<PAGE>
SCHEDULE 14A
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 (S)240.14a-11(c) or (S)240.14a-12
JACLYN, INC.
---------------------------------------------
(Name of Registrant as Specified in Its Charter)
________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11(Set forth the amount on which the filing fee is
calculated and state how it was determined):
_______________________________________________________________________
4) Proposed Maximum aggregate value of transaction:
_______________________________________________________________________
<PAGE>
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:
_______________________________________________________________________
-2-
<PAGE>
JACLYN, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To The Stockholders Of
JACLYN, INC.
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of JACLYN, INC.
(the "Company") will be held at the offices of the Company, 635 59th Street,
West New York, New Jersey 07093, on Tuesday, December 3, 1996, at 9:30 o'clock
a.m., prevailing local time, for the following purposes:
1. To elect seven directors to serve until the next annual meeting of
stockholders and until their respective successors are duly elected and
qualified;
2. To approve the Company's 1996 Non-Employee Director Stock Option Plan;
3. To ratify the appointment of Deloitte & Touche LLP, independent
auditors, to serve as the auditors of the Company for the fiscal year ending
June 30, 1997; and
4. To transact such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.
Only stockholders of record at the close of business on October 25, 1996 are
entitled to notice of and to vote at the Annual Meeting and at any adjournment
thereof.
Your attention is called to the Proxy Statement on the following pages. We
hope that you will attend the Annual Meeting. If you do not plan to attend,
please complete, sign, date and mail the enclosed proxy in the envelope
provided, which requires no postage if mailed in the United States.
By Order of the Board of Directors
Jaclyn Hartstein
Secretary
October 31, 1996
THE BOARD OF DIRECTORS REQUESTS ALL STOCKHOLDERS TO COMPLETE, DATE, SIGN AND
MAIL PROMPTLY THE ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
<PAGE>
JACLYN, INC.
635 59TH STREET
WEST NEW YORK, NEW JERSEY 07093
-----------------
PROXY STATEMENT
-----------------
This Proxy Statement is being furnished to stockholders on or about October
31, 1996 in connection with the solicitation by the Board of Directors of
Jaclyn, Inc. (the "Company") of proxies in the enclosed form for use at the
Annual Meeting of Stockholders to be held on December 3, 1996 and at any
adjournments thereof (the "Annual Meeting"). Any proxy given pursuant to such
solicitation and received in time for the Annual Meeting will be voted with
respect to all shares represented by it in accordance with the instructions,
if any, given in such proxy. Any proxy may be revoked by the person giving the
proxy by written notice received by the Secretary of the Company at any time
prior to its use or by voting in person at the Annual Meeting.
Only stockholders of record at the close of business on October 25, 1996
will be entitled to notice of and to vote at the Annual Meeting. On October
25, 1996, there were outstanding 2,691,405 shares of the Company's Common
Stock, $1 par value per share ("Common Stock"). Each share of Common Stock
entitles the record holder thereof to one vote. The holders of a majority of
the outstanding shares of Common Stock, represented in person or by proxy,
will constitute a quorum for the transaction of business.
The affirmative vote of a plurality of votes cast at the Annual Meeting is
required to elect directors. The affirmative vote of a majority of shares of
Common Stock present, in person or by proxy, and entitled to vote at the
Annual Meeting will be required to approve the Company's 1996 Non-Employee
Director Stock Option Plan (the "1996 Plan") and to ratify the appointment of
Deloitte & Touche LLP as the Company's independent auditors for the fiscal
year ending June 30, 1997.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The following table sets forth information at October 25, 1996 with respect
to each person (including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) who is known to the
Company to be the beneficial owner of more than 5% of the Company's Common
Stock, its only class of voting securities:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP* CLASS
------------------- ---------- -------
<S> <C> <C>
Allan Ginsburg............................ 217,586 (1)(2)(3)(4) 8.0%
635 59th Street
West New York, New Jersey 07093
Robert Chestnov........................... 197,381 (1)(2)(3)(5) 7.2%
635 59th Street
West New York, New Jersey 07093
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP* CLASS
------------------- ---------- -------
<S> <C> <C>
Howard Ginsburg........................... 186,147 (1)(2)(3)(6) 6.8%
635 59th Street
West New York, New Jersey 07093
Bonnie Sue Levy........................... 220,626 (1)(7) 8.2%
635 59th Streett
West New York, New Jersey 07093
Jaclyn, Inc. Employee Stock............... 172,703 6.4%
Ownership Plan
c/o Jaclyn, Inc.
635 59th Street
West New York, New Jersey 07093
Dimensional Fund Advisors................. 183,773 (8) 6.8%
1299 Ocean Avenue
Santa Monica, California 90401
</TABLE>
- ------------
* Except as otherwise indicated below, each person listed above has sole
voting and investment power with respect to the shares indicated as
beneficially owned by such person.
(1) Such stockholder is a party, along with certain of his or her family
members, trusts and custodianships for the benefit of such stockholder and
his or her family members, and the Company, to a stockholders agreement,
described below under the caption "Stockholders Agreement," which
provides, among other things, that a committee of four of the signatory
stockholders may direct the vote of the shares as to which such
stockholder may have or share voting power. At October 25, 1996, 1,044,195
shares of Common Stock (38.8%) were subject to such stockholders
agreement.
(2) Includes 22,654 shares of Common Stock owned by the Jaclyn, Inc.
Employees' Pension Trust, of which Messrs. Abe Ginsburg, Allan Ginsburg,
Robert Chestnov and Howard Ginsburg are co-trustees, with respect to which
each shares voting and investment power and with respect to which each
disclaims beneficial ownership. See the table below under the caption
"SECURITY OWNERSHIP OF MANAGEMENT" for certain information with respect to
the beneficial ownership by Abe Ginsburg of Common Stock of the Company.
(3) Except as described in footnotes (4), (5) and (6) to this table and
footnote (2) to the table below under the caption "SECURITY OWNERSHIP OF
MANAGEMENT" with respect to Messrs. Allan Ginsburg, Robert Chestnov,
Howard Ginsburg and Abe Ginsburg, respectively, excludes 172,703 shares of
Common Stock owned by the Jaclyn, Inc. Employee Stock Ownership Plan,
("ESOP"), with respect to which Messrs. Abe Ginsburg, Allan Ginsburg,
Robert Chestnov and Howard Ginsburg, as co-trustees, share investment
power. If the 172,703 shares of Common Stock owned by the ESOP were
included in the beneficial ownership of such individuals, Abe Ginsburg
would be deemed to own 10.0% of the Company's Common Stock; Allan
Ginsburg, 14.0%; Robert Chestnov, 13.2%; and Howard Ginsburg, 12.7%. Each
disclaims beneficial ownership of such shares.
2
<PAGE>
(4) Includes 39,307 shares of Common Stock which Allan Ginsburg has the right
to acquire pursuant to presently exercisable stock options. Also includes
21,984 shares of Common Stock held of record by Mr. Ginsburg as custodian
for his children, 10,769 shares owned by Mr. Ginsburg's wife and 2,609
shares owned by a charitable foundation of which Mr. Ginsburg serves as an
officer and trustee, with respect to which Mr. Ginsburg shares voting and
investment power. Mr. Ginsburg disclaims beneficial ownership of all of
such shares. In addition, includes 9,109 shares allocated to Mr.
