SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JANUARY 1, 1997
ACTIVE APPAREL GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-025918 13-3672716
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1350 BROADWAY, SUITE 2300, NEW YORK, NEW YORK 10018
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(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 239-0990
N/A
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
Effective January 1, 1997, the Registrant and Everlast World's Boxing
Headquarters Corp., a New York corporation ("Everlast"), entered into two
Consolidated Amendment Agreements that consolidated previous amendments and
further amended the terms of the Registrant's exclusive license agreements with
Everlast to produce and market certain apparel in the United States and Canada.
Among other things, the Consolidated Amendment Agreements extend the license and
option periods from December 31, 2002 to December 31, 2012. A copy of each
Consolidated Amendment Agreement is annexed hereto and incorporated by reference
as Exhibits 10.1 and 10.2 to this Report.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
EXHIBIT NO. EXHIBITS
10.1 Consolidated Amendment Agreement by and between
Everlast and Registrant, dated as of January 1,
1997.
10.2 Consolidated Amendment Agreement (Canada) by and
between Everlast and Registrant, dated as of
January 1, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACTIVE APPAREL GROUP, INC.
Dated: January 16, 1997 By: /s/ George Q. Horowitz
-----------------------------------------
Name: George Q. Horowitz
Title: Chief Executive Officer,
President, Treasurer and
Director
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CONSOLIDATED AMENDMENT AGREEMENT
THIS CONSOLIDATED AMENDMENT AGREEMENT made and entered into as of the
1st day of January, 1997 by and between Everlast World's Boxing Headquarters
Corp., a New York corporation of 750 East 132nd Street, Bronx, New York 10454
("Everlast"), and Active Apparel Group, Inc., a Delaware corporation having its
principal place of business at 1350 Broadway, Suite 2300, New York, New York
10018 (the "Licensee")
W I T N E S S E T H
WHEREAS, by License Agreement dated June 1, 1992, which was amended by
a First Amendment Agreement dated June 1, 1992, a Second Amendment Agreement
dated January 1, 1993, and a Third Amendment Agreement dated November 15, 1993
(the said License Agreement as so amended being hereinafter referred to as the
"License Agreement") Everlast authorized Total Impact, Inc. to use certain
Licensed Marks in connection with certain women's sportswear, and
WHEREAS, the License Agreement was duly assigned to TI Sportswear,
Inc., a New York corporation and the said New York corporation was subsequently
merged into the Licensee which thereby acquired and assumed the License
Agreement, and
WHEREAS, the parties desire to consolidate the prior amendments and to
further amend the License Agreement as hereinafter set forth,
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<PAGE>
NOW THEREFORE, for and in consideration of the premises and of the
mutual promises and conditions herein contained, the parties do hereby agree as
follows:
1. Effective as of the date hereof the License Agreement is hereby
modified and amended in the following respects:
(i) Paragraph l(a) shall be changed by deleting the words
"headwear specifically coordinated with Licensed Products and sold
together therewith" and inserting in lieu thereof "baseball style caps
decorated solely with the embroidered designs shown on Exhibit A
annexed, specifically coordinated with, and sold solely as an integral
part of an ensemble, with other Licensed Products".
(ii) The date "December 31, 1996" in Paragraph l(c) is changed
to "December 31, 2002".
(iii) Paragraph l(f) is hereby amended in its entirety
to read as follows:
f) "Option Periods" shall mean the two
successive periods of five (5) years each
commencing January 1, 2003 and January 1, 2008
respectively.
(iv) The third sentence of Paragraph 3(c) is hereby amended in
its entirety to read as follows:
The minimum advertising expenditure under this
agreement during each Contract Year of the
Contract Period and each Option Period, if
Licensee shall exercise such options, shall be
as follows:
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<PAGE>
CONTRACT YEAR AMOUNT $
CONTRACT PERIOD
1997 187,500
1998 206,250
1999 225,000
2000 243,750
2001 262,500
2002 281,250
FIRST OPTION PERIOD
2003 300,000
2004 318,750
2005 337,500
2006 356,250
2007 375,000
SECOND OPTION PERIOD
2008 393,750
2009 412,500
2010 431,250
2011 450,000
2012 468,750
(v) Paragraphs 7(a) and 7(b) are hereby amended to read in
their entirety as follows:
7(a) Licensee shall pay to Everlast
the minimum amounts set forth below during each
Contract Year of the Contract Period:
YEAR AMOUNT--$
---- ---------
1997 450,000
1998 495,000
1999 540,000
2000 585,000
2001 630,000
2002 675,000
(b) Licensee shall pay to Everlast the
minimum amounts set forth below during each
Contract Year of each Option Period, if
Licensee shall exercise such options, the
amounts set forth below:
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<PAGE>
YEAR AMOUNT--$
---- ---------
FIRST OPTION PERIOD
2003 720,000
2004 765,000
2005 810,000
2006 855,000
2007 900,000
SECOND OPTION PERIOD
2008 945,000
2009 990,000
2010 1,035,000
2011 1,080,000
2012 1,125,000
All amounts to be paid under paragraph 7(a) or
this paragraph shall be paid in twelve equal
installments on the first day of each month
during each respective Contract Year.
