SCHEDULE 14A
(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:
|X| Preliminary proxy statement |_| Confidential, for Use of the
|_| Definitive proxy statement Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BIG SMITH BRANDS, INC.
----------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant) 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:
(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
March 30, 1999
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Big Smith Brands, Inc. (the "Company"), which will be held at the Renaissance
Airport Hotel, St. Louis, Missouri, on Tuesday, April 20, 1999, at 9:00 A.M.,
St. Louis time.
The Notice of Annual Meeting and Proxy Statement covering the formal
business to be conducted at the Annual Meeting follow this letter.
We hope you will attend the Annual Meeting in person. Whether or not you
plan to attend, please complete, sign, date and return the enclosed proxy
promptly in the accompanying reply envelope to assure that your shares are
represented at the meeting.
Sincerely yours,
S. PETER LEBOWITZ
Chairman of the Board
<PAGE>
BIG SMITH BRANDS, INC.
7100 West Camino Real
Suite 402
Boca Raton, Florida 33433
(561) 367-8283
-----------------------------
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
April 20, 1999
-----------------------------
The Annual Meeting of Stockholders of Big Smith Brands, Inc. (the
"Company") will be held at the Renaissance Airport Hotel, St. Louis, Missouri,
at 9:00 A.M., St. Louis time, on Tuesday, April 20, 1999, for the following
purposes:
1. to approve the sale to Walls Industries, Inc., Cleburne, Texas
("Walls") of all assets of the Company relating to the Company's
workwear business, other than real estate and trademarks, and the
license to Walls of the "Big Smith" trademark and certain related
trademarks for use in the manufacture, sale and licensing of workwear
products;
2. to elect five directors, each to serve until their respective
successors have been duly elected and qualified;
3. to ratify the appointment of Daszkal, Bolton & Manela, CPAs,
as the Company's independent public auditors for the Company's fiscal
year ending December 31, 1999; and
4. to transact such other business as may be properly brought
before the meeting and any adjournment or postponement thereof.
The Board of Directors unanimously recommends that you vote FOR the sale
of assets and the licensing of the specified trademarks, FOR the election of all
five nominees as directors and FOR the approval of the appointment of the
independent public auditors.
Stockholders of record at the close of business on March 3, 1999, are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment or
postponement thereof.
Whether or not you plan to attend the Annual Meeting in person, please
complete, sign, date and return the enclosed proxy in the reply envelope
provided which requires no postage if mailed in the United States. Stockholders
attending the Annual Meeting may vote in person even if they have returned a
proxy. By promptly returning your proxy, you will greatly assist us in preparing
for the Annual Meeting.
By Order of the Board of Directors
S. PETER LEBOWITZ
Chairman of the Board
Boca Raton, Florida
March 30, 1999
<PAGE>
BIG SMITH BRANDS, INC.
7100 West Camino Real
Suite 402
Boca Raton, Florida 33433
(561) 367-8283
-----------------------------
PROXY STATEMENT FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 20, 1999
-----------------------------
This Proxy Statement and the enclosed form of proxy are being furnished,
commencing on or about March 30, 1999, in connection with the solicitation of
proxies in the enclosed form by the Board of Directors of Big Smith Brands,
Inc., a Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders ("Stockholders") of the Company (the "Annual Meeting") to be held
at the Renaissance Airport Hotel, St. Louis, Missouri, at 9:00 A.M., St. Louis
time, on Tuesday, April 20, 1999, and at any adjournment or postponement
thereof, for the purposes set forth in the foregoing Notice of Annual Meeting of
Stockholders. The hotel is conveniently located near the St. Louis airport.
The Annual Report of the Company, containing financial statements of the
Company as of December 31, 1998, and for the year then ended, has been delivered
or is included with this proxy statement and the information contained therein
is incorporated by reference herein. The principal executive offices of the
Company are located at 7100 West Camino Real, Suite 402, Boca Raton, Florida
33433.
A list of the Stockholders entitled to vote at the Annual Meeting will
be available for examination by Stockholders during ordinary business hours for
a period of ten days prior to the Annual Meeting at the offices of the Company,
7100 West Camino Real, Suite 402, Boca Raton, Florida 33433. A Stockholder list
will also be available for examination at the Annual Meeting.
If you are unable to attend the Annual Meeting, you may vote by proxy on
any matter to come before that meeting. The enclosed proxy is being solicited by
the Board of Directors. Any proxy given pursuant to such solicitation and
received in time for the Annual Meeting will be voted as specified in such
proxy. If no instructions are given, proxies will be voted (i) FOR the sale to
Walls Industries, Inc., Cleburne, Texas ("Walls") of all assets of the Company
relating to the Company's workwear business, other than real estate and
trademarks, and the license to Walls of the "Big Smith" trademark and certain
related trademarks for use in the manufacture, sale and licensing of workwear
products, (ii) FOR the election of the nominees named below under the caption
"Election of Directors," (iii) FOR the ratification of the appointment of
Daszkal, Bolton & Manela, CPAs ("DB&M") as independent public auditors for the
Company's fiscal year ending December 31, 1999, and (iv) in the discretion of
the proxies named on the proxy card with respect to any other matters properly
brought before the Annual Meeting. Attendance in person at the Annual Meeting
will not of itself revoke a proxy; any Stockholder who does attend the Annual
Meeting, however, may revoke a proxy orally and vote in person. Proxies may be
revoked at any time before they are voted by submitting a properly executed
proxy with a later date or by sending a written notice of revocation to the
Secretary of the Company at the Company's principal executive offices.
This Proxy Statement and the accompanying form of proxy are being mailed
to Stockholders of the Company on or about March 30, 1999.
Following the original mailing of proxy solicitation material, executive
and other employees of the Company and professional proxy solicitors may solicit
proxies by mail, telephone, telegraph and personal interview. Arrangements may
also be made with brokerage houses and other custodians, nominees and
fiduciaries which are record holders of the Company's Common Stock to forward
proxy solicitation material to the beneficial owners of such stock. Although it
has entered into no formal agreements to do so, the Company
<PAGE>
may reimburse such record holders for their reasonable expenses incurred in such
forwarding. The cost of soliciting proxies in the enclosed form will be borne by
the Company.
