SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
SUPREME INTERNATIONAL CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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>
SUPREME INTERNATIONAL CORPORATION
3000 N.W. 107th Avenue
Miami, Florida 33172
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 31, 1998
----------------
To the Shareholders of Supreme International Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Supreme International Corporation, a Florida corporation
(the "Company"), will be held at the Company's principal executive offices at
3000 N.W. 107th Avenue, Miami, Florida 33172 at 3:00 P.M. on July 31, 1998 for
the following purposes:
1. To approve an amendment to the Company's Articles of Incorporation to
create a classified Board of Directors;
2. To elect seven directors to serve for terms of one to three years if
Proposal 1 is approved, and to elect the same persons as directors for a
term of one year if Proposal 1 is not approved;
3. To consider and vote upon a proposal to approve an amendment to the
Company's Articles of Incorporation to increase the number of authorized
shares of the Common Stock, from an aggregate of 10,000,000 shares to an
aggregate of 30,000,000 shares;
4. To consider and vote upon a proposal to approve an amendment to the
Company's Articles of Incorporation to add to the Company's authorized
capital stock 15,000,000 shares of Class A Common Stock, par value $.01
per share, having a one-tenth vote per share;
5. To consider and vote upon a proposal to approve an amendment to the
Company's 1993 Stock Option Plan to increase the number of shares of the
Company's common stock, $.01 par value per share (the "Common Stock")
reserved for issuance thereunder from an aggregate of 450,000 shares to an
aggregate of 900,000 shares;
6. To consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent public accountants for
the fiscal year ending January 31, 1999; and
7. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponements thereof.
The Board of Directors has fixed the close of business on June 16, 1998 as
the record date for determining those shareholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
<PAGE>
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the pre-addressed envelope provided for that purpose as
promptly as possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
FANNY HANONO,
Secretary
Miami, Florida
June 26, 1998
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. THOSE
SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY URGED TO EXECUTE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO
EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE ANNUAL MEETING, REVOKE THEIR
PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
SUPREME INTERNATIONAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 31, 1998
----------------------
PROXY STATEMENT
----------------------
TIME, DATE AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Supreme International Corporation, a Florida
corporation (the "Company"), of proxies from the holders of the Company's
Common Stock, par value $.01 per share (the "Common Stock"), for use at the
Annual Meeting of Shareholders of the Company to be held at the Company's
principal executive offices at 3000 N.W. 107th Avenue, Miami, Florida 33172 at
3:00 P.M. on July 31, 1998, and at any adjournments or postponements thereof
(the "Annual Meeting") pursuant to the enclosed Notice of Annual Meeting.
The approximate date this Proxy Statement and the enclosed form of proxy
are first being sent to shareholders is June 26, 1998. Shareholders should
review the information provided herein in conjunction with the Company's Annual
Report to Shareholders which accompanies this Proxy Statement. The Company's
principal executive offices are located at 3000 N.W. 107 Avenue, Miami, Florida
33172, and its telephone number is (305) 592-2830.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting and the enclosed proxy is to be borne by the Company.
In addition to the use of mail, employees of the Company may solicit proxies
personally and by telephone. The Company's employees will receive no
compensation for soliciting proxies other than their regular salaries. The
Company may request banks, brokers and other custodians, nominees and
fiduciaries to forward copies of the proxy material to their principals and to
request authority for the execution of proxies. The Company may reimburse such
persons for their expenses in so doing.
<PAGE>
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the Company's shareholders will consider and vote
upon the following matters:
1. To approve an amendment to the Company's Articles of Incorporation to
create a classified Board of Directors;
2. To elect seven directors to serve for terms of one to three years if
Proposal 1 is approved, and to elect the same persons as directors for a
term of one year if Proposal 1 is not approved;
3. To consider and vote upon a proposal to approve an amendment to the
Company's Articles of Incorporation to increase the number of authorized
shares of the Common Stock, from an aggregate of 10,000,000 shares to an
aggregate of 30,000,000 shares;
4. To consider and vote upon a proposal to approve an amendment to the
Company's Articles of Incorporation to add to the Company's authorized
capital stock 15,000,000 shares of Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), having a one-tenth vote per share;
5. To consider and vote upon a proposal to approve an amendment to the
Company's 1993 Stock Option Plan (the "1993 Plan") to increase the number
of shares of the Common Stock reserved for issuance thereunder from an
aggregate of 450,000 shares to an aggregate of 900,000 shares;
6. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the fiscal year ending January 31,
1999; and
7. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth herein)
will be voted (a) for the election of the respective nominees for director
named below and (b) in favor of all other proposals described in the Notice of
Annual Meeting. In the event a shareholder specifies a different choice by
means of the enclosed proxy, his shares will be voted in accordance with the
specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on June 16, 1998 as
the record date (the "Record Date") for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 6,705,248 shares of Common Stock issued and outstanding, all of
which are entitled to be voted at the Annual Meeting. Each share of Common
Stock is entitled to one vote on each matter submitted to shareholders for
approval at the Annual Meeting.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors
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will be elected by plurality of the votes cast by the shares of Common Stock
represented in person or by proxy at the Annual Meeting. The affirmative votes
of the holders of a majority of the shares of Common Stock represented in
person or by proxy at the Annual Meeting will be required for approval of the
other proposals covered by this Proxy Statement. If less than a majority of the
outstanding shares entitled to vote are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting to another
date, time or place, and notice need not be given of the new date, time or
place if the new date, time or place is announced at the meeting before an
adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions will
be considered as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not be counted as
votes cast for or against any given matter.
A broker or nominee holding shares registered in its name, or in the name
of its nominee, which are beneficially owned by another person and for which it
has not received instructions as to voting from the beneficial owner, may have
discretion to vote the beneficial owner's shares with respect to the election
of directors and other matters addressed at the Annual Meeting. Any such shares
which are not represented at the Annual Meeting either in person or by proxy
will not be considered to have cast votes on any matters addressed at the
Annual Meeting.
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BENEFICIAL SECURITY OWNERSHIP
The following table sets forth, as of the Record Date, information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person who is known by the Company to beneficially own 5% or more of the
Company's outstanding Common Stock, (ii) the Company's Chief Executive Officer
and each of the other "Named Executive Officers" (as defined below in
"Executive Compensation--Summary Compensation Table"), (iii) each director of
the Company, and (iv) all directors and executive officers of the Company as a
group. The Company is not aware of any beneficial owner of more than 5% of the
outstanding Common Stock other than as set forth in the following table.
<TABLE>
<CAPTION>
NAME AND ADDRESS % OF CLASS
OF BENEFICIAL OWNER(1)(2) NUMBER OF SHARES OUTSTANDING
- ------------------------------------------- ------------------ ------------
<S> <C> <C>
George Feldenkreis(3) .................... 1,738,653 25.4
Oscar Feldenkreis(4) ..................... 1,308,688 19.2
Fanny Hanono(5) .......................... 400,358 6.0
Salomon Hanono(5)(6) ..................... 416,608 6.2
Carfel, Inc(7) ........................... 361,525 5.4
Richard L. Dunn(8) ....................... 0 0
Joseph Roisman(9) ........................ 12,750 *
Ronald Buch(10) .......................... 5,750 *
Gary Dix(11) ............................. 21,800 *
Richard W. McEwen(12) .................... 14,750 *
Leonard Miller(13) ....................... 55,250 *
FMR Corporation
82 Devonshire Street
Boston, Massachusetts 02109(14) ......... 653,400 9.7
The Kaufmann Funds, Inc.
140 East 45th Street, 43rd Floor
New York, New York 10017(15) ............ 450,000 6.7
All directors and executive officers
as a group (ten persons)(16) ........... 3,574,249 46.6
</TABLE>
- ----------------
<TABLE>
<S> <C>
* Less than 1%.
(1) Except as otherwise indicated, the address of each beneficial owner is c/o the Company, 3000 N.W.
107th Avenue, Miami, Florida 33172.
(2) Except as otherwise indicated, the Company believes that all beneficial owners named in the table
have sole voting and investment power with respect to all shares of Common Stock beneficially
owned by them.
(3) Represents (a) 1,141,728 shares of Common Stock held by George Feldenkreis, (b) 150,000 shares
of Common Stock issuable upon the exercise of stock options held by George Feldenkreis,
(c) 361,525 shares of Common Stock held by Carfel, Inc. ("Carfel") of which company
Mr. Feldenkreis is a director, executive officer and principal shareholder and (d) 85,400 shares of
Common Stock held by a charitable foundation of which George Feldenkreis, Oscar Feldenkreis
and Fanny Hanono are each directors and officers (the "Foundation").
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
</TABLE>
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<TABLE>
<S> <C>
(4) Represents (a) 1,122,288 shares of Common Stock held by a limited
partnership of which Oscar Feldenkreis is the sole shareholder of the
general partner and the sole limited partner, (b) 1,000 shares of
Common Stock held by Mr. Feldenkreis directly, (c) 100,000 shares of
Common Stock issuable upon the exercise of stock options held by Oscar
Feldenkreis and (d) 85,400 shares held by the Foundation.
(5) Represents (a) 314,958 shares of Common Stock held by a limited
partnership of which Fanny Hanono is the sole shareholder of the
general partner and the sole limited partner and (b) 85,400 shares held
by the Foundation. Fanny Hanono and Salomon Hanono are husband and
wife.
(6) Also includes 16,250 shares of Common Stock issuable upon the exercise
of stock options held by Mr. Hanono.
(7) The shares of Common Stock held by Carfel are pledged to a bank to
secure Carfel's credit facility.
(8) Mr. Dunn resigned as an executive officer of the Company in April 1998.
(9) Represents (a) 1,500 shares of Common Stock held by Mr. Roisman and (b)
11,250 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Roisman.
(10) Represents (a) 750 shares of Common Stock held by Mr. Buch and (b)
5,000 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Buch.
(11) Represents (a) 3,000 shares of Common Stock held by Mr. Dix, (b) 1,800
shares of Common Stock held in trust for his children, (c) 750 shares
held in an individual retirement account and (d) 16,250 shares of
Common Stock issuable upon the exercise of stock options held by Mr.
Dix.
(12) Represents (a) 2,250 shares of Common Stock held by Mr. McEwen and (b)
12,500 shares of Common Stock issuable upon the exercise of stock
options held by Mr. McEwen.
(13) Represents (a) 39,000 shares of Common Stock held by Mr. Miller and (b)
16,250 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Miller.