Ginsburg's account under the ESOP.
(5) Includes 40,776 shares of Common Stock which Robert Chestnov has the right
to acquire pursuant to presently exercisable stock options. Also includes
35,200 shares held of record by Mr. Chestnov as trustee of two trusts with
respect to which he shares voting power and has sole investment power,
27,423 shares held of record by Mr. Chestnov as co-trustee of a trust with
respect to which he shares voting and investment power and 3,500 shares
owned by a charitable foundation of which Mr. Chestnov serves as an
officer and director, with respect to which Mr. Chestnov shares voting and
investment power. Mr. Chestnov disclaims beneficial ownership of the
shares he holds as trustee, co-trustee and as officer and director of the
charitable foundation. In addition, includes 372 shares of Common Stock
owned by Mr. Chestnov's wife and 6,906 shares held of record by her as
custodian for their children, with respect to which shares Mr. Chestnov
disclaims beneficial ownership, and 9,109 shares allocated to Mr.
Chestnov's account under the ESOP.
(6) Includes 39,307 shares of Common Stock which Howard Ginsburg has the right
to acquire pursuant to presently exercisable stock options. Also includes
55,114 shares of Common Stock held of record by Mr. Howard Ginsburg as
custodian for his children and 1,800 shares owned by his wife, with
respect to all of which shares Mr. Ginsburg disclaims beneficial
ownership. In addition, includes 9,109 shares allocated to Mr. Ginsburg's
account under the ESOP.
(7) Includes 12,500 shares of Common Stock which Mrs. Levy has the right to
acquire pursuant to presently exercisable stock options and 4,322 shares
allocated to Mrs. Levy's account under the ESOP.
(8) Pursuant to a Schedule 13G, as amended, filed by Dimensional Fund Advisors
Inc. ("DFA") with the Securities and Exchange Commission, DFA has
indicated that all shares listed in the immediately preceding table
opposite its name are owned by advisory clients of DFA, no one of which,
to DFA's knowledge, owns more than 5% of the Company's Common Stock. DFA
has indicated that it has sole dispositive power with respect to all such
shares of Common Stock, that it has sole voting power with respect to
113,846 of such shares and that certain of its officers, who also serve as
officers of DFA Investment Dimensions Group Inc. (the "Fund") and The DFA
Investment Trust Company (the "Trust"), each an open-end management
investment company registered under the Investment Company Act of 1940, in
their capacities as officers of the Fund and the Trust, vote 14,500
additional shares of Common Stock which are owned by the Fund and 55,427
shares of Common Stock which are owned by the Trust.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information at October 25, 1996 as to the
ownership of shares of the Company's Common Stock, its only outstanding class
of equity securities, with respect to (a) each director and nominee for
director, (b) each executive officer named in the Summary Compensation Table
under the caption "EXECUTIVE COMPENSATION" below and (c) all directors and
executive officers of the Company as a group (10 persons):
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP (1) CLASS
------------------------ ------------- -------
<S> <C> <C>
Abe Ginsburg............................................. 95,536 (2) 3.5%
Allan Ginsburg........................................... 217,586 (3) 8.0%
Robert Chestnov.......................................... 197,381 (4) 7.2%
Howard Ginsburg.......................................... 186,147 (5) 6.8%
Norman Seiden............................................ 808 *
Martin Brody............................................. 387 *
Michael Singer........................................... -- --
Richard Chestnov......................................... 46,273 (6) 1.7%
Anthony Christon......................................... 20,000 (7) *
Bonnie Sue Levy.......................................... 220,626 (8) 8.2%
All directors and executive officers as a group (10 per-
sons)................................................... 889,359 (9) 31.3%
</TABLE>
- ------------
* Less than one (1%) percent.
(1) Except as otherwise indicated below, each person named above and each
person in the group referred to above has sole voting and investment power
with respect to shares indicated as beneficially owned by such person or
group.
(2) Reference is made to footnotes (1), (2) and (3) to the table above under
the caption "SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS". Includes
53,244 shares of Common Stock and 2,581 shares of Common Stock,
respectively, owned by two charitable foundations in which Abe Ginsburg
serves as an officer and director, with respect to which Mr. Ginsburg
shares voting and investment power. Mr. Ginsburg disclaims beneficial
ownership of such shares. Also includes 14,040 shares of Common Stock
owned by Mr. Ginsburg's wife, with respect to which he disclaims
beneficial ownership, and 385 shares allocated to Mr. Ginsburg's account
under the ESOP.
(3) See footnotes (1), (2), (3) and (4) to the table above under the caption
"SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS" for certain information
concerning the beneficial ownership by Allan Ginsburg of Common Stock of
the Company.
(4) See footnotes (1), (2), (3) and (5) to the table above under the caption
"SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS" for certain information
concerning the beneficial ownership by Robert Chestnov of Common Stock of
the Company.
(5) See footnotes (1), (2), (3) and (6) to the table above under the caption
"SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS" for certain information
concerning the beneficial ownership by Howard Ginsburg of Common Stock of
the Company.
4
<PAGE>
(6) Richard Chestnov holds 27,423 of the shares set opposite his name as co-
trustee of a trust, 3,500 of the shares set opposite his name as an
officer and director of a charitable foundation, with respect to which, in
each case, he shares voting and investment power, and 200 shares as
custodian for his child. Mr. Chestnov disclaims beneficial ownership of
such shares.
(7) These shares are issuable to Mr. Christon pursuant to presently
exercisable stock options.
(8) See footnotes (1) and (7) to the table above under the caption "SECURITY
OWNERSHIP BY CERTAIN BENEFICIAL OWNERS" for certain information concerning
the beneficial ownership by Bonnie Sue Levy of Common Stock of the
Company.
(9) Reference is made to footnotes (2) through (8) above. Includes an
aggregate of 151,890 shares of Common Stock which executive officers of
the Company have the right to acquire pursuant to presently exercisable
stock options and an aggregate of 32,034 shares of Common Stock allocated
to the respective accounts of executive officers of the Company under the
ESOP.
STOCKHOLDERS AGREEMENT.
Messrs. Abe Ginsburg, Allan Ginsburg, Robert Chestnov and Howard Ginsburg,
certain other family members, trusts and custodianships for the benefit of
such individuals and family members, and the Company are parties to an amended
and restated stockholders agreement dated as of July 30, 1996 ("Stockholders
Agreement"). The Stockholders Agreement, among other things, entitles Messrs.