The Company's Board of Directors has unanimously voted to recommend (i)
the sale to Walls of all assets of the Company relating to the Company's
workwear business, other than real estate and trademarks, and the license to
Walls of the "Big Smith" trademark and certain related trademarks for use in the
manufacture, sale and licensing of workwear products, (ii) the nominees for
election to the Board of Directors listed below under the caption "Election of
Directors" and (iii) the appointment of DB&M as the independent public auditors
for the Company for the fiscal year ending December 31, 1999.
The holders of a majority of the outstanding shares entitled to vote,
present in person or represented by proxy, will constitute a quorum for the
transaction of business. Shares represented by proxies that are marked "abstain"
will be counted as shares present for purposes of determining the presence of a
quorum on all matters. Brokers holding shares for beneficial owners in "street
name" must vote those shares according to specific instructions they receive
from the owners of such shares. If instructions are not received, brokers may
vote the shares, in their discretion, depending on the type of proposals
involved. Broker non-votes result when brokers are precluded from exercising
their discretion on certain types of proposals. Brokers have discretionary
authority to vote on the sale and license to Walls, the election of directors
and the ratification of the appointment of DB&M. Shares that are voted by
brokers on some but not all of the matters will be treated as shares present for
purposes of determining the presence of a quorum on all matters, but will not be
treated as shares entitled to vote at the Annual Meeting on those matters as to
which authority to vote is withheld from the broker.
Approval of the Board of Directors' recommendation of the sale and
license to Walls requires the affirmative vote of a majority of the shares of
the Company's Common Stock outstanding as of the Record Date. Accordingly,
abstentions, Broker non-votes and unvoted shares will all have the effect of
negative votes. The election of each nominee for director requires a plurality
of votes cast. Accordingly, abstentions and Broker non-votes will not affect the
outcome of the election. The affirmative vote of the holders of a majority of
the votes cast is required for the approval of the appointment of the
independent public auditors. On this matter abstentions will have the same
effect as a negative vote. Because Broker non-votes will not be treated as
shares that are present and entitled to vote with respect to a specific
proposal, Broker non-votes will have no effect on the outcome of this matter.
As of the Record Date, S. Peter Lebowitz and a trust holding shares for
the benefit of Mr. Lebowitz's children (the "Trust") held an aggregate of
1,856,000 shares of Common Stock, representing 25.2% of the Company's issued and
outstanding Common Stock. Each of Mr. Lebowitz and the Trust has agreed to vote
in favor of the sale and license to Walls discussed below.
The Company will appoint an inspector to act at the Annual Meeting who
will: (1) ascertain the number of shares outstanding; (2) determine the shares
represented at the Annual Meeting and the validity of the proxies and ballots;
(3) count all votes and ballots; (4) determine and retain for a reasonable
period a record of the disposition of any challenges made to any determinations
by such inspector; and (5) certify his determination of the number of shares
represented at the Annual Meeting and his count of all votes and ballots.
Only Stockholders of record at the close of business on March 3, 1999
(the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting and any adjournment or postponement thereof. As of the close of business
on March 3, 1999, there were 7,354,683 shares of the Company's common stock, par
value $.01 per share (the "Common Stock"), outstanding. Each share of Common
Stock entitles the record holder thereof to one vote on all matters properly
brought before the Annual Meeting and any adjournment or postponement thereof,
with no cumulative voting.
-2-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 3, 1999, the number of
shares of Common Stock (and the percentage of Common Stock) beneficially owned
by (i) each person known (based solely on Schedules 13D or 13G filed) to the
Company to be the beneficial owner of more than 5% of the Common Stock, (ii)
each director and nominee to the Board of Directors of the Company, (iii) the
Named Executive (as hereinafter defined) 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) 1,659,000 21.8%
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Theresa Lebowitz and Michael S. Nelson,
Esq., as trustees (2) 447,000 6.1%
c/o Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Glen Freeman (3) 20,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Theodore Listerman (3) 20,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Jack Schultz (3) 20,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Julian Shaps (3) 20,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
Howard H. Ward, Esq. (4) 10,000 *
c/o Big Smith Brands, Inc.
7100 West Camino Real, Suite 402
Boca Raton, Florida 33433
All directors and officers as a group (6
persons) (5) 1,749,000 22.7%
</TABLE>
-3-
<PAGE>
- -----------------
* Indicates beneficial ownership of less than one (1%) percent.
(1) Includes 250,000 shares issuable upon exercise of options exercisable
within 60 days.
(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 LLP, the Company's outside corporate counsel, 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 20,000 shares issuable upon exercise of options exercisable
within 60 days.
(4) Includes 10,000 shares issuable upon exercise of options exercisable
within 60 days.
(5) Includes options and warrants to purchase 340,000 shares exercisable
within 60 days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
(the "Commission") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Reporting
persons are required by Commission regulations to furnish the Company with
copies of all forms they file pursuant to Section 16(a).
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, the following persons failed to file, on a
timely basis, reports required by Section 16(a) of the Exchange Act, for the
number of transactions indicated, during fiscal year 1998.
Messrs. Freeman, Listerman, Schultz and Shaps each failed to file on a
timely basis a Statement of Change of Beneficial Ownership of Securities on Form
4 ("Form 4") with regard to options to purchase 10,000 shares of Common Stock
granted to each of them on February 11, 1998. See "--Compensation of Directors."
Howard H. Ward, Esq. failed to file on a timely basis an Initial Statement of
Beneficial Ownership of Securities on Form 3 in connection with his appointment
as General Counsel to the Company as of August 19, 1998.
Mr. S. Peter Lebowitz failed to file on a timely basis a Statement of
Change of Beneficial Ownership of Securities on Form 4 with respect to options
to purchase 1,000,000 shares of Common Stock granted to him on February 11,
1998.
