<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] 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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
ALFIN, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
ALFIN, INC.
720 FIFTH AVENUE, NEW YORK, NEW YORK 10019
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1997
------------------------
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 Omni Berkshire Place, 21 East 52nd Street, New York, New York 10022, on
May 20, 1997, at 3:00 p.m. (New York time), for the following purposes:
(1) To elect a board of four (4) directors to serve until the next
Annual Meeting of Shareholders or until their respective successors are
elected and qualified;
(2) To ratify the selection of Arthur Andersen LLP as independent
public accountants for the Company for fiscal year 1997; and
(3) To transact such other business as may properly be brought before
the Meeting or any adjournment thereof.
The shareholders of record of the Company at the close of business on March
31, 1997 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
April 29, 1997
<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., a New York corporation (the "Company"), for use at the Annual
Meeting of Shareholders of the Company to be held on May 20, 1997, at 3:00 p.m.
(New York time) at the Omni Berkshire Place, 21 East 52nd Street, New York, New
York 10022, 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 April 29, 1997, to
all of the shareholders of record of the Company on March 31, 1997. 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 Elisabeth Fayer, the Chief Executive
Officer and President of the Company, and Michael D. Ficke, the 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
all of their costs and expenses in forwarding soliciting materials.
VOTING RIGHTS
Only holders of shares of Common Stock of record at the close of business
on March 31, 1997 will be entitled to vote at the Meeting. On March 31, 1997,
the Company had 11,787,983 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 at the
meeting shall constitute a quorum for the transaction of business. If a quorum
is present, the affirmative vote of the holders 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 properly come 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. A shareholder may, with respect to that
election of Directors, (i) vote for the election of all nominees proposed by the
Board, (ii) withhold authority to vote for all such nominees or (iii) withhold
authority to vote for any of such nominees by so indicating in the appropriate
space on the proxy.
<PAGE> 4
SECURITY OWNERSHIP
The following table sets forth certain information as of March 31, 1997
regarding (i) the share ownership of the Company by each person who is known to
the Company to be the record or 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 of the Company and the share ownership of the Chief
Executive Officer of the Company and each of the other most highly paid
executive officers of the Company who earned in excess of $100,000 during the
Company's last fiscal year (collectively the "Named Executives") and (iii) the
share ownership of the Company of all directors of the Company and Named
Executives, as a group.
<TABLE>
<CAPTION>
PERCENT
AMOUNT OF COMMON STOCK OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
- ------------------------------------------------------------ ---------------------- -------
<S> <C> <C>
Elisabeth Fayer............................................. 7,288,935(2) 61.8
32 Belvedere Road
Westmont, Quebec
Canada H3Y 1P4
Jacques Desjardins.......................................... 100,000 *
617 Avenue Powell
Mt. Royal, Quebec
Canada 113R 1L7
Steven Korda................................................ 66,667 *
One Westmont Square
Suite 1500
Montreal, Quebec
Canada 113Z 2P9
Suzanne Langlois............................................ 100,000 *
53 Breton
Laval Des Rapides,
Quebec
Canada H6N 3K8
Adrienne Newman(3).......................................... 625,000(4) 5.0
2 East End Avenue
New York, New York 10021
Jean Farat(5)............................................... -0- *
235 West 48th Street, Apt. 41H
New York, New York 10036
Michael Ficke............................................... -0- *
75 Waters Edge Road
Sparta, New Jersey 07871
All Directors and Executive Officers as a Group (7 8,180,602 65.9
Persons)..................................................
</TABLE>
- ---------------
* Less than 1%.
(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 11,787,983 shares of Common Stock
outstanding on March 31, 1997.
(2) Includes 7,188,935 shares of Common Stock which are owned of record by Fine
Fragrances Distribution, Inc. ("FFD"), a wholly-owned subsidiary of 3143040
Canada, Inc. of which Elisabeth Fayer is the sole owner. Elisabeth Fayer,
through 3143040 Canada, Inc., has sole investment and voting discretion with
respect to all of the shares of the Company owned by FFD.