Abe Ginsburg, Allan Ginsburg, Robert Chestnov and Howard Ginsburg, in their
capacity as a stockholders' committee (in such capacity, collectively, the
"Stockholders Committee"), acting by the vote of at least two-thirds, or by
the unanimous written consent, of the members of the Stockholders Committee,
for a period of ten years from the date of the Stockholders Agreement, to
direct the voting of the shares of Common Stock with respect to which the
signatory stockholders have or share, or may hereafter have or share, voting
power with respect to all matters submitted to stockholders of the Company at
any annual or special meeting of stockholders of the Company or pursuant to a
written consent in lieu thereof. At October 25, 1996, the Stockholders
Committee was entitled, pursuant to the Stockholders Agreement, to direct the
vote as to 1,044,195 shares of Common Stock (38.8%).
ITEM 1: ELECTION OF DIRECTORS
NOMINEES FOR ELECTION.
A Board of Directors consisting of seven directors is to be elected by
stockholders at the Annual Meeting to hold office until the next annual
meeting of stockholders and until their respective successors are duly elected
and qualified. The number of directors currently comprising the entire Board
of Directors is eight. However, Norman Seiden has informed the Board of
Directors that he will not seek re-election to the Board and that, effective
with the election of directors at the Annual Meeting, he will retire from the
Board of Directors after 28 years of distinguished service to the Company. At
such time, the number of directors comprising the entire Board of Directors
will be reduced to seven.
Unless otherwise specified in the proxies, the shares represented by all
proxies received will be voted for the election of the nominees named in the
following table, all of whom are now directors of the Company. All nominees
have consented to being named in this Proxy Statement and to serve if elected.
While the Board of Directors has no reason to believe that any of those named
will not be available as a candidate for election as a director of the
Company, should such a situation arise, proxies may be voted for the election
of the remaining named nominees and for such substitute nominee or nominees as
the holders of the proxies may determine.
5
<PAGE>
Certain information with respect to each director is set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION
---- --- -------- --------------------
<S> <C> <C> <C>
NOMINEES:
Abe Ginsburg ........................... 79 1968 Chairman of the Executive Committee
of the Company
Allan Ginsburg.......................... 54 1968 Chairman of the Board of the Company
Robert Chestnov......................... 48 1981 President and Chief Executive
Officer of the Company
Howard Ginsburg......................... 54 1981 Vice Chairman of the Board of of the
Company; President of the Company's
Shane Handbag Division
Martin Brody............................ 75 1980 Private Investor
Michael Singer.......................... 68 1981 Chairman of the Board and Chief
Executive Officer of Kennington
Industries, Inc., a corporation
engaged in forms, graphics and
systems design
Richard Chestnov........................ 51 1988 Partner of Chego International, an
apparel importer
<CAPTION>
DIRECTOR WHOSE TERM OF OFFICE WILL
NOT CONTINUE AFTER THE ANNUAL
MEETING
- ----------------------------------
<S> <C> <C> <C>
Norman Seiden........................... 71 1968 Vice President of Herrod
Construction Co., a construction
company
</TABLE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS.
The business experience during the last five years of the directors of the
Company is as follows:
Abe Ginsburg has been Chairman of the Executive Committee of the Company
since November 29, 1988.
Allan Ginsburg has been Chairman of the Board of the Company since November
29, 1988.
Robert Chestnov has been the President and Chief Executive Officer of the
Company since November 29, 1988.
Howard Ginsburg has been Vice Chairman of the Board of the Company since
November 29, 1988 and has been President of the Company's Shane Handbag
Division for more than the past five years.
Norman Seiden has been Vice President of Herrod Construction Co., a
construction company, since January 1996 and was its President for more than
five years prior thereto.
Martin Brody has been a private investor since his retirement on January 1,
1994. From April 1990 through December 1993, Mr. Brody was Vice Chairman of
the Board of Restaurant Associates Corporation, the owner and operator of
specialty restaurants, and was Chairman of its Board for more than five years
prior thereto. Mr. Brody also serves as a director of a number of Smith Barney
Shearson mutual funds.
Michael Singer has been Chairman of the Board and Chief Executive Officer of
Kennington Industries, Inc., a corporation engaged in forms, graphics and
systems designs, for more that the past five years.
Richard Chestnov has been a partner of Chego International, an apparel
importer, for more than the past five years.
6
<PAGE>
MEETINGS AND COMMITTEES.
During the Company's fiscal year ended June 30, 1996 the Board of Directors
held five meetings. Each director except Martin Brody and Norman Seiden
attended at least 75% of the meetings of the Board of Directors, and of
committees of the Board of Directors on which he served, during such fiscal
year. Each director who is not an employee of the Company receives an annual
fee of $12,000 for serving as a director. In addition, if stockholders approve
the 1996 Plan, each non-employee director in office immediately after each
annual meeting of stockholders, commencing with the Annual Meeting, and each
non-employee director, on the date such person is first elected a director,
will automatically be granted an option to purchase 2,000 shares of Common
Stock. If stockholders do not approve the 1996 Plan, the 1996 Plan will
terminate and will be of no force or effect. No options have yet been granted
under the 1996 Plan. See "APPROVAL OF 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN" below. Employees who are directors receive no additional compensation
for service on the Board of Directors.
The Company does not have a nominating committee, the functions of which are
performed by the Board of Directors, or a compensation committee, the
functions of which are performed by the Company's Executive Committee and
Stock Option Committee to the extent set forth below under the caption
"Executive Committee and Stock Option Committee Report on Executive
Compensation." The Executive Committee, whose members are Abe Ginsburg
(Chairman), Allan Ginsburg, Robert Chestnov and Howard Ginsburg, meets
informally throughout the Company's fiscal year. The Stock Option Committee
held no meetings during the fiscal year ended June 30, 1996. The Company's
Audit Committee, which met twice during the fiscal year ended June 30, 1996,
consists of Messrs. Martin Brody, Norman Seiden, Michael Singer and Richard
Chestnov. The Audit Committee recommends the appointment of independent
auditors to audit the Company's consolidated financial statements and to
perform professional services related to the audit, reviews with the
independent auditors the scope and results of their audit, reviews and
recommends the performance by the independent auditors of professional
services in addition to those which are audit-related and considers the
possible effect the performance of such services would have on the
independence of the auditors, reviews with the independent auditors the
Company's system of internal controls, and reviews with management and the
independent auditors the annual certified financial statements.
EXECUTIVE OFFICERS.
The executive officers of the Company are set forth in the table below. All
executive officers are elected at the annual meeting or at interim meetings of
the Board of Directors. No arrangement or understanding exists between any
executive officer and any other person pursuant to which he or she was elected
as an executive officer.
<TABLE>
<CAPTION>
NAME AGE POSITION AND PERIOD SERVED
- ---- --- --------------------------
<S> <C> <C>
Abe Ginsburg................ 79 Chairman of the Executive Committee since November
29, 1988
Allan Ginsburg.............. 54 Chairman of the Board since November 29, 1988
Robert Chestnov............. 48 President and Chief Executive Officer since
November 29, 1988
Howard Ginsburg............. 54 Vice Chairman of the Board since November 29, 1988
and President of the Company's Shane Handbag
Division for more than the past five years
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION AND PERIOD SERVED
- ---- --- --------------------------
<S> <C> <C>
Bonnie Sue Levy............. 51 Vice President for more than the past five years;
President of the Company's Aetna Kiddie Bag
Division since April 1995 (Co-President from
May 1994 to April 1995 and President for more than
five years prior to May 1994)
Anthony Christon............ 51 Chief Financial Officer since August 22, 1995
(employed by the Company since May 1, 1995; for
more than five years prior to 1995, Vice President
and Controller of Calvin Klein Sport, Inc., an
apparel manufacturer)
</TABLE>
FAMILY RELATIONSHIPS.
