<PAGE> 1
SCHEDULE 14A
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 Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
ALFIN, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 0-111:
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
1 (Set forth the amount on which the filing fee is calculated and state how it
was determined):
/ / 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> 2
ALFIN, INC.
720 FIFTH AVENUE, NEW YORK, NEW YORK 10019
-----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Alfin, Inc., a New York corporation (the "Company") will be held
at the Hotel Parker Meridien, 119 West 56th Street, New York, New York on April
28, 1995, at 2:00 p.m. (New York time), for the following purposes:
(1) To elect a board of five (5) directors to serve until the next Annual
Meeting of Shareholders or until their respective successors are elected and
qualified;
(2) To authorize the issuance of stock options to each of Jacques
Desjardins, Elisabeth Fayer, Steven Korda, Suzanne Langlois and Walter M.
Epstein to purchase up to 100,000 shares of Common Stock each at $1.00 per
share;
(3) To ratify the selection of Arthur Andersen & Co. as independent public
accountants for the Company for fiscal 1995; and
(4) To transact such other business as may properly be brought before the
Meeting or any adjournment thereof.
The shareholders of record at the close of business on March 21, 1995, are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
We hope you plan to attend the Meeting in person, but in any event you are
urged to mark, date, sign and return your proxy in the enclosed self-addressed
envelope as soon as possible so that your shares may be voted in accordance
with your wishes. Any proxy given by a shareholder may be revoked by the
shareholder at any time prior to the voting of the proxy.
By Order of the Board of Directors
MICHAEL D. FICKE
Secretary
New York, NY
March 24, 1995
<PAGE> 3
ALFIN, INC.
720 FIFTH AVENUE, NEW YORK, NEW YORK 10019
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Alfin, Inc. (the "Company") for use at the Annual Meeting of Shareholders to
be held April 28, 1995, at 2:00 p.m. (New York time) at the Hotel Parker
Meridien, 119 West 56th Street, and any adjournment thereof (the "Meeting").
The matters to be considered and acted upon at the Meeting are described in the
foregoing Notice of Annual Meeting of Shareholders and this Proxy statement.
This Proxy statement and the related form of proxy are being mailed on or about
March 24, 1995, to all shareholders of record on March 21, 1995. Shares of the
Company's Common Stock, $.01 par value ("Common Stock"), represented by proxies
will be voted as hereinafter described or as otherwise specified by the
shareholder. Any proxy given by a shareholder may be revoked by the shareholder
at any time prior to the voting of the proxy by delivering a written notice to
the Secretary of the Company, by executing and delivering a later-dated proxy
or by attending the Meeting and voting in person.
The persons named as proxies are Mayer D. Moyal, Chairman of the Board of
the Company, and Michael D. Ficke, Secretary of the Company. The cost of
preparing, assembling and mailing the proxy, this Proxy Statement and the other
material enclosed and all clerical and other expenses of solicitation will be
borne by the Company. In addition to the solicitation of proxies by use of the
mails, directors, officers and employees of the Company may solicit proxies by
telephone, telegram or personal interview. The Company also will request
brokerage houses and other custodians, nominees and fiduciaries to forward
soliciting material to the beneficial owners of Common Stock held of record by
such custodians and will reimburse such custodians for their expenses in
forwarding soliciting materials.
VOTING RIGHTS
Only holders of shares of Common Stock of record at the close of business
on March 21, 1995 will be entitled to vote at the Meeting. On March 21, 1995,
the Company had 11,402,904 outstanding shares of Common Stock, each such share
entitling the holder thereof to one vote on each matter. Holders of shares of
Common Stock are not entitled to cumulative voting rights.
The presence at the Meeting in person or by proxy of the holders of a
majority of the outstanding shares of Common Stock entitled to vote shall
constitute a quorum for the transaction of business. If a quorum is present,
the affirmative vote of a plurality of the shares cast at the Meeting and
entitled to vote will be required to act on the election of directors, and the
affirmative vote by the holders of a majority of the shares cast at the Meeting
and entitled to vote will be required to act on all other matters to come
properly before the Meeting. If a shareholder, present in person or by proxy,
abstains on any matter, the shareholder's shares will not be treated as a vote
against such matter. Broker non-votes are treated as shares as to which voting
power has been withheld by the beneficial owners of such shares and, therefore,
as shares not cast.
