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 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
ACTIVE APPAREL GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than 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)(1)
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
<PAGE>
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:
-2-
<PAGE>
ACTIVE APPAREL GROUP, INC.
1350 BROADWAY, SUITE 2300
NEW YORK, NY 10018
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of
Active Apparel Group, Inc. (the "Company") will be held on Thursday, June 5,
1998 at 10:00 AM local time at the Doral Court Hotel, 130 East 39th Street (at
Lexington Avenue), New York, New York 10016, in the Windsor Room on the second
floor, for the following purposes.
1. To elect six directors to serve until the next annual meeting at
which their successors are elected and qualified.
2. To ratify the selection of Berenson & Company, LLP as the Company's
auditors.
3. To transact such other business as may properly come before the
meeting and any adjournments thereof and matters incident to
the conduct of the Annual Meeting.
The Board of Directors has fixed the close of business on April 27,
1998 as the record date for the determination of the Company's Common Stock and
Class A Common Stock entitled to notice of, and to vote at the Annual Meeting
and any adjournments thereof.
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, WE URGE YOU TO SIGN, DATE AND
RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE TO ENSURE THE PRESENCE
OF A QUORUM AT THE MEETING. A SELF-ADDRESSED STAMPED ENVELOPE IS ENCLOSED FOR
THAT PURPOSE. IF YOU SEND IN YOUR PROXY AND THEN DECIDE TO ATTEND THE MEETING
TO VOTE YOUR STOCK IN PERSON, YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE AT
YOUR REQUEST.
<PAGE>
ACTIVE APPAREL GROUP, INC.
1350 BROADWAY, SUITE 2300
NEW YORK, NY 10018
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Active Apparel Group, Inc. (the
"Company") to be voted at the Annual Meeting of Shareholders to be held on
Thursday, June 5, 1998 at 10:00 AM local time at the Doral Court Hotel, 130 East
39th Street (at Lexington Avenue), New York, New York 10016, in the Windsor Room
on the second floor, and at any adjournments thereof (the "Meeting") for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
When a proxy is returned properly signed, the shares represented
thereby will be voted by the proxies in accordance with the shareholder's
directions. If the proxy is signed and returned without choices having been
specified, the shares will be voted for the election as directors of the persons
named herein, and for the ratification of the selection of Berenson & Company,
LLP as the Company's auditors as described in "PROPOSAL 2 -- RATIFICATION OF THE
COMPANY'S AUDITORS". If for any reason any of the nominees for election as
directors shall become unavailable for election, discretionary authority may be
exercised by the proxies to vote for substitutes proposed by the Board of
Directors of the Company.
A shareholder giving a proxy has the right to revoke it at any time
before it is voted by filing with the Secretary of the Company a written notice
of revocation, or a duly executed later-dated proxy, or by requesting return of
the proxy at the Meeting and voting in person. Broker "non-votes" and the shares
of Common Stock as to which a shareholder abstains are included for purposes of
determining the presence or absence of a quorum at the Meeting. A broker
"non-vote" occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner. Broker `non-votes" are not included in the tabulation of
the voting results on the election of Directors or issues requiring approval of
the majority of the votes present and, therefore, do not have the effect of
votes in opposition in such tabulations. An abstention from voting on a matter
or a proxy instructing that a vote be withheld has the same effect as a vote
against a matter since it is one less vote for approval.
Only shareholders of record at the close of business on April 27, 1998
are entitled to notice of, and to vote at the Meeting. As of April 27, 1998
there were outstanding 2,494,081 shares of the Company's Common Stock $.002 par
value per share (the "Common Stock"), each of which is entitled to one (1) vote
per share at the Meeting; and there were 100,000 shares of the Company's Class A
Common Stock $.01 par value per share (the "Class A Stock"), each of which
shares is entitled to five (5) votes per share at the Meeting. A majority of the
outstanding shares of Common Stock and Class A Common Stock, combined, present
in person or by proxy is required for a quorum.
The cost of solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by use of the mails, some of the
officers, directors and regular employees of the Company, without extra
remuneration, may solicit proxies personally or by telephone, telefax or similar
transmission. The Company will reimburse record holders for expenses in
forwarding proxies and proxy soliciting material to the beneficial owners of the
shares held by them.
The approximate date on which the enclosed form of proxy and this proxy
statement are first being sent to shareholders is April 28, 1998.
