<PAGE> 1
TRISTAR CORPORATION
12500 San Pedro Avenue, Suite 500
San Antonio, Texas 78216
January 22, 1997
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1997 Annual Meeting of the Stockholders of TRISTAR CORPORATION. The Annual
Meeting will be held Friday, February 21, 1997 at 10:00 a.m., C.S.T., at the
Company's corporate offices at 12500 San Pedro Avenue, Suite 500, San Antonio,
Texas. The formal Notice of the Annual Meeting is set forth in the enclosed
material.
The matters expected to be acted upon at the meeting are described in
the attached Proxy Statement. During the meeting, stockholders will have the
opportunity to ask questions and comment on TRISTAR CORPORATION's operations.
It is important that your views be represented whether or not you are
able to be present at the Annual Meeting. Please sign and return the enclosed
proxy card promptly.
We appreciate your investment in TRISTAR CORPORATION and urge you to
return your proxy card as soon as possible.
Sincerely,
[signature]
Viren S. Sheth
President
Chief and Executive Officer
<PAGE> 2
TRISTAR CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of
TRISTAR CORPORATION (the "Company") will be held on Friday, February 21,
1997, at 10:00 a.m., C.S.T., at the Company's corporate offices at 12500 San
Pedro Avenue, Suite 500, San Antonio, Texas, for the following purposes:
1. To elect a Board of five directors to serve for the ensuing
year and until their respective successors are duly elected
and qualified.
2. To consider and act upon a proposal that the stockholders
approve a stock option for the Company's President and Chief
Executive Officer.
3. To consider and act upon a proposal that the stockholders
approve the appointment of KPMG Peat Marwick LLP, as the
Company's independent accountants for fiscal year 1997.
4. To transact such other and further business as may lawfully
come before the Annual Meeting or any adjournment or
adjournments thereof.
Information with respect to the above matters is set forth in the
Proxy Statement that accompanies this Notice.
The Board of Directors has fixed the close of business on January 13,
1997, as the record date for determining stockholders entitled to notice of and
to vote at the meeting. A complete list of the stockholders entitled to vote
at the meeting will be maintained at the Company's principal executive offices
during ordinary business hours for a period of ten days prior to the meeting.
The list will be open to the examination of any stockholder for any purpose
germane to the meeting during this time. The list will also be produced at the
time and place of the meeting and will be open during the whole time thereof.
By Order of the Board of Directors,
[Signature]
PHILLIP M. RENFRO
Secretary
San Antonio, Texas
January 22, 1997
--------------------
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
EVEN IF YOU PLAN TO BE PRESENT, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY
VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE> 3
TRISTAR CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 21, 1997
GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of TRISTAR
CORPORATION, a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of proxies for use at the Annual Meeting
of Stockholders to be held on Friday, February 21, 1997, at 10:00 a.m.,
C.S.T., in the Company's executive offices at 12500 San Pedro Avenue, Suite
500, San Antonio, Texas, and at any adjournment or postponement thereof, for
the purposes set forth in the foregoing Notice of Annual Meeting of
Stockholders. Properly executed proxies received in time for the meeting will
be voted.
The securities of the Company entitled to vote at the Annual Meeting
consist of shares of Common Stock, $0.01 par value ("Common Stock), of the
Company. At the close of business on January 13, 1997 (the "record date"),
there were outstanding and entitled to vote 16,710,176 shares of Common Stock.
The holders of record of Common Stock on the record date will be entitled to
one vote per share. The Company's Certificate of Incorporation does not permit
cumulative voting in the election of directors.
The Annual Report to Stockholders for the year ended August 31, 1996
has been or is being furnished with this Proxy Statement, which is being mailed
on or about January 22, 1997, to the holders of record of Common Stock on the
record date. The Annual Report to Stockholders does not constitute a part of
the proxy materials.
VOTING AND PROXY PROCEDURES
Properly executed proxies received in time for the meeting will be
voted. Stockholders are urged to specify their choices on the proxy, but if no
choice is specified, eligible shares will be voted for the election of the five
nominees for director named herein, for the approval of a stock option for the
President and Chief Executive Officer of the Company and for ratification of
the appointment of KPMG Peat Marwick LLP as independent public accountants for
fiscal year ending August 30, 1997. At the date of this Proxy Statement,
management of the Company knows of no other matters which are likely to be
brought before the Annual Meeting. However, if any other matters should
properly come before the Annual Meeting, the persons named in the enclosed
proxy will have discretionary authority to vote such proxy in accordance with
their best judgment on such matters.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked by a later-dated proxy or by written notice filed with
Loren M. Eltiste at the Company's executive offices at any time before the
enclosed proxy is exercised. Stockholders attending the Annual Meeting may
revoke their proxies and vote in person. The Company's executive offices are
located at 12500 San Pedro Avenue, Suite 500, San Antonio, Texas 78216.
The holders of a majority of the total shares of Common Stock issued
and outstanding at the close of business on the record date, whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. The affirmative vote of a plurality of the
total shares of Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting is required for the election of
directors, and the affirmative vote of a majority of the total shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is required for any other matters as may properly come before
the Annual Meeting or any adjournment thereof.
Abstentions are counted toward the calculation of a quorum, but are
not treated as either a vote for or against a proposal. An abstention has the
same effect as a vote against the proposal. Any unvoted
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position in a brokerage account will be considered as not voted and will not be
counted toward fulfillment of quorum requirements.
The cost of solicitation of proxies will be paid by the Company. In
addition to solicitation by mail, proxies may be solicited by the directors,
officers and employees of the Company, without additional compensation, by
personal interview, telephone, telegram or otherwise. Arrangements will also
be made with brokerage firms and other custodians, nominees and fiduciaries who
hold the voting securities of record for the forwarding of solicitation
materials to the beneficial owners thereof. The Company will reimburse such
brokers, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith. The Company has no present
plans to hire special employees or paid solicitors to assist in obtaining
proxies, but reserves the option of doing so if it should appear that a quorum
otherwise might not be obtained.
OWNERSHIP OF COMMON STOCK
PRINCIPAL STOCKHOLDERS
The following table sets forth as of December 20, 1996, certain
information with respect to the Common Stock beneficially owned by persons who
are known to the Company to be the beneficial owners of more than five percent
of the Common Stock. For purposes of this Proxy Statement, beneficial
ownership is defined in accordance with the rules of the Securities and
Exchange Commission (the "Commission") to mean generally the power to vote or
dispose of shares, regardless of any economic interest therein. The persons
listed have sole voting power and sole dispositive power with respect to all
shares set forth in the table unless otherwise specified in the footnotes to
the table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL Percent
NAME AND ADDRESS OWNERSHIP OF CLASS
--------------------------------------------------- ----------------------- ----------------------
<S> <C> <C>
Core Sheth Families(1) . . . . . . . . . . . . . 15,397,984 80.6%
Post Office Box 5551
Dubai, United Arab Emirates
Transvit Manufacturing Corporation(2) . . . . . . 9,977,810 52.2%
1211 Geneva
25 Switzerland
Case Postale 69
Starion International Limited(3) . . . . . . . . 5,313,174 27.8%
Woodbourne Hall, P.O. Box 3162
Road Town, Tortola
British Virgin Islands
Ibrahim Ahmed Al-Musbahi . . . . . . . . . . . . 1,000,000 5.2%
c/o Al-Musbahi Establishment
P.O. Box 20002
Jeddah 21455
Saudi Arabia
</TABLE>
- ---------------
(1) Shashikant S. Sheth, Jamnadas Sheth, Kirit Sheth and Mahendra Sheth
comprise the Core Sheth Families. The Core Sheth Families own and
control Transvit and Starion B.V.I. The 15,397,984 shares includes
9,977,810 shares beneficially owned by Transvit and 5,313,174 shares
beneficially owned by Starion B.V.I. (which includes 2,400,000 shares
issuable upon the exercise of currently exercisable Common Stock
warrants held by Starion B.V.I.) and 107,000 shares otherwise owned or
controlled by the Core Sheth Families. The members of the Core Sheth
Families share voting and investment power with respect to all of
these shares.