To the Company's knowledge, all reporting persons discussed immediately
above have now filed the required reporting forms and are currently in
compliance with Section 16(d) of the Exchange Act.
-4-
<PAGE>
PROPOSAL 1 - SALE AND LICENSE TO WALLS
General. On February 2, 1999, the Company's Board of Directors
unanimously voted in favor of the sale to Walls of all assets of the Company
relating to the Company's workwear business, other than real estate and
trademarks, and the license to Walls of the "Big Smith" trademark and certain
related trademarks for use in the manufacture, sale and licensing of workwear
products and unanimously voted to recommend to stockholders of the Company that
they vote in favor of such sale and license.
Walls Industries, Inc., Cleburne, Texas is a Delaware corporation
located in Cleburne, Texas. Walls is primarily engaged in manufacturing and
selling various apparel products. The principal executive offices of Walls are
located at 1905 North Main Street, Cleburne, Texas 76033, telephone number (800)
433-1765.
Asset Purchase Agreement. The Company has entered into an Asset Purchase
Agreement with Walls, pursuant to which, if the stockholders approve the sale
and license to Walls, the Company will sell to Walls its entire inventory of
workwear products and raw materials and its machinery and equipment used in the
manufacture of workwear products (excluding only certain computer equipment).
The Company will also lease to Walls its facilities in Carthage, Missouri for a
minimum of twelve months and its retained computer equipment for a minimum of
three months. Walls will assume responsibility for all of the Company's leases
for properties used in the manufacture and distribution of workwear products
including the lease for the warehouse and manufacturing facilities in Miami,
Oklahoma. Walls will hire substantially all of the employees of the Company
currently involved in the workwear business. The Company will retain
substantially all of the assets currently used in its sportswear business.
In addition, the Company will place all of the trademarks it owns in a
subsidiary, the stock of which will be owned 60% by the Company and 40% by
Walls. Walls will have the right to have one representative on the Board of
Directors of this subsidiary, Big Smith Holdings, Inc. ("Holdings"), and the
Company will have the right to choose all other directors. The Certificate of
Incorporation of Holdings will restrict its activities solely to owning and
licensing the "Big Smith" trademarks.
Holdings will grant to Walls a royalty-free, perpetual license to use
the "Big Smith" trademark and certain related tradenames in connection with the
manufacture, sale and licensing of workwear products. Holdings will grant to the
Company a royalty-free, perpetual license to use the "Big Smith" trademark and
certain related tradenames for sportswear and, subject to certain approval
rights of Walls, for all other purposes. Any other licenses granted by Holdings
will require the unanimous vote of its Board of Directors.
In consideration of the sale and license, Walls will pay to the Company
for the assets purchased a price equal to the appraised value (on a liquidated
basis) of the machinery and equipment sold plus the book value of the Company's
good, saleable and useable inventory. The Company currently estimates the
purchase price based on this formula to be approximately $3,135,000. Walls will
pay the Company $2,000 per month for a minimum of one year for its lease of the
Company's Carthage, Missouri facilities and $10,000 per month for a minimum of
three months for its lease of the Company's retained computer equipment.
In addition, in consideration for the Company entering a ten-year
non-compete agreement, Walls will pay the Company $400,000 at closing, $400,000
six months after closing, $700,000 at the end of each of the second and third
years after the sale and license has closed, $600,000 at the end of each of the
next two years, and $400,000 at the end of each of the next three years.
Payments under the non-compete agreement together with the consideration to be
paid for machinery, equipment and inventory and rental payments for the
Carthage, Missouri facility and the computer equipment will result in total
payments to the Company estimated at approximately $7,780,000.
Purpose of Transaction. The Board of Directors has recommended this sale
and license to the stockholders for several reasons. First, the Board of
Directors recognizes that increased global competition
-5-
<PAGE>
coupled with relatively high domestic labor costs have led to decreased margins
and increased offshore production in the workwear industry.
Additionally, a disproportionate amount of the Company's resources have
been directed towards overhead associated with its manufacturing plant,
inventory and overhead related to its low margin workwear operations. This in
turn has resulted in on-going high interest expense reflecting the full
draw-down of the Company's credit facility, the Company's on-going liquidity and
working capital deficits and difficulties expanding inventory and thus, sales.
The Board of Directors believes that without a much greater economy of
scale than the Company currently has the resources to achieve, it is unlikely to
achieve substantial profitability while continuing to maintain the workwear
business with the Company's traditional focus on domestic manufacture.
The proposed transaction will free the Company from its low-potential
workwear focus and the related overhead and interest costs enabling it to focus
on the growth of its higher-margin sportswear business. The Company will also be
able to pursue and support the establishment of a global licensing program
involving various additional products including, without limitation, ladieswear,
childrenswear, sweaters, jackets, sleepwear, belts, shoes and other leather
products, sunglasses and socks.
The Company expects to reduce its outstanding line of credit to
approximately $1,968,000 upon closing of the transaction, reducing interest
costs. The divestiture of the Company's manufacturing operations will also
free-up considerable management resources previously devoted to managing the
Company's manufacturing base and to managing the Company's relationship and
credit status with its raw materials providers.
Pro Forma Financial Information
The following pro forma financial information is based on the audited
Financial Statements of the Company and the related Notes thereto appearing in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1998
that has been delivered or is included with this Proxy Statement. The pro forma
financial information is presented to assist stockholders in analyzing the pro
forma impact of the sale and license to Walls on the Company's Balance Sheet and
Statement of Operations; stockholders should not assume, however, that the
following pro forma information reflects what the Company's financial condition
or results of operations actually would have been if the sale and license to
Walls had occurred on December 31, 1998 (Balance Sheet) or January 1, 1998
(Statement of Operations).
-6-
<PAGE>
BIG SMITH BRANDS, INC.