2
<PAGE> 5
(3) Terminated her Employment Agreement, whereby she served as President and
Chief Executive Officer of the Company's wholly-owned subsidiary, Adrien
Arpel, Inc., on October 28, 1996.
(4) Represents 625,000 shares of Common Stock issuable upon exercise of
warrants. Such warrants are fully vested and have an exercise price of $1.25
per share. 500,000 of such warrants expire on November 19, 1998 and 125,000
of such warrants expire on July 31, 2001.
(5) Resigned, as of October 23, 1996, as Chairman of the Board and Chief
Executive Officer of the Company.
PROPOSAL I -- ELECTION OF DIRECTORS
NOMINATIONS AND ELECTION OF DIRECTORS
The Board has nominated Jacques Desjardins, Elisabeth Fayer, Steven Korda
and Suzanne Langlois (all of whom are members of the present Board of Directors
of the Company) to serve as directors of the Company until the Company's 1998
Annual Meeting of Shareholders or until their respective 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>
NAME OF NOMINEE AGE DIRECTOR SINCE POSITION WITH COMPANY
------------------------------- --- -------------- --------------------------
<S> <C> <C> <C>
Jacques Desjardins............. 63 Nov. 1992 Director
Elisabeth Fayer................ 50 Nov. 1992 Chief Executive Officer,
President and Director
Steven Korda................... 56 Nov. 1992 Director
Suzanne Langlois............... 43 Nov. 1992 Director
</TABLE>
JACQUES DESJARDINS, a Canadian citizen, was elected as 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 as a director of the
Company in November 1992. Mrs. Fayer became the President of the Company in
September 1996, and was named Chief Executive Officer of the Company in October
1996 when the acting Chairman of the Board and Chief Executive Officer, Mr. Jean
Farat, resigned from the Company. For more than the past five (5) years, Mrs.
Fayer has owned and served as President and Chief Executive Officer of Gerbe, a
major French hosiery company, and has also partially owned and managed various
French fragrance and cosmetic companies including the world famous fashion house
Pierre Balmain.
3
<PAGE> 6
STEVEN KORDA, a Canadian citizen, was elected as 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 as 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, Elisabeth Fayer's late husband, 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 five times during
fiscal year 1996. During fiscal year 1996, all current directors attended 75% or
more of the meetings of the Board of Directors and the committees on which they
served which were held during fiscal year 1996. The Board maintains standing
Executive, Stock Option and Audit Committees, but does not have Nominating or
Compensation Committees.
The Executive Committee consists of Elisabeth Fayer 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 meetings during fiscal year 1996.
The Stock Option committee consists 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 year
1996.
The Audit Committee consists 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
Company's independent accountants, 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 with respect
thereto. The Audit Committee did not have any meetings during fiscal year 1996.
EXECUTIVE OFFICERS
Set forth below is certain information, as of April 7, 1997, regarding the
executive officers of the Company:
<TABLE>
<CAPTION>
EXECUTIVE OFFICER
NAME AGE POSITION WITH COMPANY SINCE
----------------------- --- -------------------------------------- -----------------
<S> <C> <C> <C>
Elisabeth Fayer........ 50 Chief Executive Officer and President September 1996
Jo Ann Segal........... 46 Senior Vice President, General Manager October 1996
Michele Mas............ 50 Vice President, Marketing November 1996
Vice President, Chief Financial
Michael D. Ficke....... 41 Officer; November 1993
Secretary
</TABLE>
Information with respect to Elisabeth Fayer is set forth under "Information
Covering Nominees."
JO ANN SEGAL joined the Company as Senior Vice President/General Manager in
October 1996 and has served in this capacity since that time. For more than the
past five (5) years, prior to assuming this position, Ms. Segal served as a
senior level sales executive for various cosmetic companies including Lancome, a
4
<PAGE> 7
division of Cosmair, Revlon, Borghese, Inc. and ColorLabs Electronic Management,
Inc., a company started by Ms. Segal.
