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 1999 Annual Meeting of Shareholders of
Active Apparel Group, Inc. (the "Company") will be held on Friday, June 11, 1999
at 10:00 AM local time at The Kitano, 66 Park Avenue (at 38th Street), New York,
New York 10016, in the Park Avenue Room on the 18th floor, for the following
purposes.
1. To elect six directors to serve until the next annual meeting at
which their successors are elected.
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 May 4, 1999
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
Friday, June 11, 1999 at 10:00 AM local time at The Kitano, 66 Park Avenue (at
38th Street), New York, New York 10016, in the Park Avenue Room on the 18th
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.
Only shareholders of record at the close of business on May 4, 1999
are entitled to notice of, and to vote at the Meeting. As of May 4, 1999 there
were outstanding 2,492,581 shares of the Company's Common Stock, $.002 par value
per share (the "Common Stock"), each of which is entitled to one 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 Stock, combined, present in
person or by proxy is required for a quorum. Broker "non-votes" and the shares
as to which a shareholder abstains are included for purposes of determining
whether a quorum of shares is present at a 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 the 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 a
majority of the votes cast and, therefore, do not have the effect of votes in
opposition in such tabulations. Proxies marked as abstaining with respect to the
proposal to ratify the appointment of independent auditors will have the effect
of a vote against such proposal.
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
<PAGE>
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 May 10, 1999.
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 meeting of
shareholders and until the successor of such director shall have been elected
and qualified. The names of, and certain information, as of May 4, 1999, 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 Kriss, 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
YEAR OF FIRST
NAME AGE ELECTION POSITION
George Horowitz 49 1992 President; Chief Executive Officer;
Chairman of the Board; Treasurer;
Director(1)
James Anderson 62 1992 Vice Chairman of the Board;
Director(1)(2)
Rita Cinque Kriss 33 1994 Executive Vice President; Secretary
of the Company; Director(3)
Larry Kring 58 1993 Director(2)(3)
Edward Epstein 59 1996 Director(2)(3)
Angelo Giusti 48 1997 Director(2)
(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.
2
<PAGE>
Horowitz was employed by Golden Touch Imports, Inc. an apparel company in New
York City, where he served as Vice President-Operations. He is currently serving
on the Executive Committee for the Sports Apparel Council of the Sporting Goods
Manufacturers Association.
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. 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 businesses, 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 the
Washington Hospital Insurance Fund and the Washington Casualty Company.
MS. CINQUE KRISS 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 Kriss 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 created 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, a printing company
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 is a
former 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, 1998. 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 provides 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
Directors who are currently entitled to Options under the Director Plan are
James Anderson, Larry Kring and Edward Epstein. 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 provides
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 of Options
thereafter to purchase 200 shares. The Chairman of each Committee also receives
automatic grants of Options to purchase 100 shares. 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. 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 Board compensation for 1998 was amended to provide annual compensation
of $ 6,000 for each non-employee director, 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, its Chairman, 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 1998.
The current members of the Compensation Committee are James
Anderson, its Chairman, Larry Kring, Edward Epstein and Angelo Giusti. This
committee has general responsibility for
4
<PAGE>
recommending to the Board remuneration for the President and 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 1998.
The current members of the Audit Committee are Larry Kring, its
Chairman, Rita Cinque Kriss 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 1998.
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, 1998 all required Section
16(a) filings by beneficial owners were complied with, except that on January
11, 1999, George Horowitz and Rita Cinque Kriss filed a Form 5 with respect to
an acquisition of 15,000 shares and 7,500, respectively, on March 26, 1998, and
on January 11, 1999, Mr. Horowitz's 1997 Form 5 was amended with respect to an
acquisition of 4,000 shares on December 17, 1997. On January 11, 1999, Angelo
Giusti filed a Form 5 with respect to the grant of options to purchase 2,500
shares of Common Stock on June 5, 1998.
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, 1999 and has further directed that management submit the selection
of independent accountants for ratification by the stockholders 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 through December 31,
1998.
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 1998 Annual Meeting of Shareholders (at
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
5
<PAGE>
Company and its stockholders. A representative of Berenson will not be present
at the Meeting to make a statement or to be available to respond to appropriate
questions.
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.
6
<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 and Class A Common Stock
as of May 4, 1999 for (i) each of the Company's directors (ii) each of the
Company's executive officers (iii) each stockholder 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:
<TABLE>
<CAPTION>
Beneficial Ownership
Common, and
Class A Common (1)
Percentage of
Name and address of Outstanding
Beneficial Owner Number (2) Stock
---------------- ---------- -----
<S> <C> <C>
George Q. Horowitz 611,794(3) 21.8%
c/o Active Apparel Group, Inc.