(14) Based solely on information contained in amendment to Schedule 13G
dated December 30, 1997 filed with the Commission. 330,000 of these
shares of Common Stock are owned by Fidelity Capital Appreciation Fund,
a wholly-owned subsidiary of FMR Corporation.
(15) Based solely on information contained in Schedule 13G dated December
31, 1996 filed with the Commission.
(16) Includes the shares of Common Stock and options to purchase shares of
Common Stock described in Notes (3) through (6) and (8) through (13).
</TABLE>
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PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO CREATE A CLASSIFIED BOARD OF DIRECTORS
The Board of Directors has approved and recommends that the shareholders
adopt an amendment (the "Classified Amendment") to the Company's Amended and
Restated Articles of Incorporation (the "Articles of Incorporation") to divide
the Company's Board of Directors into three approximately equal classes with
staggered terms. Each shareholder should carefully study the description of the
Classified Amendment. The purpose of the Classified Amendment is to promote
continuity and stability in the Company's management and policies and thereby
enhance the ability of the Company to carry out long-range plans and goals for
its benefit and the benefit of shareholders. The Board of Directors has
observed the use of certain coercive takeover tactics in recent years,
including the accumulation of substantial common stock positions as a prelude
to a threatened takeover or corporate restructuring, proxy fights and partial
tender offers. The Board of Directors believes that the use of these tactics
can place undue pressure on a corporation's board of directors and shareholders
to act hastily and on incomplete information, and, therefore, can be highly
disruptive to a corporation as well as result in unfair differences in
treatment of shareholders who act immediately in response to an announcement of
takeover and those who choose to act later, if at all. The proposed Classified
Amendment is not, however, in response to any efforts of which the Company is
aware to accumulate the Company's Common Stock or any other takeover overtures.
Rather, the Board of Directors wishes to protect shareholder investments in the
Company by ensuring that unsolicited bidders will not be in a position to place
undue pressure on the ability of the Board of Directors to negotiate with any
potential acquiror from the strongest practical position, which is in the
interest of all shareholders.
To implement the classified Board of Directors, the Classified Amendment
would permit Class I, Class II and Class III directors initially to be elected
at the Annual Meeting for terms of one year, two years and three years,
respectively. If the Classified Amendment is adopted, Class I directors elected
at the Annual Meeting will hold office until the 1999 Annual Meeting; Class II
directors elected at the Annual Meeting will hold office until the 2000 Annual
Meeting; and Class III directors elected at the Annual Meeting will hold office
until the 2001 Annual Meeting; and, in each case, until their successors are
duly elected and qualified or until their earlier death, resignation or
removal. At each annual meeting commencing with the 1999 Annual Meeting,
directors elected to succeed those in the class whose terms then expire will be
elected for three-year terms so that the terms of one class of directors will
expire each year. Thus, the shareholders will elect only approximately
one-third of the directors at each annual meeting. In addition, the Board of
Directors may fill any vacancies which occur for the remainder of the term of
the director who ceases to be a director.
Florida law provides that the articles of incorporation of a corporation
may provide that the directors be divided into one, two or three classes, with
each class to be as nearly equal in number as possible, the terms of the
directors initially to be classified as follows: the first class to expire at
the annual meeting next ensuing; the second class one year thereafter; and the
third class two years thereafter, and that at each annual election held after
such classification, directors shall be elected for a full term. The Classified
Amendment is also consistent with the rules of the Nasdaq National Market on
which the Company's Common Stock is traded.
The Board of Directors believes that dividing the directors into three
classes is advantageous to the Company and its shareholders because providing
that directors will serve three-year terms rather than
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one-year terms increases the likelihood of continuity and stability in the
policies formulated by the Board of Directors and enhances the Company's
ability to carry out its long-range plans and goals for its benefit and the
benefit of the shareholders. While management has not experienced any problems
with continuity in the past, it wishes to ensure that this experience will
continue and believes that the staggered election of directors will promote
continuity because only approximately one-third of the directors will be
subject to election each year.
The Classified Amendment would significantly extend the time required to
make any change in control of the Board of Directors and will tend to
discourage any hostile takeover bid for the Company. Presently, a change in
control of the Board of Directors can be made by the holders of a majority of
the outstanding voting stock of the Company at a single annual meeting. Under
the proposed Classified Amendment, it will take at least two annual meetings
for such shareholders to make a change in control of the Board, except in the
event of vacancies resulting from resignation, removal for cause or other
reasons, since only a minority of the directors will be elected at each
meeting. Staggered terms would also guarantee that approximately two-thirds of
the directors at any one time would have at least one year's experience as
directors of the Company.
The Classified Amendment will make it more difficult for shareholders to
change the composition of the Board of Directors even if shareholders believe
such a change would be desirable. Because of the additional time required to
change control of the Board of Directors, the Classified Amendment will also
tend to perpetuate incumbent management. The Classified Amendment will increase
the amount of time required for a takeover bidder to obtain control of the
Company without the cooperation of the Board of Directors, even if the bidder
were to acquire a majority of the Company's outstanding stock; accordingly, it
will tend to discourage certain mergers, proxy rights and certain tender
offers, perhaps including some offers that shareholders might deem to be in
their best interest. As a result, shareholders may be deprived of opportunities
to sell some or all of their shares in a tender offer. Tender offers for
control usually involve a purchase price higher than the current market price
and may involve a bidding contest between competing takeover bidders. The
Classified Amendment could also discourage open market purchases by a potential
takeover bidder. Such purchases could temporarily increase the market value of
the Company's Common Stock, enabling shareholders to sell their shares at a
price higher than that which would otherwise prevail. Finally, the Classified
Amendment could decrease the market price of the Company's Common Stock by
making the stock less attractive to persons who invest in securities in
anticipation of an increase in price if a takeover attempt develops.
For information regarding the nominees for election to the Board of
Directors at the Annual Meeting and the class of directors in which each
director will initially serve if the Classified Amendment is adopted, see
Proposal No. 2 below.
The Company's Articles of Incorporation and Amended and Restated Bylaws
presently contain other provisions having an anti-takeover effect. The proposal
to create a classified board of directors is not part of a plan by management
to adopt a series of anti-takeover measures and the Company does not presently
intend to propose other anti-takeover amendments in future proxy solicitations.
The Company has 1,000,000 authorized and unissued shares of Preferred
Stock. The existence of authorized but unissued Preferred Stock may enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a merger, tender offer, proxy
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consent or otherwise. For example, if in the due exercise of its fiduciary
obligations, the Board of Directors were to determine that a takeover proposal
is not in the Company's best interests, the Board of Directors could cause
shares of Preferred Stock to be issued without shareholder approval in one or
more private offerings or other transactions that might dilute the voting or
other rights of the proposed acquiror or insurgent shareholder or shareholder
group or create a substantial voting block in institutional or other hands that
might undertake to support the position of the incumbent Board of Directors. In
this regard, the Company's Articles of Incorporation grants the Board of
Directors broad power to establish the rights and preferences of authorized and
unissued Preferred Stock. The issuance of shares of Preferred Stock pursuant to
the Board of Director's authority described above could decrease the amount of
earnings and assets available for distribution to holders of Common Stock and
adversely affect the rights and powers, including voting rights, of such
holders and may have the effect of delaying, deferring or preventing a change
in control of the Company. The Board of Directors does not currently intend to
seek shareholder approval prior to any issuance of Preferred Stock, unless
otherwise required by law.
The aforementioned is a summary of the material terms of the Classified
Amendment. This summary is qualified in its entirety by reference to the
complete text of the Classified Amendment, which is set forth in Article VI of
the Articles of Incorporation attached to the Proxy Statement as Exhibit A.
Shareholders are urged to read the actual text of the Classified Amendment in
its entirety.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
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ELECTION OF DIRECTORS
By resolution of the Board of Directors at its meeting on May 8, 1998, the
number of directors composing the Board of Directors has been set at seven.
Assuming shareholder approval of Proposal 1, Messrs. Buch and Hanono will hold
office until the 1999 Annual Meeting (Class I), Messrs. McEwen and Oscar
Feldenkreis will hold office until the 2000 Annual Meeting (Class II), and
Messrs. Dix, Miller and George Feldenkreis will hold office until the 2001
Annual Meeting (Class III). If Proposal 1 is not approved by the shareholders,
all directors will be elected to hold office until the 1999 Annual Meeting and
until their successors are duly elected and qualified.
The accompanying form of proxy when properly executed and returned to the
Company, will be voted FOR the election as directors of the seven persons named
below, unless the proxy contains contrary instructions. Proxies cannot be voted
for a greater number of persons than the number of nominees named in the Proxy
Statement. Management has no reason to believe that any of the nominees are
unable or unwilling to serve if elected. However, in the event that any of the
nominees should become unable or unwilling to serve as a director, the proxy
will be voted for the election of such person or persons as shall be designated
by the Board of Directors.
The following table sets forth certain information concerning each
nominee.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- -------------------------------- ----- --------------------------------------------------
<S> <C> <C>
George Feldenkreis(1) .......... 62 Chairman of the Board and Chief Executive Officer
Oscar Feldenkreis .............. 38 President, Chief Operating Officer and Director
Ronald L. Buch ................. 62 Director
Gary Dix(1) .................... 50 Director
Salomon Hanono ................. 48 Director
Richard W. McEwen(2) ........... 77 Director
Leonard Miller(1)(2) ........... 68 Director
</TABLE>
- ----------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
GEORGE FELDENKREIS founded the Company in 1967, has been involved in all
aspects of its operations since that time and served as the Company's President
and a Director until February 1993, when he was elected Chairman of the Board
and Chief Executive Officer. Mr. Feldenkreis is also a director, executive
officer and principal shareholder of Carfel, an importer and distributor of
automotive parts which he founded in 1961, is Vice President of the Greater
Miami Jewish Federation and is a trustee of the University of Miami. Mr.
Feldenkreis devotes a vast majority of his working time to the affairs of the
Company and devotes the balance of his working time to the affairs of Carfel.
OSCAR FELDENKREIS was elected Vice President and a Director in 1979 and
joined the Company on a full-time basis in 1980. Mr. Feldenkreis has been
involved in all aspects of the Company's operations since that time and was
elected President and Chief Operating Officer in February 1993. Oscar
Feldenkreis also serves as a director of Carfel, but does not devote any of his
working time to its affairs.
RONALD L. BUCH was elected to the Company's Board of Directors in January
1996. Prior to his retirement in 1995, Mr. Buch was employed by K-Mart
Corporation for over 39 years, most recently as Vice President and General
Merchandise Manager.