MICHELE MAS joined the Company as Vice President/Marketing in November 1996
and has served in this capacity since that time. Prior to joining the Company,
Ms. Mas served as President of Selecta, USA, Inc., a distributor of children's
toiletries. Prior to serving in this position, Ms. Mas served as Vice
President/Marketing for the Company's fragrance division.
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 certified public accountant
and prior to joining the Company in 1989 he 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, 1996, 1995, and 1994 respecting all compensation awarded to, earned by or
paid to the Company's Chief Executive Officers and all other Named Executives in
all capacities in which each such officer served. Two other officers of Adrien
Arpel Inc., who resigned from their positions with Adrien Arpel, Inc. in
November 1996, are not included as Named Executives because they did not perform
policy-making functions for the Company.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------
STOCK OPTION
ANNUAL COMPENSATION WARRANT/
--------------------- OTHER ANNUAL COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ COMPENSATION AWARDS
- ------------------------------------- ---- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Jean Farat(1)........................ 1996 $270,000 $ -0- $ -0-(2) $ -0-
Chairman and Chief 1995 33,750 -0- -0-(2) -0-
Executive Officer
Adrienne Newman(3)................... 1996 $250,000 $3,448,105(4) $65,000(5) $ -0-
Vice President of the Company and 1995 250,000 3,374,990(4) 65,000(5) -0-
President and Chief Executive Officer 1994 250,000 986,488(4) 65,000(5) 1,000,000
of Adrien Arpel, Inc.
Michael D. Ficke..................... 1996 $ 96,500 $ 5,000 $ -0-(2) $ -0-
Vice President, 1995 93,000 -0- -0-(2) -0-
Chief Financial Officer, 1994 88,167 -0- -0-(2) -0-
Secretary
Elisabeth Fayer(6)................... 1996 $290,000 $ -0- $ -0- $ -0-
President and Chief Executive Officer 1995 114,500 -0- -0- -0-
</TABLE>
- ---------------
(1) Became Chairman of the Board and Chief Executive Officer of the Company in
June 1995 and resigned from these positions as of October 23, 1996.
(2) Excludes personal benefits which did not exceed the lesser of $50,000 or
10%, on an annual basis, of such officer's salary and bonus.
(3) Terminated her Employment Agreement, whereby she served as President and
Chief Executive Officer of the Company's wholly-owned subsidiary, Adrien
Arpel, Inc., on October 28, 1996. See "Executive Compensation-Employment
Agreements."
5
<PAGE> 8
(4) Commissions paid based on 1/3 of the revenues, net of direct expenses,
derived from television shopping sales of cosmetics.
(5) Represents a non-accountable annual expense allowance of $65,000.
(6) Named President of the Company in September 1996 and became Chief Executive
Officer of the Company in October 1996.
YEAR-END OPTION VALUES TABLE
The following table sets forth information at July 31, 1996, respecting
exercisable and non-exercisable options held by the Named Executives. 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, 1996 HELD AT JULY 31, 1996(2)
------------------------- -------------------------
NOT NOT
EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Adrienne Newman(1).................................. 625,000 -0- $ 468,750 $ -0-
</TABLE>
- ---------------
(1) 1,000,000 Warrants granted on November 19, 1993 at $1.25 per share.
(2) Based on a July 31, 1996 closing price of $2.00.
EMPLOYMENT AGREEMENTS
Ms. Adrienne Newman was employed as the President and Chief Executive
Officer of the Company's wholly-owned subsidiary, Adrien Arpel, Inc., pursuant
to an employment agreement with the Company, dated as of April 4, 1990, as
amended November 18, 1991 and November 19, 1993 (together, the "Employment
Agreement"). The Employment Agreement terminated on the earliest to occur of (i)
April 4, 1998, (ii) the last day of any month in which Ms. Newman died, (iii)
the last day of the month in which the Company elected to terminate Ms. Newman's
employment due to her physical or mental disability, (iv) the termination by the
Company of Ms. Newman's employment for "good cause" as therein defined, and (v)
the termination of television marketing efforts after April 4, 1994. The
Employment Agreement provided for salary, fringe benefits and commission
payments based upon 33% of the revenues, net of direct expenses, attributable to
television shopping sales. Ms. Newman, who served as the selling host under the
name Adrien Arpel, in the Company's sales program on the Home Shopping Network,
Inc. ("HSN"), also had vested rights in 625,000 warrants, 500,000 of which were
scheduled to expire on November 19, 1998, and the remaining 125,000 of which
were scheduled to expire on July 31, 2001.