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
Directors are elected by a plurality of the votes cast by the
shareholders of the Company at a meeting at which a quorum of shares is
represented. Each Director shall serve until the next annual shareholder's
meeting and until the successor of such Director shall have been elected and
qualified. The names of, and certain information, as of April 27, 1998, with
respect to the persons nominated for election as directors are presented below.
If no contrary instructions are indicated, proxies will be voted for
the election of George Horowitz, James Anderson, Rita Cinque, Larry Kring,
Edward Epstein and Angelo Giusti, the six nominees of the Board of Directors.
All of the nominees are currently Directors of the Company. The Company does not
expect that any of the nominees will be unavailable for election, but if that
should occur before the Meeting, the proxies will be voted in favor of the
remaining nominees and may also be voted for a substitute nominee or nominees
selected by the Board of Directors.
The Board of Directors has unanimously approved the above-named
nominees for Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF
THESE NOMINEES.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
YEAR OF FIRST
NAME AGE ELECTION POSITION
<S> <C> <C> <C>
George Horowitz 48 1992 President; Chief Executive Officer; Chairman of
the Board; Treasurer; Director(1)
James Anderson 61 1992 Vice Chairman of the Board; Director(1)(2)
Rita Cinque 32 1992 Executive Vice President; Secretary of the Company;
Director(3)
Larry Kring 57 1993 Director(2)(3)
Edward Epstein 58 1996 Director(2)(3)
Angelo Giusti 47 1997 Director(2)
</TABLE>
(1) Member of the Executive Committee of the Board of Directors
(2) Member of the Compensation Committee of the Board of Directors
(3) Member of the Audit Committee of the Board of Directors
MR. GEORGE HOROWITZ has been the President, Chief Executive Officer,
Treasurer and a Director of the Company since its inception in July 1992. Since
January 1996 he has been Chairman of the Board. From October 1990 to January
1993, Mr. Horowitz was President and a Director of Total Impact, Inc., an
activewear apparel company in New York City. From March 1976 to March 1990, Mr.
Horowitz was employed by Golden Touch Imports, Inc. (?Golden Touch?), an apparel
company in New York City, where he served as Vice President-Operations and was a
shareholder of that company. He is currently serving on the Fitness Apparel
Council as an industry advisor of the Sporting Goods Manufacturers Association.
2
<PAGE>
MR. ANDERSON has been a Director of the Company since August 1992 and
was Chairman of the Board from January 1994 through December 1995. Since January
1996 he has been Vice-Chairman of the Board. Since August 1996, he has been
Managing Partner of Millenium Venture Management LLC, and CEO of Compucolor LLC,
an anti-graffiti company. Since July 1987 he has been a management consultant in
restructuring businesses. From 1981 to 1987, he was President of Pacific First
Financial Corp. and Pacific First Federal Savings Bank, and in 1984, also became
chairman of the board and CEO of each company. He has served on the boards of
directors of numerous business, civic, arts and educational organizations and is
a member of the Whitman College Board of Overseers. He is currently a member of
the Board of Directors of HERS Interactive, Inc. a software publishing company,
the Washington Hospital Insurance Fund and the Washington Casualty Company.
MS. CINQUE has been Executive Vice President and a Director of the
Company since May 1994. From April 1993 to May 1994, she was Vice President -
Operations of the Company, and from August 1992 to April 1993, she served as a
consultant to the Company in operations management. From November 1990 to August
1992, Ms. Cinque was the President of ITEW, Ltd., a management consulting
company in the apparel industry. In 1986, she was a founding member of Women in
International Trade, an organization to promote international trade, where she
served as a director from January 1990 to January 1993.
MR. KRING has been a Director of the Company since January 1993.
Since August 1993, Mr. Kring has been a Group Vice President of Esterline
Technologies, a diversified instrumentation, equipment and component
manufacturing company listed on the New York Stock Exchange and located in
Bellevue, Washington. From July 1978 to July 1993, Mr. Kring was the President
and Chief Executive Officer of Heath Tecna Aerospace Company, a manufacturer of
aircraft interior and aerospace components and a division of Ciba-Geigy
Corporation.