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(2) Transvit shares voting and investment power with the members of the
Core Sheth Families with respect to their cumulative shares.
(3) The 5,313,174 shares includes 2,400,000 shares issuable upon the
exercise of currently exercisable Common Stock warrants held by
Starion B.V.I. who shares voting and investment power with the members
of the Core Sheth Families with respect to all of these shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of December 20, 1996, certain
information with respect to the Company's Common Stock beneficially owned by
each of its directors and nominees for director, each executive officer named
in the Summary Compensation Table and by all its directors and officers as a
group, as of the record date. Such persons have sole voting power and sole
dispositive power with respect to all shares set forth in the table unless
otherwise specified in the footnotes to the table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL Percent
NAME AND ADDRESS OWNERSHIP OF CLASS
--------------------------------------------------- ----------------------- ----------------------
<S> <C> <C>
Viren S. Sheth(1) . . . . . . . . . . . . . . . . -0- -0-%
12500 San Pedro Ave., Suite 500
San Antonio, TX 78216
Richard P. Rifenburgh . . . . . . . . . . . . . . -0- -0-%
133 N. Pompano Beach Blvd.
Pompano Beach, FL 33062
Robert R. Sparacino -0- -0-%
Sparacino Associates, Inc.
175 Blackberry Drive
Stamford, CT 06903
Aaron Zutler 10,000 0.1%
Marketing Congress, Inc.
80 Skyline Drive
Plainview, New York 11803
Jay J. Sheth(2) -0- -0-%
Starion House
319 Pinner Road
North Harrow, Middlesex
HA 1 4HF England
Loren M. Eltiste(3) 66,206 0.4%
12500 San Pedro Ave., Suite 500
San Antonio, TX 78216
Ricardo A. Bunge -0- -0-%
12500 San Pedro Ave., Suite 500
San Antonio, TX 78216
Joseph KeKama(4) 50,000 0.3%
250 W. 57th Street, #2232
New York, New York 10107
All executive officers and directors as a group 132,206(5) 0.8%
(ten persons, including the executive officers and
directors listed above)
</TABLE>
4
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(1) Viren S. Sheth, a director of the Company and its President and Chief
Executive Officer, although not a member of the Core Sheth Families, is related
by blood to certain members of the Core Sheth Families. Viren S. Sheth
disclaims beneficial ownership of shares beneficially owned by the Core Sheth
Families.
(2) Jay J. Sheth, a director of the Company, although not a member of the
Core Sheth Families, is related by blood to certain members of the Core Sheth
Families. Jay J. Sheth disclaims beneficial ownership of shares beneficially
owned by the Core Sheth Families.
(3) Loren M. Eltiste has the right to acquire the 66,206 shares pursuant to
stock options issued under a stock option agreement.
(4) Joseph DeKama has the right to acquire the 50,000 shares pursuant to
stock options issued under a stock option agreement.
(5) Includes 66,206 shares beneficially owned by Loren M. Eltiste; 10,000
shares beneficially owned by Aaron Zutler, 50,000 shares beneficially owned by
Joseph DeKama and 6,000 shares beneficially owned by Peter Liman.
MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and Bylaws provide that the
Board of Directors will consist of not less than three persons, the exact
number to be fixed from time to time by the Board of Directors. The Board of
Directors has fixed the authorized number of directors at five.
Five directors (constituting the entire Board) are to be elected at
the Annual Meeting to serve until the next Annual Meeting of Stockholders and
until their successors shall have been duly elected and qualified. All of the
persons named below are now directors of the Company.
The following table contains certain information as of December 20,
1996, with respect to the persons who have been nominated to serve as
directors:
<TABLE>
<CAPTION>
Served as a
Name Age Position and Offices with the Company Director Since
---- --- -------------------------------------- --------------
<S> <C> <C> <C>
Richard P. Rifenburgh(1) 64 Chairman of the Board of Directors 1992
Robert R. Sparacino(2) 69 Vice-Chairman of the Board of Directors 1992
Viren S. Sheth 47 President and Chief Executive Officer and 1992
Director
Aaron Zutler 61 Director 1995
Jay J. Sheth 38 Director 1996
</TABLE>
5
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(1) Mr. Rifenburgh became Chairman of the Board in August 1992. The
Chairman of the Board is not an officer of the Company.
(2) Dr. Sparacino became Vice-Chairman of the Board in August 1992. The
Vice-Chairman of the Board is not an officer of the Company
Biographical information on these continuing directors is set forth
below under "Further Information -- Board of Directors and Executive Officers."
The persons set forth in the table above were not selected as a
director pursuant to any arrangement or understanding between him and any other
person (other than directors or officers of the Company acting solely in their
capacities as such) except for Jay J. Sheth, who agreed to serve as a director
of the Company pursuant to a consensus among the Core Sheth Families. The Core
Sheth Families is a group which is the beneficial owner of 80.6% of the
Company's Common Stock as more particularly set forth below and in the Core
Sheth Schedule 13D and amendments thereto. Viren S. Sheth regularly consults
with the Core Sheth Families with respect to the operations of the Company.
It is the intention of the persons named in the enclosed proxy to vote
such proxy for the election of such nominees. Management of the Company does
not contemplate that any of such nominees will become unavailable for any
reason, but if that should occur before the meeting, proxies that do not
withhold authority to vote for directors will be voted for another nominee, or
other nominees, in accordance with the best judgment of the person or persons
appointed to vote the proxy.
The enclosed form of proxy provides a means for the holders of Common
Stock to vote for all of the nominees listed therein, to withhold authority to
vote for one or more of such nominees or to withhold authority to vote for all
such nominees. Each properly executed proxy received in time for the meeting
will be voted as specified therein, or if a stockholder does not specify in his
or her executed proxy how the shares represented by his or her proxy are to be
voted, such shares shall be voted for the nominees listed therein or for other
nominees as provided above. The director nominees receiving a plurality of the
votes cast at the Annual Meeting will be elected as directors. Abstentions and
broker non-votes will not be treated as a vote for or against any particular
director nominee and will not affect the outcome of the election. Two
affiliates of the Core Sheth Families, Transvit Manufacturing Corporation
("Transvit") and Starion International Limited ("Starion B.V.I."), the record
holders of 59.7% and 17.4% of the Company's outstanding Common Stock,
respectively, have indicated to the Company that they intend to vote in favor
of all of the nominees set forth above.
The Company's Certificate of Incorporation provides that nominations
for the election of directors may be made by the Board, a committee of the
Board or any stockholder entitled to vote for the election of directors.
Nominations by stockholders shall be made by notice, in writing, delivered or
mailed by first class mail, postage prepaid, to the Secretary of the Company
not less than 14 days nor more that 50 days prior to any meeting of the
stockholders called for the election of directors; provided, that if less than
21 days notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the Company
not later than the close of the seventh day following the day on which notice
of the meeting was mailed to stockholders. Each such notice shall set forth
the name, age
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and business address of each proposed nominee, the principal occupation or
employment of each such nominee, and the number of shares of Common Stock owned
by such nominee.
COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of its
Board of Directors. The Company's Board of Directors has established four
standing committees: Audit, Compensation, Nominating and Executive
("Executive").
The Audit Committee is comprised of certain directors who are not
employees of the Company or any of its subsidiaries. Dr. Sparacino and Mr.