On October 28, 1996 the Company received notice from Adrienne Newman
purporting to terminate the Employment Agreement based on an alleged breach of
the Employment Agreement by the Company. On November 8, 1996, the Company and
Adrienne Newman reached an agreement (the "Interim Agreement") whereby Ms.
Newman agreed to appear as the selling host for Adrien Arpel, Inc. on HSN shows
scheduled for November 14-18, 1996, December 12-16, 1996 and January 23-27, 1997
(the "HSN Selling Period"). During the HSN Selling Period, Ms. Newman served as
an independent contractor and not as an employee of the Company. The Company and
Ms. Newman also agreed to refrain from initiating legal action against the other
in connection with their dispute over Ms. Newman's termination of the Employment
Agreement until after the expiration of the HSN Selling Period.
6
<PAGE> 9
On January 28, 1997, after the expiration of the HSN Selling Period, the
Company was served by Adrienne Newman with a summons and complaint returnable in
the Supreme Court, New York County, whereby she asserted claims for damages
against the Company based upon alleged breaches by the Company of Ms. Newman's
Employment Agreement and the Interim Agreement. Unspecified damages were
claimed. A further claim requested a judicial determination that the Employment
Agreement was materially breached by the Company resulting in its termination.
The Company served an Answer and Counterclaim on March 19, 1997 in response
to the action commenced by Ms. Newman. The Company's Counterclaim asserts
various claims against Ms. Newman, seeking damages and injunctive relief. Among
other things, it is the position of the Company that Ms. Newman was in material
breach of her Employment Agreement when she terminated the Employment Agreement
on October 28, 1996. As a consequence, it is the Company's belief that Ms.
Newman's refusal to perform throughout the term of the Employment Agreement
which ends in April 1998, particularly her willful refusal and failure to appear
as selling host on HSN, will damage the Company in the sum of at least eleven
million dollars ($11,000,000). The Company also asserted claims against Ms.
Newman for breaches of her covenant not to compete and her covenant not to
disclose trade secrets and proprietary data, and for attempting to disparage the
Company.
Ms. Langlois has been providing consulting services to the Company since
December 1992. She initially received payments at a rate of $9,600 per annum,
which amount was increased to $16,800 per annum effective November 1, 1994.
These consulting services consist of legal advice on contract matters as
requested by the Company from time to time, are not full time services and may
be terminated by the Company at will. There is no written consulting agreement
between the Company and Ms. Langlois.
Mrs. 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.
This was increased to $290,000 per annum effective May 1, 1995 and to $600,000
per annum effective September 1, 1996. During September 1996, Mrs. Fayer was
named President of the Company and she has also been serving as the Chief
Executive Officer of the Company since October 1996 when the acting Chairman of
the Board and Chief Executive Officer, Mr. Jean Farat, resigned from the
Company. There is no written employment agreement between the Company and Mrs.
Fayer.
Ms. Jo Ann Segal is employed by the Company pursuant to an employment
agreement dated October 23, 1996. This agreement terminates on the earliest to
occur of (i) October 27, 1997 or (ii) the termination of Ms. Segal's employment
for "cause", as therein defined. After October 27, 1997, this agreement may be
terminated on 90 days prior written notice. Ms. Segal serves as Senior Vice
President/General Manager of the Company at an annual base salary of $225,000,
plus certain benefits which do not exceed 10% of her annual compensation. She is
also provided with an apartment leased by the Company in New York City. Ms.