Pro Forma Balance Sheet
December 31, 1998
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS After
- -------------- -----
December 31, 1998 Sale of Assets Other Non-Compete Transaction Note #
----------------- -------------- ----- ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Cash $ 112,917 $ $ 32,000 $ 400,000 $ 544,917 1,3a & 3c
Temporary Investments 4,799 4,799
Accounts Receivable, less allowance 2,327,240 2,327,240
for doubtful accounts of $58,210
Due from Seller - Miami Security 4,060 4,060 3c
Deposits
A/R Non-Compete 400,000 400,000 1
A/R Rental Income 22,000 22,000 3a & 3b
Inventories 3,340,741 (2,809,357) 531,384 2a
Prepaid Expenses 122,802 122,802
------------- --------------- ---------- -------- ----------
Total current assets 5,908,499 (2,809,357) 58,060 800,000 3,957,202
------------- --------------- ---------- -------- ----------
PROPERTY AND EQUIPMENT, At Cost
Land 20,000 20,000
Buildings 600,317 (11,000) 589,317 2b
Equipment 1,936,213 (1,462,030) 474,183 2b
Vehicles 62,985 (62,985) 0 2b
------------- --------------- ---------- -------- ----------
2,619,515 (1,536,015) 1,083,500
Less accumulated depreciation (1,607,886) (1,214,717) (393,169) 2b
------------- --------------- ---------- -------- ----------
Net property and equipment 1,011,629 (321,298) 690,331
------------- --------------- ---------- -------- ----------
OTHER ASSETS
Certificate of Deposit 200,000 200,000
Security Deposits 42,280 (4,970) 37,310 3c, 4
Deferred finance charges, less 527,285 527,285
accumulated amortization of $160,522
Trademark, less accumulated 398,359 398,359
------------- --------------- ---------- -------- ----------
amortization of $117,501
Total other assets 1,167,924 (4,970) 1,162,954
------------- --------------- ---------- -------- ----------
Total Assets $ 8,088,052 $(3,130,655) $ 53,090 $800,000 $5,810,487
============= =============== ========== ======== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Revolving line-of-credit $ 3,911,316 $ (1,885,614) $ $ $2,025,702 2c
Current maturities of long term debt 379,176 (116,496) 262,680 2c
Checks outstanding in excess of bank 181,596 181,596
balance
Accrued restructuring/litigation 130,291 130,291
Deferred income 42,000 42,000 1, 3a & 3b
Accrued royalties 664,587 664,587
Account Payable 2,562,052 (667,007) 10,020 1,905,065 2c,3a
Accrued Expenses 357,202 357,202
Note payable-stockholder 250,000 (250,000) 0
------------- --------------- ---------- -------- ----------
Total current liabilities 8,436,220 (2,919,117) 52,020 5,569,123
------------- --------------- ---------- -------- ----------
LONG-TERM DEBT 755,245 (218,615) - 536,630
------------- --------------- ---------- -------- ----------
STOCKHOLDERS' DEFICIT
Common stock, $.01 par value; authorized
10,000,000 shares: issued and 73,547 73,547
outstanding 7,354,665
Additional paid-in capital 9,130,767 9,130,767
Accumulated Deficit (10,307,727) 7,077 1,070 800,000 (9,499,580)
------------- --------------- ---------- -------- ----------
Total stockholders' deficit (1,103,413) 7,077 1,070 800,000 (295,266)
------------- --------------- ---------- -------- ----------
Total liabilities and $ 8,088,052 $ (3,130,655) $ 53,090 $800,000 $5,810,487
stockholders' deficit ============= =============== ========== ======== ==========
</TABLE>
7
<PAGE>
BIG SMITH BRANDS, INC.
PRO FORMA STATEMENT OF OPERATIONS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Sale of After
December 31, 1998 Adjustments Assets Other Non-Compete Transaction Note #
----------------- ----------- ------ ----- ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ 13,210,107 $ (11,424,296) $ $ $ $1,785,811
Cost of Goods Sold 9,989,048 (8,976,467) 1,012,581
------------- --------------- ---------- -------- -------- ----------
Gross Profit 3,221,059 (2,447,829) 0 0 0 773,230
------------- --------------- ---------- -------- -------- ----------
Operating Expenses
Selling 1,673,469 (708,786) 964,683 4
General & Administrative 1,634,869 (960,847) 674,022 3a
Bad debts (7,652) (7,652)
------------- --------------- ---------- -------- -------- ----------
Total operating expenses 3,300,686 (1,669,633) 0 0 0 1,631,053
------------- --------------- ---------- -------- ------- ----------
Gain/(Loss) from operations (79,627) (778,196) 0 0 0 (857,823)
------------- --------------- ---------- -------- -------- ----------
Other Income (Expenses)
Royalty Income 50,000 50,000
Interest income 261 261
Interest expense (593,996) 473,996 (120,000)
Non-compete income 800,000 800,000 1
Rental Income 54,000 54,000 3a & 3b
Gain/(Loss) sale of assets 7,077 7,077 2b
Amortization of trademarks and loan
fees (124,963) (124,963)
Amortization of debenture discount (606,204) 606,204 -
Foreign currency transaction gain
(loss) (596) (596)
Loss on sale of equipment (19,363) 19,363 -
Other income (3,942) 3,942
------------- --------------- ---------- -------- -------- ----------
(1,298,803) 1,103,505 7,077 54,000 800,000 665,779
------------- --------------- ---------- -------- -------- ----------
Gain/(Loss) before Income Taxes (1,378,430) 325,309 7,077 54,000 800,000 (192,044)
Provision for Income Taxes - - - - - -
------------- --------------- ---------- -------- -------- ----------
Net Gain/(Loss) $ (1,378,430) $ 325,309 $7,077 $ 54,000 $800,000 $ (192,044)
============= =============== ========== ======== ======== ==========
Net Gain/(Loss) per share $ (0.21)
=============
(0.03)
==========
Weighted Average
Common shares outstanding 6,530,366 6,530,366
============= ==========
</TABLE>
8
<PAGE>
Big Smith Brands, Inc.