MR. EPSTEIN has been a Director since January 1996. Mr. Epstein is an
attorney admitted to practice law in both New York and Florida. He is an
experienced litigator, and has represented clients in all aspects of the garment
industry for 30 years. He is a member of the bars of the Supreme Court of the
State of Florida, the Supreme Court of the State of New York, various United
States District Courts and the United States Court of Appeals for the Second
Circuit. He is a member of the Commercial Panel of Arbitrators, American
Arbitration Association, the New York State Trial Lawyers Association,
Association of Trial Lawyers of America and the Florida Academy of Trial
Lawyers.
MR. GIUSTI has been a Director since January 1997. He has been Vice
President of Operations at the Company since June 1997. From 1984 until June
1997, Mr. Giusti was President of Universal Business Forms Inc., a printing
concern in New York City. From 1978 to 1984, Mr. Giusti was Sales Manager in New
York for Uarco, a national printing company. Mr. Giusti has served on many
community boards and activities. He was a New York City Public School teacher
and he has remained active in local education and in youth sports activities. He
currently is President of the Holmdel (Jersey shore) Pop Warner Football League.
3
<PAGE>
The Board of Directors of the Company met six (6) times during the
fiscal year ended December 31, 1997. All the Directors attended 75% or more of
the aggregate number of applicable Board of Directors and committee meetings
held during the year.
COMPENSATION OF DIRECTORS
In addition to reimbursement for all reasonable out-of-pocket
expenses actually incurred by Directors in connection with attendance at
meetings of the Board of Directors, or with officers of the Company for
Company-related purposes, all non-employee Directors receive options to purchase
shares of the Company's common stock as compensation for services as Directors.
Effective January 1, 1995, non-employee Directors receive options
pursuant to the Company's 1995 Non-Employee Director Stock Option Plan (the
"Director Plan") which was approved by the Shareholders on October 6, 1995. The
Director Plan provided for automatic grants of options to purchase 3,000 shares
on the date of shareholder approval and, thereafter, yearly grants of options
(the "Options") to purchase 3,000 shares of Common Stock (subject to adjustment
as provided in the Director Plan) to each active Director serving on the Board
at the time of grant who is not an officer or employee of the Company. The
Director Plan also provides for automatic grants of options to the Chairman and
Secretary of the Board of Directors and the Chairman of each Committee of the
Board, provided that such persons are not officers or employees of the Company.
The Director Plan provided for the grant of options to the Chairman and
Secretary of the Board to purchase 200 shares on the date of shareholder
approval and yearly grants thereafter to purchase 200 shares. The Chairman of
each Committee will receive automatic grants to purchase 100 shares. The
Directors who are currently entitled to Options under the Director Plan are
James Anderson, Larry Kring and Edward Epstein. The exercise price per share for
all options granted under the Director Plan is the fair market value of the
shares of Common Stock covered by the option on the date of grant of such
option. All options vest in three equal installments on the first, second and
third anniversary of the date of grant. The term of each option is seven (7)
years from the date of grant. An Option is exercisable only while the holder is
serving as a Director of the Company or within 30 days after the holder ceases
to so act (except that if the holder becomes disabled or dies while serving as a
Director of the Company, the option is exercisable prior to the last day of the
sixth or twelfth month, respectively, following the date that such person ceases
to be a Director).
At a special meeting of the Board of Directors held on December 8,
1997, the compensation of non-employee Directors for 1998 was amended to provide
annual compensation of $6,000, payable quarterly, together with options to
purchase 2,500 shares of Common Stock.
COMMITTEES OF THE BOARD
The Board has established three standing committees to assist it in
carrying out its responsibilities:
The members of the Executive Committee of the Board are George
Horowitz and James Anderson. This committee has responsibility for such special
matters are determined by the Board from time to time. This Committee met four
(4) times during 1997.
The current members of the Compensation Committee are James Anderson,
Larry Kring, Edward Epstein and Angelo Giusti. This committee has general
responsibility for recommending to the Board remuneration for the President,
Chief Executive Officer and determining the remuneration of other officers
elected by the Board; granting stock options and otherwise administering the
Company's stock option plans; and approval and administration of any other
compensation plans or agreements. This committee met five (5) times during 1997.
