $9,973, $8,700 and $6,600 for 1996, 1995
and 1994, respectively.
(2) Represents a one-time grant of options in connection with the Company's
initial public offering, the vesting of which was contingent upon the
Company achieving a certain level of net income during the fiscal year
ended December 31, 1995, which level was not achieved.
(3) Represents a one-time grant of options in connection with the Company's
initial public offering, the vesting of which is contingent upon the
Company achieving a certain level of net income during the fiscal years
ended December 31, 1995 and 1996, which levels were not achieved.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company will receive one thousand dollars
plus expenses for each meeting of the board that they attend. On June 1, 1995,
each director was granted an option under the Company's 1994 Stock Incentive
Plan to purchase 15,000 shares of the Company's Common Stock at an exercise
price of $4.00 per share. The directors agreed to defer the award of 10,000
additional options previously promised to them in order to facilitate the grant
of the remaining authorized options to a broad group of employees of the
Company. During 1996, following the authorization of additional options each
director was granted an option to purchase an additional 10,000 shares at an
exercise price of $1.00 per share, which grant had an effective date of June 1,
1995. Each grant vests in four substantially equal parts on each of the first
four anniversaries of the date of the grant. To the extent the options are
unexercised, they expire on the fifth anniversary of the date of the grant.
EMPLOYMENT ARRANGEMENTS
The Company has entered into a three year employment agreement with S.
Peter Lebowitz pursuant to which he has agreed to serve as the Company's
President and Chief Executive Officer through December 31, 1998, at an annual
compensation of $300,000 and an annual bonus of up to $200,000 if the Company
achieves a certain specified levels of net income. Such levels were not achieved
in 1996. The employment agreement with Mr. Lebowitz further provides that if his
employment is terminated by the Company without cause or at any time following a
change of control, or by Mr. Lebowitz within twelve months after a change of
control, the Company shall pay to Mr. Lebowitz salary, bonus and benefits in the
amount and kind then in effect subject to certain
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<PAGE>
adjustments for three years following such termination. The payment of the
salary and bonus shall be made in a lump sum 30 days after the date of such
termination.
In addition, in 1994, Mr. Lebowitz was granted (i) options to purchase
up to 50,000 shares of Common Stock that would have vested had the Company
achieved certain specified levels of net income for fiscal year 1995 and (ii)
options to purchase up to 50,000 shares of Common Stock that would have vested
had the Company achieved certain specified levels of net income for fiscal year
1996. Such levels of income were not achieved. In 1995, Mr. Lebowitz was granted
options to purchase up to 125,000 shares of Common Stock that would have vested
had the Company achieved a certain specified level of net income for fiscal year
1996. Such levels of income were not achieved. All of the options were
exercisable at an exercise price equal to 75% of the market price of the
Company's Common Stock at the time the options would have become exercisable.
19. AMENDMENT OF CHARTER, BY-LAWS OR OTHER DOCUMENTS:
On November 21, 1997, the Board of Directors adopted a resolution
unanimously approving and recommending to the Stockholders for their approval by
written consent, an amendment to the Certificate of Incorporation to provide
therein for the authorization of a total of 7,500,000 shares of capital stock.
The text of the Article Fourth of the Certificate of Incorporation, as restated,
is set forth in Annex A to this Information Statement. The Written Consent
approved such amendment. Immediately upon the effectiveness of the Written
Consent on December 22, 1997, the Company will file a Certificate of Amendment
and Restatement to the Restated Certificate of Incorporation to effect the
Charter Amendment.
The Company's Certificate of Incorporation currently authorizes the
Company to issue up to 10,000,000 shares of Common Stock. The Company, currently
has issued and outstanding 3,995,987 shares of Common Stock and has reserved an
additional 2,040,000 shares of Common Stock for issuance upon exercise of
outstanding warrants of the Company, 500,000 shares of Common Stock for issuance
under the Company's stock option plan and would have to issue 6,250,295 shares
of Common Stock upon a full conversion of the Debentures, asssuming a conversion
based upon the trading price of the Company's Common Stock as of November 20,
1997. After giving effect to the one-for-three reverse stock split, the
aggregate number of shares of Common Stock issued and outstanding or reserved
for the foregoing purposes would be approximately 4,262,094. The Board of
Directors, upon consideration of the capitalization needs of the Company in
light of the one-for-three reverse stock split approved in the Written Consent,
has determined that it is in the best interest of the Company and its
stockholders to save unnecessary franchise taxes by reducing the authorized
capital stock of the Company to 7,500,000 from 10,000,000.
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<PAGE>
20. REVERSE STOCK SPLIT
The Board of Directors, believing it to be in the best interests of the
Company and its stockholders to effect a one-for-three reverse stock split, on
November 21, 1997, unanimously voted to recommend to the stockholders of the
Company such a reverse stock split pursuant to which each three shares of Common
Stock of the Company presently issued and outstanding be changed into one share
of Common Stock; that each holder of record of certificates representing shares
of Common Stock be entitled upon surrender of old certificates representing
shares of Common Stock to receive a new certificate(s) representing one share of
Common Stock for each outstanding three shares of Common Stock held by such
holder; and that any fractional number of shares due to any holder of record
resulting from such reverse stock split shall be rounded up to the next whole
number.
The reverse stock split was approved by the Majority Stockholders in
the Written Consent in an effort to restore the trading price of the Common
Stock to levels that will meet the bid price requirements of the Nasdaq SmallCap
Market ("Nasdaq") for continued listing of the Company's Common Stock on Nasdaq.
Failure to meet the requirements of Nasdaq could result in delisting of the
Company's Common Stock which could have a substantial negative impact on the
Company and its stockholders. The Written Consent approved this proposal to
effect a one-for-three reverse stock split.
By Order of the Board of Directors
/s/ S. Peter Lebowitz
----------------------------------
S. PETER LEBOWITZ
Chairman of the Board
Boca Raton, Florida
December 2, 1997
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