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GARY DIX was elected to the Company's Board of Directors in May 1993.
Since February 1994, Mr. Dix, a certified public accountant, has been a partner
at Mallah Furman & Company, P.A., an accounting firm in Miami, Florida. From
1979 to January 1994, Mr. Dix was a partner of Silver Dix & Hammer, P.A.,
another Miami accounting firm.
SALOMON HANONO was elected to the Company's Board of Directors in February
1993. Mr. Hanono has been employed by Carfel in various sales capacities since
1987 and currently is Export Director, with overall responsibilities for
Carfel's export sales. Mr. Hanono devotes substantially all of his working time
to the affairs of Carfel.
RICHARD W. MCEWEN was elected to the Company's Board of Directors in
September 1994. Mr. McEwen serves as a director of Lennar Corporation, Sound
Advice, Inc. and Wometco Enterprises, Inc. Prior to his retirement in 1985, Mr.
McEwen was Chairman of the Board and Chief Executive Officer of Burdines, a
division of Federated Department Stores, Inc.
LEONARD MILLER was elected to the Company's Board of Directors in May
1993. Mr. Miller has been Vice President and Secretary of Pasadena Homes, Inc.,
a home construction firm in Miami, Florida, since 1959.
George Feldenkreis is the father of Oscar Feldenkreis and Fanny Hanono,
the Company's Secretary-Treasurer, and the father-in-law of Salomon Hanono.
The Company's executive officers are elected annually by the Board of
Directors and serve at the discretion of the Board. The Company's directors
hold office until the next annual meeting of shareholders and until their
successors have been duly elected and qualified.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and holders of more than ten
percent of the Company's Common Stock, to file reports of ownership and changes
in ownership with the Commission. Such persons are required to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
oral or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that, with respect to the
fiscal year ended January 31, 1998 ("Fiscal 1998"), all filing requirements
applicable to its executive officers, directors and greater than ten percent
beneficial owners were complied with.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During Fiscal 1998, the Board of Directors held four formal meetings.
During Fiscal 1998, no director attended fewer than 75% of the number of
meetings of the Board of Directors and each Committee of the Board of Directors
held during the period he served on the Board.
The only committees of the Board of Directors are the Audit Committee and
the Compensation Committee. The Board does not have a nominating or similar
committee.
10
<PAGE>
The Audit Committee is presently comprised of George Feldenkreis, Gary Dix
and Leonard Miller. The duties and responsibilities of the Audit Committee
include (a) recommending to the Board of Directors the appointment of the
Company's independent public accountants and any termination of engagement, (b)
reviewing the plan and scope of independent audits, (c) reviewing the Company's
significant accounting policies and internal controls, (d) having general
responsibility for all related auditing matters, and (e) reporting its
recommendations and findings to the full Board of Directors. The Audit
Committee met on one occasion during Fiscal 1998.
The Compensation Committee is presently comprised of Leonard Miller and
Richard W. McEwen. The Compensation Committee reviews and approves the
compensation of the Company's executive officers and administers the 1993 Plan
and the Company's Directors' Stock Option Plan (the "Directors' Plan"). The
Compensation Committee met on one occasion during Fiscal 1998.
11
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following compensation table sets forth, for the fiscal years ended
January 31, 1996, 1997 and 1998, the cash and certain other compensation paid
by the Company to the Company's Chief Executive Officer ("CEO") and such other
executive officers whose annual salary and bonus exceed $100,000 during Fiscal
1998 (together with the CEO, collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------- -----------------------
SECURITIES UNDERLYING ALL OTHER
FISCAL SALARY BONUS OPTION/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)(1)
- ------------------------------ -------- --------- --------- ----------------------- -------------
<S> <C> <C> <C> <C> <C>
George Feldenkreis 1998 125,000 100,000 -- 4,750
Chairman and CEO 1997 120,000 50,000 -- 500
1996 120,000 -- -- 1,970
Oscar Feldenkreis 1998 350,000 460,000 -- 4,750
President and 1997 350,000 450,000 -- 500
Chief Operating Officer 1996 350,000 200,000 -- 2,634
Richard L. Dunn 1998 155,000 9,000 -- 2,500
Vice President, Finance and 1997 145,000 10,000 -- 500
Chief Financial Officer(2) 1996 132,692 10,000 -- 2,269
Joseph Roisman 1998 147,000 21,000 -- 4,750
Executive Vice President 1997 140,000 10,000 -- 500
1996 116,000 10,000 -- 2,179
</TABLE>
- ----------------
(1) The dollar amount represents Company contributions for the Named Executive
Officer of the Company's 401(K) plan.
(2) Mr. Dunn resigned as an executive officer of the Company in April 1998.
STOCK OPTIONS HELD AT END OF FISCAL 1998
The following table indicates the total number and value of exercisable
and unexercisable stock options held by each of the Named Executive Officers
listed as of January 31, 1998. No options to purchase stock were exercised by
any of the Named Executive Officers in Fiscal 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END
------------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
- --------------------------- ------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Oscar Feldenkreis ......... 45,000 0 $ 467,100 0
Richard L. Dunn ........... 37,500 0 389,250 0
Joseph Roisman ............ 11,250 0 116,775 0
</TABLE>
- ----------------
(1) Based on The Nasdaq National Market closing price for the Company's Common
Stock on January 30, 1998 of $10.38 per share.
12
<PAGE>
COMPENSATION OF DIRECTORS
During Fiscal 1998, non-employee directors, with the exception of Salomon
Hanono, were compensated at the rate of $1,500 per quarter and $500 for each
meeting of the Board of Directors or any committee thereof attended, up to a
maximum of $8,000 per annum. Directors are reimbursed for travel and lodging
expenses in connection with their attendance at meetings. Mr. Hanono receives
no cash compensation for his services as a director. Directors are also
entitled to receive options under the Company's 1993 Plan and the Directors'
Plan. As of January 31, 1998, the following Options were outstanding:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
NAME OF OPTIONEE SHARES PRICE DATE
- --------------------------- ----------- ---------- -------------
<S> <C> <C> <C>
Gary Dix .................. 11,250 $ 8.00 June 2, 2000
Richard W. McEwen ......... 7,500 $ 8.00 June 2, 2000
Leonard Miller ............ 11,250 $ 8.00 June 2, 2000
Salomon Hanono ............ 11,250 $ 8.00 June 2, 2000
</TABLE>
In May 1998, each of the above-referenced persons was granted a ten-year
option under the Directors' Plan to purchase 5,000 shares of Common Stock at an
exercise price of $15.75 per share.
EMPLOYMENT AGREEMENTS
The Company is party to an employment agreement with Oscar Feldenkreis,
the Company's President and Chief Operating Officer, which was renewed in May
1998 for an additional two-year period. In connection with the renewal of the
employment agreement, Mr. Feldenkreis was granted ten-year options under the
1993 Plan to purchase 55,000 shares of Common Stock at an exercise price of
$15.75 per share, subject to the approval by the shareholders of the amendment
to the 1993 Plan. The employment agreement, as amended, provides for an annual
salary of $350,000, subject to annual cost-of-living increases, and an annual
bonus as may be determined by the Compensation Committee in its discretion, up
to a maximum of $500,000. The employment agreement requires Mr. Feldenkreis to
devote his full-time to the affairs of the Company. Upon termination of the
employment agreement by reason of the employee's death or disability, Mr.
Feldenkreis or his estate will receive a lump sum payment equal to one year's
salary plus a bonus as may be determined by the Compensation Committee in its
discretion. The employment agreement also prohibits Mr. Feldenkreis from
directly or indirectly competing with the Company for one year after
termination of his employment for any reason except the Company's termination
of Mr. Feldenkreis without Cause.
The Company is also party to an employment agreement with George
Feldenkreis, the Company's Chairman of the Board and Chief Executive Officer,
which was renewed in May 1998 for an additional two-year period. In connection
with the renewal of the employment agreement, Mr. Feldenkreis was granted
options under the 1993 Plan to purchase 150,000 shares of Common Stock at an
exercise price of $15.75 per share, subject to the approval by the shareholders
of the amendment to the 1993 Plan. The employment agreement, as amended,
provides for an annual salary of $375,000, subject to annual cost-of-living
increases, and an annual bonus as may be determined by the Compensation
Committee in its discretion, up to a maximum of $250,000. Pursuant to his
employment agreement, Mr. Feldenkreis devotes a majority of his working time to
the affairs of the Company. George Feldenkreis' employment agreement contains
termination and non-competition provisions similar to those set forth in Oscar
Feldenkreis' agreement.
13
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The Company did not grant stock options during Fiscal 1998 to any of the
Named Executive Officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under rules established by the Securities and Exchange Commission, the
Company is required to provide a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting the
Company's executive officers (including the Named Executive Officers) during
the past fiscal year. The report of the Company's Compensation Committee is set
forth below.
COMPENSATION PHILOSOPHY
The three principal components of the Company's executive compensation are
salary, bonus and stock options. These components are designed to facilitate
fulfillment of the compensation objectives of the Company's Board of Directors
and the Compensation Committee, which objectives include (i) attracting and
retaining competent management, (ii) recognizing individual initiative and
achievement, (iii) rewarding management for short and long term
accomplishments, and (iv) aligning management compensation with the achievement
of the Company's goals and performance.
The Compensation Committee endorses the position that equity ownership by
management is beneficial in aligning management's and shareholders' interests
in the enhancement of shareholder value. This alignment is amplified by the
extensive holdings by management of Company Common Stock and stock options.
Base salaries for new management employees are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for managerial
talent, including a comparison of base salaries for comparable positions at
similar companies of comparable sales and capitalization. Annual salary
adjustments are determined by evaluating the competitive marketplace, the
performance of the Company, the performance of the executive, and the
responsibilities assumed by the executive.
The Compensation Committee intends to review the Company's existing
management compensation programs on an ongoing basis and will (i) meet with the
Chief Executive Officer to consider and set mutually agreeable performance
standards and goals for members of senior management and/or the Company, as
appropriate or as otherwise required pursuant to any such officer's employment
agreement and (ii) consider and, as appropriate, approve modifications to such
programs to ensure a proper fit with the philosophy of the Compensation
Committee and the agreed-upon standards and goals. The Compensation Committee
has not yet considered or approved the individual or corporate performance
goals or standards for the fiscal year ending January 31, 1999 with respect to
the Company's management incentive programs.