Abe Ginsburg, Chairman of the Executive Committee and a director of the
Company, is the father of Howard Ginsburg, Vice Chairman of the Board and a
director of the Company. Allan Ginsburg, Chairman of the Board and a director
of the Company, is the brother of Bonnie Sue Levy, Vice President of the
Company, is a nephew of Abe Ginsburg and is a first cousin of Howard Ginsburg.
Robert Chestnov, President, Chief Executive Officer and a director of the
Company, and Richard Chestnov, a director of the Company, are brothers.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE.
The following table sets forth certain summary information concerning the
compensation of the Company's chief executive officer and each of its four
other most highly compensated executive officers:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL
COMPENSATION AWARDS
------------------- ---------------------- ALL OTHER
NAME AND PRINCIPAL SALARY BONUS SECURITIES COMPENSATION
POSITION YEAR ($) ($) UNDERLYING OPTIONS (#) ($) (1)
------------------ ---- -------- ------- ---------------------- ------------
<S> <C> <C> <C> <C> <C>
Robert Chestnov,........ 1996 $285,900 $75,000 $15,052
President and Chief Ex-
ecutive Officer 1995 285,900 13,337
1994 280,600 50,000 16,161 27,582
Allan Ginsburg,......... 1996 $285,900 $75,000 $ 8,627
Chairman of the Board 1995 285,900 19,946
1994 280,600 50,000 14,692 29,146
Howard Ginsburg,........ 1996 $285,900 $75,000 $18,011
Vice Chairman of the
Board 1995 285,900 22,356
1994 280,600 50,000 14,692 21,444
Anthony Christon,....... 1996 $178,405 $50,000 $ 3,514
Chief Financial Officer 1995 25,080(2) 25,000
1994
Bonnie Sue Levy,........ 1996 $179,405 $ 7,500 $11,594
Vice President 1995 192,010 13,190
1994 298,000 5,000 6,515
</TABLE>
- ------------
(1) Amounts in this column for the fiscal year ended June 30, 1996 include (i)
premiums paid during fiscal 1996 by the Company for term life insurance
for the benefit of certain of the named executive officers (Robert
Chestnov--$3,360, Allan Ginsburg--$3,360, Howard Ginsburg--$3,360, Anthony
Christon--$550 and Bonnie Sue Levy--$1,680), (ii) reimbursement during
fiscal 1996 of medical and/or dental expenses under a supplemental medical
and dental expense reimbursement program for executive officers and
certain other employees of the Company (Robert Chestnov--$9,724, Allan
Ginsburg--$3,299, Howard Ginsburg--$12,683, Anthony Christon--$2,964 and
Bonnie Sue Levy--$7,950) and (iii) the value, as at June 30, 1996, of
shares of Common Stock allocated to accounts of certain of the named
executive officers under the ESOP during fiscal 1996 (Robert Chestnov--
$1,968, Allan Ginsburg--$1,968, Howard Ginsburg--$1,968 and Bonnie Sue
Levy--$1,964).
(2) Includes amounts from May 1, 1995, when Mr. Christon's employment with the
Company commenced.
STOCK OPTIONS.
FISCAL YEAR END OPTION VALUES. The following table sets forth certain
information concerning the number and value at June 30, 1996 of shares of
Common Stock subject to unexercised options held by the
9
<PAGE>
executive officers named in the Summary Compensation Table. No stock options
were granted to or exercised by such executive officers during the Company's
fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS AT FISCAL
AT FISCAL YEAR END (#) YEAR END ($)
---------------------- -----------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE (1)
---- ---------------------- -----------------
<S> <C> <C>
Robert Chestnov.................. 16,161/-- --/--
Allan Ginsburg................... 14,692/-- --/--
Howard Ginsburg.................. 14,692/-- --/--
Anthony Christon................. 25,000/-- $3,125/--
Bonnie Sue Levy.................. 5,000/-- --/--
</TABLE>
- ------------
(1) Based on the closing price on the American Stock Exchange on June 28, 1996
(the last trading day in fiscal 1996) of the shares of Common Stock
subject to the stock options.
PENSION PLAN.
The Company maintains a defined benefit pension plan entitled the "Jaclyn,
Inc. Employees Pension Trust" (the "Pension Plan") which covers all non-union
employees of the Company and certain of its subsidiaries who have attained age
21 and have completed at least six months of service to the Company. The
following table sets forth the estimated annual benefit payable under the
Pension Plan to an employee who retires at age 65 in 1996 at the remuneration
and years-of-service classifications set forth in the table. The benefits do
not take into account voluntary employee contributions, are not subject to any
deduction for Social Security benefits and represent annual benefits payable
for life with one hundred twenty (120) monthly payments guaranteed, commencing
at age 65. The table gives effect to the limitations imposed by the Internal
Revenue Code of 1986, as amended (the "Code"), on the accrual of benefits on
compensation above certain levels (presently a maximum of $150,000).
<TABLE>
<CAPTION>
ASSUMED YEARS OF SERVICE
ASSUMED ANNUAL ---------------------------------------
AVERAGE COMPENSATION 15 20 25 30 35
- -------------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$100,000.............................. $14,250 $19,000 $23,750 $28,500 $33,250
$125,000.............................. 18,000 24,000 30,000 36,000 42,000
$150,000 and greater.................. 21,750 29,000 36,250 43,500 50,750
</TABLE>
Compensation under the Pension Plan includes all cash compensation subject
to withholding (as reflected on each participant's Form W-2 as reported for
the preceding year) plus salary deferral contributions made by the employee to
the Jaclyn, Inc. Premium Payment Plan, excluding commissions, and, as to the
individuals named in the table under the caption "EXECUTIVE COMPENSATION--
Summary Compensation Table," would be the amounts set forth opposite their
respective names under the captions "Salary" and "Bonus" (subject, however, to
the Code limitations referred to above). As of June 30, 1996, the following
individuals had the number of years of credited service under the Pension Plan
indicated after their names: Allan Ginsburg, 35; Robert Chestnov, 26; Howard
Ginsburg, 35; Anthony Christon 1; and Bonnie Sue Levy, 21.
EXECUTIVE COMMITTEE AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION.
The Company does not have a compensation committee. The Executive Committee
of the Board of Directors determines compensation of the Company's executive
officers. The Stock Option Committee is responsible for the grant of options
to purchase shares of Common Stock under the Company's 1990 Stock Option Plan
and for the administration of all stock option plans of the Company.