Notes To Pro Forma Financial Statements
December 31, 1998
1. Accounting treatment for the transaction:
The various elements of the transaction were recorded in their entirety
as though the transaction had been consummated as of December 31, 1998 (Balance
Sheet) and January 1, 1998 (Statement of Operations). In most instances the
various elements of the transaction were recorded on a cash basis. At December
31, 1998, approximately $3,137,732 would have been due upon the closing of the
transaction (the "Closing") for the workwear inventory and fixed assets. The
payments under the non-compete agreement extend over a period of eight (8)
years, with $400,000 due upon Closing and an additional $400,000 due six (6)
months thereafter. Walls Industries, Inc., Cleburne, Texas ("Walls") will rent
certain retained computer equipment at $10,000 per month for a minimum of three
(3) months. Walls will also rent the Company's facilities in Carthage, Missouri
for $2,000 per month for a minimum of twelve (12) months. The first month's rent
for the Carthage, Missouri facilities and three (3) months computer rental
payments aggregating $32,000 are due at Closing. The assumption of the leases
for the Miami, Oklahoma facilities will effect the return of the $4,060 security
deposits relating thereto. All expenses related to the transaction were
recorded. At December 31, 1998, the total cash due at Closing would have been
$3,573,379.
The consummation of the transaction will affect the outstanding
revolving line-of-credit and principal balances with NationsCredit Commercial
Fund ("NationsCredit"). As a result of the transaction, the revolving
line-of-credit and the term loan will be reduced to $2,025,702 and $552,666
respectively, leaving a total balance due NationsCredit of $2,578,368. This
transaction will effect a reduction of the Company's monthly interest and loan
payments of approximately $15,000.
The actual working capital deficit for the year ended December 31, 1998
was $2.53 million. If the transaction had been consummated as of December 31,
1998, the working capital deficit would have been $1.61 million.
2. The federal income tax consequences of the transaction:
Non-compete income $800,000
Rental income 54,000
Related expenses (30,060)
Security deposits (910)
Gain on sale of assets 7,077
----------
Income before income taxes 830,107
Provision for income taxes 285,000
Benefit from NOL carryforward (285,000)
Net income tax expense 0
---------------
Net Income $830,107
========
The Company currently has net operating loss carryforwards of $3,825,509
which should be sufficient to offset all income received under the non-compete
agreement.
3. Notes to transaction recorded:
1. The Company will grant to Walls a royalty-free, perpetual license
to use the "Big Smith" trademark and certain related tradenames
in connection with the manufacture, sale and licensing of
workwear products. In consideration for the Company entering a
ten-year non-compete agreement, Walls will pay the Company a
total of $4,600,000, as follows:
-9-
<PAGE>
Year 1 $800,000
Year 2 $700,000
Year 3 $700,000
Year 4 $600,000
Year 5 $600,000
Year 6 $400,000
Year 7 $400,000
Year 8 $400,000
Year one (1) payment is $400,000 at Closing and the remaining
$400,000 is due and payable six (6) months thereafter. The
subsequent year payments will be due and payable on the
anniversary of the Closing.
2. Sale of Assets:
a. Workwear:
Work in process $ 358,784
Piece goods 353,792
Trim 303,121
Finished Goods 1,793,660
-----------
Total $2,809,357
===========
The above figures are based on Company records as of December 31,
1998. The inventory has been financed by NationsCredit at an
advance rate of sixty percent (60%). At December 31, 1998, the
payment due to NationsCredit on the sale of the inventory would
have been $1,885,614. The Company has further agreed with
NationsCredit to reduce the revolving line-of-credit by (1)
$1,665,614 and (2) an additional $200,000 in exchange for the
return of the pledged certificate of deposit held as additional
collateral. These payments will reduce the Company's revolving
line-of-credit with NationsCredit to $2,025,702 and also will
reduce the Company's interest costs.
b. Machinery and equipment:
Factory Equipment $1,127,371
Furniture & Fixtures 345,659
Trucks 62,985
-------------
Subtotal $1,536,015
Less depreciation $1,214,717
-------------
Total $321,298
=============
Walls will pay to the Company for the assets purchased a price
that includes the appraised value (on a liquidated basis) of the
machinery and equipment sold which, at December 31, 1998, would
have been $328,375. At December 31, 1998, the net gain on the
sale of the machinery and equipment would have been $7,077.
The Company's obligation at March 17, 1999 to NationsCredit on
the term loan portion of the credit facility against the
machinery and equipment is $439,040, with a remaining loan
availability of $109,760. The original principal amount of the
loan was based on the forced liquidation value of machinery and
equipment at December 10, 1997 of $686,000, with an advance of
eighty percent (80%) and repayment over five (5) years. The
Company has been repaying the loan at the average rate of $9,146
per month. At December 31, 1998, the pro forma repayment to
NationsCredit of $328,375, would have reduced the collateral
balance to $357,625 equaling a loan balance of $247,865 and
remaining loan availability of $109,760. This
-10-
<PAGE>
would reduce the monthly payment on the term loan to $5,960 per
month over the remaining four (4) year term. The Company
currently has two (2) other long-term obligations to
NationsCredit on the term loan portion of the credit facility
against (1) the Carthage, Missouri real property of $124,800 with
a monthly payment of $2,600 and (2) the Company's trademarks of
$180,000 with a monthly payment of $6,667.
c. On a pro forma basis as of December 31, 1998, the cash
received for the sale of the Inventory and Machinery and
Equipment would have been $3,137,732. The distribution and
application of the cash received would have been as
follows:
Revolving line-of-credit $1,885,614
Machine & Equipment loan 328,375
S. Peter Lebowitz loan 250,000
Accounts Payable 667,007
Other Accrued expenses 6,736
--------------
Total Distribution $3,137,732
==============
The first funds received pursuant to the non-compete
agreement and the rental income will be applied to working
capital. All accounts receivable, $2,340,817 at March 17,
1999, are security for the credit facility with
NationsCredit, and are expected to generate additional
working capital availability of approximately $351,123.