4
<PAGE>
The current members of the Audit Committee are Larry Kring, Rita
Cinque and Edward Epstein. This committee has oversight responsibility for
reviewing the scope and results of the independent accountants' annual
examination of the Company's financial statements; reviewing the overall
adequacy and conduct of internal controls; and recommending to the Board of
Directors the appointment of the independent accountants. This committee met two
(2) times during 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who
beneficially own more than ten percent of the Company's Common Stock, to file
with the Securities and Exchange Commission (the "SEC") reports of ownership of
Common Stock and other equity securities of the Company. Officers, directors and
more than ten percent stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company during the fiscal year ended December 31, 1997 all required Section
16(a) filings by beneficial owners were complied with, except that (i) on
January 16, 1997 Angelo Giusti filed a Form 3 relating to his election as a
Director on January 3, 1997, (ii) on February 14, 1997 Larry Kring filed a Form
4 relating to the grant of stock options pursuant to the Director Plan and (iii)
on February 16, 1998 each of James Anderson, Rita Cinque, Edward Epstein, Angelo
Giusti and George Horowitz filed a Form 5 relating to the aquisition by each of
such persons of 2,000, 1,000, 1,000, 1,000 and 2,000 shares, respectively, of
Common Stock on December 17, 1997.
PROPOSAL 2 -- RATIFICATION OF THE COMPANY'S AUDITORS
The Board of Directors has selected Berenson & Company LLP
("Berenson") as the Company's independent accountants for the fiscal year ending
December 31, 1998 and has further directed that management submit the selection
of independent accountants for ratification by the shareholders at the Annual
Meeting. Berenson was engaged in May 1995 and has audited the Company's
financial statements for the years ended December 31, 1995 , 1996 and 1997.
Representatives of Berenson will not be present at the Annual Meeting to answer
questions or make a statement.
Shareholder ratification of the selection of Berenson as the
Company's independent accountants is not required by the Company's By-laws or
otherwise. However, as was true for the 1996 and 1997 Annual Meeting of
Shareholders (at each of which the shareholders ratified the selection of
Berenson), the Board is submitting the selection of Berenson to the shareholders
for ratification as a matter of good corporate practice. If the shareholders
fail to ratify the selection, the Audit Committee and the Board will reconsider
whether or not to retain that firm. Even if the selection is ratified, the Audit
Committee and the Board in their discretion may direct the appointment of a
different independent accounting firm at any time during the year if they
determine that such a change would be in the best interest of the Company and
its shareholders.
The affirmative vote of the holders of shares representing a majority
of the votes represented in person or by proxy and entitled to vote at the
meeting will be required to ratify the selection of Berenson & Company LLP. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
BERENSON & COMPANY, LLP AS THE COMPANY'S AUDITORS.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
the beneficial ownership of the Company's Common Stock as of March 10, 1998 for
(i) each of the Company's directors, (ii) each of the Company's executive
officers, (iii) each shareholder known to be the beneficial owner of more than
five percent of any class of the Company's voting securities and (iv) all
directors and executive officers as a group:
Beneficial Ownership
Common, and
Class A Common (1)
Name and Address of Percentage of
Beneficial Owner Number (2) Outstanding Stock
- ------------------- ---------- -----------------
George Q. Horowitz 606,961(3) 23.4%
c/o Active Apparel Group, Inc.
1350 Broadway, Suite 2300
New York, NY 10018
Donald J. Horowitz 259,792(4) 9.8%
2000 43rd Avenue East
No. 503
Seattle, WA 98112
James K. Anderson 165,008(5) 6.3%
4903 163rd Ave., N.E.
Redmond, WA 98052
Rita Cinque 95,200(6) 3.7%
c/o Active Apparel Group, Inc.
1350 Broadway, Suite 2300
New York, NY 10018
Larry Kring 29,037(7) 1.1%
3265 126th Ave., N.E.
Bellevue, WA 98005
Edward R. Epstein 4,000(8) *
915 Middle River Drive
Suite 419
Fort Lauderdale, FL 33304
Angelo Giusti 2,400(9) *
19 Deer Park
Holmdel, NJ 07733
All directors and 902,606(3)(5) 33.7%
executive officers as a group (6 persons) (6)(7)(8)(9)
(1) Under rules adopted by the Securities and Exchange Commission, a person
is deemed to be a beneficial owner of securities with respect to which
such person has or shares: (i) voting power, which includes the power to
vote or direct the vote of the security, or (ii) investment power, which
includes the power to dispose of or to direct the disposition of the
security. Unless otherwise indicated below, the persons named in the
table above have sole voting and investment power with respect to all
shares beneficially owned.