<PAGE> 4
SECURITY OWNERSHIP
The following table sets forth certain information as of March 21, 1995
regarding (i) the share ownership of the Company by each person who is known to
the Company to be the beneficial owner of more than five percent (5%) of the
Company's outstanding Common Stock, (ii) the share ownership of the Company of
each director; and the Chief Executive Officer and the other 4 most highly paid
current executive officers of the Company who earned in excess of $100,000
during the Company's last fiscal year (the "Named Executives") and (iii) the
share ownership of the Company of all directors and Named Executives, as a
group.
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OF AMOUNT OF COMMON STOCK OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
---------------- ------------------ --------
<S> <C> <C>
Erich Fayer,
Elisabeth Fayer,
2692325 Canada Inc.,
2757826 Canada Inc. . . . . . . . . . . . . . . . 7,188,935(2) 63.0
Produits Parfums et
Cosmetiques
Universels Ltee ("PP&CU") and
Fine Fragrances
Distribution, Inc. ("FFD")
3420 rue Drummond
Montreal, Quebec, Canada . . . . . . . . . . . .
Jacques Desjardins . . . . . . . . . . . . . . . -0- -0-
James Grintz(3) . . . . . . . . . . . . . . . . . -0- -0-
Steven Korda . . . . . . . . . . . . . . . . . . -0- -0-
Suzanne Langlois . . . . . . . . . . . . . . . . -0- -0-
Mayer D. Moyal . . . . . . . . . . . . . . . . . 300,000(4) 2.6
Adrienne Newman . . . . . . . . . . . . . . . . . 600,000(5) 5.2
Lawrence Pesin(6) . . . . . . . . . . . . . . . . -0- -0-
All Directors and Executive Officers as
a Group (8 Persons) . . . . . . . . . . . . . . 8,090,935 65.8
</TABLE>
- -------------------
(1) For purposes of computing these percentages, shares not outstanding but
beneficially held through contract rights, stock options or warrants
exercisable within 60 days from the date hereof are deemed outstanding
with respect to such individual(s). Based upon 11,402,904 shares of
Common Stock outstanding on March 21, 1995.
(2) Consists of 7,188,935 shares of Common Stock which are owned of record by
FFD a wholly-owned subsidiary of PP&CU of which Erich Fayer is the
President and an Administrator. Erich Fayer and Elisabeth Fayer, the wife
of Erich Fayer, through separate holding companies, 2692325 Canada Inc.
and 2757826 Canada Inc., have or share investment and voting discretion
with FFD and PP&CU, with respect to all of such shares.
(3) Mr. Grintz resigned his position with the Company as of February 10, 1995.
(4) Issuable upon exercise of 300,000 options granted to Mr. Moyal. For a
description of such options see "Executive Compensation--Option/SAR
Grants in Last Year."
(5) Issuable upon exercise of 600,000 warrants currently exercisable by Ms.
Newman. For a
<PAGE> 5
description of Ms. Newman's warrants see "Executive
Compensation--Option/SAR Grants in Last Year."
(6) Terminated as chief executive officer on January 3, 1994.
PROPOSAL I--ELECTION OF DIRECTORS
NOMINATIONS AND ELECTION OF DIRECTORS
The Board has nominated Jacques Desjardins, Elizabeth Fayer, Steven Korda,
Suzanne Langlois and Mayer D. Moyal (all of whom are members of the present
Board) to serve as directors of the Company until the 1996 Annual Meeting of
Shareholders and until their successors have been elected and qualified.
Unless otherwise specified, shares represented by proxies will be voted in
favor of the election of all of the nominees, except that, in the event any
nominee should not continue to be available for election, such proxies will be
voted for the election of such persons as the Board of Directors may recommend.
Management does not presently contemplate that any of the nominees will become
unavailable for any reason.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
OF EACH OF THE NOMINEES.