10
<PAGE>
The primary objectives of the Company's executive compensation structure are
to maintain executive compensation at competitive levels to retain qualified
personnel and to reward individuals for their respective contributions to the
Company's success. Bonuses, in particular, are granted in order to reward and
acknowledge employees for, among other things, individual initiative and
achievement. The grant of stock options is intended to provide executives with
a stake in the long-term success of the Company and to coordinate executives'
and stockholders' long-term interests by creating a direct link between a
portion of executive compensation and increases in the market price of Common
Stock.
The Executive Committee and the Stock Option Committee each consider a
number of factors in determining compensation of executives, such as
historical financial results, anticipated revenues and earnings for the next
fiscal year, individual contributions to, and length of service with, the
Company, compensation levels at other companies (both within and outside the
Company's industry), and equity and fairness within the top levels of
management. Historically, the Executive Committee has fostered the objective
of equity and fairness by setting equal salaries and bonuses for the Company's
Chairman of the Board, President and Vice-Chairman of the Board. Decisions by
the Executive Committee and the Stock Option Committee are, however, primarily
subjective. No specific corporate performance-related targets are formally
used and no pre-determined weight is generally assigned to any of the factors
mentioned above.
The salary of Robert Chestnov, the Company's Chief Executive Officer, for
the fiscal year ended June 30, 1996 was $285,900. Mr. Chestnov also received a
bonus of $75,000. In determining not to increase Mr. Chestnov's salary rate
for the fiscal year ended June 30, 1996, the Executive Committee primarily
considered the Company's disappointing fiscal 1995 operating results and the
restructuring program initiated in that fiscal year, each of which contributed
to the Company's fiscal 1995 net loss. However, in granting Mr. Chestnov a
bonus for fiscal 1996, the Executive Committee particularly noted the
successful completion of the Company's restructuring program, as well as
significantly improved fiscal 1996 operating results, including fiscal 1996
net earnings of $685,000 ($.25 per share) compared to a net loss in fiscal
1995. No stock options were granted to Mr. Chestnov or any other employee of
the Company in fiscal 1996.
<TABLE>
<CAPTION>
THE EXECUTIVE
COMMITTEE THE STOCK OPTION COMMITTEE
- ------------- --------------------------
<S> <C>
Abe Ginsburg, Chairman Abe Ginsburg
Allan Ginsburg Norman Seiden
Robert Chestnov Richard Chestnov
Howard Ginsburg
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The members of the Company's Executive Committee are Abe Ginsburg, Chairman
of the Executive Committee of the Company, Allan Ginsburg, Chairman of the
Board of the Company, Robert Chestnov, President and Chief Executive Officer
of the Company, and Howard Ginsburg, Vice Chairman of the Board of the
Company. The members of the Stock Option Committee are Abe Ginsburg, Norman
Seiden and Richard Chestnov.
During the fiscal year ended June 30, 1996, the Company leased a warehouse
located in North Bergen, New Jersey, under a lease which expired on June 30,
1996, at an annual rental payment of $250,300. The warehouse is owned by a
partnership of which Allan Ginsburg and Howard Ginsburg, officers and
directors of the Company, and Bernice Gailing and Jaclyn Hartstein, daughters
of Abe Ginsburg, Chairman of the Executive Committee of the Company, are
partners. The Company believes the terms of the lease were at least as
favorable to the Company as those available from unaffiliated third parties.
11
<PAGE>
PERFORMANCE GRAPH.
The following graph compares the yearly percentage change in the cumulative
total return on the Company's Common Stock for the five fiscal years ended
June 30, 1996 with (i) Media General Financial Services' American Stock
Exchange Market Value Index and (ii) a peer group of three companies,
consisting of Sirco International Corp., Swank, Inc. and Fuqua Enterprises,
Inc. (formerly known as Vista Resources, Inc.), which either compete with the
Company in one of its product categories or are engaged in related industries.
The comparison assumes an investment of $100 on July 1, 1991 in the Company
and in each of the comparison groups and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG JACLYN INC., AMEX MARKET INDEX AND PEER GROUP INDEX
<CAPTION>
Measurement period
(Fiscal year Covered) JACLYN, INC. AMEX MARKET INDEX PEER GROUP INDEX
- --------------------- ------------ ----------------- ----------------
<S> <C> <C> <C>
Measurement PT -
06/30/91 $ 100 $ 100 $ 100
FYE 06/30/92 $ 118.94 $ 109.95 $ 152.63
FYE 06/30/93 $ 178.05 $ 120.21 $ 204.62
FYE 06/30/94 $ 204.14 $ 116.04 $ 200.95
FYE 06/30/95 $ 91.87 $ 139.63 $ 194.2
FYE 06/30/96 $ 71.81 $ 159.88 $ 255.29
</TABLE>
ITEM 2: APPROVAL OF 1996 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
On May 14, 1996, the Board of Directors of the Company adopted, subject to
stockholder approval, the 1996 Plan. The purpose of the 1996 Plan is to
attract and retain the services of experienced and knowledgeable non-employee
directors ("Non-Employee Directors") for the benefit of the Company and its
stockholders and to provide additional incentive for such Non-Employee
Directors to continue to work for the best interests of the Company and its
stockholders through ownership of Common Stock.
A copy of the 1996 Plan is set forth as Exhibit A to this Proxy Statement
and the following discussion of the 1996 Plan is qualified in its entirety by
reference thereto.
12
<PAGE>
STOCK SUBJECT TO THE 1996 PLAN, ADMINISTRATION AND ELIGIBILITY.
The maximum number of shares of Common Stock as to which options may be
granted under the 1996 Plan is 100,000, subject to adjustment as discussed
below under the caption "Adjustment of and Changes in Common Stock." Upon the
expiration, cancellation or termination of unexercised options, the shares
subject thereto will again be available for grant under the 1996 Plan. The
1996 Plan is administered by the Board of Directors. Participation in the 1996
Plan is limited to Non-Employee Directors.
GRANT OF OPTIONS.
The 1996 Plan provides for the grant following the Annual Meeting and
following each subsequent annual meeting at which directors are elected of an
option to each Non-Employee Director to purchase 2,000 shares of Common Stock.
In addition, each person who first becomes a Non-Employee Director between
annual meetings of stockholders will be granted, effective as of the date that
such person becomes a Non-Employee Director, an option to purchase 2,000
shares of Common Stock. An employee director who ceases to be an employee, but
remains a director, will not be considered a Non-Employee Director under the
1996 Plan unless and until such director is serving as a Non-Employee Director
following the next annual meeting of stockholders at which directors are
elected.
No options have yet been granted under the 1996 Plan.
EXERCISE PRICE.
The exercise price of each share granted under the 1996 Plan will be the
fair market value of the Company's Common Stock subject to the option on the
date of grant. Upon exercise of the option, the exercise price must be paid in
full in cash or by check, with previously acquired shares of Common Stock, or
a combination of the foregoing. The closing price of the Company's Common
Stock on the American Stock Exchange on October 15, 1996 was $5.375 per share.
TERM OF OPTIONS.
Each option will have a term of ten years, subject to earlier termination as
provided in the 1996 Plan. Each option will be exercisable immediately as to
the full number of shares subject to the option.