Rifenburgh are the current members of the Audit Committee. The Audit Committee
meets with the independent auditors, management representatives and internal
auditors; recommends to the Company's Board of Directors appointment of
independent auditors; approves the scope of audits and other services to be
performed by the independent and internal auditors; considers whether the
performance of any professional services by the auditors other than services
provided in connection with the audit function could impair the independence of
the outside auditors; and reviews the results of internal and external audits
and the accounting principles applied in financial reporting and financial and
operational controls. The independent auditors and internal auditors have
unrestricted access to the Audit Committee and vice versa.
The Executive Committee, composed of Mr. Rifenburgh, Dr. Sparacino and
Viren S. Sheth, performs the Nominating Committee and Compensation Committee
functions. Voting by the members of the Executive Committee is weighted to
assure that the independent directors (Mr. Rifenburgh and Dr. Sparacino)
control the committee. When performing Nominating Committee type functions,
the Executive Committee's duties include developing a policy on the size and
composition of the Board and criteria relating to candidate selection;
identifying candidates for Board membership and establishing procedures whereby
individuals may be recommended by stockholders for consideration by the
committee as possible candidates for election to the Board. The Executive
Committee's Compensation Committee functions include reviewing the Company's
compensation philosophy and programs, including the payment of direct salaries
and incentive compensation to directors and officers; reviewing loans to, or
guarantees of obligations of, officers, directors and employees of the Company;
and administering the Company's stock option plan. The Executive Committee
met one time during fiscal 1996.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended August 31, 1996, the Board of Directors
met seven (7) times, the Audit Committee met three (3) times, and the Executive
Committee met one (1) time. Each of the directors of the Company attended at
least 75 percent of the aggregate of the meetings of the Board of Directors and
committees of which he was a member.
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COMPENSATION OF DIRECTORS
The Company provides reimbursement for travel and other expenses
incurred by all directors in connection with their service as directors of the
Company. The Company also provides compensation to Messrs. Rifenburg and
Zutler and Dr. Sparacino for their services as directors and members of various
committees of the Board.
Dr. Sparacino and Messrs. Rifenburgh and Zutler each receive $2,500
per day per Board or committee meeting attended. In addition, each receives a
quarterly fee of $10,000 as reimbursement for services outside of Board and
committee meetings. During fiscal 1996, Messrs. Rifenburgh and Zutler and Dr.
Sparacino (through his company, Sparacino Associates, Inc.) received $76,000,
$80,000 and $69,000, respectively, in connection with their service as
directors and members of committees of the Board.
PROPOSAL 2: RATIFICATION OF VIREN SHETH STOCK OPTION
The Company desires to have Mr. Viren Sheth remain in its employ and
increase his proprietary interest in the Company. Pursuant to such, on April
19, 1996 the Company and Mr. Viren Sheth entered into a Stock Option Agreement
whereby Mr. Sheth was granted an option to purchase up to 480,000 shares of
common stock of the Company (such option being hereinafter referred to as the
"Option"), subject to stockholder approval. Under the Stock Option Agreement,
Mr. Sheth has until April 19, 2006 to exercise his Option at an exercise price
equal to $7.5625 per share.
The Option may be exercised as to the following number of shares from
time to time, on a cumulative basis beginning on each of the following dates
if Mr. Sheth is employed by the Company on such date:
a. 160,000 shares on April 19, 1997;
b. 160,000 shares on April 19, 1998; and
c. 160,000 shares on April 19, 1999.
The Option is a non-qualified stock option which does not satisfy the
requirements of Section 422A of the Internal Revenue Code of 1986, as amended.
The Option is granted outside of and therefore shall not be subject to the
terms and provisions of the Company's 1991 Amended and Restated Stock Option
Plan, as amended.
The Option granted to Mr. Sheth is nontransferable and nonassignable,
except by will or under the laws of descent and distribution, and shall be
exercisable, during his lifetime, only by him.
The Option shall terminate on the date Mr. Sheth ceases to be an
employee of the Company, unless Mr. Sheth dies or becomes permanently or
totally disabled while an employee of the Company, in which case his legatees
or personal representative may exercise the
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previously unexercised vested portion of the Option at any time within one year
after his death or the termination of his employment, or if Mr. Sheth resigns or
retires with the consent of the Company, in which case he may exercise the
previously unexercised portion of the Option at any time within three months
after his resignation or retirement, to the extent Mr. Sheth could have
exercised the vested portion of the Option immediately prior to such resignation
or retirement.
The Stock Option Agreement does not impose any obligation on the
Company to continue the employment of Mr. Sheth, nor does it impose any
obligation on Mr. Sheth to continue in the employ of the Company.
In the event the capital structure of the Company is changed by reason
of a stock dividend, stock split, reorganization, recapitalization, merger,
split up or other change an adjustment may be made by the Company, in its sole
and absolute discretion, to prevent dilution or enlargement of the Option, and
the determination of the Company as to these matters shall be conclusive.
Mr. Sheth shall not have any rights as a stockholder with respect to
any shares covered by the Option until the date of issuance of a stock
certificate for such shares. The Company shall not be required to sell or
issue any shares to Mr. Sheth under the Option if the issuance of such shares
shall constitute or result in a violation by either Mr. Sheth or the Company
of any provision of any law, statute or regulation of any governmental
authority. No adjustment for dividends, or otherwise, will be made if the
record date therefore is prior to the date of issuance of such certificate.
This Proposal No. 2 will be approved if approved by the vote of a
majority of the shares present in person or by proxy at the meeting, provided
the total shares present at the meeting constitutes a quorum. With respect to
Proposal No. 2, all such shares will be voted FOR or AGAINST, or not voted, as
specified on each proxy. If no choice is indicated, a proxy will be voted FOR
THE PROPOSAL NO. 2. THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR
OF THE PROPOSAL NO. 2.
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee,
has appointed the firm of KPMG Peat Marwick LLP to serve as independent public
accountants of the Company for the fiscal year ending August 30, 1997.
Although stockholder ratification is not required, the Board of Directors has
directed that such appointment be submitted to the stockholders of the Company
for ratification at the Annual Meeting. KPMG Peat Marwick LLP has served as
independent public accountants of the Company with respect to the Company's
consolidated financial statements for the fiscal year ending August 31, 1996
and is considered by management of the Company to be well qualified. If the
stockholders do not ratify the appointment of KPMG Peat Marwick LLP, the Board
of Directors may reconsider the appointment.
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Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders.
Ratification of the appointment of KPMG Peat Marwick LLP requires the
affirmative vote of a majority of the votes cast by the holders of shares of
Common Stock entitled to vote at the Annual Meeting. Abstentions and broker
non- votes will not be considered as a vote for or against the proposal and
therefore will have no effect on the outcome of the proposal. Proxies will be
voted for or against such approval in accordance with specifications marked
thereon, and if no specification is made, the proxies will be voted for such
approval.
FURTHER INFORMATION
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information with respect to each director and
executive officer of the Company as of December 20, 1996. The executive
officers are elected by the Board of Directors and serve at the discretion of
the Board.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR
RICHARD P. RIFENBURGH has served as Chairman of the Board of Moval
Management Corporation since 1968. Moval Management Corporation is a
management consulting firm which specializes in restoring companies in
financial distress. Since 1994 Mr. Rifenburgh has also served as a director of
Glasstech, Inc., a manufacturer of glass forming equipment. From February 1989
until May 1991, Mr. Rifenburgh served as Chairman of the Board and Chief
Executive Officer of MiniScribe Corporation, a publicly-held company and
manufacturer of computer disc drives. From 1987 to 1990, he was a General
Partner at Hambrecht and Quist Venture Partners, a venture capital
organization. From 1988 to 1990, he was Chairman of the Board and Chief
Executive Officer of Ironstone Group, Inc., a publicly-held holding company.
