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)
Robert H. Friedman, Esq.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
(212) 753-7200
- --------------------------------------------------------------------------------
(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 paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
<PAGE>
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 2000 Annual Meeting of Shareholders
of Active Apparel Group, Inc. (the "Company") will be held on Friday, June 9,
2000 at 10:00 AM local time at The Doral Park Avenue, 70 Park Avenue (at 38th
Street), New York, New York 10016, in the Morgan Room on the 2nd 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,
2000 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 (the "Board") of Active
Apparel Group, Inc. (the "Company") to be voted at the Annual Meeting of
Shareholders to be held on Friday, June 9, 2000 at 10:00 AM local time at The
Doral Park Avenue, 70 Park Avenue (at 38th Street), New York, New York 10016, in
the Morgan Room on the 2nd 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 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, 2000
are entitled to notice of, and to vote at the Meeting. As of May 4, 2000 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 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
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.
<PAGE>
The approximate date on which the enclosed form of proxy and this
proxy statement are first being sent to shareholders is May 12, 2000.
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, 2000, 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. 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.
The Board has unanimously approved the above-named nominees for
directors. The Board recommends a vote FOR all of these nominees.
MANAGEMENT
Directors and Executive Officers
Name Age Year of First Position
Election
George Horowitz 50 1992 President; Chief Executive
Officer; Chairman of the Board;
Treasurer; Director(1)
James Anderson 63 1992 Vice Chairman of the Board;
Director(1)(2)
Rita Cinque Kriss 34 1994 Executive Vice President;
Secretary of the Company;
Director(3)
Larry Kring 59 1993 Director(2)(3)
Edward Epstein 60 1996 Director(2)(3)
Angelo Giusti 49 1997 Director(2)
(1) Member of the Executive Committee of the Board
(2) Member of the Compensation Committee of the Board
(3) Member of the Audit Committee of the Board
Mr. George Horowitz is the Chairman, Chief Executive Officer
("CEO")and President of the Company and has served in such capacities since his
founding of the Company in 1992. Mr. Horowitz, formerly an educator, entered the
apparel industry in 1976. Mr. Horowitz was employed by Golden Touch Imports,
Inc., an apparel company in New York City, where he served as Vice President of
Operations and was a shareholder of that company. The media frequently calls
upon Mr. Horowitz for his views on issues pertaining to the Company and the
industry in general. He has
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appeared on numerous television talk shows, such as CNBC's "Squawk Box" and
"Market Wrap," CNN's "Business Day" and "Moneyline News Hour with Lou Dobbs,"
and Fox News Channel's "Cavuto Business Report," among others. He has been
included in the Sportstyle Magazine's Top 100 most influential people in the
sporting goods industry for 3 consecutive years. He is currently serving on the
Executive Committee for the Sports Apparel Product Council of the Sporting Goods
Manufacturers Association. Mr. Horowitz is also a member of the International
Radio and Television Society Foundation, Inc. He has been a speaker for several
industry events, including the Women's Wear Daily CEO Annual Summit and the
Fashion Round Table. Mr. Horowitz was chosen along with other selected top
leaders in the fashion industry to join President Clinton for an evening
celebrating The William Jefferson Clinton Presidential Library Foundation. He
serves as a member of the Benefit Committee of Fashion and Media Leaders for the
NOW Legal Defense and Education Fund. Mr. Horowitz has been involved in various
civic and sports related activities. He is a member of the Three Miles of Men
Honorary Committee for The Susan G. Komen Breast Cancer Foundation New York City
Race for the Cure. He has also served in different capacities as a leader and a
mentor to the youth in his community.
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 and
Chairman of the Board of Directors of Reality Based Learning Corp.
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 more than 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 New York
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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 also
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 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.