6
<PAGE>
(2) As of March 10, 1998, there were outstanding 2,469,375 shares of Common
Stock and 100,000 shares of Class A Common Stock. The Class A Common
stock, while held by George Horowitz, as they currently are, entitle
George Horowitz to five (5) votes for each share held. Thus, while there
are 2,569,375 total shares outstanding (not including any unexercised
options) this represents 2,969,375 votes.
(3) Consists of (i) 481,628 shares of Common Stock (1,000 of which are owned
by minor children) (ii) 100,000 shares of super-voting Class A Common
Stock issued to Mr. George Q. Horowitz in July 1995 in exchange for
112,500 shares of Common Stock and (iii) 25,333 shares of Common Stock
issuable upon exercise of options exercisable currently or within 60
days, including (A) options to purchase 2,000 shares at an exercise price
of $6.25 per share granted by Donald Horowitz, George Horowitz?s brother,
which expire on December 31, 1999, and (B) options to purchase 10,000
shares granted by the Company at the exercise price of 11.75 per share,
which expire on November 3, 2005, and (C) options to purchase 8,333
shares at an exercise price $ 14.25 per share, which expire on November
7, 2006.
(4) Consists of (i) 204,756 shares of Common Stock, of which Mr. Horowitz
owns 39,400 shares of Common Stock with his wife, as joint tenants, and
(ii) 55,036 shares of Common Stock, issuable upon the exercise of options
exercisable currently or within 60 days, including (A) options to
purchase 839 shares of Common Stock at an exercise price of $ 1.75 per
share, which expire on December 31, 2004, (B) options to purchase 839
shares of Common Stock at an exercise price of $3.00 per share, which
expire on December 31, 2004, (C) options to purchase 839 shares of Common
Stock at an exercise price of $5.00 per share, which expire on December
31, 2004, (D) options to purchase 8,725 shares of Common Stock at an
exercise price of $3.30 per share, which expire on June 30, 1999, (E)
options to purchase 1060 shares of Common Stock at an exercise price of
$5.50 per share, which expire on December 31, 1999, (F) options to
purchase 30,000 shares of Common Stock at an exercise price of $6.25 and
(G) options to purchase 12,734 shares of Common Stock at an exercise
price of $5.43 per share, which expire on August 15, 2007. Of the 39,400
shares of Common Stock owned by Mr. and Mrs. Horowitz, as joint tenants,
22,500 shares are subject to options granted to the children of Mr. and
Mrs. Horowitz, at an exercise price of $6.25 per share, which expire on
December 31, 1999 and 2,000 shares are subject to options granted to
George Horowitz, the brother of Mr. Horowitz and the Company's President
and Chief Executive Officer, at an exercise price of $6.25 per share,
which expire on December 31, 1999.
(5) Consists of (i) 106,350 shares of Common Stock of which Mr. Anderson owns
100,000 shares of Common Stock with his wife, as joint tenants, and (ii)
58,658 shares of Common Stock issuable upon exercise of options
excercisable currently or within 60 days, including
(A) 839 shares @ $ 1.75 expires December 31, 2004
(B) 839 shares @ $ 3.00 expires December 31, 2004
(C) 839 shares @ $ 5.00 expires December 31, 2004
(D) 839 shares @ $ 6.25 expires December 31, 2004
(E) 4,706 shares @ $ .85 expires December 31, 2003
(F) 28,400 shares @ $ .375 expires June 30, 1998
(G) 11,630 shares @ $ 3.30 expires June 30, 1999
(H) 4,200 shares @ $ 5.50 expires December 31, 1999
(I) 3,200 shares @ $11.75 expires November 3, 2002
(J) 2,133 shares @ $12.50 expires January 2, 2003
(K) 1,033 shares @ $14.75 expires January 3, 2004
7
<PAGE>
(6) Consists of (i) 79,700 shares of Common Stock and (ii) 15,500 shares of
Common Stock issuable upon exercise of options exercisable currently or
within 60 days including (A) options to purchase 10,500 shares of Common
Stock at an exercise price of $11.75 per share, which expire on November
3, 2005 and (B) 5,000 shares of Common Stock at an exercise price of
$14.75 per share, which expire on December 13, 2006.