3. Rental Income and Miami Security Deposit:
a. Computer Rental:
Walls has agreed to rent the AS400 computer and RLM
program for a period of at least three (3) months at
$10,000 per month. The Company expends $10,020 on the
lease and service contract resulting in a loss of $20 per
month.
b. Building occupancy:
Walls has agreed to rent all of the Company's real
property located in Carthage, Missouri at a monthly rental
of $2,000 for at least twelve (12) months. This monthly
payment will be used to offset certain other costs related
to the ownership of this real property.
c. Miami, Oklahoma Security Deposits:
Walls has agreed to assume both of the leases covering the
Miami, Oklahoma facilities. Accordingly, all deposits
relating to these facilities will be refunded to the
Company.
4. Outlet and Retail Stores:
The Company will retain ownership of the outlet and retail stores
and the leaseholds on the leased properties related to these
stores. The security deposits on the Monett, Missouri and the
Miami, Oklahoma outlet stores aggregating $910 will be applied to
last month's rents. The three workwear outlet stores will be
closed shortly after the Closing. The Miami, Florida retail store
will remain open for business.
-11-
<PAGE>
Federal Income Tax Consequences. The Company estimates that the total
gain from the transaction for the current taxable year will be entirely offset
by net operating loss carryforwards of the Company carried over from previous
tax years. The Company also expects income realized from the receipt of payments
pursuant to the non-compete agreement over the eight-year period will also be
offset in its entirety by net operating loss carryforwards. There will be no
federal income tax consequences to the Company's stockholders.
Vote Required for Sale and License to Walls
The sale and license to Walls requires the affirmative vote of a
majority of the shares of Common Stock of the Company outstanding and entitled
to vote thereon.
The Board of Directors recommends a vote FOR the sale and license to
Walls.
-12-
<PAGE>
PROPOSAL 2 - ELECTION OF DIRECTORS
Nominees for Election
The Board of Directors proposes the election of a Board of five
directors for the upcoming year and until their respective successors are duly
elected and qualified. All of the nominees set forth below are currently members
of the Board of Directors. Unless instructed otherwise, the enclosed proxy will
be voted FOR the election of the nominees named below. Voting is not cumulative.
While management has no reason to believe that any of the nominees will not be
available as a candidate, should such a situation arise, proxies may be voted
for the election of such other person as a director as the holders of the
proxies may, in their discretion, determine.
The following sets forth certain information with respect to each of the
five nominees to the Board of Directors as well as to the remaining executive
officers of the Company:
<TABLE>
<CAPTION>
Year First Elected
Name Age Director Office
- ---- --- -------- ------
<S> <C> <C> <C>
Nominees to the Board
S. Peter Lebowitz 67 1985 Chief Executive Officer,
President and Director
Glen Freeman 69 1994 Director
Theodore Listerman 75 1995 Director
Jack Schultz 62 1994 Director
Julian Shaps 73 1994 Director
Other Executive Officers and
Significant Employees
Susan A. Leonhardt 55 N/A Director - Accounting/
Administration
Howard H. Ward 65 N/A General Counsel
Howard Kaplan 50 N/A Secretary
================================================================================
</TABLE>
Nominees to the Board
S. Peter Lebowitz has served as Chief Executive Officer and President of
the Company since 1980. Mr. Lebowitz has been employed full time in the men's
apparel industry for over 40 years beginning in 1954 when he joined Hochschild,
Kohn & Co., Baltimore, Maryland. Thereafter, he served as a salesman in the
Menswear Divisions at The Van Heusen Company and as Vice-President of Big Yank
Corporation and Anvil Brands, Inc. From 1971 to 1979, he was Chairman and Chief
Executive Officer of Smith Brothers Manufacturing Company, Carthage, Missouri,
then the corporate owner of the Big Smith label. In 1980, he founded the
Company, and in 1985, the Company acquired certain assets of Smith Brothers
Manufacturing Company, including the ownership of the Big Smith label.
-13-
<PAGE>
Glen Freeman was elected a director of the Company in September 1994.
Mr. Freeman served as General Manager of the Company after its acquisition of
certain assets of Smith Brothers Manufacturing Company in 1985 until 1994. Mr.
Freeman served as Vice-President of Merchandising of Smith Brothers
Manufacturing Company from 1969, when it acquired Continental Manufacturing
Company, to 1985. From 1945 to 1969, Mr. Freeman was employed by Continental
Manufacturing Company. Mr. Freeman has been employed in the workwear industry
for 50 years.
Theodore L. Listerman was elected a director of the Company in January
1995. Mr. Listerman was involved in various aspects of the apparel business for
approximately thirty years. Mr. Listerman served in numerous senior management
positions at a number of major manufacturers and marketers of men's apparel
products. At present Mr. Listerman is a doctoral candidate at the University of
Missouri.
Jack Schultz was elected a director of the Company in February 1994.
Since 1993, Mr. Schultz has served as an active consultant to the retail
industry dealing with assignments that cover a broad range of issues and
entities involving virtually all major segments of the retail industry. Prior to
his full time entry into the consulting business, Mr. Schultz served from 1991
to 1993 as the President of the National Retail Federation, a leading retail
industry trade association.
Julian Shaps was elected a director of the Company in February 1994. Mr.
Shaps retired from full time participation in business in October 1990 following
a career that spanned forty years in the sales and merchandising segment of the
apparel industry. Mr. Shaps' previous positions include twenty-five years in
various senior management positions at Salant, Inc., and approximately fifteen
years as Vice President of Sales and Merchandising at M. Fine & Sons, Inc.
Executive Officers and Significant Employees
Susan A. Leonhardt joined the Company in July 1998 as Director of
Accounting and Administration. She is responsible for all financial reporting,
accounting, internal auditing and related administrative functions. Ms.
Leonhardt, a Certified Public Accountant, received a Bachelor's degree in
Business Administration from Ohio State University of Columbus, Ohio in 1966 and
a Master's degree in Accounting from the University of California, Los Angeles
in 1972. Ms. Leonhardt has held increasingly responsible financial,
administrative, accounting and management positions in a variety of business
environments. From August 1994 until October 1997, Ms. Leonhardt served as the
Controller of InnoPet Brands, Inc. From October 1991 until May 1994, Ms.