INFORMATION COVERING NOMINEES
The following table sets forth the names of the nominees and certain
information with regard to each nominee.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE SINCE POSITION WITH COMPANY
- --------------- --- ----- ---------------------
<S> <C> <C> <C>
Mayer D. Moyal 65 Aug. 1993 Chairman of the Board and
Chief Executive Officer
Jacques Desjardins 60 Nov. 1992 Director
Elisabeth Fayer 47 Nov. 1992 Director
Steven Korda 53 Nov. 1992 Director
Suzanne Langlois 40 Nov. 1992 Director
</TABLE>
- -------------
Mayer D. Moyal, a French and Israeli citizen, was elected as Chairman of
the Board and Chief Executive Officer in August 1993. For more than the past
five years, Mr. Moyal has acted as an independent financial consultant.
Jacques Desjardins, a Canadian citizen, was elected a director of the
Company in November 1992 and has for more than the past five (5) years been
engaged in private practice as a general legal advisor (a notary and title
attorney) in Montreal, Quebec, Canada.
Elisabeth Fayer, a Canadian citizen, was elected a director of the Company
in November 1992 and for more than the past five (5) years through various
privately owned holding corporations controlled by herself and her husband,
Erich Fayer, has owned and operated various commercial properties situated in
Canada, as well as various perfume producing and distributing corporations in
France, including the French designer, Pierre Balmain.
<PAGE> 6
Steven Korda, a Canadian citizen was elected a director of the Company in
November 1992 and has for more than the past five (5) years been the principal
of Korda & Associates, a law firm located in Montreal, Quebec, Canada, engaged
in the general and commercial practice of law.
Suzanne Langlois, a Canadian citizen was elected a director of the Company
in November 1992 and has been legal counsel to Zanimob Distributions Inc., a
privately owned Canadian holding corporation affiliated with Erich Fayer and
Elisabeth Fayer, from January 1981 to the present.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES
The business and affairs of the Company are managed by the Board of
Directors, which met or acted by unanimous written consent 6 times during
fiscal 1994. During fiscal 1994 all current directors attended 75% or more of
the meetings of the Board of Directors and the committees on which they served
held during fiscal 1994 with the exception of Elizabeth Fayer who attended
approximately 33% of the meetings. The Board maintains standing Executive,
Stock Option and Audit Committees, but has no Nominating or Compensation
Committees.
The Executive Committee is composed of Suzanne Langlois and Mayer D. Moyal
and has the authority of the Board of Directors in the management of the
business and the affairs of the Company, except as prohibited by law or the
Company's By-Laws. The Executive Committee did not have any formal meetings
during fiscal 1994 but frequently consulted on current operating affairs of the
Company.
The Stock Option committee is composed of Jacques Desjardins and Steven
Korda. It reviews and make recommendations to the Board of Directors on officer
and senior employee compensation and stock awards and generally oversees
matters relating to compensation, including nonmonetary benefits of employees
of the Company. The Stock Option Committee did not have any meetings during
fiscal 1994.
The Audit Committee is composed of Jacques Desjardins and Steven Korda.
The Audit Committee recommends engagement of the Company's independent
accountants, reviews the scope of the audit and the activities and
recommendations of the auditors, and considers comments made by the independent
accountants with respect to weaknesses in the internal controls and
consideration given or corrective action taken by management. The Audit
Committee did not have any meetings during fiscal 1994.
<PAGE> 7
EXECUTIVE OFFICERS
Set forth below is certain information, as of March 21, 1995, regarding
the executive officers of the Company:
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE POSITION WITH COMPANY SINCE
---- --- --------------------- ---------
<S> <C> <C> <C>
Mayer D. Moyal . . . . . . . . . . . . 65 Chairman of the Board, August 1993
Chief Executive Officer
Adrienne Newman . . . . . . . . . . . . 53 Executive Vice President; April 1990
President and Chief
Executive Officer of
Adrien Arpel Inc.
Michael D. Ficke . . . . . . . . . . . 39 Vice President; November 1993
Chief Financial Officer;
Secretary
</TABLE>
- -------------------
Information with respect to Mayer D. Moyal is set forth under "Directors."
Adrienne Newman joined the Company as an Executive Vice President in April
1990 and has served in this capacity since that time. Since April 1990, Ms.
Newman has also served as President and Chief Executive Officer of the
Company's Adrien Arpel, Inc. subsidiary. For more than five years prior
thereto, Ms. Newman served as Chairman of the Board and Chief Executive Officer
of Adrien Arpel, Inc.