In the event that an optionee ceases to serve on the Board of Directors for
any reason (including as a result of not being re-elected to the Board), other
than by reason of death or disability (as defined in the 1996 Plan), options
held by the optionee may be exercised in whole or in part at any time within
three months after such cessation of service, but in no event after the date
on which the option would otherwise expire. However, if the Non-Employee
Director's service on the Board is terminated for cause or without the consent
of a majority of the remaining members of the Board, the Non-Employee
Director's options will terminate immediately.
If an optionee ceases to serve on the Board by reason of disability, options
held by such optionee may be exercised in whole or in part at any time within
one year after cessation of service on the Board, but in no event after the
date on which the option would otherwise expire.
If an optionee dies while serving on the Board, options held by such
optionee may be exercised in whole or in part by the legatee or legatees of
the optionee within one year after the date of such optionee's death, but in
no event after the date on which the option would otherwise expire.
13
<PAGE>
ADJUSTMENT OF AND CHANGES IN COMMON STOCK.
In the event of any change in the Company's outstanding Common Stock by
reason of a stock dividend, stock split, stock combination, recapitalization,
merger in which the Company is the surviving corporation, reorganization or
the like, the aggregate number of shares available for option under the 1996
Plan, the number and kind of shares subject to each outstanding option, and
the exercise price thereof, will be adjusted by the Board in a manner similar
to antidilution adjustments made under the Company's employee stock option
plans.
MISCELLANEOUS.
An option may not be transferred by a Non-Employee Director other than by
will or by the laws of descent and distribution, and an option may be
exercised during the optionee's lifetime only by the optionee. In addition, it
is a condition to the exercise of any option that either (a) a registration
statement under the Securities Act of 1933, as amended (the "Act"), is
effective and current with respect to its underlying shares at the time of
exercise of the option or (b) in the opinion of counsel to the Company, there
is an exemption from registration under the Act for the issuance of shares of
Common Stock upon such exercise. As a further condition to exercise of an
option, the Company may require that the shares of Common Stock underlying
such option or the 1996 Plan are listed for trading on any securities market
on which the Company's Common Stock is traded and have been appropriately
registered or qualified under applicable state securities laws, and that any
necessary or desirable governmental approval or consent has been obtained.
DURATION AND AMENDMENT OF THE 1996 PLAN.
No options may be granted under the 1996 Plan after May 13, 2006. Options
outstanding on that date, however, shall in all respects continue subject to
the 1996 Plan. The Board may amend, suspend or terminate the 1996 Plan at any
time except that the Board may not without the approval of stockholders make
any alteration or amendment which would change the class of eligible
participants under the 1996 Plan or increase the total number of shares
available for the grant of options thereunder (except for antidilution
adjustments described above under the caption "Adjustment of and Changes in
Common Stock").
FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of the federal income tax consequences
under the Code as currently in effect with respect to options under the 1996
Plan.
The optionee will not recognize any income for federal income tax purposes,
and the Company will not be entitled to any deduction, upon the grant of an
option.
Generally, an optionee recognizes ordinary taxable income at the time an
option is exercised in an amount equal to the excess, if any, of the fair
market value of the shares of Common Stock on the date of exercise over the
exercise price. The Company generally will be entitled to a compensation
deduction for Federal income tax purposes at the same time as, and in the same
amount that, the option holder recognizes such income.
When an optionee subsequently disposes of the shares of Common Stock
received upon exercise of an option, the optionee will recognize long-term or
short-term capital gain or loss (depending upon the holding period of the
shares) in an amount equal to the difference between the sale price and the
fair market value of the shares on the date of exercise of the option.
REQUIRED VOTE.
The affirmative vote of a majority of shares of Common Stock present, in
person or by proxy, and entitled to vote on this proposal is required to
approve the 1996 Plan. The Board of Directors recommends that stockholders
vote FOR approval of the 1996 Plan.
14
<PAGE>
ITEM 3: SELECTION OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP, independent
auditors, to audit the books and accounts of the Company for the fiscal year
ending June 30, 1997. This firm is the successor to the firm of auditors which
has audited the books of the Company or its predecessor since 1965. A
representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting to respond to appropriate questions and will be given an
opportunity to make a statement if such representative desires to do so.
The appointment of Deloitte & Touche LLP is subject to ratification by a
majority of the shares of Common Stock present, in person or by proxy, and
entitled to vote at the Annual Meeting. If the appointment of Deloitte &
Touche LLP is not ratified by such stockholder vote, the Board of Directors
will reconsider its action and select independent auditors without further
stockholder action.
The Board of Directors recommends a vote FOR ratification of the appointment
of Deloitte & Touche LLP as auditors of the Company. Unless otherwise
specified in the proxies, the shares represented by all proxies received will
be voted FOR the appointment of Deloitte & Touche LLP.
OTHER INFORMATION
PROPOSALS FOR 1997 ANNUAL MEETING.
Consistent with Securities and Exchange Commission regulations, stockholder
proposals intended to be included in the proxy statement and form of proxy for
the 1997 Annual Meeting of Stockholders must be received at the principal
executive offices of the Company, 635 59th Street, West New York, New Jersey
07093, no later than July 4, 1997. Any such proposals, as well as any
questions relating thereto, should be directed to the Secretary of the
Company.
GENERAL.
The solicitation of proxies in the accompanying form will be made, at the
Company's expense, primarily by mail and through brokerage and banking
institutions. In addition, proxies may be solicited in person or by telephone,
telecopier or telegraph, by officers, directors and regular employees of the
Company. The Company will reimburse brokerage firms, nominees, fiduciaries and
other custodians their reasonable expenses for forwarding the proxy material
to beneficial owners and obtaining their instructions.
Proxies submitted which contain abstentions or broker non-votes will be
deemed present at the Annual Meeting in determining the presence of a quorum.
Shares of Common Stock that are voted to abstain with respect to any matter
are considered shares entitled to vote, and cast, with respect to that matter.
Shares of Common Stock subject to broker non-votes with respect to any matter
will not be considered as shares entitled to vote with respect to that matter.
The Board of Directors is aware of no other matters that are to be presented
to stockholders for formal action at the Annual Meeting. If, however, any
other matters properly come before the meeting or any adjournment thereof, it
is the intention of the persons named in the enclosed form of proxy to vote
such proxies in accordance with their judgment on such matters.
By Order of the Board of Directors.
Jaclyn Hartstein
Secretary
October 31, 1996
15
<PAGE>
EXHIBIT A
JACLYN, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1.PURPOSE OF THE PLAN
The purpose of this 1996 Non-Employee Director Stock Option Plan (the
"Plan") of JACLYN, INC., a Delaware corporation (the "Company"), is to make
available shares of the Common Stock, $1.00 par value per share, of the
Company (the "Common Stock") for purchase by directors who are not employees
of the Company (the "Non-Employee Directors") and thus to attract and retain
the services of experienced and knowledgeable Non-Employee Directors for the
benefit of the Company and its stockholders and to provide additional
incentive for such Non-Employee Directors to continue to work for the best
interests of the Company and its stockholders through continuing ownership of
its Common Stock.