(vi) There shall be added to paragraph 8 of the Agreement the
following subparagraph (e):
(e) Within 30 days following the
execution of this Agreement, Licensee shall
cause to be issued and delivered to Everlast a
letter of Credit in which Everlast shall be the
beneficiary, issued by an American bank or
trust company having a net worth in excess of
$100.00 million, and shall maintain such a
Letter of Credit in effect during the Contract
Period. The Letter of Credit (a) shall be for a
period of one year and shall be automatically
renewed unless the issuing bank shall give 30
days prior written notice during which time
Licensor may draw upon the Letter of Credit for
any amounts due from the Licensee, (b) shall be
in an amount from time to time equal to the
total retainers to be paid by Licensee to
Everlast pursuant to Paragraph 7 hereof during
the Contract Year during which the Letter of
Credit shall expire, (c) shall permit Everlast
to draw upon the Letter of Credit from time to
time upon the affidavit of an officer of
Everlast stating the amount due from the
Licensee, and (d) shall otherwise in form and
substance be satisfactory to Everlast.
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In lieu of such letter of credit, the
Licensee may pay to Everlast on or before the
first day of each Contract Year an amount equal
to twenty-five (25%) percent of the minimum
annual royalty to be paid pursuant to
subparagraphs 7(a) and 7(b) of this Agreement
during the relevant Contract Year. Such amount
shall be held as security for the faithful
performance of the obligations on the part of
the Licensee to be performed under this
Agreement. The amount of the security then held
by Everlast and not otherwise previously
applied will be carried over to the next
Contract Year and shall serve to reduce the
payment required to be made upon the first day
of the next Contract Year pursuant to this
subparagraph. Upon the expiration or other
termination of this Agreement, the remaining
balance held by Everlast pursuant to this
subparagraph shall be repaid without interest
to the Licensee, provided that the Licensee has
fully performed each of the obligations on its
part to be performed hereunder.
The maintenance of such Letter of
Credit in effect or the payment of the
alternative deposit is a strict condition of
this Agreement. Everlast shall have the option
to forthwith terminate this agreement if such
Letter of Credit shall not be provided or shall
expire without being simultaneously replaced by
a Letter of Credit conforming to the foregoing
provisions, or such alternative deposit is not
timely made.
(vii) The figures "Two Million ($2,000,000) Dollars" in
Paragraphs 16(b) and 16(c) shall be changed to "Two Million Five
Hundred Thousand ($2,500,000) Dollars" during the Contract Period,
"Three Million ($3,000,000) Dollars" during the First Option Period if
Licensee shall exercise such option, and "Three Million Five Hundred
Thousand ($3,500,000) Dollars" during the Second Option Period if
Licensee shall exercise such option.
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(viii) The words "five successive terms of one (1) year each"
in the first sentence of paragraph 17 are changed to "two successive
periods of five (5) years each commencing January 1, 2003 and January
1, 2008 respectively.
(ix) Subparagraph 17(iii) is hereby amended in its entirety
to read as follows:
(iii) during the last twelve months
ending on September 30th in the final Contract
Year of the Contract Period Licensee's Net
Sales of Licensed Products in the Contract
Territory shall amount to at least $10,500,000
for the exercise of the first option, and
during the last twelve months ending on
September 30th in the final Contract Year of
the First Option Period Licensee's Net Sales of
Licensed Products in the Contract Territory
shall amount to at least $14,250,000 for the
exercise of the second option.