(7) Consists of (i) 22,838 shares of Common Stock and (ii) 6,199 shares of
Common Stock issuable upon the exercise of options currently exercisable
or within 60 days, including (A) 3,100 shares of Common Stock at an
exercise price of $11.75 per share, which expire on November 3, 2002, (B)
2,066 sharers of Common Stock at $12.50 per share, which expire on
January 2, 2003, and (C) options to purchase 1,033 shares at an exercise
price of $14.75 per share, which expire on January 3, 2004.
(8) Consists of (i) 1,000 shares of Common Stock and (ii) 3,000 shares of
Common Stock issuable upon exercise of options exercisable currently or
within 60 days, including (A) options to purchase 2,000 shares of Common
Stock at an exercise price of $ 12.50 per share, which expire on January
2, 2003 and (B) options to purchase 1,000 shares of Common Stock at an
exercise price of $14.75 per share, which expire on January 3, 2004.
(9) Consists of (i) 1,400 shares of Common Stock and (ii) 1,000 shares of
Common Stock issuable upon exercise of options exercisable currently or
within 60 days at an exercise price of $14.75 per share which expire on
January 3, 2004.
8
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
concerning total annual compensation paid to George Horowitz, the Company's
President, Chief Executive Officer and Treasurer, and Rita Cinque, the Company's
Executive Vice President and Secretary (the "Named Executive Officers"), for
services rendered in all capacities by them to the Company during fiscal years
1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Name and Other Annual All Other
Principal Positions Year Salary ($) Bonus ($) Compensation ($) Compensation ($)
------------------- ---- ---------- --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
George Horowitz(1) 1997 265,000 18,000 17,257(3) 595(6)
(President; Chief Executive Officer; 1996 250,000 24,000(2) 18,635(4) 560(6)
Treasurer) 1995 165,000 15,000 20,336(5) 469(6)
Rita Cinque(1) 1997 140,000 12,000 9,565(7) 0
(Executive Vice President; Secretary) 1996 125,000 16,000(2) 12,155(8) 0
1995 98,077 10,000 11,364(9) 0
</TABLE>
(1) Other than George Horowitz and Rita Cinque no officer of the Company
was paid more than $100,000 in total salary and bonus for Fiscal 1997,
and accordingly, no other officers are included in the table above.
(2) The Company has agreed to pay the amount of tax owed on the bonus
payment noted in the column above.
(3) Consists of an aggregate of $17,257 paid to or on behalf of Mr.
Horowitz by the Company in Fiscal 1997 in connection with automobile
lease installment payments ($13,660), related insurance premiums
($1,088) and parking expenses ($2,509).
(4) Consists of an aggregate of $18,635 paid to or on behalf of Mr.
Horowitz by the Company in Fiscal 1996 in connection with automobile
lease installment payments ($13,659), related insurance premiums
($2,176) and parking expenses ($2,800).
(5) Consists of an aggregate of $20,336 paid to or on behalf of Mr.
Horowitz by the Company in Fiscal 1995 in connection with automobile
lease installment payments ($13,659), related insurance premiums
($1,184) and parking expenses ($2,800).
9
<PAGE>
(6) Represents premiums paid by the Company in Fiscal 1997, 1996 and 1995
on term life insurance policies for the benefit of Mr. Horowitz.
(7) Consists of an aggregate of $9,565 paid to or on behalf of Ms. Cinque
by the Company in Fiscal 1997 in connection with automobile lease
installment payments ($5,601), related insurance premiums ($1,846) and
parking expenses ($2118).
(8) Consists of an aggregate of $12,155 paid to or on behalf of Ms. Cinque
by the Company in Fiscal 1996 in connection with automobile lease
installment payments ($5,134), related insurance premiums ($4,216) and
parking expenses ($2,805).
(9) Consists of an aggregate of $11,364 paid to or on behalf of Ms. Cinque
by the Company in Fiscal 1995 in connection with automobile lease
installment payments ($5,624), related insurance premiums ($1,775) and
parking expenses ($3,965).
LONG TERM INCENTIVE AND PENSION PLANS
The Company currently has no long-term incentive or defined pension
plans. The Company is the beneficiary of "key-executive" life insurance policies
on George Horowitz and Rita Cinque in the amounts of $12,000,000 and $4,500,000,
respectively.
OPTION GRANTS IN LAST FISCAL YEAR
There were no option grants to the Named Executive Officers during
the year ended December 31, 1997.