Mr. Rifenburgh currently serves as a director of Concurrent Computer
Corporation, which files reports with the Securities and Exchange Commission
(the "SEC") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Mr. Rifenburgh is also a member of the Board of Directors for
St. George Crystal Ltd., a major manufacturer of fine quality crystal products,
and CyberGuard Corporation, a provider of security software. None of the
companies set forth above with which Mr. Rifenburgh has been affiliated are, or
have been, affiliates of the Company.
ROBERT R. SPARACINO has served as president and director of Sparacino
Associates, Inc. since 1981, a management consulting firm specializing in
business consulting. Prior to forming Sparacino Associates, Inc., Dr.
Sparacino was a senior officer of Xerox Corporation. Dr. Sparacino has also
served, and currently serves, as a director of several privately-held
companies, principally in connection with services rendered by Sparacino
Associates, Inc. During 1989 and 1990, Dr. Sparacino served as a director and
chairman of the Special Committee of the Board of Directors of MiniScribe
Corporation. Dr. Sparacino currently serves
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as a director of Concurrent Computer Corporation, which files reports with the
SEC pursuant to the Exchange Act. Dr. Sparacino is also a member of the Board
of Directors of St. George Crystal Ltd., a major manufacturer of fine quality
crystal products. None of the companies with which Dr. Sparacino has been
affiliated are, or have been, affiliates of the Company.
JAY J. SHETH was appointed to the Board of Directors in January 1996.
Mr. Sheth became the Managing Director of Starion International Limited
("Starion U.K.") in 1984. Starion U.K. is a manufacturer and distributor of
fragrance and cosmetics based in the United Kingdom and is owned by the Core
Sheth Families. From 1979 to March 1993, Mr. Sheth was Managing Director of S&J
Perfume Company, Ltd., a supplier of fragrance products based in the United
Kingdom which sold principally to distributors in the Middle East and to the
Company. Mr. Sheth has been a Managing Director of Starion Cosmetics Limited
since 1991 and a Director of Star Group Services Limited, a services company,
since 1995. Since 1994 Mr. Sheth has been a Director of Plus One Design
Limited. S&J Perfume Company, Ltd., Starion Cosmetics Limited, Star Group
Services Limited and Plus One Design Limited are entities owned and controlled
by the Core Sheth Families.
VIREN S. SHETH became a director, as well as President and Chief
Executive Officer of the Company on December 3, 1992. Mr. Sheth served as
President, Chief Executive Officer and a director of Eurostar Perfumes, Inc.
("Eurostar") from August 1992 until the merger of Eurostar with and into the
Company (the "Merger") in August 1995. From 1983 to August 1992, Mr. Sheth was
a director of S&J Perfume Company, Ltd., a supplier of fragrance products based
in the United Kingdom which sold principally to distributors in the Middle East
and to the Company. S&J Perfume Company, Ltd., now known as Starion U. K., is
also an entity owned and controlled by the Core Sheth Families. For a
discussion of the relationships among Viren S. Sheth, Jay J. Sheth and entities
controlled by the Core Sheth Families, see "Certain Transactions".
AARON ZUTLER was appointed to the Board of Directors in August 1995.
Mr. Zutler is president and founder of Marketing Congress, Inc., an
international marketing consulting and new product development firm. Mr.
Zutler is also a member of the Board of Directors for St. George Crystal Ltd.,
a major manufacturer of fine quality crystal products. He is also president of
MCI Advertising which creates advertising promotional campaigns for a diverse
group of marketers in the consumer products field. On July 1, 1995, Mr. Zutler
was appointed to the Board of Directors of Eurostar where he served until the
Merger on August 31, 1995.
The following is a list of the executive officers of the Company as of
December 20, 1996 their ages, positions and offices with the Company, and
periods during which they have served in such positions and offices:
11
<PAGE> 13
<TABLE>
<CAPTION>
Name Age Positions or Offices with the Company Officer Since
---- --- ------------------------------------- -------------
<S> <C> <C> <C>
Viren S. Sheth 47 Director, President and Chief Executive December 1992
Officer (1)
Loren M. Eltiste 56 Corporate Vice President, Chief Financial October 1992
Officer, Treasurer and Assistant Secretary
Ricardo A. Bunge 63 Vice President of Sales - Latin America August 31, 1995
Division (2)
Paul R. Kimmel 48 Vice President, Chief Information Officer & August 31, 1995
Assistant Secretary
Peter L. Liman 57 Vice President, Marketing August 31, 1995
Joseph DeKama (3) 56 Senior Vice President of Sales April 18, 1996
</TABLE>
(1) Mr. Sheth served as President, Chief Executive Officer and a director of
Eurostar from August 1992 until the consummation of the Merger in August
1995.
(2) Mr. Bunge has tendered his resignation effective December 31, 1996 and will
serve as a consultant as required in the future.
(3) Prior to joining the Company, Mr. DeKama served as an Independent Sales
Representative for the Company's products.
INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS
Viren S. Sheth's business background is set forth above under
"Information with Respect to Nominees for Director".
Loren M. Eltiste has served in his present capacity with the Company
since October 1992. From October 1988 to October 1992, Mr. Eltiste served as
Chief Accounting Officer, Vice President and Corporate Controller for Tandon
Corporation, a publicly-owned company which manufactured and marketed personal
computers.
Ricardo A. Bunge has served as Vice President - Latin America Division
for the Company since August 31, 1995. From January 1993 to August 1995, Mr.
Bunge served as President of American Star Corporation, a subsidiary of
Eurostar, which was responsible for sales and marketing in Central and South
America. Mr. Bunge was a financial consultant with Merrill Lynch, Pierce,
Fenner & Smith, Inc. during the period 1991 to 1993. From 1973 to 1988 he
served as General Manager - Argentina Division, President - Latin America
Division and President - Latin America & Europe, with Revlon, Inc. Mr. Bunge
tendered his resignation effective December 31, 1996, and will serve as a
consultant as required in the future.
Paul R. Kimmel has served as Vice President, Chief Information Officer
and Assistant Secretary of the Company since August 31, 1995. From August 1994
to August 1995, Mr. Kimmel served as Vice President, Chief Financial Officer,
Secretary and Treasurer for Eurostar. Mr. Kimmel was associated with Reckitt &
Colman Inc., a major subsidiary of a large United
12
<PAGE> 14
Kingdom-based household products and food packaged goods company from 1989 to
1994. He served as its Director, Accounting Development Officer and as
Controller for Airwick Industries, its division specializing in household
products.
Peter L. Liman has served as Vice President, Marketing since August
31, 1995. From December 1982 to July 1995, Mr. Liman served as Vice President
Marketing for Del Pharmaceuticals Inc., a division of Del Laboratories, Inc., a
publicly-owned company located in Farmingdale, New York.
Joseph DeKama has served as Senior Vice President of Sales for the
Company since April 1, 1996. Prior to joining the Company, he served as an
independent sales representative for the Company from October 1995 to April
1,1996 and he was paid $201,000 in commissions. From February 1994 through
January 1996, Mr. DeKama served as President of Designer Quality Impressions,
Inc. ("DQI"). DQI filed a bankruptcy petition in October of 1996, which is
still pending. DQI was in the designer alternative fragrance business; Mr.
DeKama was the owner of 49% of its common stock. From January 1991 through
January 1994, Mr. DeKama served as President of LaSalle International, a
cosmetics distributor. Mr. DeKama was also the owner of 50% of LaSalle. From
1967 to present, Mr. DeKama has been the sole proprietor of Northside
Development, d/b/a JDK Associates, a master broker of cosmetics and fragrances.
Mr. Dekama is also the sole proprietor of Ascending Corporation, an inactive
corporation established in 1996.
FAMILY RELATIONSHIPS AMONG DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
Viren S. Sheth, President, Chief Executive Officer and a director of
the Company and Jay J. Sheth, director, are unrelated. Both are related by
blood to certain members of the Core Sheth Families.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Executive Committee of the Board of Directors of the Company (in
its role as Compensation Committee) has furnished the following report on the
Company's executive compensation policies.