2.STOCK SUBJECT TO THE PLAN
Subject to the provisions of Article 10, the total number of shares of
Common Stock for which options may be granted under the Plan shall be 100,000.
Shares issued under the Plan may be either authorized but unissued shares or
shares which shall have been purchased or acquired by the Company for this or
any other purpose. Such shares are from time to time to be allotted for option
and sale to Non-Employee Directors in accordance with the Plan. In the event
any option granted under the Plan shall expire, be canceled or terminate for
any reason without having been exercised in full or shall cease for any reason
to be exercisable in whole or in part, the unpurchased shares subject thereto
shall again be available for grant under the Plan.
3.ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the Company (the
"Board"). The Board shall, subject to the express provisions of the Plan, (a)
grant options pursuant to the terms of the Plan; (b) have the power to
interpret the Plan; (c) correct any defect, supply any omission or reconcile
any inconsistency in the Plan; (d) prescribe, amend and rescind rules and
regulations relating to, but not inconsistent with, the Plan; (e) determine
the terms and provisions of the respective option agreements (which need not
be identical); and (f) make determinations necessary or advisable for the
administration of the Plan. The determination of the Board on the matters
referred to in this Article 3 shall be conclusive. No member of the Board
shall be liable for any action or determination made in good faith with
respect to the Plan or any options granted hereunder.
4.OPTION GRANTS
Each individual who is a Non-Employee Director immediately following the
conclusion of the Company's 1996 Annual Meeting of Stockholders at which
directors are elected shall, effective as of such date, be granted an option
to purchase 2,000 shares of Common Stock. Each individual who subsequent
thereto becomes a Non-Employee Director shall, effective as of the date such
person becomes a Non-Employee Director, be granted an option to purchase 2,000
shares of Common Stock. In addition, immediately following each annual meeting
of stockholders at which directors are elected which is held subsequent to the
Company's 1996 Annual Meeting of Stockholders, each Non-Employee Director in
office immediately following the conclusion of such meeting (whether or not
elected at such meeting) shall, effective as of the date such meeting is held,
be granted an option to purchase 2,000 shares of Common Stock; provided that
an individual who becomes a Non-Employee Director
A-1
<PAGE>
for the first time at such a meeting of stockholders shall be granted only one
option to purchase an aggregate of 2,000 shares of Common Stock under this
sentence and the preceding sentence. A director who is an employee of the
Company who ceases such relationship but remains a director shall not be
deemed to become a Non-Employee Director unless and until he or she is serving
as a Non-Employee Director immediately following the conclusion of the next
annual meeting of stockholders at which directors are elected (whether or not
such person is elected as a director at such meeting). In the event the
remaining shares available for grant under the Plan are not sufficient to
grant options to each such Non-Employee Director at any time, the number of
shares subject to the options to be granted at such time shall be reduced
proportionately.
5.EXERCISE PRICE
The exercise price per share at which shares of the Common Stock may be
purchased pursuant to options granted under the Plan shall be equal to the
fair market value of the Common Stock on the date an option is granted, but
not less than the par value of the Common Stock. The fair market value of a
share of the Common Stock on any day shall be (a) if actual sales price
information is generally reported for the Common Stock on its principal
market, the closing price, regular way, per share of the Common Stock on such
day (or the last day of trade prior to such day if not traded on such day) as
reported by such market or on a consolidated tape reflecting transactions on
such market, (b) if actual sales price information is not generally reported
for the Common Stock on its principal market, the mean between the highest bid
and lowest asked prices per share for the Common Stock on such day (or the
last day quoted prior to such day if not quoted on such day) as reported by on
the National Association of Securities Dealers (including under its OTC
Bulletin Board Service), National Quotation Bureau Incorporated or a similar
organization, or (c) if neither of the above are applicable, the fair market
value of the Common Stock shall be determined by the Board by any method not
inconsistent with applicable regulations adopted by the Treasury Department
relating to stock options.
6.TERM OF EACH OPTION
The term of each option shall be ten years (the "Scheduled Expiration
Date"), subject to earlier termination as provided in the Plan.
7.EXERCISE OF OPTIONS
(a) Subject to the provisions of Article 9, each option granted under the
Plan shall be fully exercisable at any time or times during its term. A Non-
Employee Director purchasing less than the number of shares available to him
or her in any period under the option may purchase any such unpurchased shares
in any subsequent period of the option term.
(b) The option shall not be exercisable at any time in an amount less than
100 shares (or the remaining shares then covered by and purchasable under the
option if less than 100 shares). In no case may a fraction of a share be
exercised, purchased or issued under the Plan.
(c) The purchase price of the shares as to which an option shall be
exercised shall be paid in full at the time of exercise (i) in cash or by
certified check or (ii) with previously acquired shares of Common Stock having
an aggregate fair market value on the date of exercise (determined in
accordance with Article 5) equal to the aggregate exercise price of all
options being exercised, or (iii) any combination of cash, certified check or
shares of Common Stock. In addition, the Non-Employee Director shall pay to
the Company in cash, upon demand, the amount, if any, which the Company
determines is necessary to satisfy its obligation to withhold federal, state
and local income and other taxes or other amounts incurred by reason of the
grant or exercise of the option.
A-2
<PAGE>
(d) An option (or any part thereof), to the extent then exercisable, shall
be exercised by giving written notice to the Company at its principal office,
Attention: Chief Financial Officer, specifying the number of shares of Common
Stock as to which such option is being exercised and accompanied by payment in
full of the aggregate exercise price therefor.
(e) A Non-Employee Director entitled to receive shares of Common Stock upon
the exercise of an option shall not have the rights of a stockholder with
respect to such shares of Common Stock until the date of issuance of a stock
certificate to him or her for such shares; provided, that until such stock
certificate is issued, any Non-Employee Director using previously acquired
shares of Common Stock in payment of an option exercise price shall continue
to have the rights of stockholder with respect to such previously acquired
shares.
(f) Nothing in the Plan or in any option granted under the Plan shall confer
on any Non-Employee Director any right to continue as a director of the
Company.
8.NON-TRANSFERABILITY OF OPTIONS
No option granted under the Plan shall be transferable other than by will or
the laws of descent and distribution by the Non-Employee Director or his or
her legal representatives, and may be exercised during the Non-Employee
Director's lifetime only by him or her. Except to such extent, options may not
be assigned, transferred, pledged, hypothecated or disposed of in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process.
9.TERMINATION OF SERVICES ON THE BOARD OF DIRECTORS
(a) In the event that a Non-Employee Director to whom an option has been
granted under the Plan shall cease to serve on the Board for any reason
(including as a result of not being re-elected to the Board), other than by
reason of his or her death or disability (as that term is defined in paragraph
(d) of this Article 9), such option may be exercised in whole or in part by
the Non-Employee Director, at any time within three months after such
cessation of service but not thereafter, and in no event after the Scheduled
Expiration Date; provided, that if his or her service on the Board shall have
been terminated for cause or if he or she resigns without the consent of a
majority of the remaining members of the Board, his or her options shall
terminate immediately.