Michael D. Ficke joined the Company in July 1989. Mr. Ficke served Alfin,
Inc. as Corporate Controller until his promotion to Vice President and Chief
Financial Officer in November, 1993. Mr. Ficke is a C.P.A. and prior to his
joining the Company in 1989 served as Assistant Controller of Chanel inc., a
manufacturer and distributor of fragrance and cosmetic products.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the fiscal years ended July
31, 1994, 1993, and 1992 respecting all compensation awarded to, earned by or
paid to the two Chief Executive Officers in fiscal 1994 and all other Named
Executives in all capacities in which each such officer served. Two other
officers of Adrien Arpel Inc., are not included as Named Executives because
they do not perform policy making functions for the Company.
<PAGE> 8
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG TERM COMPENSATION
------------ ---------------------- OTHER LONG TERM
ANNUAL STOCK OPTION INCENTIVE ALL OTHER
COMPEN- AWARDS PLAN COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ SATION (SHARES) PAYOUTS$ SATION $
--------------------------- ---- -------- ------- ------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Mayer D. Moyal 1994 $ 116,900 $ -0- $ -0-(1) 300,000 -0- $-0-
Chairman and CEO
Lawrence Pesin 1994 69,423 -0- -0-(1) -0- -0- -0-
President and CEO(2) 1993 19,904 -0- -0-(1) -0- -0- -0-
Adrienne Newman 1994 250,000 986,488(3) 65,000(4) 1,000,000(5) -0- -0-
Executive Vice President 1993 250,000 -0- 65,000(4) -0- -0- -0-
of the Company and 1992 250,000 -0- 65,000(4) -0- -0- -0-
President and CEO
of Adrien Arpel, Inc.
James D. Grintz(6) 1994 152,000 10,000 -0-(1) -0- -0- -0-
Senior Vice President 1993 152,000 10,000 -0- -0- -0- -0-
1992 152,000 15,800 -0- -0- -0- -0-
</TABLE>
(1) Excludes personal benefits which did not exceed the lesser of $50,000 or
10% of such other officer's salary and bonus.
(2) Terminated as of January 3, 1994.
(3) Commissions paid based on 1/3 of the revenues, net of direct expenses,
derived from television shopping sales of cosmetics.
(4) Represents a non-accountable expense allowance of $65,000.
(5) Represents 1,000,000 warrants to purchase up to 1,000,000 shares of Common
Stock. For a description of Mr. Newman's warrants, see "Executive
Compensation--Option/SAR Grants in Last Year."
(6) Resigned from the Company as of February 10, 1995.
OPTION/SAR GRANTS IN LAST YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ALTERNATIVE TO
ANNUAL RATES OF STOCK (F) AND (G):
APPRECIATION GRANT DATE
INDIVIDUAL GRANTS FOR OPTION TERM VALUE
- ------------------------------------------------------------------------------------- --------------- -----
(A) (B) (C) (D) (E) (F) (G) (F)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) FISCAL YEAR (2) ($/SH) DATE 5%($) 10%($) $
---- ----------- --------------- ------ ---- ----- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mr. Mayer D. Moyal 300,000(3) 21.8 $ .9375(4) 11/22/98(5) $359,000 $ 453,000 N/A
Ms. Adrienne Newman 500,000(6) 36.3 $ 1.25(4) 11/15/98 $798,000 $1,006,600 N/A
Ms. Adrienne Newman 500,000(7) 36.3 $ 1.25(4) (7) $798,000 $1,006,600 N/A
</TABLE>
- -------------------
(1) This table also includes warrants issued by the Company during its last
fiscal year.
(2) During its last fiscal year the Company granted to employees options and
warrants to purchase 1,375,000 shares of Common Stock.
(3) These options were granted by the Board on November 22, 1993, approved by
the shareholders on April 26, 1994 and were exercisable of April 26, 1994.
<PAGE> 9
(4) This price was the market price of the Common Stock on the date of grant.
(5) Prior to this date these options will expire 90 days after Mr. Moyal is no
longer an employee of the Company.
(6) These warrants were granted by the board on November 19, 1993, approved by
the shareholders on April 26, 1994 and were exercisable as of April 26,
1994.