The Executive Committee, in its role as the Compensation Committee,
because there were no formal compensation policies in place, determined the
compensation of newly-hired executive officers based generally on the
qualifications and prior experience of the executive officers. The following
paragraphs set forth the basis of the compensation paid in fiscal 1996 to Viren
S. Sheth, Ricardo A. Bunge, Eugene H. Karam, Joseph DeKama and Loren M.
Eltiste.
On December 3, 1992, the Board elected Viren S. Sheth as President and
Chief Executive Officer. At that time, the Executive Committee established Mr.
Sheth's salary at $150,000 per annum in recognition of the same position, with
comparable compensation, Mr. Sheth held with the Company's major supplier,
Eurostar, at that date. Upon consummation of
13
<PAGE> 15
the Merger on August 31, 1995, Mr. Sheth's salary was increased to $385,000,
the aggregate of his salaries at Eurostar and Tristar, in recognition of his
increased responsibilities as a result of the Merger. As a long-term
incentive, on April 19, 1996, the Company and Mr. Sheth entered into a Stock
Option Agreement, which vests over a three-year period, whereby Mr. Sheth was
granted an option to purchase up to 480,000 shares of Common Stock of the
Company, subject to shareholder approval.
The compensation package of Eugene H. Karam, Executive Vice President
and Vice President Sales, U.S. and Canada, was initially established effective
as of September 1, 1993 as part of a three-year employment agreement pursuant
to which Mr. Karam received an initial base salary of $150,000 per annum and an
annual bonus opportunity of up to 25 percent of his base salary. Mr. Karam's
base salary was $150,000 per annum for fiscal years 1995 and 1994. As
longer-term incentive to Mr. Karam, pursuant to the agreement, of February 14,
1994, he also received an option to purchase 99,420 shares of the Company's
Common Stock which vests over a three-year period. The Executive Committee set
Mr. Karam's compensation package based on the key role he held within the
Company and in view of competitive compensation packages offered to his peer
group in the industry. Eugene H. Karam resigned and left the Company effective
September 9, 1996.
The compensation package of Joseph DeKama, Senior Vice President of
Sales was established as part of a twenty- nine month employment agreement
under which Mr. DeKama receives a base salary of $360,000 per annum and an
annual bonus opportunity of up to $60,000 per year based on performance against
key criteria. Mr. DeKama was granted an option to purchase 50,000 shares of
the Company's Common Stock which vested upon execution of the agreement. In
addition, Mr. DeKama has the opportunity to earn additional options for up to
200,000 shares if he meets certain performance criteria. The Executive
Committee set Mr. DeKama's compensation package based on his experience in the
fragrance and cosmetics industry.
The Compensation Package of Ricardo A. Bunge, originally established
by the Board of Directors of Eurostar Perfumes Inc. prior to the merger of
Eurostar into Tristar, was extended in fiscal 1996 for one year to December 31,
1996 and his annual salary was increased to $120,000. Under a bonus plan given
to Mr. Bunge, he is entitled to a bonus of up to $24,000 per annum based on
certain performance criteria. Mr. Bunge's extension was based on his
experience and in view of competitive compensation packages. Mr. Bunge
tendered his resignation effective December 31, 1996, and will serve as a
consultant as required in the future.
The compensation package of Loren M. Eltiste, Vice President & Chief
Financial Officer, was initially established on October 6, 1992 as part of a
three-year employment agreement pursuant to which Mr. Eltiste received an
initial base salary of $125,000 per annum and an annual bonus opportunity of up
to 25 percent of his base salary. In October 1993, Mr. Eltiste's base salary
was increased to $131,250 per annum. On October 6, 1992, Mr. Eltiste also
received an option to purchase 66,206 shares of the Company's Common Stock
which vested over a three-year period. The Executive Committee set Mr.
Eltiste's compensation package based on his experience as a financial executive
and in view of competitive compensation packages offered to his peer group in
the industry. The stock option was granted to provide a long-term incentive to
Mr. Eltiste.
14
<PAGE> 16
EXECUTIVE COMMITTEE
Richard P. Rifenburgh
Robert R. Sparacino
Viren S. Sheth
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain
information concerning compensation of the Company's Chief Executive Officer
and each of the Company's four other most highly compensated executive officers
for fiscal years ended August 31, 1994, 1995 and 1996. The amounts shown
include, as applicable, compensation earned by officers of Eurostar prior to
such officers joining the Company upon the Merger.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
------
OTHER
FISCAL ANNUAL COMPENSATION ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION(1) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- -------- ------------ --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Viren S. Sheth(2) 1996 $389,519 -- -- 480,000 $15,499 (3
President and Chief 1995 392,308 -- -- -- 9,424 (3)
Executive Officer 1994 371,154 $25,000 -- -- 1,298 (3)
Eugene H. Karam (4) 1996 $150,000 -- -- -- $14,042 (5)
Exec. Vice President, Vice 1995 $150,000 -- -- -- 12,257 (5)
President of Sales - 1994 $150,000 $24,375 -- 99,420 12,198 (5)
U S & Canada
Loren M. Eltiste 1996 $131,250 -- -- -- $15,856 (6)
Vice President and Chief 1995 131,250 -- -- -- 12,376 (6)
Financial Officer 1994 130,241 $18,047 -- -- 62,495 (6)
Ricardo A. Bunge(7) 1996 $121,061 $13,183 -- -- $4,401 (8)
Vice President of 1995 110,654 13,766 -- -- 1,924 (8)
Sales - Latin 1994 96,346 26,286 -- -- 46,696 (9)
America Division
Joseph DeKama (10) 1996 $351,000 $13,860 -- 50,000 $3,258 (11)
Sr. Vice President of 1995 -- -- -- -- --
Sales 1994 -- -- -- -- --
- --------------------------
</TABLE>
(1) Excludes perquisites and other benefits if the aggregate amount of such
compensation is the lesser of $50,000 or 10% of the annual salary and
bonus reported for the named executive officer.
(2) Viren S. Sheth's compensation includes the amounts earned as the President
and Chief Executive Officer of Eurostar prior to the Merger which was
effective August 30, 1995.
(3) The amounts are comprised of (i) contributions to the Company's 401(k)
Plan by the Company on behalf of Mr. Sheth to match pre-tax deferral
contributions in the amount of $7,500 in 1995 and $4,426 in 1996; and (ii)
premiums paid by the Company on behalf of Mr. Sheth with respect to
insurance not generally available to all Company employees in the amount
of $7,999 in 1995 and $6,675 in 1996. The fiscal 1994 amount is comprised
of $1,298 contributed to the Company's 401(k) Plan by the Company on
behalf of Mr. Sheth to match fiscal 1994 pre-tax deferral contributions.
(4) Eugene H. Karam resigned and left the Company effective September 9, 1996.
(5) The fiscal 1996, 1995 and 1994 amounts are comprised of (i) contributions
to the Company's 401(k) Plan by the Company on behalf of Mr. Karam to
match pre-tax deferral contributions in the amounts of $3,029, $6,646 and
$6,826, respectively; and (ii) premiums paid by the Company on behalf of
Mr. Karam with respect to insurance not generally available to all Company
employees in the amounts of $5,013, $5,611 and $5,372, respectively.
15
<PAGE> 17
(6) The fiscal 1996, 1995 and 1994 amounts are comprised of (i) contributions
to the Company's 401(k) Plan by the Company on behalf of Mr. Eltiste to
match pre-tax deferral contributions in the amounts of $4,178 in fiscal
1996, $6,197 in fiscal 1995 and $4,291 in fiscal 1994, and (ii) premiums
paid by the Company on behalf of Mr. Eltiste with respect to insurance not
generally available to all Company employees in the amounts of $5,678 in
fiscal 1996, $6,179 in fiscal 1995 and $2,859 in fiscal 1994.