The Board of Directors of the Company met six (6) times during
the fiscal year ended December 31, 1999. 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
As compensation for their services as directors of the
Company, effective January 1, 1995, non-employee directors of the Company
receive options to purchase the Company's Common Stock pursuant to the Company's
1995 Non-Employee Director Stock Option Plan. The plan provides for annual
automatic grants of options to purchase 3,000 shares of Common Stock to each
director serving at the time of the grant who is not an officer or employee of
the Company. The Chairman and Secretary of the Board (provided they are not
officers or employees of the Company) and the chairperson of a Board committee
also receive an automatic grant of options to purchase an additional 200 shares
of Common Stock, provided he or she is not an officer or employee of the
Company. Each member of a committee of the Board, provided the or she is not an
officer or employee of the Company, also receives an automatic grant of options
to purchase an additional 100 shares of Common Stock. The exercise price per
share for all such options is the fair market value of the shares of Common
Stock covered by the option on the date of grant of such option. The term of
each option is seven years from the date of grant, and the options vest in three
equal installments on the first, second and third anniversaries of the date of
grant. Effective January 1, 1998, each non-employee director was to receive a
fee of $6,000 payable quarterly at the end of each quarter. For the fiscal year
ended December 31, 1999, Mr. James Anderson, Mr. Edward Epstein and Mr. Larry
Kring each received a total of $6,000. Directors also receive reimbursement of
expenses incurred by them in performing their duties and in attending Board
meetings, provided such expenses are reasonable and evidenced by appropriate
documentation.
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 is responsible for
such special matters are determined by the Board from time to time. The
Executive Committee met four (4) times during the fiscal year ended December 31,
1999. All members of the Executive Committee attended at least 75% of its
meetings.
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<PAGE>
The members of the Compensation Committee are James Anderson,
its Chairman, Larry Kring, Edward Epstein and Angelo Giusti. This committee is
responsible for 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. The Compensation Committee met five (5) times
during the fiscal year ended December 31, 1999. All members of the Compensation
Committee attended at least 75% of its meetings.
The members of the Audit Committee are Larry Kring, its
Chairman, Rita Cinque Kriss and Edward Epstein. This committee is responsible
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 the
appointment of the independent accountants. The Audit Committee met two (2)
times during the fiscal year ended December 31, 1999. All members of the Audit
Committee attended both its meetings.
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, 1999, all
required Section 16(a) filings by beneficial owners were complied with.
PROPOSAL 2 -- RATIFICATION OF THE COMPANY'S AUDITORS
The Board has selected Berenson & Company LLP ("Berenson") as
the Company's independent accountants for the fiscal year ending December 31,
2000 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,
1999.
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 1999 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
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any time during the year if they determine that such a change would be in the
best interest of the 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.
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<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, 2000 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)
Name and Address of Number (2) Percentage of
Beneficial Owner --------- Outstanding Stock
---------------- -----------------
<S> <C> <C>
George Q. Horowitz 624,795(3) 23.7%
c/o Active Apparel Group, Inc.
1350 Broadway, Suite 2300
New York, NY 10018
James K. Anderson 104,662(4) 4.0%
4903 163rd Ave., N.E.
Redmond, WA 98052
Rita Cinque Kriss 106,033(5) 4.0%
c/o Active Apparel Group, Inc.
1350 Broadway, Suite 2300
New York, NY 10018
Larry Kring 29,522(6) 1.1%
3265 126th Ave., N.E.
Bellevue, WA 98005
Edward R. Epstein 8,867(7) *
915 Middle River Drive
Suite 419
Fort Lauderdale, FL 33304
Angelo Giusti 6,200(8) *
19 Deer Path
Holmdel, NJ 07733
All directors and 880,079(3) (4) 32.3%
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
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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, 2000, 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 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 and (iii) 46,667 shares of Common Stock issuable upon exercise
of options exercisable currently or within 60 days, including (A)
options to purchase 15,000 shares granted by the Company at the
exercise price of $2.23 per share, which expire on November 3, 2005,
(B) options to purchase 25,000 shares at an exercise price $2.23 per
share, which expire on November 7, 2006, and (C) options to purchase
6,667 shares at an exercise price of $3.97 per share, which expire
March 22, 2009.