(7) These warrants were granted by the Board on November 19, 1993, approved by
the shareholder on April 26, 1994 and become exercisable at a rate of
125,000 warrants per fiscal year if pre tax profits of the Company exceed
$2,000,000 for fiscal year 1995 and/or fiscal year 1996, and exceed
$2,500,000 for fiscal year 1997 and/or fiscal year 1998. A further
condition for the vesting of these 500,000 warrants is that Ms. Newman is
employed by the Company at the time of vesting. The 125,000 Warrants to be
vested in any fiscal year will expire if the earnings condition for such
fiscal year has not been met.
YEAR-END OPTION VALUES TABLE
The following table sets forth information at July 31, 1994, respecting
exercisable and non-exercisable options held by the Named Executives. During
fiscal 1994, none of the Named Executives exercised options. The table also
includes the value of "in-the-money" options which represents the spread
between the exercise price of the existing stock option and the year-end price
of the Common Stock.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS
JULY 31, 1994 HELD AT JULY 31, 1994(5)
------------------------------------ -------------------------------
NOT NOT
EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Adrienne Newman(1) 100,000 -0- -0- -0-
Adrienne Newman(2) 500,000 500,000 -0- -0-
Mayer D. Moyal(3) 300,000 -0- $75,000 -0-
James Grintz(4) -0- -0- -0- -0-
</TABLE>
- --------------------
(1) 100,000 Warrants granted 4/4/90 @ 1.625.
(2) 1,000,000 Warrants granted 11/19/93 @ 1.25.
(3) 300,000 Options granted 4/26/94 @ .9375.
(4) All outstanding options expired as of July 31, 1994.
(5) Based on a July 31, 1994 closing price of 1.187.
EMPLOYMENT AGREEMENTS
Ms. Newman is employed pursuant to an employment agreement with the
Company dated as of April 4, 1990 as amended November 18, 1991 and November 19,
1993. This agreement terminates on the earliest to occur of (i) April 4, 1998,
(ii) the last day of any month in which Ms. Newman dies, (iii) the last day of
the month in which the Company elects to terminate Ms. Newman's employment due
to physical or mental disability, (iv) the termination by the Company of Ms.
Newman's employment for "good cause," as defined, and (v) the termination of
television marketing efforts after April 4, 1995. Pursuant to this agreement,
Ms. Newman serves as Executive Vice President of the Company and President and
Chief Executive Officer of the Company's Adrien Arpel, Inc. subsidiary at an
annual base salary of $250,000. Ms. Newman's employment agreement also provides
for a non-
<PAGE> 10
accountable expense allowance of $65,000 per year and benefits under certain of
the Company's insurance, pension and other fringe benefit programs. In
addition, this agreement prohibits Ms. Newman, during its terms, from "engaging
or being interested in," as defined, any business which operates leased beauty
cosmetics departments or concessions in stores, or which acts as a direct
vendor of or advisor with respect to cosmetics or facial services to any store
which is a member of a retail group which the Company does business at the time
Ms. Newman's employment terminates, or which is competitive with the business
activities of a business which is using the "Adrien Arpel" name and trademark
under license from Adrien Arpel, Inc. at the time Ms. Newman's employment with
the Company terminates. In September, 1991, the Company entered into an
incentive compensation plan agreement with Ms. Newman pursuant to which she is
paid an annual bonus based on 11% of the annual pre-tax profits (as defined in
the agreement) of Adrien Arpel, Inc. for each fiscal year during her
employment commencing with the fiscal year August 1, 1991 through July 31,
1992. No bonus compensation was earned for fiscal 1992, 1993 or 1994 since
there were no pre-tax profits as calculated. Ms. Newman is entitled to receive
1/3 of revenues from television sales of cosmetics after deducting direct
expenses. For fiscal 1994 she received $986,488 from such revenues.
Ms. Langlois has been providing consulting services to the Company at a
rate of $9,600 per annum, commencing in December 1992. This was increased to
$16,800 per annum effective November 1, 1994. These services consist of legal
advice on contract matters as requested by the Company, are not full time and
may be terminated by the Company at will. There is no written agreement between
the Company and Ms. Langlois.