(7) Ricardo Bunge, formerly employed by Eurostar, joined the Company on August
31, 1995.
(8) The amounts are comprised of premiums paid by the Company on behalf of Mr.
Bunge with respect to insurance not generally available to all Company
employees; $2,047 in fiscal 1996 and $1,924 in fiscal 1995, as well as
$2,354 in fiscal 1996 contributed to the Company's 401(k) Plan by the
Company on behalf of Mr. Bunge. Mr. Bunge tendered his resignation
effective December 31, 1996, and will serve as a consultant as required
in the future.
(9) Relocation expenses in fiscal 1994 in the amount of $46,696 paid on behalf
of Mr. Bunge by the Company to relocate his household to Texas.
(10) Mr. DeKama joined the Company on April 1, 1996. Prior to that date he
served as an independent sales representative and earned commissions of
$201,000 which is included in his salary for fiscal 1996.
(11) The fiscal 1996 amount includes $758 of premiums paid by the Company on
behalf of Mr. DeKama with respect to insurance not generally available to
all Company employees.
OPTION GRANTS IN 1996 FISCAL YEAR
The following table provides information concerning grants of stock
options by the Company to the named executive officers in fiscal year 1996.
The Company has not granted any stock appreciation rights.
<TABLE>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
the Option Term
-----------------------
Individual Grants
-----------------
Percentage of Total
Options Granted to
Employees in
Options Fiscal Year Exercise Price Expiration
---------------
Name Granted (#)(1) ($/Share) Date 5% ($) 10% ($)
- ---- ----------- --------- ------------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Viren Sheth(1) 480,000 91% $7.5625 04/19/06 $2,282,887 $5,985,285
Joseph DeKama(2) 50,000 9% $7.5625 04/18/03 $153,935 $358,734
</TABLE>
(1) Mr. Sheth's options, granted April 19, 1996, were granted under a
non-qualified individual plan and are exercisable at a rate of 33
1/3% on April 19, 1997, 1998 and 1999. None of these options were
exercisable in fiscal 1996.
(2) Mr. DeKama's options, granted April 19, 1996, were granted under a
non-qualified individual plan and were exercisable immediately upon
granting.
OPTION EXERCISES IN 1996 FISCAL YEAR AND YEAR-END OPTION VALUE
The following table provides information concerning option exercises
in fiscal year 1996 by the named executive officers and the value of such
officer's exercised options at August 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN THE MONEY OPTIONS AT
ACQUIRED FISCAL YEAR END (#) FISCAL YEAR END ($) (1)
ON VALUE ------------------------------- -------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Viren S. Sheth -- -- -- 480,000 -- --
Eugene H. Karam(2) -- -- 146,280 33,140 $439,875 $62,138-
Loren M. Eltiste -- -- 66,206 -- $24,827 --
Ricardo A. Bunge -- -- -- -- -- --
Joseph DeKama -- -- 50,000 -- -- --
- --------------------------
</TABLE>
16
<PAGE> 18
(1) The "value" of any option set forth in the table above is determined
by subtracting the amount which must be paid upon exercise of the
options from the market value of the underlying Common Stock as of
August 31, 1996 (based on the closing sales price as reported by the
Nasdaq Stock Market).
(2) Gene H. Karam resigned and left the Company effective September 9,
1996.
Compensation Committee Interlocks and Insider Participation
The Core Sheth Families is the beneficial owner of approximately 80.6
percent of the Company's Common Stock. Viren S. Sheth and Jay J. Sheth,
although not members of the Core Sheth Families, are related by blood to
certain members of the Core Sheth Families. Viren S. Sheth and Jay J. Sheth
disclaim beneficial ownership of shares beneficially owned by the Core Sheth
Families.
The Executive Committee, composed of Mr. Rifenburgh, Dr. Sparacino and
Viren S. Sheth, performs the functions of the Compensation Committee. Voting by
the members of the Executive Committee is weighed to ensure that the
independent directors (Mr. Rifenburgh and Dr. Sparacino) control the
Committee. During the fiscal year ended August 31, 1996, Viren S. Sheth served
as President and Chief Executive Officer of the Company.
EMPLOYMENT AGREEMENTS
EUGENE H. KARAM. Mr. Karam had an employment agreement with the Company dated
January 14, 1994, which provided, among other things, that Mr. Karam's
employment was terminable only for cause through August 31, 1996. Under the
agreement, Mr. Karam received an annual salary of $150,000 plus a discretionary
bonus. The agreement also required the Company to maintain a $250,000 life
insurance policy on Mr. Karam, payable to the beneficiary of his choice, to
furnish long-term disability insurance coverage for Mr. Karam and to provide
Mr. Karam with a monthly car allowance. Pursuant to the agreement, Mr. Karam
also received an option to purchase 99,420 shares of Common Stock at $5.375 per
share, which option vests over a three-year period. Mr. Karam resigned from
his position on September 9, 1996.
LOREN M. ELTISTE. Mr. Eltiste's employment agreement, under which he received
an annual salary of $125,000 plus a discretionary bonus, expired August 31,
1995. Mr. Eltiste's annual salary was increased to $131,250 in October 1993.
The agreement also required the Company to maintain a $250,000 life insurance
policy on Mr. Eltiste, payable to the beneficiary of his choice, and to provide
him with a monthly car allowance. Pursuant to the agreement, Mr. Eltiste also
received an option to purchase 66,206 shares of Common Stock at $6.875 per
share, which option vested over a three-year period.
RICARDO A. BUNGE. Under Mr. Bunge's employment agreement, which expired
December 1995 but was extended through December 31, 1996, he received an annual
base salary of $100,000 in 1994, $110,000 in 1995 and $120,000 in 1996. In
addition, Mr. Bunge is entitled to receive a performance bonus of up to 20% of
his annual base salary and an incentive bonus of 0.5% of the amount that actual
sales in Central and South America exceed budgeted sales. Mr. Bunge tendered
his resignation effective December 31, 1996, and will serve as a consultant as
required in the future.
JOSEPH DEKAMA. Under Mr. DeKama's employment agreement, which expires August
31, 1998, Mr. DeKama receives a base salary of $360,000 per annum and an annual
bonus opportunity of up to $60,000 per year based on performance against key
criteria. Mr. DeKama was granted an option to purchase 50,000 shares of the
Company's common stock which vested upon execution of the agreement. In
addition, Mr. DeKama has the opportunity to earn additional options for up to
200,000 shares if he meets certain performance criteria. If terminated without
cause, Mr. DeKama would be entitled to receive his salary for the remaining
term of his contract.
Other than as set forth above, there are no compensatory plans or arrangements
with respect to any individual named in the Summary Compensation Table above or
otherwise which would result from the resignation, retirement or any other
termination of such individual's employment with the Company or a change in the
individual's responsibilities following a change in control.
17
<PAGE> 19
PERFORMANCE GRAPH
The Company has utilized the Center for Research in Security Prices ("CRSP")
Total Return Index for The Nasdaq Stock Market. The following performance
graph compares the performance of the Company's Common Stock to CRSP Total
Return Index for The Nasdaq Stock Market and to a Cosmetics/Sundries Index (for
the five year period from August 31, 1991 through August 31, 1996). The
Cosmetics/Sundries Index is comprised of all Nasdaq-listed companies having the
three digit standard industry classification code 284, which relates to
perfumes, cosmetics and toilet preparation products. The graph assumes that
the value of the investment in the Company's Common Stock and each Index was
100 at August 31, 1991 and that all dividends were reinvested.