(4) Consists of (i) 84,300 shares of Common Stock of which Mr. Anderson
owns 44,300 shares of Common Stock with his wife, as joint tenants,
and (ii) 20,362 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) 3,200 shares @ $ 2.23 expires November 3, 2002
(G) 3,200 shares @ $ 2.23 expires January 2, 2003
(H) 3,100 shares @ $ 2.23 expires January 3, 2004
(I) 1,733 shares @ $ 3.59 expires January 2, 2005
(J) 1,067 shares @ $ 9.38 expires January 3, 2006
(5) Consists of (i) 77,200 shares of Common Stock and (ii) 28,833 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 $2.23 per share, which
expire on November 3, 2005 and (B) 15,000 shares of Common Stock at an
exercise price of $2.23 per share, which expire on December 13, 2006
and (C) 3,333 shares of Common Stock, at an exercise price of $3.97
per share which expire March 22, 2009.
(6) Consists of (i) 10,338 shares of Common Stock and (ii) 19,184 shares of
Common Stock issuable upon the exercise of options currently
exercisable 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) 3,762 shares @ $ 0.85 expires December 31, 2003
(F) 3,100 shares @ $ 2.23 expires November 3, 2002
(G) 3,100 shares @ $ 2.23 expires January 2, 2003
(H) 3,100 shares @ $ 2.23 expires January 3, 2004
(I) 1,733 shares @ $ 3.59 expires January 2, 2005
(J) 1,033 shares @ $ 9.38 expires January 3, 2006
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(7) Consists of 8,867 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 $2.23
per share, which expire on January 2, 2003 and (B) options to purchase
3,000 shares of Common Stock at an exercise price of $2.23 per share,
which expire on January 3, 2004, (C) 1,800 shares of Common Stock at
an exercise price of $3.59 which expire January 2, 2005, (D) 1,067
shares at an exercise price of $9.38 which expire January 3, 2006.
(8) Consists of (i) 700 shares of Common Stock and (ii) 5,500 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 $2.23 per share, which expire on
January 3, 2004 and (B) options to purchase 1,667 shares of Common
Stock at an exercise price of $2.094 per share, which expire on June
6, 2008, (C) 833 shares of Common Stock at an exercise price of $3.97
which expire March 22, 2009.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain
information concerning total annual compensation paid to George Horowitz, the
Company's President, Chief Executive Officer and Treasurer, Rita Cinque Kriss,
the Company's Executive Vice President and Secretary and Angelo Giusti, Vice
President of Operations (the "Named Executive Officers"), for services rendered
in all capacities by them to the Company during fiscal years 1999, 1998 and,
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Securities
Other Annual All Other Underling
Name and Compensation Compensation Options(11)
Principal Positions(1) Year Salary ($) Bonus ($) ($) ($) (#)
---------------------- ---- ---------- --------- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
George Horowitz
(President; Chief Executive Officer; 1999 277,697 21,000 21,068(3) 983(6) 40,000
Treasurer) 1998 265,000 12,000 19,534(4) 853(6) 0
1997 265,000 18,000 17,257(5) 595(6) 0
Rita Cinque Kriss
(Executive vice President; Secretary) 1999 128,462 18,265 12,048(7) 0 25,500
1998 140,000 0 20,308(8) 0 0
1997 140,000 12,000(2) 9,565(9) 0 0
Angelo Giusti
(Vice President of Operations & Director) 1999 121,846 3,000 0 0 3,000
1998 110,000 0 0 0 0
1997 63,139(10) 0 0 0 0
</TABLE>
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(1) Other than George Horowitz , Rita Cinque Kriss and Angelo Giusti, no
Named Executive Officer of the Company was paid more than $100,000 in
total salary and bonus for fiscal year 1999, and accordingly, no other
Named 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 $21,068 paid to or on behalf of Mr. Horowitz
by the Company in fiscal year 1999 in connection with automobile lease
installment payments ($15,242), related insurance premiums ($1,422) and
parking expenses ($4,404).