Segal was also granted stock options for 25,000 shares of the Company's Common
Stock, valued at the closing price on the date of the grant with options for
10,000 shares becoming fully exercisable after she is employed by the Company
for a period of one year and options for the remaining 15,000 shares becoming
fully exercisable after she is employed by the Company for a period of two
years.
Ms. Michele Mas is employed by the Company pursuant to an employment
agreement dated November 1, 1996. This agreement terminates on the earliest to
occur of (i) October 31, 1997 or (ii) the termination of Ms. Mas' employment for
"cause", as therein defined. Ms. Mas serves as Vice President, Marketing of the
Company at an annual base salary of $144,000 plus certain benefits which do not
exceed 10% of her annual compensation. Ms. Mas was also granted stock options
for 25,000 shares of the Company's Common Stock,
7
<PAGE> 10
valued at the closing price on the date of the grant, with options for 10,000
shares becoming fully exercisable after she is employed by the Company for a
period of one year and options for the remaining 15,000 shares becoming fully
exercisable after she is employed by the Company for a period of two years.
Mr. Ficke is currently an executive officer of the Company earning $104,000
per annum. There is no written employment agreement between the Company and Mr.
Ficke.
COMPENSATION FOR SERVICES AS DIRECTOR
Each Director who did not also serve as an officer, employee or consultant
of the Company during fiscal year 1996 (Messrs. Desjardins and Korda for fiscal
year 1996) received $650 for each Board of Directors or Committee meeting
attended by such Director or $200 for each meeting in which such Director
participated by telephonic conference. Directors who also served as officers or
employees of the Company receive no additional compensation for attendance or
participation 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 entire
Board of Directors of the Company.
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 Standard & Poor's
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 industries 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 in fiscal year 1996 was salary. Prior to her
departure from the Company, Ms. Newman's yearly base compensation under her
employment agreement was $250,000, plus a non-accountable annual expense
allowance of $65,000. In addition she was granted a 1/3 share of the revenues,
net of direct expenses, derived from television shopping sales of cosmetics. The
large compensation provided to Ms. Newman prior to her departure from the
Company directly reflected her unique and vital role in generating a substantial
portion of the Company's revenues.
THE BOARD OF DIRECTORS
Jacques Desjardins
Elisabeth Fayer
Steven Korda
Suzanne Langlois
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Elisabeth Fayer, who is currently serving as the President and Chief
Executive Officer of the Company, and Jean Farat, who was the Company's Chairman
and Chief Executive Officer prior to his departure on October 23, 1996, and is
no longer associated with the Company, participated in determining compensation
for
8
<PAGE> 11
officers and employees of the Company in fiscal year 1996, although each
abstained in the consideration of their respective compensation as a consultant
and the Chief Executive Officer of the Company, respectively.
PROPOSAL II -- RATIFICATION OF SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board believes it is appropriate to submit for ratification by the
shareholders its selection of Arthur Andersen LLP as the independent public
accountants for the Company for fiscal year 1997. Arthur Andersen LLP has served
as independent accountants for the Company since fiscal year 1983.
Representatives of Arthur Andersen LLP 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 the
ratification of Arthur Andersen LLP as the independent public accountants for
the Company. If the shareholders do not so approve, the selection of independent
public accountants will be reconsidered by the Board.
9
<PAGE> 12
FIVE-YEAR SHAREHOLDER RETURN COMPENSATION
The graph set forth below compares the five-year cumulative total return of
the Company against the Standard & Poor's 500 Index, the American Stock Exchange
Composite Index and the Standard & Poor's Cosmetics/Personal Care Index for the
same period.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG STANDARD & POOR'S 500 INDEX,
AMERICAN STOCK EXCHANGE COMPOSITE INDEX,
STANDARD & POOR'S COSMETICS/PERSONAL CARE INDEX AND ALFIN, INC. (1)(2)
<TABLE>
<CAPTION>
STANDARD & AMERICAN STOCK STANDARD &
MEASUREMENT PERIOD POOR'S 500 EXCHANGE|COMPOSITE POOR'S|COSMETICS/PERSONAL
(FISCAL YEAR COVERED) INDEX INDEX CARE INDEX 'ALFIN, INC.'