1350 Broadway, Suite 2300
New York, NY 10018
James K. Anderson 118,708(4) 4.2%
4903 163rd Ave., N.E.
Redmond, WA 98052
Rita Cinque Kriss 96,700(5) 3.4%
c/o Active Apparel Group, Inc.
1350 Broadway, Suite 2300
New York, NY 10018
Larry Kring 29,742(6) 1.1%
3265 126th Ave., N.E.
Bellevue, WA 98005
Edward R. Epstein 6,000(7) *
915 Middle River Drive
Suite 419
Fort Lauderdale, FL 33304
Angelo Giusti 3,533(8) *
19 Deer Path
Holmdel, NJ 07733
All directors and 866,477(3)(4) 31.0%
executive officers as a group (6 persons) (5)(6)(7)(8)
</TABLE>
(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.
(2) As of May 4, 1999, there were outstanding 2,492,581 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
7
<PAGE>
2,592,581 total shares outstanding (not including any unexercised
options) this represents 2,992,581 votes.
(3) Consists of (i) 478,128 shares of Common Stock (500 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) 33,666 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
15,000 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
16,666 shares at an exercise price $ 14.25 per share, which expire on
November 7, 2006.
(4) Consists of (i) 86,350 shares of Common Stock of which Mr. Anderson owns
80,000 shares of Common Stock with his wife, as joint tenants, and (ii)
32,358 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 @ $ 0.85 expires December 31, 2003
(F) 11,630 shares @ $ 3.30 expires June 30, 1999
(G) 4,200 shares @ $ 5.50 expires December 31, 1999
(H) 3,200 shares @ $ 11.75 expires November 3, 2002
(I) 3,200 shares @ $ 12.50 expires January 2, 2003
(J) 2,066 shares @ $ 14.75 expires January 3, 2004
(5) Consists of (i) 76,200 shares of Common Stock and (ii) 20,500 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) 10,000 shares of Common Stock at an exercise price of
$14.75 per share, which expire on December 13, 2006.
(6) Consists of (i) 10,388 shares of Common Stock and (ii) 19,354 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) 3,100 shares of Common Stock at $12.50 per share, which expire on
January 2, 2003, and (C) options to purchase 2,066 shares at an exercise
price of $14.75 per share, which expire on January 3, 2004. (D) 839
shares @ $ 1.75 expires December 31, 2004, (E) 839 shares @ $ 3.00
expires December 31, 2004, (F ) 839 shares @ $ 5.00 expires December 31,
2004, (G) 839 shares @ $ 6.25 expires December 31, 2004, (H) 3,762
shares @ $ 0.85 expires December 31, 2003, (I) 3,970 shares @ $ 3.30
expires June 30, 1999.
8
<PAGE>
(7) Consists of (i) 1,000 shares of Common Stock and (ii) 5,000 shares of
Common Stock issuable upon exercise of options exercisable currently or
within 60 days, including (A) options to purchase 3,000 shares of Common
Stock at an exercise price of $12.50 per share, which expire on January
2, 2003 and (B) options to purchase 2,000 shares of Common Stock at an
exercise price of $14.75 per share, which expire on January 3, 2004.
(8) Consists of (i) 700 shares of Common Stock (ii) 2,833 shares of Common
Stock issuable upon exercise of options exercisable currently or within
60 days including (A) 2,000 shares of Common Stock at an exercise price
of $14.75 per share which expire on January 3, 2004 and (B) 833 shares
of Common Stock at an exercise price of $2.094 per share which expire on
June 5, 2008.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
concerning total annual compensation paid to George Horowitz, the Company's
President, Chief Executive Officer and Treasurer, Rita Cinque Kriss, the
Company's Executive Vice President and Secretary and Angelo Giusti, Vice
President of Operations (the "Named Executive Officers"), for services rendered
in all capacities by them to the Company during fiscal years 1998, 1997 and,
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITIONS YEAR SALARY ($) BONUS ($) COMPENSATION COMPENSATION ($)
------------------- ---- ---------- --------- ------------ ----------------
($)
<S> <C> <C> <C> <C> <C>
George Horowitz(1) 1998 265,000 12,000 19,534(3) 853(6)
(President; Chief Executive
Officer; Treasurer) 1997 265,000 18,000 17,257(4) 595(6)
1996 250,000 24,000 18,635(5) 560(6)
Rita Cinque Kriss(1) 1998 140,000 0 20,308(7) 0
(Executive Vice President;
Secretary) 1997 140,000 12,000(2) 9,565(8) 0
1996 125,000 16,000 12,155(9) 0
Angelo Giusti(1) 1998 110,000 0 0 0
(Vice President of
Operations & Director) 1997 63,139(10) 0 0 0
</TABLE>
9
<PAGE>
(1) Other than George Horowitz, Rita Cinque Kriss and Angelo Giusti, no
executive officer of the Company was paid more than $100,000 in
total salary and bonus for Fiscal 1998, and accordingly, no other
executive 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 $19,534 paid to or on behalf of Mr.