Leonhardt served as the Controller of Noon & Pratt.
Howard H. Ward has served the Company as a business and financial
consultant since 1993. He was appointed General Counsel by the Board of
Directors in August 1998. Mr. Ward received a Bachelor's degree in History and
English from Upsala College of East Orange, New Jersey in 1955 and a J.D. degree
from the University of Pennsylvania Law School of Philadelphia, Pennsylvania in
1958. For the past five years, Mr. Ward has been a private business and
financial consultant for various small and medium size businesses. Mr. Ward is
not currently and has never been an employee of the Company.
Howard Kaplan was elected Secretary of the Company in August 1994. Since
1991, Mr. Kaplan has served as President of Fabric Resources Corporation, a
denim jobber, and from 1988 to 1991, he served as Purchasing Agent for the
Company. Mr. Kaplan is not currently an employee of the Company.
All directors hold office until the next annual meeting of the
stockholders of the Company and until their successors have been duly elected
and qualified, or until their earlier death, resignation or removal. The
Company's outside directors devote such time as is necessary and customary to
attend meetings of the Board of Directors and committees of the Board of
Directors and otherwise to perform their duties as directors.
The Company's officers are elected annually by, and serve at the
pleasure of, the Board of Directors, subject to the terms of any employment
agreements. Mr. Lebowitz has an employment agreement with the
-14-
<PAGE>
Company. See "Executive Compensation-Employment Arrangements." No familial
relationships exist between any directors or officers of the Company.
Committees
The Company's Board of Directors has an Internal Audit Committee and an
Executive/Compensation Committee. Messrs. Glen Freeman and Theodore Listerman
serve on the Internal Audit Committee and Messrs. Theodore Listerman, Jack
Schultz and Julian Shaps serve on the Executive/Compensation Committee. The
Internal Audit Committee is the principal financial organ to review the results
of the annual audit. The Internal Audit Committee also reviews the scope of the
annual audit and other services before they are undertaken by the Company's
auditors and reviews the adequacy and effectiveness of the Company's internal
accounting controls. The Executive/Compensation Committee administers the
Company's 1994 Stock Incentive Plan, as amended (the "1994 Plan") and makes
recommendations to the full Board concerning compensation, including incentive
arrangements, for the Company's officers and employees.
Meetings of the Board of Directors and its Committees
During the fiscal year ended December 31, 1998, there were five meetings
of the Board of Directors of the Company, two meetings of the Audit Committee,
and three meetings of the Executive/Compensation Committee. No director attended
fewer than 75% of the aggregate of (1) the total number of meetings held by all
committees of the Board on which he served (during the periods that he served)
and (2) the number of meetings of the Board of Directors.
Compensation of Directors
Non-employee directors of the Company receive one thousand dollars plus
expenses for each meeting of the Board of Directors that they attend and,
pursuant to the Company's 1994 Stock Incentive Plan (the "1994 Plan"), are
automatically granted 10,000 options annually upon election at the Annual
Meeting. On June 12, 1997, each non-employee director received an option to
purchase 20,000 shares of the Company's Common Stock at an exercise price of
$0.42. On February 11, 1998, each non-employee director was granted an option to
purchase 10,000 shares of the Company's Common Stock at an exercise price of
$0.53. Each grant under the 1994 Plan 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.
-15-
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation
for services in all capacities for the fiscal years ended December 31, 1998,
December 31, 1997 and December 31, 1996, of the Chief Executive Officer of the
Company, who is the only executive officer at the Company who earned over
$100,000 (the "Named Executive") for the fiscal year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
======================================================================================================
Annual Compensation Long Term Compensation
- ------------------------------------------------------------------------------------------------------
Other Annual Awards All Other
Name and Fiscal Salary Bonus Compensation Options Compensation
Principal Position Year ($) ($) ($) (1) (#) ($)
- ------------------------------------------------------------------------------------------------------
S. Peter Lebowitz-Chief 1998 $300,000 - $ 11,379 1,000,000 -
Executive Officer 1997 $300,000 - $ 10,996 - -
1996 $300,000 - $ 9,973 - -
======================================================================================================
</TABLE>
(1) Represents the value of certain club membership dues and
automobile lease payments.
Employment Arrangements
S. Peter Lebowitz is employed as the Company's President and Chief
Executive Officer under an employment agreement, expiring on December 31, 2003.
Pursuant to the employment agreement, Mr. Lebowitz receives annual compensation
of $300,000 and an annual bonus of up to $200,000 if the Company achieves a
certain specified level of net income, which level has not been achieved as of
yet during the term of the employment agreement. The employment agreement with
Mr. Lebowitz further provides that if his employment were 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 will pay to
Mr. Lebowitz three years' salary, bonus and benefits in the amount and kind then
in effect, subject to certain adjustments, in a lump sum 30 days after such
termination.
On February 11, 1998, in connection with his entry into the employment
agreement, Mr. Lebowitz was granted options for the purchase of 1,000,000 shares
of Common Stock pursuant to the terms and conditions of the Company's 1994 Stock
Incentive Plan, as amended (the "1994 Plan"). The options are exercisable at
$0.53 per share, the highest ask price on the last date on which trading took
place prior to the date of grant, and vest in equal annual installments on the
first four anniversaries of the date of grant.
Vote Required for Election of Directors
The election of each nominee for director requires a plurality of the
votes cast. Accordingly, abstentions and Broker non-votes will not affect the
outcome of the Election. Proxies solicited by the Board of Directors will be
voted for each of the nominees listed above, unless stockholders specify
otherwise.
The Board of Directors unanimously recommends a vote FOR the election of
each of the nominees listed above.