Ms. Fayer was retained to provide consulting services to the Company and
Adrien Arpel, Inc. commencing November 1, 1994 at an annual rate of $84,000.
Ms. Fayer is responsible for assisting in the purchase of package components
and premium items for the Company and Adrien Arpel, Inc. There is no written
agreement between the Company and Ms. Fayer.
Mr. Moyal has been providing financial services to the Company since
August 1993 at a rate of $96,000 per annum which increased to $132,000 per
annum effective December 1, 1993, $150,000 per annum effective May 1, 1994 and
$216,000 per annum effective November 1, 1994, plus certain benefits which do
not exceed 10% of his compensation. There is no written agreement between the
Company and Mr. Moyal.
Mr. Ficke is currently an employee earning less than $100,000 per annum
and does not have a written employment agreement. Mr. Grintz resigned from the
Company as of February 10, 1995.
COMPENSATION FOR SERVICES AS DIRECTOR
Each Director who was not also an officer or employee of the Company
(Messrs. Desjardins and Korda for fiscal 1994) received $650 per meeting or
$200 for telephonic participation. Directors who are officers or employees of
the Company receive no additional compensation for attendance at Board of
Directors or Committee meetings.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Board of Directors is responsible for matters pertaining to
compensation of officers, including the Named Executives and key employees, as
well as stock awards for all employees. The Board is advised on these matters
by the Stock Option Committee. The following report is presented by the Board.
<PAGE> 11
The Board of Directors executive compensation program is designed to
attract, reward and retain executives who are important to the Company's
long-term viability and success and to provide compensation that is competitive
with that of companies of comparable size and stature in the cosmetics and
fragrance industries. These comparable companies are not included on the Dow
Jones Cosmetics/Personal Care Index, and generally have sales in the
$20,000,000 to $50,000,000 range, are engaged in the fragrance and/or cosmetics
industry and are primarily privately owned. The Board of Directors has access
to compensation professionals, such as executive recruiters, in determining
executive compensation.
With respect to all employees other than Adrienne Newman the basic
component of executive compensation was salary. The Board of Directors in view
of the difficult period experienced by the Company terminated the employment
contract of Mr. Grintz and reduced his salary. Mr. Moyal's salary has been
increased to reflect his significant efforts in reducing expenses and
overseeing the efforts to improve the Company's performance. Mr. Moyal's salary
is believed to be in the mid-range of comparative companies. Ms. Newman's
compensation was continued at a base of $250,000 plus a nonaccountable expense
allowance of $65,000 in extending the term of her employment agreement through
1998. In addition she was granted a 1/3 share of television sales of cosmetics
after deducting direct expenses which resulted in compensation of $986,488 in
fiscal 1994. This large sum was directly tied to a percentage of net revenues
produced and reflects both the significant executive and direct marketing
efforts of Ms. Newman. Among other things, Ms. Newman is the selling
representative of the Company's cosmetic products on television.
The Board of Directors also granted, and the shareholders approved, the
issuance of 1,000,000 warrants to Ms. Newman and 300,000 options to Mr. Moyal
to further motivate their performance.
THE BOARD OF DIRECTORS
Jacques Desjardins
Elisabeth Fayer
Steven Korda
Suzanne Langlois
Mayer D. Moyal
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Moyal and Ms. Suzanne Langlois participated on the Board of Directors
in the making of compensation discussions although each abstained in the
consideration of their respective compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Adrien Arpel, Inc. subsidiary periodically retains Display
Creations, Inc., a promotional display creator, to supply Adrien Arpel, Inc.
with point of purchase displays. Mr. Ronald Newman, husband of Ms. Adrienne
Newman, Executive Vice President of the Company and President and Chief
Executive Officer of the Company's Adrien Arpel, Inc. subsidiary, is the sole
owner of Display Creations, Inc. For the fiscal year 1994, Adrien Arpel, Inc.
paid Display Creations, Inc. $8,171 for services rendered. Adrien Arpel, Inc.
intends to retain Display Creations, Inc. from time to time throughout fiscal
1995 to supply point of purchase displays. It is anticipated that payments by
Adrien Arpel, Inc. to Display Creations, Inc. during fiscal 1995 will exceed
$60,000 in the aggregate.