<TABLE>
<CAPTION>
================================================================================
Year (Aug. start date) 1991 1992 1993 1994 1995 1996
================================================================================
<S> <C> <C> <C> <C> <C> <C>
Company Index 100.0 77.5 62.0 44.4 62.0 81.7
NASDAQ Index 100.0 108.5 143.1 148.9 200.5 226.1
Cosmetics/Sundries Index 100.0 90.2 85.4 96.1 128.4 189.5
</TABLE>
[performance graph here]
The foregoing graph is based on historical data and is not necessarily
indicative of future performance. This graph shall not be deemed to be
"soliciting material" or to be "filed" with the Commission or subject to
Regulations 14A and 14C under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or to the liabilities of Section 18 under the Exchange
Act.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors, executive
officers and persons who own more than 10% of the Company's Common Stock to
file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Based
solely upon a review of Forms 3 and 4 and amendments thereto furnished to the
Company during the 1996 fiscal year and Forms 5 and amendments there to
furnished to the Company with respect to the 1996 fiscal year, the Company
believes that its officers, directors and holders of more than 10% of the
Company's Common Stock complied with Section 16(a) filing requirements except
for the following: Eugene Harrell Karam filed two Forms 4 late which
represented one transaction each. Viren Sheth and Joseph DeKama each filed one
Form 4 late which represented one transaction for each person.
18
<PAGE> 20
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
As previously disclosed, a federal grand jury in Greenville, South Carolina had
been examining the events relating to the previously undisclosed ownership
interest of the Core Sheth Families and other issues. In March 1994, the
Company entered into an agreement with federal authorities pursuant to which
the Company was not prosecuted in connection with the matters under
investigation by the grand jury.
The Company and the Core Sheth Families, who hold beneficial ownership of 80.6%
of the Company's Common Stock, principally through their ownership of Transvit
and Starion B.V.I., actively cooperated with the federal inquiry. The
Company's agreement with the federal authorities is contingent upon continued
cooperation by the Company and companies affiliated with the Core Sheth
Families.
Under the terms of the agreement, the Company's President, Viren S. Sheth, pled
guilty to a technical infraction in connection with causing the disclosure
violation. Jay J. Sheth, a Director of the Company and the Managing Director
of Starion U.K., which is owned by the Core Sheth Families, pled guilty to a
technical infraction in connection with causing the disclosure violation. The
agreement with federal authorities acknowledges that these individuals were
unaware of the legal requirement that was violated. These infractions are the
lowest possible level of federal charge, and do not subject them to any term of
incarceration.
Starion B.V.I., an entity owned by the Core Sheth Families that holds
beneficial ownership of 27.8% of the Company's Common Stock, pled guilty to a
felony in connection with the failure to disclose its ownership interest.
In November 1994, Starion B.V.I. was sentenced to five years of probation and
required to pay to the U.S. Government $5.5 million in lieu of a forfeiture of
2,013,174 of its holdings of shares of Common Stock of the Company. Starion
B.V.I. has made payments of $3.4 million to the Government on a non-interest
bearing promissory note. The promissory note is to be paid according to the
following schedule: (a) $700,000 by November 22, 1997; (b) ) $700,000 by
November 22, 1998; (c ) $700,000 by November 22, 1999; and (d). The promissory
note also required Starion B.V.I. to place in escrow one million shares to
secure these remaining payments, of which 600,000 shares remain in escrow.
Starion B.V.I. retains all rights to vote and dispose of the shares placed in
escrow and the right to receive dividends on those shares.
In November 1994, Viren S. Sheth was sentenced to one year of probation. The
sentence imposed was based on an infraction for violating (without knowledge
thereof) 17 C.F.R. Section 240.13d-1 and 15 U.S.C. Section 78ff by aiding,
abetting and causing the Core Sheth Families' failure to disclose, prior to
September 1992, their ownership of more than 5% of the outstanding Common Stock
of the Company.
In November 1994, Jay J. Sheth was sentenced to one year of probation. The
sentence imposed was based on an infraction for violating (without knowledge
thereof) 17 C.F.R. Section 240.13d-1 and 15 U.S.C. Section 78ff by aiding,
abetting and causing the Core Sheth Families' failure to disclose,
19
<PAGE> 21
prior to September 1992, their ownership of more than 5% of the outstanding
Common Stock of the Company
The United States Attorney's information charging Viren S. Sheth and Jay J.
Sheth with these violations expressly alleged that they did not have knowledge
of either of these regulations. The court imposed the following conditions of
probation: (1) complying with all federal and state securities laws; and (2)
directing and insuring that Starion B.V.I. make all required forfeiture
payments under the promissory note and plea agreement.
The sentencing concluded all outstanding criminal proceedings with respect to
the above named persons.
In June 1992, the Company, Jay J. Sheth, Viren S. Sheth, Starion B.V.I. and
other Core Sheth Family affiliates, were advised that they were the subject of
an investigation by the staff of the United States Securities and Exchange
Commission regarding the non-disclosure of the share holdings of the Core Sheth
Families, as well as potential accounting irregularities and other matters. In
September 1995, the Company, Jay J. Sheth, Viren S. Sheth and other Core Sheth
Family affiliates, without admitting or denying the allegations of the
Securities and Exchange Commission, consented to the entry of an administrative
order agreeing to cease and desist from future violations of the federal
securities laws.
Except for the matters discussed above, none of the Company's directors,
officers or affiliates, nor any beneficial owner of more than 5% of the
Company's Common Stock, nor any associate of any such directors, officers,
affiliates or 5% stockholders, is a party adverse to the Company or has a
material interest adverse to the Company in any material legal proceeding.
FREITAS AND KENNER
In October 1994, a suit was filed in Florida state court against the Company,
and two of its directors by Ross Freitas, Carolyn Kenner, Rose Freitas and
Melissa Freitas. The complaint alleges causes of action by two plaintiffs for
libel and seeks indemnification in connection with the work of the Special
Committee of the Board of Directors that investigated, among other things, a
prior failure to disclose the Core Sheth Families' holdings of Company stock.
The complaint also alleges, on behalf of all four plaintiffs, that the
Company's disclosures relating to these and other matters were fraudulent or
negligently misrepresented. In April 1995, the court dismissed the complaint
without prejudice, in part due to the plaintiffs' failure to state a claim for
relief. In May 1995 the plaintiffs refiled the complaint, asserting many of
the same claims, and in June 1996, amended their complaint yet again, naming
only the Company and one of its directors as defendants. The Company intends
to dispute these allegations vigorously and believes that ultimate disposition
of the case will not have a material adverse effect on its business, financial
condition or results of operations.
20
<PAGE> 22
CERTAIN TRANSACTIONS
CORE SHETH FAMILIES
At August 31, 1996, a majority of the Company's stock (80.6%),
continued to be controlled by the Core Sheth Families, principally through
their ownership and control of Transvit and Starion B.V.I.
TRANSACTIONS WITH CORE SHETH FAMILIES' AFFILIATES
During fiscal 1996, the Company purchased approximately $7,037,000 of
finished goods and fragrance product components from the Core Sheth Families'
affiliates. At August 31, 1996, the Company had outstanding payables to the
Core Sheth Families' affiliates in the amount of $3,061,000.
During fiscal 1996, the Company sold products to the Core Sheth
Families' affiliates in the amount of $1,997,000. At August 31, 1996, the
Company had a receivable outstanding from the Core Sheth Families' affiliates
of $1,679,000.
DIRECTOR FEES
For fiscal 1996, the Company incurred approximately $225,000 in fees
to current directors, Robert R. Sparacino, Richard P. Rifenburgh and Aaron
Zutler. These fees were paid directly to the directors, with the exception of
$69,000 which was paid to Dr. Sparacino through his company, Sparacino
Associates, Inc. These fees relate to the participation of Messrs. Rifenburgh
and Zutler and Dr. Sparacino in meetings of the Company's Board and
committees. As of August 31, 1996, $19,000 of these fees had not yet been
paid.