(x) Paragraph 21 of the License Agreement shall be amended to
read as follows:
ASSIGNMENT. This Agreement shall bind, and
inure to the benefit of Everlast, and the
successors and assigns of Everlast. The rights
granted to Licensee hereunder shall be
exclusive to it and shall not, without the
prior written consent of Everlast, be
transferred or assigned by it to any other
person, firm or corporation except (i) to a
wholly owned subsidiary thereof (in which case
Licensee shall remain fully liable to Everlast
hereunder as though it were a party hereto), or
(ii) in the event of the merger, consolidation
or acquisition of Licensee by an unrelated
entity (provided that the successor entity
assumes the obligations of Licensee hereunder
and has a net worth at least equal to that of
Licensee at that time). In addition, the
provisions hereof shall be deemed to preclude
assignment by operation of law and shall be
deemed to restrict the hypothecation, pledge,
granting of a security
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interest or in any manner taking steps or
permitting the integrity of this Agreement
between the parties to be affected in any
manner or form. Any assignment, transfer, or
sublicense of any of the rights granted to the
Licensee hereunder which does not conform to
the requirements of this Agreement shall be
null and void."
2. The License Agreement and all of the remaining terms and provisions
thereof shall continue to remain in full force and effect. All rights and
obligations of the parties accruing prior to the date hereof shall not be
effected by this Consolidated Amendment Agreement.
IN WITNESS WHEREOF the parties have signed this Fourth Amendment
Agreement as of the day and year first above written.
EVERLAST WORLD'S BOXING HEADQUARTERS CORP., Licensor
By: /s/ Ben Nadorf
---------------------------------------
Ben Nadorf, President
ACTIVE APPAREL GROUP, INC., Licensee
By: /s/ George Horowitz
----------------------------------------
George Horowitz, President
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<PAGE>
EXHIBIT A
[GRAPHICS OMITTED]
Graphic representation of baseball style caps decorated with
embroidered design of (1) "EVERLAST WOMAN" and (2) "EVERLAST" with boxing gloves
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CONSOLIDATED AMENDMENT AGREEMENT
(CANADA)
THIS CONSOLIDATED AMENDMENT AGREEMENT made and entered into as
of the 1st day of January, 1997 by and between Everlast World's Boxing
Headquarters Corp., a New York corporation of 750 East 132nd Street, Bronx, New
York 10454 ("Everlast") and Active Apparel Group, Inc., a Delaware corporation
having its principal place of business at 1350 Broadway, Suite 2300, New York,
New York 10018 (the "Licensee")
W I T N E S S E T H
WHEREAS, by License Agreement dated January 1, 1993, which was
amended by a First Amendment Agreement dated November 5, 1993, (the said License
Agreement as so amended being hereinafter referred to as the "License
Agreement") Everlast authorized Total Impact, Inc. to use certain Licensed Marks
in Canada in connection with certain women's sportswear, and
WHEREAS, the License Agreement was duly assigned to TI
Sportswear, Inc., a New York corporation and the said New York corporation was
subsequently merged into the Licensee which thereby acquired and assumed the
License Agreement, and
WHEREAS, the parties desire to consolidate the prior amendment
and to further amend the License Agreement as hereinafter set forth,
NOW THEREFORE, for and in consideration of the premises and of
the mutual promises and conditions herein contained, the parties do
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<PAGE>
hereby agree as follows:
1. Effective as of the date hereof the License Agreement is hereby
modified and amended in the following respects:
(i) Paragraph 1(a) shall be changed by deleting the words "headwear
specifically coordinated with Licensed Products and sold together
therewith" and inserting in lieu thereof "baseball style caps decorated
solely with the embroidered designs shown on Exhibit A annexed,
specifically coordinated with, and sold solely as an integral part of
an ensemble, with other Licensed Products".
(ii) The date "December 31, 1996" in paragraph 1(c) is changed to
"December 31, 2002".
(iii) Paragraph 1(f) is hereby amended in its entirety to read as
follows:
f) "Option Periods" shall mean the two
successive periods of five (5) years each
commencing January 1, 2003 and January 1, 2008
respectively."
(iv) The third sentence of Paragraph 3(c) is hereby amended in its
entirety to read as follows:
The minimum advertising expenditure under this
agreement during each Contract Year of the
Contract Period and each Option Period, if
Licenseee shall exercise such options, shall be
as follows:
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<PAGE>
CONTRACT YEAR AMOUNT CDN $
------------- ------------
CONTRACT PERIOD
1997 55,000
1998 62,500
1999 70,000
2000 77,500
2001 85,000
2002 92,500
FIRST OPTION PERIOD
2003 100,000
2004 107,500
2005 115,000
2006 122,500
2007 130,000
SECOND OPTION PERIOD
2008 137,500
2009 145,000
2010 152,500
2011 160,000
2012 167,500
(v) Paragraphs 7(a) and 7(b) are hereby amended to read in their
entirety as follows:
7(a) Licensee shall pay to Everlast the minimum
amounts set forth below during each Contract Year of
the Contract Period:
YEAR AMOUNT CDN $
---- ------------
1997 132,000
1998 150,000
1999 168,000
2000 186,000
2001 204,000
2002 222,000
(b) Licensee shall pay to Everlast the minimum
amounts set forth below during each Contract Year of
the Option Period, if Licensee shall exercise such
options, the amounts set forth below:
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<PAGE>
YEAR AMOUNT CDN $
---- ------------
FIRST OPTION PERIOD
2003 240,000
2004 258,000
2005 276,000
2006 294,000
2007 312,000
SECOND OPTION PERIOD
2008 330,000
2009 348,000
2010 366,000
2011 384,000
2012 402,000
All amounts to be paid under paragraph 7(a) or this
paragraph shall be paid in twelve equal installments on
the first day of each month during each respective
Contract Year.