Horowitz by the Company in Fiscal 1998 in connection with automobile
lease installment payments ($13,659), related insurance premiums
($1,088) and parking expenses ($4,787).
4) 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).
(5) 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).
(6) Represents premiums paid by the Company in Fiscal 1998, 1997 and
1996 on term life insurance policies for the benefit of Mr.
Horowitz.
(7) Consists of an aggregate of $12,732 paid to or on behalf of Ms.
Cinque Kriss by the Company in Fiscal 1998 in connection with
automobile lease installment payments ($8,019), related insurance
premiums ($3,806) and parking expenses ($907), and $7,576 for income
taxes on 1997 bonus.
(8) Consists of an aggregate of $9,565 paid to or on behalf of Ms.
Cinque Kriss by the Company in Fiscal 1997 in connection with
automobile lease installment payments ($5,601), related insurance
premiums ($1,846) and parking expenses ($2,118).
(9) Consists of an aggregate of $12,155 paid to or on behalf of Ms.
Cinque Kriss by the Company in Fiscal 1996 in connection with
automobile lease installment payments ($5,134), related insurance
premiums ($4,216) and parking expenses ($2,805).
(10) Mr. Giusti has been an employee of the Company since June 1997.
LONG-TERM INCENTIVE AND PENSION PLANS
The Company currently has no long-term incentive or defined pension
plans.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE
NAME GRANTED FISCAL YEAR ($/SH) EXPIRATION DATE
---- ------- ----------- ------ ---------------
Angelo Giusti 2,500 15.6% $2 3/32 6/5/08
There were no other option grants to Named Executive Officers during
the year ended December 31, 1998.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES TABLE
No stock options were exercised by the Named Executive Officers
during the year ended December 31, 1998. The following sets forth certain
information regarding unexercised options held by each of the Named Executive
Officers at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS AT
DECEMBER 31, 1998(#) DECEMBER 31, 1998($)(1)
-------------------- -----------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
George Horowitz 31,666 8,334 0 0
Rita Cinque Kriss 20,500 5,000 0 0
Angelo Giusti 1,000 4,500 0 $15,078
</TABLE>
(1) Represents the total gain that would be realized if all the
in-the-money options held at December 31, 1998 were exercised,
determined by multiplying the number of shares underlying the
options by the difference between the per share option exercise
price and the closing sale price of Common Stock of $ 8 1/8 per
share as reported on the Nasdaq SmallCap Market for December 31,
1998. An option is in-the-money if the fair market value of the
underlying shares exceeds the exercise price of the option.
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
11
<PAGE>
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. The Company is the beneficiary of
"key-executive" life insurance policies on George Horowitz in the amount of
$5,000,000.
RITA CINQUE KRISS. The Company and Rita Cinque Kriss are parties to an
employment agreement, dated as of August 1, 1994, pursuant to which Ms. Cinque
Kriss serves as Executive Vice President of the Company, for which Ms. Cinque
Kriss 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 and will continue to be renewed for additional one-year
periods unless either Ms. Cinque Kriss 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
Kriss 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 Kriss 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 Kriss is
also entitled to receive reimbursement for all reasonable out-of-pocket expenses
that she incurs relating to her services under such agreement. The Company is
the beneficiary of a "key-executive" life insurance policy on Rita Cinque Kriss
in the amounts of $1,000,000.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Edward R. Epstein, a Director, was paid $67,736 for legal
services for the year ending December 31, 1998
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 January 11, 2000.
Management of the Company is allowed to use its discretionary proxy voting
authority in connection with any shareholder proposal received by the Company
after March 26, 2000 intended for presentation from the floor of the next annual
meeting of shareholders.
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, 1998, 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 May 4, 1999. For further copies, please contact:
Secretary, ACTIVE APPAREL GROUP, INC., 1350 Broadway, Suite 2300, New York, NY
10018.
May 4, 1999
By Order of the Board of Directors
George Q. Horowitz
President, Chief Executive Officer
and Chairman of the Board
13
<PAGE>
ACTIVE APPAREL GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
JUNE 11, 1999
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 11, 1999 at 10:00 A.M. local
time, at The Kitano, 66 Park Avenue, New York, New York 10016 in the Park Avenue
Room on the 18th 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 Kriss,
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.
Dated:___________, 1999
----------------------------------
Signature
----------------------------------
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.