CHIEF EXECUTIVE OFFICER COMPENSATION
The principal factors considered by the Board of Directors in determining
Fiscal 1998 salary and bonus for George Feldenkreis, the Chairman of the Board
and Chief Executive Officer of the Company, included an analysis of the
compensation of chief executive officers of public companies within the
14
<PAGE>
Company's industry and public companies similar in size and capitalization to
the Company. The Compensation Committee also considered the Company's Fiscal
1998 earnings, expectations for the fiscal year ending January 31, 1999 and
other performance measures in determining George Feldenkreis' compensation, but
there was no specific relationship or formula by which such compensation was
tied to Company performance. The Company also considered that notwithstanding
the fact that his employment agreement does not require Mr. Feldenkreis to
devote more than 50% of his working time to the affairs of the Company, the
fact that Mr. Feldenkreis has devoted the vast majority of his working time to
the affairs of the Company. The Compensation Committee also renewed George
Feldenkreis' employment agreement with the Company, which was to expire on May
1997, for a one-year period. In May 1998, the Compensation Committee renewed
Mr. Feldenkreis' employment agreement for an additional two-year period and in
connection therewith increased his base salary to $375,000.
OTHER EXECUTIVE OFFICERS' COMPENSATION
Fiscal 1998 base salary and bonus for the Company's other executive
officers were determined by the Compensation Committee. This determination was
made after a review and consideration of a number of factors, including each
executive's level of responsibility and commitment, level of performance (with
respect to specific areas of responsibility and on an overall basis), past and
present contribution to and achievement of Company goals and performance during
Fiscal 1998, compensation levels at competitive publicly held companies and the
Company's historical compensation levels. Although Company performance was one
of the factors considered, the approval of the Compensation Committee was based
upon an overall review of the relevant factors, and there was no specific
relationship or formula by which compensation was tied to Company performance.
As a result of its evaluation, the Compensation Committee renewed Oscar
Feldenkreis' employment agreement with the Company, which was to expire in May
1997, for a one-year period. In May 1998, the Compensation Committee renewed
Mr. Feldenkreis' employment agreement for an additional two-year period.
STOCK OPTIONS
The Company maintains stock option plans which are designed to attract and
retain executive officers, directors and other employees of the Company and to
reward them for delivering long-term value to the Company. The Compensation
Committee did not grant any options to Named Executive Officers during Fiscal
1998. In connection with the renewal of their employment agreements in May
1998, the Committee granted to George Feldenkreis and Oscar Feldenkreis,
150,000 and 55,000 options under the 1993 Plan, respectively, subject to the
approval by the shareholders of an amendment to the Company's 1993 Plan,
increasing the number of shares of Common Stock reserved for issuance
thereunder.
/s/ Richard W. McEwen
/s/ Leonard Miller
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
15
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Stock with the cumulative total stockholder return on the
Nasdaq Stock Market-US Index and The S&P Textile-Apparel Manufacturer Index
commencing on May 21, 1993 (the first day the Common Stock began trading on The
Nasdaq National Market) and ending January 31, 1998.
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG SUPREME INTERNATIONAL CORPORATION,
THE NASDAQ STOCK MARKET--U.S. INDEX
AND THE S&P TEXTILE-APPAREL INDEX
[GRAPH OMMITTED]
<TABLE>
<CAPTION>
MAY 21, 1993 JANUARY 31,
-------------- -------------------------------------------
1994 1995 1996 1997 1998
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Supreme .............. $100 $ 89 $ 84 $102 $121 $132
Nasdaq US ............ 100 121 116 164 214 253
S&P Textiles ......... 100 81 81 91 109 107
</TABLE>
- ----------------
* Assumes that $100 was invested on May 21, 1993 in the Company's Common Stock
or on April 30, 1993 in the Nasdaq Stock Market Index or The S&P
Textile-Apparel Manufacturer Index, and that all dividends are reinvested.
16
<PAGE>
CERTAIN TRANSACTIONS
During the latter half of Fiscal 1998, the Company consolidated its
administrative offices and substantially all of its warehouse and distribution
facilities into a new 238,000 square foot leased facility in Miami which was
built to the Company's specifications. During Fiscal 1998, the Company also
leased the following facilities from affiliated parties.
The Company leased a 19,000 square foot building in Miami, Florida which
housed the Company's executive offices. The space is leased from George
Feldenkreis, the Company's Chairman of the Board, pursuant to a lease which
expires in December 2000. The Company's current rental for the office facility
is $128,000 per annum. The Company will continue to pay rent on this facility
until the expiration of the lease or the lease of the facility to another
party.
The Company also leased an approximately 54,000 square foot
warehouse/office building adjacent to its former executive offices from George
Feldenkreis pursuant to a lease which expired in April 1998. Fiscal 1998 rental
for this facility was approximately $308,000. The Company leases a second
32,000 square foot warehouse building from a partnership of which Mr.
Feldenkreis is a general partner. This warehouse is leased pursuant to a lease
expiring in June 1998, at a current annual rental of approximately $136,000. A
portion of this facility is still being used by the Company and a portion is
subleased to Carfel, an affiliated automotive parts importer and distributor.
The Company will vacate this facility upon expiration of the lease.
The Company leases a showroom and office space in New York City, maintains
an office in Guangzhou and also leases offices jointly with Carfel in Beijing,
Taipei and Mexico City to monitor foreign production of their respective
products.
In January 1995, the Company entered into a license agreement (the "1995
License Agreement") with Isaco International, Inc. ("Isaco"), pursuant to which
Isaco was granted an exclusive license to use the Natural Issue /registered
mark/ brand name in the United States, its territories and possessions and
Puerto Rico (the "Territory") to market a line of mens' underwear and
loungewear. The 1995 License Agreement provided for a guaranteed minimum annual
royalty of $112,500 through May 31, 1997 (with increasing amounts in succeeding
years) and expired on May 31, 1998. In June 1998, the Company and Isaco extended
the 1995 License Agreement for an additional year at a guaranteed minimum
royalty of $137,500. Royalty income earned from the 1995 License Agreement
amounted to approximately $298,000 for Fiscal 1998. In January 1998, the Company
entered into two additional three-year license agreements with Isaco for use of
the Natural Issue /registered mark/ brand name in the Territory to market lines
of hosiery and neckwear. The license agreement for neckwear provides for a
guaranteed minimum annual royalty of $15,000 and the license agreement for
hosiery provides for a guaranteed minimum annual royalty of $25,000 during the
first year, increasing by $5,000 in each subsequent year. The principal
shareholder of Isaco is Isaac Zelcer, who is Oscar Feldenkreis' father-in-law.
The Company believes that its arrangements with George Feldenkreis, Carfel
and Isaco are on terms at least as favorable as the Company could secure from a
non-affiliated third party.
17
<PAGE>
PROPOSAL TO AMEND ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED SHARES
OF COMMON STOCK FROM 10,000,000 TO 30,000,000
The Board of Directors of the Company has approved and recommends that the
shareholders of the Company approve an amendment to the Company's Articles of
Incorporation for the purpose of increasing the number of its authorized shares
of Common Stock from 10,000,000 to 30,000,000. Such amendment will be
accomplished by amending the Company's Articles of Incorporation.
The Company's shareholders do not have preemptive rights to subscribe for
or purchase any of the additional shares of Common Stock to be authorized.
Additional shares of Common Stock could be used for any proper corporate
purpose, including acquisitions, raising of additional equity capital, stock
dividends or upon the exercise of stock options. The future issuance of
additional shares of Common Stock on other than a pro rata basis may dilute the
ownership of the current shareholders, as well as their proportionate voting
rights.
If the proposed amendment to the Company's Articles of Incorporation is
adopted, no further approval of the shareholders would be required for the
issuance of shares of Common Stock as authorized by the amendment and, absent
any legal or Nasdaq National Market requirements, it is not contemplated that
further approval of the holders of Common Stock would be sought for issuance of
any shares authorized by the amendment. The Company has no present plans to
issue any shares of Common Stock which would be authorized hereby.
The approval of the proposed amendment could make it more difficult to
acquire control of the Company and thereby discourage attempts to do so, even
though the Company's shareholders may deem such an acquisition desirable.
Issuance of shares of Common Stock could dilute the ownership interest and
voting power of the Company's shareholders who may seek control of the Company.
Shares of Common Stock could be issued in a private placement to one or more
organizations sympathetic to the Company and opposed to any take-over bid, or
under other circumstances that could make it more difficult and thereby
discourage attempts to acquire control of the Company. To the extent that it
impedes any such attempts, the amendment may serve to perpetuate the Company's
management.
Although the Company has from time to time considered the issuance of
additional securities in connection with a strategic alliance or acquisition,
the Company has no present plans, agreements or arrangements for the issuance
of shares of Common Stock in excess of the number of such shares presently
authorized in connection with any particular transaction. The Company does not
anticipate soliciting the vote of its shareholders to authorize the issuance of
shares of the Common Stock unless otherwise required under the Florida Business
Corporation Act, the Company's Articles of Incorporation or its By Laws.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
18
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO CREATE CLASS A COMMON STOCK
The Board of Directors has approved and recommends that the shareholders
adopt an amendment (the "Dual Class Amendment") to the Company's Articles of
Incorporation to create the Class A Common Stock.
GENERAL INFORMATION AND BACKGROUND OF THE DUAL CLASS AMENDMENT
In recent years, a number of publicly held companies have adopted capital
structures utilizing two classes of common stock. As part of its consideration
of future potential growth strategies, management of the Company became
interested in effecting such a "dual class" structure in order to provide
flexibility in considering, proposing and structuring acquisition and financing
transactions to potentially augment the Company's growth. Although the Company
continually reviews and evaluates acquisition and financing alternatives, the
Company does not presently have any agreements, understanding or arrangement
with respect to the issuance of any Class A Common Stock in connection with any
acquisitions or financings.
As indicated in "Beneficial Security Ownership," George Feldenkreis and
Oscar Feldenkreis and members of their family and their affiliates
(collectively, the "Feldenkreis Family Group") beneficially own in the
aggregate approximately 45.1% of the issued and outstanding shares of Common
Stock. In light of the possible effects of a dual class stock structure on the
shareholders of the Company (including the Feldenkreis Family Group), on May 8,
1998, the Board of Directors reviewed and discussed, in the absence of George
Feldenkreis, Oscar Feldenkreis and Solomon Hanono, the proposed Dual Class
Amendment. At the meeting, the participating directors discussed and evaluated
the Dual Class Amendment with legal counsel. The participating directors also
consulted the Company's investment bankers.