-16-
<PAGE>
PROPOSAL 3 - APPOINTMENT OF INDEPENDENT PUBLIC AUDITORS
The firm of Daszkal, Bolton & Manela, CPAs ("DB&M"), independent
certified public auditors, has audited the Company's financial statements for
the fiscal years ended December 31, 1997 and December 31, 1998. It is expected
that a representative of DB&M will be present at the Annual Meeting with the
opportunity to make a statement if he desires to do so, and will be available to
respond to appropriate questions.
On January 16, 1998, the Company accepted the resignation of Baird,
Kurtz & Dobson ("BK&D") as its independent auditors. The decision to accept the
resignation of BK&D was approved by the Company's Board of Directors. BK&D's
reports on the financial statements for the prior two years contained no
qualification, adverse or disclaimer of opinion. Their report dated February 26,
1997, however, included a paragraph reflecting substantial doubt about the
Company's ability to continue as a going concern. Through the date of the change
in accountants, there were no disagreements with BK&D on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
such accountants, would have caused them to make reference to the subject matter
of the disagreements in connection with their reports.
Vote Required for Ratification of DB&M
Ratification of the appointment of DB&M requires the affirmative vote of
a majority of the shares of Common Stock present at the Annual Meeting and
entitled to vote thereon.
The Board of Directors recommends a vote FOR ratification of the
appointment of DB&M.
STOCKHOLDER PROPOSALS
The deadline for submitting stockholder proposals for inclusion in the
Company's proxy statement and form of proxy for the Company's next annual
meeting is November 30, 1999. To be properly submitted, the proposal must be
received at the Company's principal executive offices, 7100 West Camino Real,
Suite 402, Boca Raton, Florida 33433, no later than the deadline. In order to
avoid controversy, stockholders should submit any proposals by means, including
electronic means, that permit them to prove the date of delivery.
If a stockholder submits notice of a proposal not in compliance with the
procedures set forth above (and more fully described in Rule 14a-8 of the
Exchange Act), such a notice of proposal must be received by the Company at its
principal executive offices, described above, by February 11, 1999. If notice of
a stockholder proposal is received after this date, the Company may have the
discretionary authority to refuse to allow the proposal to be brought before the
next annual meeting.
The deadlines described above are calculated by reference to the date
the proxy materials for this year's Annual Meeting were first mailed to
stockholders. If the Board of Directors changes the date of next year's annual
meeting by more than 30 days, the Board will, in a timely manner, inform the
stockholders of such a change and the effect of such a change on the deadlines
given above by including a notice under Item 5 in the Company's earliest
possible quarterly report on Form 10-QSB, or if that is impracticable, then by
any means reasonably calculated to inform the stockholders.
-17-
<PAGE>
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not
aware of any other matter that is to be presented to Stockholders for formal
action at the Annual Meeting. If, however, any other matter properly comes
before the meeting or any adjournment or postponement thereof, it is the
intention of the persons named in the enclosed form of proxy to vote such
proxies in accordance with their judgment on such matters.
OTHER INFORMATION
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, THE BOARD URGES YOU TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID
REPLY ENVELOPE. YOUR COOPERATION AS A STOCKHOLDER, REGARDLESS OF THE NUMBER OF
SHARES OF STOCK YOU OWN, WILL REDUCE THE EXPENSES INCIDENT TO A FOLLOW-UP
SOLICITATION OF PROXIES.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING YOUR SHARES, PLEASE TELEPHONE THE
COMPANY TOLL FREE AT (877) 879-1289.
Sincerely yours,
S. PETER LEBOWITZ
Chairman of the Board
Boca Raton, Florida
March 30, 1999
<PAGE>
BIG SMITH BRANDS, INC.
Annual Meeting of Stockholders
-----------------------------
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints S. Peter Lebowitz and Howard H. Ward, or
if only one is present, then that individual, with full power of substitution,
to vote all shares of BIG SMITH BRANDS, INC. (the "Company"), which the
undersigned is entitled to vote at the Annual Meeting of the Company's
Stockholders to be held at the Renaissance Airport Hotel, St. Louis, Missouri,
on the 20th day of April, 1999, at 9:00 a.m. St. Louis time, and at any
adjournment or postponement thereof, hereby ratifying all that said proxies or
their substitutes may do by virtue hereof, and the undersigned authorizes and
instructs said proxies to vote as follows:
1. SALE AND LICENSE TO WALLS: To approve the sale to Walls Industries,
Inc., Cleburne, Texas of all assets of the Company relating to the
Company's workwear business, other than real estate and trademarks, and
the license to Walls of the "Big Smith" trademark and certain related
trademarks for use in the manufacture, sale and licensing of workwear
products:
FOR |_| AGAINST |_| ABSTAIN |_|
2. ELECTION OF DIRECTORS: To elect the nominees for director below for a
term of one year;
FOR all nominees listed below |_| WITHHOLD AUTHORITY |_|
(except as marked to the contrary below) to vote for all nominees
listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
S. Peter Lebowitz Jack Schultz
Glen Freeman Julian Shaps
Theodore Listerman
3. APPROVAL OF AUDITORS: To ratify and approve the appointment of Daszkal,
Bolton & Manela, CPAs, as independent public auditors for the fiscal
year ending December 31, 1999;
FOR |_| AGAINST |_| ABSTAIN |_|
and in their discretion, upon any other matters that may properly come before
the meeting or any adjournment or postponement thereof.
(Continued and to be dated and signed on the other side.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDERS. IF NO OTHER DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1, FOR ALL NOMINEES LISTED IN PROPOSAL 2 AND
FOR PROPOSAL 3.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Receipt of the Notice of Annual Meeting of Stockholders and of the Proxy
Statement and Annual Report of the Company accompanying the same is hereby
acknowledged.
Dated: _____________________________, 1999
------------------------------------------------
(Signature of Stockholder)
------------------------------------------------
(Signature of Stockholder)
Your signature should appear the
same as your name appears herein. If
signing as attorney, executor,
administrator, trustee or guardian,
please indicate the capacity in
which signing. When signing as joint
tenants, all parties to the joint
tenancy must sign. When the proxy is
given by a corporation, it should be
signed by an authorized officer.
- 2 -