The Company purchases inventory from vendors related to FFD. For the years
ended July 31, 1994 and 1993, the Company made inventory purchases from vendors
related to FFD of $319,050 and $1,568,242, respectively.
On June 10, 1993, the Company entered into a financing agreement with
Cosmetique Alena Inc., an entity related to FFD, for borrowings of up to $2
million Canadian. Borrowings were based on 75% of Adrien Arpel Inc.'s accounts
receivable with a customer in Canada. This loan bore interest
<PAGE> 12
at a rate of 2% above the prime rate of the National Bank of Canada (7.25% and
6% at July 31, 1994 and 1993, respectively). On October 24, 1994, the Company
and Cosmetique Alena amended the terms to the advancing by Cosmetique Alena of
funds necessary to make various purchases, such as packaging, promotional items
and inventory, based on receipt of 100% of Adrien Arpel Inc.'s payments from
this same Canadian customer. As of March 22, 1995 Cosmetique Alena held excess
funds of the Company of approximately $48,000. These funds will be used to fund
further expenditures including amounts owed by the Company to FFD.
FIVE-YEAR SHAREHOLDER RETURN COMPENSATION
The graph below compares the cumulative total return of the Company
against the American Stock Exchange Composite Index and the Dow Jones
Cosmetics/Personal Care Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG AMERICAN STOCK EXCHANGE COMPOSITE INDEX,
DOW JONES COSMETICS/PERSONAL CARE INDEX AND ALFIN, INC.(1)
[LINE GRAPH]
<TABLE>
<CAPTION>
JULY 31,
- -------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Stock Exchange
Composite Index 100 94 98 104 116 116
- -------------------------------------------------------------------------------------------
Dow Jones Cosmetics/Personal
Care Index 100 129 155 197 193 276
- -------------------------------------------------------------------------------------------
Alfin, Inc. 100 83 42 42 42 40
- -------------------------------------------------------------------------------------------
</TABLE>
- ------------------
(1) Total return assumes reinvestment of dividends. The Company did not
declare dividends on its Common Stock during the period set forth above.
<PAGE> 13
PROPOSAL II--APPROVAL OF GRANT OF AN AGGREGATE
OF 500,000 OPTIONS AT $1 PER SHARE TO
JACQUES DESJARDINS, ELISABETH FAYER, STEVEN
KORDA, SUZANNE LANGLOIS AND
WALTER M. EPSTEIN, OF OPTIONS
TO PURCHASE COMMON STOCK OF THE COMPANY
Subject to approval by the Company's shareholders, the Company has, by
action of the Board of Directors on March 6, 1995, granted to each of Jacques
Desjardins, Elisabeth Fayer, Steven Korda, Suzanne Langlois and Walter M.
Epstein options ("Options") to purchase up to 100,000 shares of Common Stock
each at $1.00 per share of the Company.
The purpose of granting the Options to Jacques Desjardins, Elisabeth
Fayer, Steven Korda and Suzanne Langlois is to encourage them to continue their
efforts in promoting the long-term growth and profitability of the Company and
in the case of Walter Epstein to promote the long-term growth and business
developments of the Company. In the event that the Company's shareholders do
not approve the grant of such Options, such Options will be null and void.
The Options provide for the purchase of Common Stock at $1.00 per share.
This per share purchase price is in excess of the closing sales price for
shares of Common Stock of the Company on the American Stock Exchange on the
date of grant ($.9375). The Options may be exercised in whole or in part at any
time through December 31, 1999.
The Options are not transferable otherwise than by will or the laws of
descent and distribution and are exercisable during each grantee's lifetime,
only by each grantee. If any grantee dies, the person or persons to whom the
Options are transferred by will or the laws of descent and distribution may
exercise the Options at any time within 90 days from the date of death.
It is anticipated that the proceeds from the exercise, if ever, of the
Options will be utilized by the Company for working capital purposes. The
Options are subject to protection against dilution in certain events, including
stock splits, stock dividends and certain reorganizations, mergers or
consolidations involving the Company. There are no preemptive rights associated
with the Options or the shares of Common Stock of the Company underlying the
Options.
Based on the current capitalization of the Company, upon the exercise by
any grantee of the Options, such grantee will own shares which represent less
than 1% of the outstanding shares of Common Stock of the Company.