The objectives sought to be achieved by, and the various proposed terms
of, the Dual Class Amendment were reviewed. The anticipated benefits and
possible disadvantages of the dual class stock structure to be effected by the
Dual Class Amendment were also discussed. See "Reasons for the Dual Class
Structure" and "Certain Potential Disadvantages of the Dual Class Structure."
At that meeting, they also discussed the potential market price differential
between voting and sub-voting shares, the potential impact on market liquidity,
the potential reaction of institutional investors to non-voting stock
structures and the potential impact on the Company's ability to raise capital.
Upon such review, each participating director concluded that the advantages of
the Dual Class Amendment far outweighed the potential disadvantages, and
unanimously voted to approve the adoption of the Dual Class Amendment and to
recommend their adoption to the Company's shareholders. The Board of Directors
then directed that the proposed terms of the Dual Class Amendment be finalized
and that this Dual Class Amendment be incorporated as a proposal in the
Company's 1998 Proxy Statement.
Management of the Company anticipates that the authorized but unissued
shares of Class A Common Stock would be utilized by the Company for general
corporate purposes, including the issuance of such shares in public offerings
or privately negotiated transactions. Future issuances of Class A Common Stock
may also be made for a variety of other valid corporate purposes, including as
stock dividends to existing shareholders, to reduce indebtedness, to increase
working capital or to fund additions to fixed assets. The Company may also use
such stock to effect acquisitions of or business
19
<PAGE>
combinations with other corporations or business entities and to fund employee
benefit and incentive plans. Although the Company continually reviews and
evaluates acquisition and financing alternatives, the Company does not
presently have any agreements, understanding or arrangement with respect to the
issuance of any Class A Common Stock in connection with any acquisitions or
financings. As an equity security, the Class A Common Stock would participate
fully from a financial point of view in any future growth of the Company.
SUMMARY OF NEWLY AUTHORIZED CLASS A COMMON STOCK
The Company's authorized capital stock currently consists of 11,000,000
shares, consisting of 10,000,000 shares of Common Stock, of which 6,705,248
shares were outstanding as of the Record Date; and 1,000,000 shares of
Preferred Stock, none of which are outstanding.
The Dual Class Amendment modifies the Company's capitalization such that,
upon filing the Dual Class Amendment with the Secretary of State of the State
of Florida, the Company's authorized capital stock will include 15,000,000
shares of Class A Common Stock.
The Dual Class Amendment will become effective upon filing with the
Secretary of State of the State of Florida (the "Effective Date") after
approval of holders of a majority of the shares of Common Stock represented in
person or by proxy at the Annual Meeting. Pursuant to the Dual Class Amendment,
the economic rights of each share of Common Stock and Class A Common Stock will
be identical, except that each share of Common Stock will entitle the holder
thereof to one vote in respect of matters submitted for the vote of holders of
Common Stock, whereas each share of Class A Common Stock will entitle the
holder thereof to a vote on such one-tenth matters. See "Description of Common
Stock."
REASONS FOR THE DUAL CLASS STRUCTURE
The Board of Directors believes that the adoption of the Dual Class
Amendment, including the dual class stock structure created thereby, is in the
best interests of the Company. The material advantages and disadvantages of the
dual class stock structure considered by the Board of Directors are set forth
herein. The Board of Directors believes that the creation of a capital
structure with both full-voting Common Stock and sub-voting Class A Common
Stock will offer a number of potential benefits to the Company and its
shareholders as set forth below:
FINANCING FLEXIBILITY. By authorizing the Company to issue either
full-voting or sub-voting shares, the Dual Class Amendment will provide the
Company with increased flexibility to issue Class A Common Stock (i) in order
to raise equity capital (either through direct issuances of stock or through
issuances of convertible securities) to finance future capital expenditures and
to finance the future growth of the Company, (ii) as consideration for future
acquisitions, and (iii) in connection with employee stock benefit plans as a
means of attracting, compensating and retaining key employees, without
materially diluting the voting power of the Company's existing shareholders,
even though their relative equity interests would decrease. Although the
Company continually reviews and evaluates acquisition and financing
alternatives, the Company does not presently have any agreements, understanding
or arrangement with respect to the issuance of any Class A Common Stock in
connection with any acquisitions or financings. Management believes that by
providing the Company with the
20
<PAGE>
ability to issue sub-voting equity securities, the Dual Class Amendment also
helps mitigate any reluctance that the Feldenkreis Family Group (see
"Beneficial Security Ownership") might otherwise have to support the issuance
of significant amounts of additional common stock because of the accompanying
voting dilution. Avoiding such voting dilution also reduces the risk of
disruption in the continuity of the Company's management, current policies and
long-term strategy, as discussed below under "Continuity."
The Dual Class Amendment will provide all shareholders, including the
Feldenkreis Family Group, increased flexibility to dispose of a portion of
their equity interest in the Company without significantly affecting their
relative voting power. Because shareholders who are interested in maintaining
their voting interest in the Company may be more willing to sell shares of the
Company if such sale does not result in a corresponding decrease in their
relative voting power, the Dual Class Amendment may also result in increased
trading of the equity securities of the Company, thereby increasing liquidity.
CONTINUITY. The Dual Class Amendment will provide the Company with the
flexibility to issue Class A Common Stock for financing, acquisition and
compensation purposes without materially diluting the voting power of the
Company's existing shareholders, including the Feldenkreis Family Group. As a
practical matter, the Dual Class Amendment will permit the Feldenkreis Family
Group to retain significant voting power even if the Company issues shares of
Class A Common Stock. Accordingly, the Dual Class Amendment is expected to
reduce the risk of disruption in the continuity of the Company's management and
its current operating policies and long-term strategy that might otherwise
result if the Company issued a substantial number of additional shares of
Common Stock.
KEY EMPLOYEES. The Dual Class Amendment is intended to permit all
employees of the Company to continue to concentrate on their employment
responsibilities by reducing concerns, if any, that the future of the Company
could be affected by real or perceived succession issues or by an unsolicited
takeover attempt. By reducing these uncertainties, the Dual Class Amendment may
enhance the ability of the Company to attract and retain highly qualified key
employees. In addition, the Company's ability to issue Class A Common Stock
will increase the Company's flexibility in structuring compensation plans and
arrangements so those employees may continue to participate in the growth of
the Company without materially diluting the voting power of existing
shareholders.
KEY CUSTOMERS AND SUPPLIERS. The Dual Class Amendment is also intended to
provide reassurance to long-time customers, suppliers and other entities that
have significant business relationships with the Company, each of which may
have concerns about potential changes in control, thereby increasing their
willingness to enter into long-term commitments with the Company.
ANTITAKOVER EFFECTS OF DUAL CLASS STOCK STRUCTURE
The Dual Class Amendment may deter or frustrate a takeover attempt of the
Company that a holder of Common Stock might consider in its best interest,
including those attempts that might result in a premium over the market price
for the capital stock held by the shareholder. While the Dual Class Amendment
and the creation and issuance of shares of Class A Common Stock may act as an
effective deterrent or bar to future takeover attempts not sanctioned by
management or the holders of a majority of the Common Stock, the Dual Class
Amendment is not being proposed in reaction to any such takeover attempt or to
any accumulation of the Company's Common Stock known to
21
<PAGE>
management. The Dual Class Amendment is being proposed at this time to give
management the flexibility to issue additional equity securities in future
corporate transactions without threatening the voting power in the present
shareholders. Set forth below is a brief summary of the principal anti-takeover
effects of the Dual Class Amendment.
DUAL CLASS STOCK STRUCTURE. Holders of Class A Common Stock will have per
share voting rights that are one-tenth of the voting rights of holders of
Common Stock. One of the principal purposes of having two classes of common
stock with different voting rights is to maintain existing shareholders' voting
power in the Company. See "Certain Potential Disadvantages of the Dual Class
Stock Structure."
AUTHORIZED BUT UNISSUED SHARES. The Dual Class Amendment provides for a
significant number of authorized but unissued shares of Class A Common Stock
that will be available for future issuance without shareholder approval. These
additional shares may be utilized for a variety of corporate purposes,
including future public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. Although the Company continually
reviews and evaluates acquisition and financing alternatives, the Company does
not presently have any agreements, understanding or arrangement with respect to
the issuance of any Class A Common Stock in connection with any acquisitions or
financings.
CERTAIN POTENTIAL DISADVANTAGES OF THE DUAL CLASS STOCK STRUCTURE
While the Board has determined that the implementation of the dual class
stock structure reflected in the Dual Class Amendment is in the best interest
of the Company, such structure may also be considered to have certain
disadvantages, including, but not limited to, those set forth below and those
set forth under "Certain Effects of the Dual Class Amendment."
INFLUENCE BY THE FELDENKREIS FAMILY GROUP. The Feldenkreis Family Group
beneficially owns in the aggregate approximately 45.1% of the Company's
outstanding capital stock. The Feldenkreis Family Group is therefore able to
substantially influence the election of members of the Company's Board of
Directors and the control of the business, policies and affairs of the Company.
The voting power of the Feldenkreis Family Group may discourage certain types
of transactions involving an actual or potential change in control of the
Company, including transactions in which the holders of Common Stock might
receive a premium for such shares over prevailing market prices.
INVESTMENT BY INSTITUTIONS. The dual class stock structure effected by the
Dual Class Amendment may affect the decision of certain institutional investors
that would otherwise consider investing in or retaining the Common Stock. The
holding of sub-voting shares may not be permitted by the investment policies of
certain institutional investors. The Company is not aware of the effect, if
any, that the adoption of the Dual Class Amendment will have on the continued
holdings of those institutional investors who currently own Common Stock.
ACQUISITION ACCOUNTING. In order for the Company to effect a business
combination to be accounted for using the "pooling of interests" method, the
Company would be required to issue Common Stock in order to effect any such
combination. Class A Common Stock may not be used, either alone or in
combination with Common Stock, to effect a business combination utilizing such
method of accounting.
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STATE STATUTES. Some state securities law statutes contain provisions
which, following the issuance of Class A Common Stock, may restrict certain
offerings of equity securities by the Company or the secondary trading of such
equity securities in those states. However, due to exemptions or for other
reasons, the Company does not believe that such provisions will have a material
adverse effect on the amount of equity securities that the Company will be able
to offer, the price obtainable for such equity securities in such an offering,
or the secondary trading market for the Company's equity securities.