(4) Consists of an aggregate of $19,534 paid to or on behalf of Mr. Horowitz
by the Company in fiscal year 1998 in connection with automobile lease
installment payments ($13,659), related insurance premiums ($1,088) and
parking expenses ($4,787).
(5) Consists of an aggregate of $17,257 paid to or on behalf of Mr. Horowitz
by the Company in fiscal year 1997 in connection with automobile lease
installment payments ($13,660), related insurance premiums ($1,088) and
parking expenses ($2,509).
(6) Represents premiums paid by the Company in fiscal year 1999, 1998 and
1997 on term life Insurance policies for the benefit of Mr. Horowitz.
(7) Consists of an aggregate of $12,048 paid to or on behalf of Ms. Cinque
Kriss by the Company in fiscal year 1999 in connection with automobile
lease installment payments ($9,558), and related insurance premiums
($2,490).
(8) Consists of an aggregate of $12,732 paid to or on behalf of Ms. Cinque
Kriss by the Company in fiscal year 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.
(9) Consists of an aggregate of $9,565 paid to or on behalf of Ms. Cinque
Kriss by the Company in fiscal year 1997 in connection with automobile
lease installment payments ($5,601), related insurance premiums ($1,846)
and parking expenses ($2,118).
(10) Mr. Giusti has been an employee of the Company since June 1997.
(11) See report on repricing of options section for details of repriced
options.
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Long-Term Incentive and Pension Plans
The Company currently has no long-term incentive or defined
pension plans. The Company offers all employees a 401(k) savings plan that
allows the employee to voluntarily defer a certain portion of their income
before taxes. The Company pays all the administrative fees for the plan.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted To Exercise Or
Options Employees in Base Price
Name Granted Fiscal Year ($/Sh) Expiration Date
---- ------- ----------- ------ ---------------
<S> <C> <C> <C> <C>
George Horowitz 20,000 18.5% $3.97 3/22/09
20,000 18.5% $2.23 12/31/09
Rita Cinque Kriss 10,000 9.3% $3.97 3/22/09
10,000 9.3% $2.23 12/31/09
Angelo Giusti 2,500 2.3% $3.97 3/22/09
2,500 2.3% $2.23 12/31/09
</TABLE>
There were no other option grants to Named Executive Officers
during the year ended December 31, 1999.
Aggregated Option Exercises and Year-End Option Values Table
No stock options were exercised by the Named Executive Officers
during the year ended December 31, 1999. The following sets forth certain
information regarding unexercised options held by each of the Named Executive
Officers at December 31, 1999.
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options Held at Options at
December 31, 1999(#) December 31, 1999($)(1)
-------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
George Horowitz 46,667 33,333 0 0
Rita Cinque Kriss 28,833 16,667 0 0
Angelo Giusti 5,500 5,000 $ 193(2) $ 97
(1) Represents the total realized if all the in-the-money options held at
December 31, 1999 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 $ 2.21 per share as reported on the Nasdaq SmallCap Market for
December 31, 1999. An option is
11
<PAGE>
in-the-money if the fair market value of the underlying shares exceeds
the exercise price of the option.
(2) Includes options which are exercisable within 60 days hereof at
an exercise price of $2.094.
Employment Contracts
The Company and George Horowitz are parties to an employment agreement,
dated as of January 1, 2000 (the "Agreement") pursuant to which Mr. Horowitz
will serve as the President and Chief Executive Officer of the Company through
December 31, 2005 (the "Term"). Mr. Horowitz's annual salary shall initially be
$320,000 (the "Base Salary") and shall be considered for increase by the Board.