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EMPLOYMENT CONTRACTS
GEORGE HOROWITZ. The Company and George Horowitz are parties to an employment
agreement, dated as of August 1, 1994 (the "Agreement") pursuant to which Mr.
Horowitz serves as the President and Chief Executive Officer of the Company, for
which Mr. Horowitz was paid an annual base salary of $125,000 from August 1,
1994 through December 31, 1994, $165,000 from January 1, 1995 through December
31, 1995, $250,000 from January 1, 1996 through December 31, 1996 and is paid an
annual base salary of $265,000 commencing January 1, 1997 and continuing
thereafter through the Term (as defined below) of the Agreement, unless
increased by the Board of Directors on an annual basis during the Term. The
initial term of the Agreement expires on July 31, 2000 but continues thereafter
for additional one-year periods unless either Mr. Horowitz or the Company gives
the other ninety days' prior written notice of non-renewal (as and if so
extended, the "Term"). At the discretion of the Board of Directors, the Company
may also pay Mr. Horowitz a cash bonus on or before December 31 of any year
during the Term. In addition to such base salary and contingent cash bonuses,
Mr. Horowitz is entitled to receive an automobile allowance which on August 12,
1996 was modified from $12,000 annually to reimbursement for an automobile
commensurate with his position and duties with the Company (to include
appropriate insurance), reimbursement for parking expenses which was modified
from a limit of $6,000 annually to such amount as is reasonably and customarily
charged in the area of the Company's principal offices, health and medical
insurance and is entitled to participate in any retirement, life and disability
insurance, dental insurance and any bonus, incentive or profit-sharing plans
which the Company makes available from time to time to its executives. Mr.
Horowitz is also entitled to receive reimbursement of all reasonable
out-of-pocket expenses that he actually incurs relating to his services under
the Agreement.
The Agreement also restricts, generally, Mr. Horowitz from
disclosing certain confidential information obtained by Mr. Horowitz during the
Term for a period of three years following the termination or expiration of the
Term, and further restricts Mr. Horowitz from competing with the Company
(including soliciting the Company's employees or agents) for a period of one
year following the expiration or termination of the Term. The Agreement may be
terminated by the Company "for cause" (as defined in the Agreement), and in the
event of such termination, or in the event of the voluntary resignation by Mr.
Horowitz, the obligations of the Company under the Agreement will terminate
(except with respect to certain indemnification, confidentiality and
"non-compete" provisions). In the event of the termination of the Agreement by
reason of Mr. Horowitz's death, his estate is entitled to receive an amount
equal to twice his then-current base salary (which, in the case of Mr.
Horowitz's death, may be funded, wholly or partially, by a life insurance policy
paid for by the Company, at its option). If the Agreement is terminated for
reasons other than Mr. Horowitz's death, voluntary resignation or "for cause,"
Mr. Horowitz will be entitled to receive an amount equal to twice his
then-current base salary, plus all other amounts due to him under the Agreement
through the date of such termination.
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<PAGE>
RITA CINQUE. The Company and Rita Cinque are parties to an employment agreement,
dated as of August 1, 1994, pursuant to which Ms. Cinque serves as Executive
Vice President of the Company, for which Ms. Cinque was paid an annual base
salary of $70,000 from August 1, 1994 through December 31, 1994, $90,000 from
January 1, 1995 through June 30, 1995, $105,000 from July 1, 1995 through
December 31, 1995, $125,000 from January 1, 1996 through December 31, 1996, and
is paid an annual base salary of $140,000 commencing January 1, 1997 and
continuing thereafter through the Term (as defined below) of the agreement,
unless increased by the Board of Directors on an annual basis during the Term.