<S> <C> <C> <C> <C>
1991 100 100 100 100
1992 113 106 132 100
1993 123 119 137 100
1994 129 119 169 95
1995 163 154 215 100
1996 190 168 290 160
</TABLE>
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(1) Total return assumes reinvestment of dividends. The Company did not declare
any dividends on its Common Stock during the period set forth above.
(2) The Company has selected the Standard & Poor's 500 Index as its broad equity
market index for the purposes of measuring the Company's cumulative total
return, rather than the American Stock Exchange Composite Index, which was
the broad equity market index the Company previously used for its
immediately preceding fiscal year. The Company believes that due to its
decision in July 1995 to cease distribution of fragrance products and the
Company's increased emphasis on retail sales, the Standard & Poor's 500
Index is a more suitable broad equity market index than the American Stock
Exchange Composite Index for the purpose of measuring the Company's
cumulative total return on an ongoing basis.
10
<PAGE> 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Adrien Arpel, Inc. subsidiary has periodically retained
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, the former Executive Vice President of the Company and the former
President and Chief Executive Officer of the Company's wholly-owned subsidiary,
Adrien Arpel, Inc., is the sole owner of Display Creations, Inc.
INDEPENDENT ACCOUNTANTS
The Company has engaged Arthur Andersen LLP as independent public
accountants for the Company for fiscal year 1997. Arthur Andersen LLP has served
as the independent accountants for the Company since fiscal year 1983.
Representatives of Arthur Andersen LLP 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.
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 in their discretion.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended July 31, 1996,
including financial statements, is being furnished herewith to shareholders of
record of the Company on March 31, 1997. The Annual Report does not constitute a
part of the proxy soliciting material.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any shareholder desiring to present proposals to shareholders at the 1998
Annual Meeting of the Company must transmit such proposal to the Company so that
it is received by the Company on or before December 30, 1997. All such proposals
should be in compliance with applicable SEC regulations.
By Order of the Board of Directors
Michael D. Ficke
Secretary
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<PAGE> 14
ALFIN, INC.
720 FIFTH AVENUE, NEW YORK, NEW YORK 10019
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - MAY 20, 1997
The undersigned hereby appoints ELISABETH FAYER and MICHAEL FICKE, as
Proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of Common Stock, $.01 par value, of ALFIN, INC. held of record by the
undersigned on March 31, 1997 at the Annual Meeting of Shareholders (the
"Meeting") of ALFIN, INC., on May 20, 1997 at 3:00 p.m., or at any adjournments
thereof.
(1) Election of Directors
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<S> <C>
[ ] FOR all nominees listed below (except as indi- [ ] WITHHOLD AUTHORITY to vote for all
cated otherwise below) nominees listed below
</TABLE>
INSTRUCTION: To withhold authority to vote for an individual nominee, write such
nominees's name in the space below.
NOMINEES: Jacques Desjardins, Elisabeth Fayer, Steven Korda and Suzanne
Langlois.
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<S> <C> <C> <C>
(2) To ratify the selection of Arthur Andersen LLP as independent public FOR AGAINST ABSTAIN
accountants for the Company for fiscal year 1997. [ ] [ ] [ ]
(3) In their discretion, the Proxies are authorized to vote upon such other FOR AGAINST ABSTAIN
business as may properly come before the meeting or any adjournments [ ] [ ] [ ]
thereof.
</TABLE>
(To be signed below)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN ABOVE.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please indicate the capacity in which signing. When a
ballot is given by a corporation, please give your full corporation name and
have the ballot signed by the president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Date:_______________________________________________________, 1997
Stockholder:______________________________________________________
__________________________________________________________________
Signature
__________________________________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