(vi) Paragraph 8(b) is hereby amended to read in its entirety as
follows:
b) All references to currency herein shall be
to Canadian dollars. All payments by Licensee to
Everlast under this Agreement shall be made by
checks drawn in Canadian dollars on a United States
or Canadian bank to the order of Everlast and
delivered to Everlast at P.O.Box 3343, Commerce
Court Postal Station, Toronto, Ontario M5L 1K1, or
to such other address or account as everlast may
direct from time to time.
(vii) The last sentence of subparagraph 8(d) is deleted and the
following is hereby inserted in lieu thereof:
In lieu of such letter of credit, the
Licensee may pay to Everlast on or before the first
day of each Contract Year an amount equal to
twenty-five (25%) percent of the minimum annual
royalty to be paid pursuant to subparagraphs 7(a)
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and 7(b) of this Agreement during the relevant
Contract Year. Such amount shall be held as
security for the faithful performance of the
obligations on the part of the Licensee to be
performed under this Agreement. The amount of the
security then held by Everlast and not otherwise
previously applied will be carried over to the next
Contract Year pursuant to this subparagh. Upon the
expiration or other termination of this Agreement,
the remaining balance held by Everlast, pursuant to
this subparagraph shall be repaid without interest
to the Licensee, provided that the Licensee has
fully performed each of the obligations on its part
to be performed hereunder.
The maintenance of such Letter of Credit in
effect or the payment of the alternative deposit is
a strict condition of this Agreement. Everlast
shall have the option to forthwith terminate this
Agreement if such Letter of Credit shall not be
provided or shall expire without being
simultaneously replaced by a Letter of Credit
conforming to the foregoing provisions, or such
alternative deposit is not timely made.
(viii) The figures "Two Million ($2,000,000) Dollars" in Paragraphs
16(b) and 16(c) shall be changed to "Three Million Five Hundred Thousand
(CDN$3,500,000) Canadian Dollars" during the Contract Period, "Four Million
Two Hundred Thousand (CDN$4,200,000) Canadian Dollars" during the First
Option Period if Licensee shall exercise such option, and "Four Million
Nine Hundred Thousand (CDN$4,900,000) Canadian Dollars" during the Second
Option Period if Licensee shall exercise such option.
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<PAGE>
(ix) The words "Five successive terms of one (1) year each" in the
first sentence of paragraph 17 are changed to "two successive periods of
five (5) years each commencing January 1, 2003 and January 1, 2008
respectively.
(x) Subparagraph 17(iii) is hereby amended in its entirety to read as
follows:
(iii) during the last twelve months ending on September
30th in the final Contract Year of the Contract Period
Licensee's Net Sales of Licensed Products in the
Contract Territory shall amount to at least $3,400,000
for the exercise of the first option, and during the
last twelve months ending on September 30th in the final
Contract Year of the First Option Period Licensee's Net
Sales of Licensed Products in the Contract Territory
shall amount to at least $4,900,000 for the exercise of
the second option.
2. The License Agreement and all of the remaining terms and provisions
thereof shall continue to remain in full force and effect. All rights and
obligations of the parties accruing prior to the date hereof shall not be
effected by this Consolidated Amendment Agreement.
IN WITNESS WHEREOF the parties have signed this Fourth Amendment
Agreement as of the day and year first above written.
EVERLAST WORLD'S BOXING HEADQUARTERS CORP., Licensor
By: /s/ Ben Nadorf
-------------------------------------
Ben Nadorf, President
ACTIVE APPAREL GROUP, INC., Licensee
By: /s/ George Horowitz, Pres.
------------------------------------
George Horowitz, President
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<PAGE>
EXHIBIT A
[GRAPHICS OMITTED]
Graphic representation of baseball style caps decorated with
embroidered design of (1) "EVERLAST WOMAN" and (2) "EVERLAST" with boxing gloves
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