The Business Corporation Law of the State of New York requires that the
grant of the Options be approved by the holders of a majority of the shares of
the Common Stock of the Company entitled to vote at the Meeting. Unless
otherwise specified, shares represented by proxies will be voted to approve
this proposal.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
<PAGE> 14
PROPOSAL III--RATIFICATION OF SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board believes it appropriate to submit for ratification by the
shareholders its selection of Arthur Andersen & Co. as independent public
accountants for the Company for fiscal year 1995. Arthur Andersen & Co. has
served as independent accountants for the Company since fiscal year 1983.
Representatives of Arthur Andersen & Co. are expected to be present at the
Meeting, will have the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions. Unless
otherwise specified, shares represented by proxies will be voted for
ratification of Arthur Andersen & Co. as independent public accountants. If the
shareholders do not so approve, the selection of independent public accountants
will be reconsidered by the Board.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
OTHER BUSINESS
Management of the Company knows of no other business which will be
presented for consideration at the Meeting, but should any other matters be
brought before the Meeting, it is intended that the persons named in the
accompanying proxy will vote such proxy at their discretion.
ANNUAL REPORT
The Annual Report for the fiscal year ended July 31, 1994, including
financial statements, is being furnished herewith to shareholders of record on
March 21, 1995. The Annual Report does not constitute a part of the proxy
soliciting material.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any shareholder desiring to present proposals to shareholders at the 1996
Annual Meeting must transmit such proposal to the Company so that it is
received by the Company on or before November 24, 1995. All such proposals
should be in compliance with applicable SEC regulations.
By Order of the Board of Directors
Michael D. Ficke
Secretary
<PAGE> 15
PROXY CARD ALFIN, INC.
720 FIFTH AVENUE, NEW YORK, NEW YORK 10019
ANNUAL MEETING OF SHAREHOLDERS--APRIL 28, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mayer Moyal and Michael D. Ficke, or
either of them proxies of the undersigned with full power of substitution, to
vote all the shares of Common Stock, $.01 par value, of Alfin, Inc. (the
"Company") held of record by the undersigned on March 21, 1995, at the Annual
Meeting of Shareholders to be held April 28, 1995 and at any adjournment
thereof.
<TABLE>
<S> <C>
(1) Election of Directors
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to
(except as indicated otherwise below) vote for all nominees listed below
</TABLE>
INSTRUCTION: To withhold authority to vote for an individual nominee,
write such nominee's name in the space below.
NOMINEES: Jacques Desjardins, Elisabeth Fayer, Steven Korda,
Suzanne Langlois and Mayer D. Moyal.
<TABLE>
<S> <C> <C> <C> <C>
(2) Authorize the issuance of options to each of Jacques Desjardins,
Elisabeth Fayer, Steven Korda, Susanne Langlois and Walter M. Epstein FOR AGAINST ABSTAIN
to purchase up to 100,000 shares each of the Company's Common Stock / / / / / /
(3) Ratify the selection of Arthur Andersen & Co. as independent public FOR AGAINST ABSTAIN
accountants for the Company / / / / / /
(4) In their discretion, the proxies are authorized to vote upon such matters as FOR AGAINST ABSTAIN
may come before the meeting or any other adjournment thereof. / / / / / /
</TABLE>
<PAGE> 16
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE
UNDERSIGNED SHAREHOLDER, IF NO CHOICE IS SPECIFIED BY THE SHAREHOLDER, THIS
PROXY WILL BE VOTED "FOR" ITEMS (1), (2) AND (3), AND IN THE PROXIES'
DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms
all the said attorneys, agents, proxies, their substitutes or any of them may
lawfully do by virtue hereof.
-----------------------------------
-----------------------------------
Dated: , 1995
----------------------
Please date this Proxy and sign your
name exactly as it appears hereon.
When there is more than one owner,
each should sign. When signing as an
attorney, administrator, executor,
guardian, or trustee, please add
your title as such. If executed by a
corporation, this Proxy should be
signed by a duly authorized officer.
If a partnership, please sign in
partnership name by authorized
persons.
Please date, sign and return this
Proxy Card in the enclosed
envelope. No postage required if
mailed in the United States.