SECURITY FOR CREDIT. While there can be no assurance, the Company does not
expect that the implementation of the dual class stock structure reflected in
the Dual Class Amendment will affect the ability of shareholders to use shares
of either Common Stock or Class A Common Stock as security for the extension of
credit by financial institutions, securities brokers or dealers.
DESCRIPTION OF THE COMMON STOCK
The terms of the Common Stock and the Class A Common Stock are set forth
in full in Article III of the Amended and Restated Articles of Incorporation
attached to this Proxy Statement as Exhibit A. The rights of the two classes
will be identical except as otherwise described below.
VOTING. Under the Company's current Articles of Incorporation, each share
of Common Stock is entitled to one vote per share. Pursuant to the proposed
Dual Class Amendment, (i) each share of Common Stock will be entitled to one
vote per share, and (ii) each share of Class A Common Stock will be entitled to
a one-tenth vote per share. Except as required by applicable law, holders of
Common Stock and Class A Common Stock will vote together, with each other, and
not as separate classes, on all matters submitted to a vote of the
shareholders. Neither the Common Stock nor the Class A Common Stock will have
cumulative voting rights. The Dual Class Amendment does not affect the relative
voting power of holders of Common Stock.
DIVIDENDS AND DISTRIBUTIONS. The Dual Class Amendment provides that,
subject to the rights of the holders of the Company's Preferred Stock, the
holders of Common Stock and Class A Common Stock will be entitled to receive
when, as and if declared by the Board of Directors, out of funds legally
available therefor, dividends and other distributions payable in cash,
property, stock (including shares of any class or series of the Company,
whether or not shares of such class or series are already outstanding) or
otherwise. Each share of Common Stock and each share of Class A Common Stock
will have identical rights with respect to dividends and distributions, subject
to the following: (i) a common stock dividend payable with respect to the
Company's Common Stock may be paid in Class A Common Stock or Common Stock or a
combination of both; (ii) a common stock dividend payable with respect to the
Company's Class A Common Stock may be paid in Class A Common Stock or Common
Stock or a combination of both; (iii) whenever a dividend or distribution is
payable in shares of Common Stock and/or Class A Common Stock, the number of
shares payable per each share shall be equal in number; and (iv) a stock
dividend payable with respect to Common Stock that is paid in shares of Common
Stock will be considered to be identical to a stock dividend payable with
respect to Class A Common Stock that is paid in a proportionate number of
shares of Class A Common Stock. The dividend provisions of the Dual Class
Amendment provides the Board of Directors with the flexibility to determine
appropriate dividend levels, if any, under the circumstances from time to time.
CONVERTIBILITY. Neither the Common Stock nor the Class A Common Stock will
be convertible into another class of securities of the Company.
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SPLITS OR COMBINATIONS. The Dual Class Amendment provides that, if the
Company shall in any manner split, subdivide or combine the shares of
outstanding Common Stock or Class A Common Stock, then the outstanding shares
of the other such class shall be proportionately split, subdivided or combined
in the same manner and on the same basis as the outstanding shares of the class
that has been split, subdivided or combined.
MERGERS AND CONSOLIDATIONS. In the event of a merger, consolidation or
combination of the Company with another entity (whether or not the Company is
the surviving entity), the holders of Common Stock and Class A Common Stock
will be entitled to receive the same per share consideration in that
transaction, except that any common stock that holders of Common Stock and
Class A Common Stock are entitled to receive in any such event may differ as to
voting rights and otherwise to the extent and only the extent that the Common
Stock and the Class A Common Stock differ as set forth in Article III of the
Articles of Incorporation.
LIQUIDATION. In the event of liquidation, after payment of the debts and
other liabilities of the Company and after making provision for the holders of
Preferred Stock, if any, the remaining assets of the Company will be
distributable ratably among the holders of the Common Stock and Class A Common
Stock treated as a single class.
PREEMPTIVE RIGHTS. Neither the Common Stock nor the Class A Common Stock
will carry any preemptive rights enabling a holder to subscribe for or receive
shares of the Company of any class or any other securities convertible into any
class of the Company's stock.
SALES AND REPURCHASES. The Board of Directors is permitted to authorize
the sale of shares of either the Common Stock or Class A Common Stock even
though a higher price could be obtained by selling shares of the other class
due to differing values and market prices for such classes. The Board of
Directors is also permitted to authorize the repurchase of shares of either the
Common Stock or the Class A Common Stock without regard to whether a lesser
price could be paid for the same number of shares of the other class.
SHAREHOLDER INFORMATION. The Company will deliver to the holders of the
Common Stock and Class A Common Stock the same proxy statements, annual reports
and other information reports.
CERTAIN EFFECTS OF THE DUAL CLASS AMENDMENT
EFFECTS ON RELATIVE OWNERSHIP INTEREST AND VOTING POWER. The Dual Class
Amendment will not itself affect the relative voting power or equity interests
of the holders of Common Stock. Such shareholders' relative voting power will
change only upon and to the extent impacted by future issuances of stock.
EFFECT ON MARKET VALUE, PRICE AND TRADING MARKET. The market price of
shares of the Common Stock and Class A Common Stock, when issued, will depend
on many factors, including, among others, the future performance of the
Company, general market conditions and conditions relating to companies similar
to the Company and the industry in general. Accordingly, the Company cannot
predict the market prices at which the Common Stock and the Class A Common
Stock, when issued, will trade following the adoption of the Dual Class
Amendment or whether one class will trade at a
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premium over the other class. The Company believes that the market value of the
Common Stock immediately after the Dual Class Amendment will not be materially
less than the market value of the Common Stock immediately prior to the
announcement of the Dual Class Amendment, but there can be no assurance as to
the trading prices of either the Common Stock or the Class A Common Stock, when
issued. The Common Stock is currently traded on the Nasdaq National Market. On
the Record Date, the last reported sales price per share of the Common Stock
was $ . If the market price of the Class A Common Stock, when issued, were
to drop significantly below the market price of the Common Stock, the potential
benefits of the Dual Class Amendment's dual class stock structure with respect
to flexibility for financings by the Company or resales by the shareholders may
be limited.
The Common Stock will continue to be listed on the Nasdaq National Market,
and in the event the Class A Common Stock is issued, the Company may seek
authorization to list the Class A Common Stock on the Nasdaq National Market.
Any issuance of Class A Common Stock by the Company may serve to increase
market activity in the Class A Common Stock relative to the Common Stock.
Greater market activity may result in increased volatility in pricing and could
enlarge any price differential, either higher or lower, between the Class A
Common Stock and the Common Stock.
SUBSEQUENT AMENDMENTS. The Dual Class Amendment will not prevent the
Company from taking any action, or otherwise affect the Company's ability, with
the requisite approval of its shareholders, to adopt any future amendments to
the Company's Dual Class Amendment for the purpose of further changing the
Company's capital structure or for any other lawful purpose. The issuance of
Preferred Stock with voting rights or conversion rights may adversely affect
the voting power of the Common Stock and the Class A Common Stock.
NASDAQ NATIONAL MARKET CRITERIA. The Dual Class Amendment is intended to
comply with the rules of the Nasdaq National Market that prohibit the disparate
reduction or restriction of the voting rights of existing shareholders through
any corporate action or issuance. The purpose of the rule is to prohibit stock
issuances and other corporate actions that have a "disenfranchising effect" or
nullifying, restricting, or disparately reducing the per share voting rights of
existing shareholders. Although the Company has no present plans or proposals
to issue sub-voting Class A Common Stock, the Company presently anticipates
that both the Common Stock and the Class A Common Stock if and when issued will
be traded on the Nasdaq National Market. Future issuances of either Common
Stock or Class A Common Stock may be subject to further Nasdaq National Market
approval.
The Dual Class Amendment also requires that if any shares of Class A
Common Stock require registration with or approval of any governmental
authority under any federal or state law, the Company will cause such shares of
Class A Common Stock to be duly registered or approved, as the case may be. The
Company is also required to endeavor to use its best efforts to list the shares
of Class A Common Stock to be delivered prior to such delivery upon each
national securities exchange upon which the outstanding shares of Class A
Common Stock are listed at the time of such delivery.
POTENTIAL CHANGES IN LAWS OR REGULATIONS. In the past, bills have been
introduced in Congress that, if enacted, would have prohibited the registration
of common stock on a national securities exchange if such common stock were
part of a class of securities which has no voting rights or carried
disproportionate voting rights. While these bills have not been acted upon by
Congress, there can be no assurance that such a bill (or a modified version
thereof) will not be introduced in Congress in the
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future. Legislation or other regulatory developments could make the Company's
Common Stock and Class A Common Stock ineligible for trading on national
securities exchanges. The Company is unable to predict whether any such
regulatory proposals will be adopted or whether they will have such effect.
VOTE REQUIRED. Approval of the Dual Class Amendment will require the
affirmative vote of the holders of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting. Abstentions and broker
non-votes are considered shares of stock outstanding and entitled to vote and
are counted in determining the number of votes necessary for a majority. An
abstention or broker non-vote will therefore have the practical effect of
voting against approval of the Dual Class Amendment because it represents one
fewer vote for approval of the Dual Class Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
PROPOSAL TO AMEND 1993 STOCK OPTION PLAN
The Board of Directors of the Company has amended, subject to shareholder
approval, the 1993 Plan to increase the number of shares of Common Stock
authorized for issuance under the 1993 Plan by 600,000 shares from a total of
450,000 shares to 900,000 shares of Common Stock.
1993 PLAN DESCRIPTION
The statements in this Proxy Statement concerning the terms and provisions
of the 1993 Plan are summaries only and do not purport to be complete. All such
statements are qualified in their entirety by reference to the full text of the
1993 Plan, which is attached hereto as Exhibit B.
The purpose of the 1993 Plan is to advance the interests of the Company by
providing an additional incentive to attract and retain qualified and competent
persons as employees, upon whose efforts and judgment the success of the
Company is largely dependent, through the encouragement of stock ownership in
the Company by such persons.
The 1993 Plan was effective as of April 12, 1993, and, unless sooner
terminated by the Board of Directors of the Company in accordance with the
terms thereof, shall terminate on April 12, 2003. Certain employees, who are
selected by the stock option committee, or if there is no stock option
committee by the Board of Directors, may participate in the 1993 Plan; however,
no incentive stock option, as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code" or "Internal Revenue Code") shall be
granted to a consultant who is not also an employee of the Company.