(b) If a Non-Employee Director to whom an option has been granted under the
Plan shall cease to serve on the Board by reason of disability, the option may
be exercised in whole or in part by the Non-Employee Director at any time
within one year after such cessation of service but not thereafter, and in no
event after the Scheduled Expiration Date.
(c) If a Non-Employee Director to whom an option has been granted under the
Plan shall die while he or she is serving on the Board, such option may be
exercised in whole or in part by the legatee or legatees of such option under
the Non-Employee Director's last will, or by his or her personal
representatives or distributees, within one year after the date of his or her
death, but not thereafter, and in no event after the Scheduled Expiration
Date.
(d) For the purpose of this Article 9, "disability" shall mean permanent and
total disability within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), as reasonably determined by the
Board. The Non-Employee Director as to whom such determination is being made
shall not participate in the Board's deliberation or vote in making such
determination.
A-3
<PAGE>
10.ADJUSTMENT OF AND CHANGES IN COMMON STOCK
In the event of any change in the outstanding Common Stock by reason of a
stock dividend, stock split, stock combination, recapitalization, spin-off,
merger in which the Company is the surviving corporation, reorganization or
the like, the aggregate number and kind of shares subject to the Plan, the
number and kind of shares to be granted annually, and the aggregate number and
kind of shares subject to each outstanding option and the exercise price
thereof shall be appropriately adjusted by the Board in a manner similar to
the antidilution adjustments made under the Company's employee stock option
plans. The Board's determination under this Article 10 shall be conclusive and
binding on all parties.
11.COMPLIANCE WITH SECURITIES LAWS
(a) It is a condition to the exercise of any option that either (i) a
Registration Statement under the Securities Act of 1933, as amended, or any
succeeding act (collectively, the "Securities Act"), with respect to its
underlying shares shall be effective and current at the time of exercise of
the option or (ii) in the opinion of counsel to the Company, there shall be an
exemption from registration under the Securities Act for the issuance of
shares of Common Stock upon such exercise. Nothing herein shall be construed
as requiring the Company to register shares subject to the Plan for issuance
or for resale.
(b) In connection with fulfilling the condition set forth in clause (a)(ii)
of this Article 11, the Company may require a Non-Employee Director, as a
condition to the exercise of an option, to execute and deliver to the Company
representations and warranties, in form and substance satisfactory to counsel
to the Company, that (i) the shares of Common Stock to be issued upon the
exercise of the option are being acquired by the Non-Employee Director for his
or her own account, for investment only and not with a view to the resale or
distribution thereof, all within the meaning of the Securities Act, and (ii)
any subsequent resale or distribution of shares of Common Stock by such Non-
Employee Director will be made only pursuant to (x) a Registration Statement
under the Securities Act which is effective and current with respect to the
shares of Common Stock being sold at the time of sale or (y) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption, the Non-Employee Director shall, prior to any offer
or sale or distribution of such shares of Common Stock, provide the Company
with a favorable written opinion of counsel, in form and substance
satisfactory to counsel to the Company, as to the applicability of such
exemption to the proposed sale or distribution. The Company may endorse such
legend or legends upon the certificates for shares of Common Stock issued upon
exercise of an option under the Plan, and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares, as it
determines, in its discretion, to be necessary or appropriate to prevent a
violation of, or to perfect an exemption from, the registration requirements
of the Securities Act.
(c) The Company may also require, as a further condition to the exercise of
an option, in whole or in part, that the shares of Common Stock underlying
such option or the Plan be specifically listed on the securities markets on
which the Company's Common Stock is traded and be registered or qualified
under any applicable state securities laws, and that the consent or approval
of any governmental regulatory body, which the Company deems necessary or
desirable as a condition to the exercise of such option or the issue of shares
thereunder, shall have been effected or obtained free of any conditions
requiring the Company to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction wherein it has not
already done so and free of any other conditions not customarily imposed by a
securities exchange, law or governmental regulatory body in connection with
such listing, qualification, consent or approval.
A-4
<PAGE>
12.AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the Plan or any portion thereof at
any time except that, to the extent required by applicable law, the Board may
not, without the approval of the Company's stockholders, make any alteration
or amendment which changes the class of eligible participants as determined in
accordance with Articles 1 and 4 hereof, or increases the total number of
shares of Common Stock for which options may be granted under the Plan except
as provided in Article 10 hereof. No amendment shall adversely affect the
rights under any then outstanding option without the consent of the holder
thereof.
13.STOCK OPTION CONTRACTS
Each option shall be evidenced by an appropriate contract which shall be
duly executed by the Company and the Non-Employee Director, and shall contain
such terms and conditions not inconsistent with the Plan as may be determined
by the Board.
14.DUTIES OF THE COMPANY
The Company shall, at all times during the term of each option, reserve and
keep available for issuance or delivery such number of shares of Common Stock
as will be sufficient to satisfy the requirements of all options at the time
outstanding, shall pay all original issue taxes with respect to the issuance
or delivery of shares pursuant to the exercise of such options and all other
fees and expenses necessarily incurred by the Company in connection therewith.
15.EFFECTIVE PERIOD
The Plan shall become effective on May 14, 1996, the date of its adoption by
the Board of Directors; provided, that if the Plan is not approved within 12
months thereof by the favorable vote then required for such action under the
Delaware General Corporation Law at a meeting to be held to consider such
approval, the Plan will be null and void ab initio and of no further effect.
No options may be granted under the Plan after May 13, 2006. Options
outstanding on or prior to such date shall, however, in all respects continue
subject to the Plan.
A-5
<PAGE>
JACLYN, INC. PROXY
________________________________________________________________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints DAVID HARTSTEIN and LLOYD
FRANK, and any one of them, the proxies of the undersigned, with power of
substitution, hereby revoking any proxy heretofore given, to vote all shares
which the undersigned is entitled to vote at the 1996 Annual Meeting of
Stockholders of JACLYN, INC. (the "Company") to be held at the Company's
executive offices, 635 59th Street, West New York, New Jersey 07093, on December
3, 1996 at 9:30 a.m., and at any adjournments thereof, with all powers the
undersigned would possess if personally present, and the undersigned authorizes
and instructs said proxies to vote as follows:
Item 1 - Election of the following nominees as directors:
Abe Ginsburg, Allan Ginsburg, Robert Chestnov, Howard Ginsburg, Martin
Brody, Michael Singer and Richard Chestnov. (TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME.)
FOR [ ] WITHHOLD [ ]
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
Item 2 - Approval of the Company's 1996 Non-Employee Director Stock Option
Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Item 3 - Ratification of Deloitte & Touche LLP as independent auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Item 4 - In their discretion, upon any other matters as may properly come
before the meeting.
Date_______________________________________
Signature__________________________________
Signature__________________________________
Please mark, date and sign as your name appears
above and return in the enclosed envelope. If
acting as executor, administrator, trustee,
guardian, etc., you should so indicate when
signing. If the signer is a corporation, please
sign the full corporate name by a duly authorized
officer. If shares are held jointly, each
stockholder named should sign.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED "FOR" ITEMS 1,
2 AND 3.
-2-