FINANCING OF SETTLEMENT AGREEMENT
The Company is currently indebted to the Core Sheth Families in the
amount of $8 million in the form of subordinated long-term debt. The proceeds
of such debt was utilized by the Company in the settlement of the previously
disclosed (December 1993) stockholder class action litigation.
The loans from the Core Sheth Families mature in ten years, with
interest payable annually and principal payable 20% at the end of year eight,
20% at the end of year nine and the remaining 60% at the end of year ten.
These loans bear interest at 6.36% to 8.23% per annum and are subordinated to
indebtedness of the Company owed to its senior lenders.
Pursuant to an agreement entered into in connection with the
settlement agreement, the Core Sheth Families were granted warrants for the
right to purchase up to 2,000,000 shares of the Company's Common Stock within
ten years of the date of issuance. The initial per share
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price of the Common Stock under the warrants is $5.34 and it increases by 10%
per year after year seven.
The Company also extended until August 31, 2003, the exercise date of
previously issued Common Stock warrants held by an affiliate of the Core Sheth
Families to purchase 400,000 shares of the Company's Common Stock.
WORKING CAPITAL LOAN
In 1993, Transvit, a Core Sheth Families' affiliate, entered into a
lending arrangement with Eurostar Perfumes, Inc. ("Eurostar") (now merged into
the Company) whereby Eurostar could borrow up to $9 million at an interest rate
of 4.5 percent per annum. As of August 31, 1996, $4.7 million was outstanding.
As part of the financing agreement with the Company's commercial lender, this
debt was subordinated to the lender. Effective December 11, 1996, this debt
was exchanged for 666,529 shares of the Company's Series A redeemable
convertible Preferred Stock ($0.05 par value). Such stock carries a preferred
distribution in the event of liquidation of $7.00 per share with a cumulative
dividend of $0.315 per share, convertible at $7.00 per share into the Company's
Common Stock.
CONSULTING CONTRACT WITH JOHANNA DEKAMA
The Company entered into a Consulting Agreement with Johanna DeKama,
the spouse of Mr. Joseph DeKama, Senior Vice-President, Sales, on April 1, 1996
that will remain in effect until August 31, 1998 unless earlier terminated by
the Company for cause. Mrs. DeKama will provide the Company with advice on all
aspects of product development and testing including, but not limited to,
identifying new trends in the industry, generating special fact finding reports
as requested by executives of the Company, assisting in conducting consumer
trade research, and advising Tristar on product improvements. Mrs. DeKama will
also attend various health and beauty care expeditions, trade shows, and
seminars. She will assist in development of package and brochure copy, assist
in establishing special retailer promotions, maintain a fact book on
competitive advertising for fragrance, color cosmetics and treatment, and major
toiletry products, and act as the Company's liaison to Color Association of the
United States. She will also carry out other marketing assignments as so
directed by the Vice President, Marketing. She will file weekly consulting
project reports describing the projects, status, planned completion dates and
other comments. In exchange for her services Mrs. DeKama will receive $60,000
per annum plus all reasonable out-of-pocket expenses.
LOANS MADE TO MR. JOSEPH DEKAMA
The Company has loaned Mr. Joseph DeKama, Senior Vice President of
Sales, an aggregate amount of $145,000. $45,000 is evidenced in a Promissory
Note executed jointly by Mr. DeKama and Northside Development, a sole
proprietorship owned by Mr. DeKama, on
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October 1, 1996. In a Promissory Note dated October 15, 1996, executed solely
by Mr. DeKama, the Company loaned him an additional $100,000. The interest
rate on both Notes is 12.5% per annum, subject to change as the Company's
borrowing rate changes. Effective January 1, 1997, interest and principal on
both notes are payable monthly via payroll deductions. As of December 20,
1996, the total amount of outstanding indebtedness by Mr. DeKama to the
Company, net of a payment in October 1996 and including accrued interest, is
approximately $145,000.
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of holders of Common Stock intended to be presented at
the Annual Meeting of Stockholders of the Company to be held in 1998 must be
received by the Company, addressed to Loren Eltiste at 12500 San Pedro Avenue,
Suite 500, San Antonio, Texas 78216, no later than September 5, 1997, to be
considered for inclusion in the Proxy Statement and form of proxy relating to
that meeting.
OTHER MATTERS
Management of the Company does not know of any matters to be brought
before the Annual Meeting other than the matters set forth in the Notice of
Annual Meeting of Stockholders and described herein. However, if any other
matters should properly come before the Annual Meeting, the persons named in
the enclosed form of proxy will have discretionary authority to vote all
proxies with respect thereto in accordance with their best judgment.
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INSTRUCTIONS FOR SIGNING PROXY
The signature on the proxy should correspond with the name appearing
on the proxy. If a stockholder is a corporation or partnership, give the full
company name as appearing on the proxy and have it signed by a duly authorized
officer or partner, showing the officer's or partner's title. Where stock
stands in more than one name, all holders of record should sign. When signing
as executor, administrator, trustee or guardian, please provide the appropriate
title.
All stockholders are urged to mark, sign and promptly return the
enclosed proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
PHILLIP M. RENFRO
SECRETARY
Dated: January __________________, 1997
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TRISTAR CORPORATION
PROXY -- ANNUAL MEETING OF STOCKHOLDERS --FEBRUARY 21, 1997
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O Please mark, sign, date and return in the enclosed envelope.
X
Y
The undersigned stockholder of TRISTAR CORPORATION
(the "Company") hereby appoints Viren S. Sheth and Loren M.
Eltiste, or either of them, proxies of the undersigned with full
power of substitution to vote at the Annual Meeting of
Stockholders of the Company to be held on February 21, 1997, at
10:00 a.m., Central Standard Time, at the Company's corporate
offices at 12500 San Pedro Avenue, Suite 500, San Antonio,
Texas, and at any adjournment thereof, the number of votes which
the undersigned would be entitled to cast if personally present:
(1) ELECTION OF DIRECTORS
FOR WITHHOLD AUTHORITY
all nominees listed below to vote for all nominees
(except as marked below) listed below
Robert R. Sparacino Richard P. Rifenburgh
Jay J. Sheth Viren S. Sheth Aaron Zutler
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, DRAW A
LINE THROUGH OR STRIKE OUT THAT NOMINEE'S NAME AS SET FORTH ABOVE.
(2) PROPOSAL TO RATIFY THE VIREN SHETH STOCK OPTION AGREEMENT
FOR AGAINST ABSTAIN
(3) PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP, AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR 1997
FOR AGAINST ABSTAIN
(4) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF;
all as more particularly described in the Proxy Statement dated January 22,
1997, relating to such meeting, receipt of which is hereby acknowledged.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR the nominees listed in Proposal 1 and FOR Proposal 2.
Signature of Stockholder(s)
Please sign your name exactly as it appears hereon. Joint
owners must each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
your full title as it appears hereon.
Dated _____________ ____, 1997.
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<PAGE> 28
[FULBRIGHT & JAWORSKI, L.L.P LETTERHEAD]
December 30, 1996
VIA ELECTRONIC DELIVERY
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Tristar Corporation (the "Company")
Commission File No. 0-13099
Dear Sirs:
On behalf of the Company, transmitted herewith for electronic filing
pursuant to Rule 14a-6(b) of Regulation 14A promulgated under the Securities
Exchange Act of 1934, are three copies of the Company's proxy statement and
form of proxy relating to the Company's Annual Meeting of Stockholders to be
held on February 12, 1997.
The filing has been effected through the Securities and Exchange
Commission's EDGAR electronic filing system.
If you should need any additional information, please call the
undersigned or Phillip M. Renfro, Esq. at (210) 270-7172.
Very truly yours,
/s/ DARIN M. LIPPOLDT
Darin M. Lippoldt
Enclosures
cc: Loren Eltiste
Phillip M. Renfro (Firm)