The 1993 Plan provides for the issuance of incentive stock options
("Incentive Stock Options") and nonqualified stock options ("Nonqualified Stock
Options"). An Incentive Stock Option is an option to purchase Common Stock that
meets the definition of "incentive stock option" set forth in Section 422 of
the Code. A Nonqualified Stock Option is an option to purchase Common Stock
that meets certain requirements in the Plans but does not meet the definition
of an "incentive stock option" set forth in Section 422 of the Code.
Nonqualified Stock Options and Incentive Stock Options are sometimes referred
to herein as "Options."
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The number of shares of Common Stock that may be issued pursuant to
Options granted under the 1993 Plan is presently 450,000, and if this proposal
is approved by the shareholders, will be increased to 900,000. If any Option
granted pursuant to the 1993 Plan terminates, expires, or is canceled or
surrendered, in whole or in part, shares subject to the unexercised portion may
again be issued pursuant to the exercise of Options granted under the 1993
Plan. The shares acquired upon exercise of Options granted under the 1993 Plan
will be authorized and unissued shares of Common Stock. The Company's
shareholders will not have any preemptive rights to purchase or subscribe for
the shares reserved for issuance under the 1993 Plan.
The 1993 Plan is administered by a stock option committee of two or more
directors (the "Committee") or, if a Committee is not designated by the Board
of Directors, by the Board of Directors as a whole. The Committee has the right
to determine, among other things, the persons to whom Options are granted, the
number of shares of Common Stock subject to Options, the exercise price of
Options and the term thereof. All employees of the Company, including officers
and directors and consultants to the Company, are eligible to receive grants of
Options under the 1993 Plan; however, no Incentive Stock Option may be granted
to a consultant who is not also an employee of the Company or any of its
subsidiaries. Upon receiving grants of Options, each holder of the Options (the
"Optionee") shall enter into an option agreement with the Company which
contains the terms and conditions deemed necessary by the Committee.
TERMS AND CONDITIONS OF OPTIONS
OPTION PRICE. For any Option granted under the 1993 Plan, the option price
per share of Common Stock may be any price not less than par value per share as
determined by the Committee; however, the option price per share of any
Incentive Stock Option may not be less than the Fair Market Value (defined
below) of the Common Stock on the date such Incentive Stock Option is granted.
On the Record Date, the closing price of the Company's Common Stock as reported
by the NASDAQ National Market was $ per share.
Under the 1993 Plan, the "Fair Market Value" is the closing price of
shares on the business day immediately preceding the date of grant; however, if
the shares are not publicly traded, then the Fair Market Value will be as the
Committee shall in its sole and absolute discretion determine in a fair and
uniform manner. The closing price of the share on any business day under the
1993 Plan is (i) if the shares are listed or admitted for trading on any United
States national securities exchange, or if actual transactions are otherwise
reported on a consolidated transaction reporting system, the last reported sale
price of shares on such exchange or reporting system, as reported in any
newspaper of general circulation, (ii) if the shares are quoted on the National
Association of Securities Dealers Automated Quotations System, or any similar
system of automated dissemination of quotations of securities prices in common
use, the mean between the closing high bid and low asked quotations for such
day of shares on such system, or (iii) if neither clause (i) nor (ii) is
applicable, the mean between the high bid and low asked quotations for the
shares as reported by the National Quotation Bureau, Incorporated if at least
two securities dealers have inserted both bid and asked quotations for the
shares on at least five of the ten preceding days.
EXERCISE OF OPTIONS. Each Option is exercisable in such amounts, at such
intervals and upon such terms as the Committee may determine; however,
Incentive Stock Options must vest in three annual
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installments commencing one year from the date of grant. In no event may an
Option be exercisable after ten years from the date of grant. Unless otherwise
provided in an Option, each outstanding Option may, in the sole discretion of
the Committee, become immediately fully exercisable (i) if there occurs any
transaction (which shall include a series of transactions occurring within 60
days or occurring pursuant to a plan), that has the result that shareholders of
the Company immediately before such transaction cease to own at least 51
percent of the voting stock of the Company or of any entity that results from
the participation of the Company in a reorganization, consolidation, merger,
liquidation or any other form of corporate transaction; (ii) if the
shareholders of the Company shall approve a plan of merger, consolidation,
reorganization, liquidation or dissolution in which the Company does not
survive (unless such plan is subsequently abandoned); or (iii) if the
shareholders of the Company shall approve a plan for the sale, lease, exchange
or other disposition of all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned). The Committee may in its
sole discretion accelerate the date on which any Option may be exercised and
may accelerate the vesting of any shares subject to any Option or previously
acquired by the exercise of any Option. Options granted to the officers and
directors under the 1993 Plan may not be exercised unless otherwise expressly
provided in any Option, until six months following the date of grant and if and
only if the Optionee is in the employ of the Company on such date.
Unless further limited by the Committee in any Option, shares of Common
Stock purchased upon the exercise of Options must be paid for in cash, by
certified or official bank check, by money order, with already owned shares of
Common Stock, or a combination of the above. The Committee, in its sole
discretion, may accept a personal check in full or partial payment. If paid in
whole or in part with shares of already owned Common Stock, the value of the
shares surrendered is deemed to be their Fair Market Value on the date the
Option is exercised. Proceeds from the sale of Common Stock pursuant to the
exercise of Options will be added to the general funds of the Company to be
used for general corporate purposes. Under the 1993 Plan, the Company may also
lend money to an Optionee to exercise all or a portion of an Option granted
under the 1993 Plan. If the exercise price is paid in whole or in part with
Optionee's promissory note, such note shall (i) provide for full recourse to
the maker, (ii) be collateralized by the pledge of shares purchased by Optionee
upon exercise of such Option, (iii) bear interest at a rate of interest no less
than the rate of interest payable by the Company to its principal lender, and
(iv) contain such other terms as the Committee in its sole discretion shall
require.
NONTRANSFERABILITY. Options granted under the 1993 Plan are not
transferable by an Optionee other than by will or the laws of descent and
distribution, and Options are exercisable during an Optionee's lifetime only by
the Optionee.
TERMINATION OF OPTIONS. The expiration date of an Option is determined by
the Committee at the time of the grant and is set forth in the applicable stock
option agreement. In no event may an Option be exercisable after ten years from
the date it is granted.
The 1993 Plan provides that if an Optionee's employment is terminated for
any reason other than for cause, an improper termination, mental or physical
disability or death, then the unexercised portion of the Optionee's Options
shall terminate three months after such termination. If an Optionee's
employment is terminated for cause or if there is an improper termination of
Optionee's employment, the unexercised portion of the Optionee's Options shall
terminate immediately upon such termination. If an Optionee's employment is
terminated by reason of the Optionee's mental or physical disability, the
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unexercised portion of the Optionee's Options shall terminate 12 months after
such termination. If an Optionee's employment is terminated by reason of the
Optionee's death, the unexercised portion of the Optionee's Options shall
terminate 12 months after the Optionee's death.
The Committee in its sole discretion may by giving written notice cancel,
effective upon the date of the consummation of certain corporate transactions
that would result in an Option becoming fully exercisable, cancel any Option
that remains unexercised on such date. Such notice shall be given in a
reasonable period of time prior to the proposed date of such cancellation and
may be given either before or after shareholder approval of such corporate
transaction.
OUTSTANDING OPTIONS
As of the Record Date, Options to purchase a total of 450,000 shares of
Common Stock had been granted pursuant to the 1993 Plan, 122,250 of which have
been exercised and 327,750 of which are outstanding (of which 150,313 Options
are exercisable). Outstanding Options, which are held by 38 persons, are
exercisable at prices ranging from $7.67 per share to $15.38 per share and are
exercisable through various expiration dates from 1998 to 2001. In connection
with the renewal of their employment agreements in May 1998, the Committee
granted to George Feldenkreis and Oscar Feldenkreis, 150,000 and 55,000 Options
under the 1993 Plan, respectively, subject to the approval by the shareholders
of an amendment to the Company's 1993 Plan, increasing the number of shares of
Common Stock reserved for issuance thereunder. In addition 14,125 Options
granted under the 1993 Plan to another employee are subject to the approval by
shareholders of this proposal.
FEDERAL INCOME TAX EFFECTS
The 1993 Plan is not qualified under the provisions of Section 401(a) of
the Code, nor is it subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
INCENTIVE STOCK OPTIONS. Incentive Stock Options are "incentive stock
options" as defined in Section 422 of the Internal Revenue Code. Under the
Code, an Optionee generally is not subject to ordinary income tax upon the
grant or exercise of an Incentive Stock Option. However, an employee who
exercises an Incentive Stock Option by delivering shares of Common Stock
previously acquired pursuant to the exercise of an Incentive Stock Option is
treated as making a Disqualifying Disposition (defined below) of such shares if
the employee delivers such shares before the expiration of the holding period
applicable to such shares. The applicable holding period is the longer of two
years from the date of grant or one year from the date of exercise. The effect
of this provision is to prevent "pyramiding" the exercise of an Incentive Stock
Option (i.e., the exercise of the Incentive Stock Option for one share and the
use of that share to make successive exercise of the Incentive Stock Option
until it is completely exercised) without the imposition of current income tax.
The amount by which the fair market value of the shares acquired at the
time of exercise of an Incentive Stock Option exceeds the purchase price of the
shares under such Option will be treated as an item of adjustment included in
the Optionee's alternative minimum taxable income for purposes of the
alternative minimum tax. If, however, there is a Disqualifying Disposition in
the year in which the Option is exercised, the maximum amount of the item of
adjustment for such year is the gain on the disposition of the shares. If there
is Disqualifying Disposition in a year other than the year of exercise, the
dispositions will not result in an item of adjustment for such other year.
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If, subsequent to the exercise of an Incentive Stock Option (whether paid
for in cash or in shares), the Optionee holds the shares received upon exercise
for a period that exceeds (a) two years from the date such Incentive Stock
Option was granted or, if later, (b) one year from the date of exercise (the
"Required Holding Period"), the difference (if any) between the amount realized
from the sale of such shares and their tax basis to the holder will be taxed as
long-term capital gain or loss. If the holder is subject to the alternative
minimum tax in the year of disposition, such holder's tax basis in his or her
shares will be increased for purposes of determining his alternative minimum
tax for such year, by the amount of the item of adjustment recognized with
respect to such shares in the year the Option was exercised.