The initial term of such agreement expired on July 31, 1997 but was renewed for
additional one-year periods unless either Ms. Cinque or the Company gives the
other ninety days' prior written notice of non-renewal (as and if so extended,
the "Term"). At the discretion of the Board of Directors, the Company may also
pay Ms. Cinque a cash bonus on or before December 31 of any year during the
Term. In addition to such base salary and contingent cash bonuses, Ms. Cinque is
entitled to receive an automobile allowance of $9,000 annually, reimbursement
for parking expenses up to $4,800 annually, health and medical insurance, and is
also entitled to participate in any retirement, life and disability insurance,
dental insurance and any bonus, incentive or profit-sharing plans which the
Company makes available from time to time to its executives. Ms. Cinque is also
entitled to receive reimbursement for all reasonable out-of-pocket expenses that
she incurs relating to her services under such agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DONALD HOROWITZ EMPLOYMENT AGREEMENT. The Company and Donald Horowitz (a
former director of the Company) were parties to a one year Agreement, effective
September 1, 1996 pursuant to which Mr. Horowitz served as Legal Counsel to the
Company, for which he was paid, a total base salary of $36,000 in cash, payable
on a quarterly basis and options to purchase 3,200 option Shares exercisable at
an amount equal to the exercise price of options granted to non-employee members
of the Board of Directors for their service for the year 1997. The Company and
Donald Horowitz terminated this relationship on August 31, 1997. The 1996
Agreement replaced a previous Agreement of September 1, 1994 which expired on
September 1, 1996, pursuant to which Mr. Horowitz served as General Counsel to
the Company, for which he was paid or granted, over the two years of such
Agreement, an annual base salary of $45,000 in cash, payable on a quarterly
basis and options to purchase 30,000 option Shares exercisable at an exercise
price of $6.25.
SHAREHOLDERS PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for the
next year's annual meeting of shareholders, any shareholder proposal (other than
the submission of nominees for directors) must be received by the Company at its
principal offices not later than the close of business on December 29, 1998.
12
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OTHER MATTERS
The Board of Directors does not intend to present and has not been
informed that any other person intends to present any matters for action at the
Meeting other than those specifically referred to in this proxy statement. If
any other matters properly come before the Meeting, it is intended that the
holders of the proxies will act in respect thereof in accordance with their best
judgment.
A copy of the Company's Form 10-KSB containing the Company's
financial statements for the year ending December 31, 1997, as filed with the
SEC was included as part of the Company's Annual Report to Shareholders which is
being furnished along with this Proxy Statement to all beneficial shareholders
or shareholders of record on April 27, 1998. For further copies, please contact
the company at its principal executive offices set forth as follows: ACTIVE
APPAREL GROUP, INC., 1350 Broadway, Suite 2300, New York, NY 10018.
April 27, 1998
By Order of the Board of Directors
/s/ George Q. Horowitz
----------------------------------
George Q. Horowitz
President, Chief Executive Officer
and Chairman of the Board
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<PAGE>
ACTIVE APPAREL GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 1998
The undersigned hereby appoints each of George Q. Horowitz and
James Anderson as the undersigned's proxy, with full power of substitution, to
vote all of the undersigned's shares of Common Stock and Class A Common Stock in
Active Apparel Group, Inc. (the "Company"), at the Annual Meeting of
Shareholders of the Company to be held on June 5, 1998 at 10:00 A.M. local time,
at the Doral Court Hotel, 130 E. 39th Street, New York, New York 10016 in the
Windsor Room on the second floor, or at any adjournment, on the matters
described in the Notice of Annual Meeting and Proxy Statement and upon such
other business as may properly come before such meeting or any adjournments
thereof, hereby revoking any proxies heretofore given.
PROPOSAL 1. ELECTION OF DIRECTORS:
WITHHOLD AUTHORITY
to vote for
FOR all nominees nominees listed Except for the
listed below below. following nominees:
NOMINEES:
/ / / / George Horowitz,
James Anderson,
Rita Cinque,
Larry Kring,
Edward Epstein,
Angelo Giusti
PROPOSAL 2. RATIFICATION OF THE COMPANY'S AUDITORS:
FOR ___ AGAINST ___ ABSTAIN _____
(continued and to be signed on reverse side)
<PAGE>
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH
SPECIFICIATIONS MADE ON THE REVERSE SIDE HEREOF. IF NO
SPECIFICATIONS ARE MADE, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED FOR THE LISTED NOMINEES AND FOR PROPOSAL 2.
Signature ____________________________ Dated:___________, 1998
Signature if held jointly _______________________________
SIGN EXACTLY, AS SET FORTH HEREIN. IF SIGNED AS EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, INDICATE THE CAPACITY IN WHICH YOU ARE ACTING. PROXIES BY
CORPORATIONS SHOULD BE SIGNED BY A DULY AUTHORIZED OFFICER AND BEAR CORPORATE
SEAL.
PLEASE SIGN AND RETURN THE PROXY CARD PROMPTLY IN ENCLOSED
ENVELOPE.