In addition to the Base Salary, Mr. Horowitz is entitled to an annual cash bonus
(the "Cash Bonus") based upon certain "net sales" and "before tax profits"
targets. Mr. Horowitz is also entitled to receive under the Agreement a monthly
automobile allowance, reimbursement for parking expenses, health and medical
insurance, and participation 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. The Company has
also agreed to include Mr. Horowitz as a named insured in any director or
officer liability insurance policy the Company maintains on the same basis as is
made available to the directors and other executive officers of the Company. The
Agreement generally restricts Mr. Horowitz from disclosing certain confidential
information during the Term and for a period of one year following the Term, and
further restricts Mr. Horowitz from competing with the Company for a period of
one year following the Term. The Agreement may be terminated by Mr. Horowitz for
"good reason" or the Company "for cause". If the Agreement is terminated by the
Company "for cause" or in the event of the resignation by Mr. Horowitz without
"good reason," the obligations of the Company under the Agreement will terminate
(except with respect to certain indemnification provisions). In the event of
termination of the Agreement by reason of Mr. Horowitz's death, his estate is
entitled to receive the pro-rata amount of the Cash Bonus as of the time of his
death at the end of the same fiscal year. If Mr. Horowitz's employment is
terminated due to a Change of Control (as defined in the Agreement), he will be
entitled to a lump sum payment of 2.99 times the sum of the Base Salary, Cash
Bonus and benefits, and payment for expenses incurred as a result of such
termination and any deferred compensation, including but not limited to deferred
bonuses allocated or credited to Mr. Horowitz as of the date of his termination.
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
12
<PAGE>
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 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, 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.
Report on Repricing of Options
On December 31, 1999, the Company's Board approved the
cancellation and replacement grant with a new exercise price of previously
granted options under the 1993 Employee Stock Option Plan and the 1995
Non-Employee Directors Option Plan (collectively referred to as the "Option
Plans") to its directors as follows:
No. of Option Original Option
Director Shares Exercise Price
George Horowitz 15,000 $11.75
25,000 $14.25
James Anderson 3,200 $11.75
3,200 $12.50
3,100 $14.25
Rita Cinque-Kriss 10,500 $11.75
15,000 $14.75
Larry Kring 3,100 $11.75
3,100 $12.50
3,100 $14.75
Edward Epstein 3,000 $12.50
3,000 $14.75
Angelo Giusti 3,000 $14.75
The Board determined that the original option exercise prices
shown above were significantly in excess of the then current market price of the
Common Stock, and was not fulfilling its designated purpose under their
respective Option Plans of providing the various directors incentive to remain
in
13
<PAGE>
the employ and service of the Company and to stimulate their efforts on behalf
of the Company. Accordingly, to restore the purpose for which the options were
granted, the exercise price of the options was reduced to $2.23, the average of
the high and low trading price of the Common Stock as quoted on the Nasdaq
SmallCap Market on December 30, 1999. All replacement options are immediately
exercisable and terminate based on their respective original termination date.
This action was taken to help restore the incentive value of the options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Edward R. Epstein, a Director, was paid $93,889 for legal services for
the year ending December 31, 1999.
The Company had a promissory note dated December 23, 1996 with Mr.
George Q. Horowitz, President and Chief Executive Officer of the Company, in the
amount of $120,000 that was due July 31, 2000. The unpaid principal bears
interest at prime plus 1 1/2%. This note was refinanced on December 31, 1999 in
the amount of $91,200 and is due on July 31, 2009.
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 9, 2001.
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 24, 2001 intended for presentation from the floor of the next annual
meeting of shareholders.
OTHER MATTERS
The Board 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, 1999, 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, 2000. For further copies, please contact:
Secretary, ACTIVE APPAREL GROUP, INC., 1350 Broadway, Suite 2300, New York, NY
10018.
May 4, 2000
By Order of the Board of Directors
/s/ George Q Horowitz
George Q Horowitz
President, Chief Executive Officer
and Chairman of the Board
<PAGE>
ACTIVE APPAREL GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
JUNE 9, 2000
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 9, 2000 at 10:00 A.M. local time,
at The Doral Park Avenue, 70 Park Avenue (at 38th Street), New York, New York
10016 in the Morgan Room on the 2nd 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
listed below below
/ / / /
except for the 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 SPECIFICATIONS
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:___________, 2000
----------------------------------
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.
-2-