In general, if, after exercising an Incentive Stock Option, an employee
disposes of the shares so acquired before the end of the Required Holding
Period (a "Disqualifying Disposition"), such Optionee would be deemed in
receipt of ordinary income in the year of the Disqualifying Disposition, in an
amount equal to the excess of the fair market value of the shares at the date
the Incentive Stock Option was exercised over the exercise price. If the
Disqualifying Disposition is a sale or exchange which would permit a loss to be
recognized under the Code (were a loss in fact to be sustained), and the sales
proceeds are less than the fair market value of the shares on the date of
exercise, the Optionee's ordinary income would be limited to the gain (if any)
from the sale. If the amount realized upon disposition exceeds the fair market
value of the shares on the date of exercise, the excess would be treated as
short-term or long-term capital gain, depending on whether the holding period
for such shares exceeded one year.
An income tax deduction is not allowed to the Company with respect to the
grant or exercise of an Incentive Stock Option or the disposition, after the
Required Holding Period, of shares acquired upon exercise. In the event of a
Disqualifying Disposition, a Federal income tax deduction will be allowed to
the Company in an amount equal to the ordinary income to be recognized by the
Optionee, provided that such amount constitutes an ordinary and necessary
business expense to the Company and is reasonable, and the Company satisfies
its withholding obligation with respect to such income.
NONQUALIFIED STOCK OPTIONS. An Optionee granted a Nonqualified Stock
Option under the 1993 Plan will generally recognize, at the date of exercise of
such Nonqualified Stock Option, ordinary income equal to the difference between
the exercise price and the fair market value of the shares of Common Stock
subject to the Nonqualified Stock Option. This taxable ordinary income will be
subject to Federal income tax withholding. A Federal income tax deduction will
be allowed to the Company in an amount equal to the ordinary income to be
recognized by the Optionee, provided that such amount constitutes an ordinary
and necessary business expense to the Company and is reasonable, and the
Company satisfies its withholding obligation with respect to such income.
If an Optionee exercises a Nonqualified Stock Option by delivering other
shares, the Optionee will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is different from
the Optionee's tax basis. The Optionee, however, will be taxed as described
above with respect to the exercise of the Nonqualified Stock Option as if he
had paid the exercise price in cash, and the Company likewise generally will be
entitled to an equivalent tax deduction. Provided a separate identifiable stock
certificate is issued therefor, the Optionee's tax basis in that number of
shares received on such exercise which is equal to the number of shares
surrendered on such exercise will be equal to his tax basis in the shares
surrendered and his holding period for such number of shares
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received will include his holding period for the shares surrendered. The
Optionee's tax basis and holding period for the additional shares received on
exercise of a Nonqualified Stock Option paid for, in whole or in part, with
shares will be the same as if the Optionee had exercised the Nonqualified Stock
Option solely for cash.
The discussion set forth above does not purport to be a complete analysis
of the potential tax consequences relevant to the Optionees or to the Company,
or to describe tax consequences based on particular circumstances. It is based
on Federal income tax law and interpretational authorities as of the date of
this Proxy Statement, which are subject to change at any time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
PROPOSAL TO RATIFY THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP, independent public accountants, has
served as the Company's independent public accountants since 1993. The Board of
Directors has selected Deloitte & Touche LLP as the Company's independent
public accountants for the current fiscal year ending January 31, 1999. One or
more representatives of Deloitte & Touche LLP are expected to be present at the
Annual 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 from
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
Annual Meeting. If, however, any other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will vote proxies
as in their discretion they may deem appropriate, unless they are directed by a
proxy to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal to be included in the
Company's proxy statement for the Company's 1999 Annual Meeting of Shareholders
must deliver a proposal in writing to the Company's principal executive offices
no later than February 27, 1999.
By Order Of The Board of Directors
FANNY HANONO,
Secretary
Miami, Florida
June 26, 1998
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EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SUPREME INTERNATIONAL CORPORATION
ARTICLE I
The name of the Corporation is SUPREME INTERNATIONAL CORPORATION
(hereinafter called the "Corporation").
ARTICLE II
The current mailing address of the principal place of business of the
Corporation is 3000 Northwest 107th Avenue, Miami, Florida 33172.
ARTICLE III
The aggregate number of shares of all classes of capital stock which
the Corporation shall have the authority to issue is Forty-Six Million
(46,000,000), consisting of (i) Thirty Million (30,000,000) shares of common
stock, par value $.01 per share (the "Common Stock"); (ii) Fifteen Million
(15,000,000) shares of Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"); and (iii) One Milllion (1,000,000) shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock").
The designations and the preferences, limitations and relative rights
of the Preferred Stock, the Common Stock and Class A Common Stock of the
Corporation are as follows:
A. PROVISIONS RELATING TO THE COMMON STOCK AND CLASS A COMMON STOCK.
1. The Board of Directors may change the name and reference to
the Common Stock and the Class A Common Stock without altering and changing any
of the rights, privileges and preferences of the holders of the Common Stock and
the Class A Common Stock, including but not limited to renaming the Class A
Common Stock Class B Common Stock and renaming the Common Stock Class A Common
Stock.
2. The Common Stock and the Class A Common Stock shall be
subject to the express terms of the Preferred Stock and any class or series
thereof. The powers, preferences and rights of the Common Stock and the Class A
Common Stock and the qualifications,
<PAGE>
limitations and restrictions thereof, shall in all respects be identical, except
as otherwise required by law or as expressly provided in this Section 2.
(a) Except as otherwise required by law or as may be
provided by the resolutions of the Board of Directors authorizing the issuance
of any class or series of the Preferred Stock, as herein provided, all rights to
vote and all voting power shall be vested exclusively in the holders of the
Common Stock and Class A Common Stock. The holders of shares of Common Stock and
Class A Common Stock shall have the following voting rights:
(i) the holders of Common Stock shall be
entitled to one (1) vote for each share of Common Stock held on all matters
voted upon by the shareholders of the Corporation and shall vote together with
the holders of Class A Common Stock and together with the holders of any other
classes or series of stock who are entitled to vote in such manner and not as a
separate class; and
(ii) the holders of Class A Common Stock
shall be entitled to one-tenth (1/10th) vote of each share of Class A Common
Stock held on all matters voted upon by the shareholders of the Corporation and
shall vote together with the holders of Common Stock and together with the
holders of any other classes or series of stock who are entitled to vote in such
manner and not as a separate class.
(b) Subject to the rights of the holders of the
Preferred Stock, the holders of the Common Stock and the Class A Common Stock
shall be entitled to receive when, as and if declared by the Board of Directors,
out of funds legally available therefor, dividends and other distributions
payable in cash, property, stock (including shares of any class or series of the
Corporation, whether or not shares of such class or series are already
outstanding) or otherwise. Each share of Common Stock and each share of Class A
Common Stock shall have identical rights with respect to dividends and
distributions, subject to the following:
(i) a dividend or distribution in common
stock on Common Stock may be paid or made in shares of Common Stock or shares of
Class A Common Stock or a combination of both;
(ii) a dividend or distribution in common
stock on Class A Common Stock may be paid in shares of Class A Common Stock or
shares of Common Stock or a combination of both;
(iii) whenever a dividend or distribution is
payable in shares of Common Stock and/or Class A Common Stock, the number of
shares of Common Stock payable as a dividend per each share of Common Stock or
Class A Common Stock shall be equal in number;
(iv) a dividend or distribution on Common
Stock which is paid or made in shares of Common Stock shall be considered
identical to a dividend or distribution on
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Class A Common Stock which is paid or made in a proportionate number of shares
of Class A Common Stock; and
(v) if any shares of Class A Common Stock
require registration with or approval of any governmental authority under any
federal or state law before such shares may be issued upon conversion, the
Corporation shall cause such shares to be duly registered or approved, as the
case may be. The Corporation shall endeavor to use its best efforts to list the
shares of Class A Common Stock to be delivered upon conversion prior to such
delivery upon each national securities exchange upon which the outstanding
shares of Class A Common Stock are listed at the time of such delivery.
(c) If the Corporation shall in any manner split,
subdivide or combine the outstanding shares of the Common Stock or Class A
Common Stock, then the outstanding shares of the Common Stock and the Class A
Common Stock shall be proportionately split, subdivided or combined in the same
manner and on the same basis as the outstanding shares of the class that has
been split, subdivided or combined.
(d) In the event of a merger, consolidation or
combination of the Corporation with another entity (whether or not the
Corporation is the surviving entity), the holders of Common Stock and Class A
Common Stock shall be entitled to receive the same per share consideration in
that transaction, except that any Common Stock that holders of Class A Common
Stock are entitled to receive in any such event may differ as to voting rights
and otherwise to the extent and only the extent that the Common Stock and the
Class A Common Stock differ as set forth in this Section A.
(e) Upon any liquidation, dissolution or winding-up
of the Corporation, whether voluntary or involuntary, and after the holders of
the Preferred Stock shall have been paid in full the amounts to which they shall
be entitled, if any, or a sum sufficient for such payment in full shall have
been set aside, the remaining net assets of the Corporation, if any, shall be
divided among and paid ratably to the holders of Common Stock and Class A Common
Stock treated as a single class.
(f) The Board of Directors shall have the power to
cause the Corporation to issue and sell shares of either class of Common Stock
to such individuals, partnerships, joint ventures, limited liability companies,
associations, corporations, trusts or other legal entities (collectively,
"persons") and for such consideration as the Board of Directors shall from time
to time in its discretion determine, whether or not greater consideration could
be received upon the issue or sale of the same number of shares of the Common
Stock or the Class A Common Stock, and as otherwise permitted by law. The Board
of Directors shall have the power to cause the Corporation to purchase, out of
funds legally available therefor, shares of either of the Common Stock or the
Class A Common Stock from such persons and for such consideration as the Board
of Directors shall from time to time in its discretion determine, whether or not
less consideration could be paid upon the purchase of the same number of shares
of the Common Stock or the Class A Common Stock, and as otherwise permitted by
law.
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B. PROVISIONS RELATING TO PREFERRED STOCK
1. The Preferred Stock may be issued from time to time, in one
or more classes or series, the shares of each class or series to have such
designation powers, preferences and rights, and qualifications, limitations and
restrictions thereof as are stated and expressed herein and in the resolution or
resolutions providing for the issuance of such class or series adopted by the
Board of Directors as hereinafter prescribed.
2. Authority is hereby expressly granted to and vested in the
Board of Directors to authorize the issuance of the Preferred Stock from time to
time, in one or more classes or series, to determine and take necessary
proceedings fully to effect the issuance and redemption of any such Preferred
Stock, and, with respect to each class or series of Preferred Stock, to fix and
state by the resolution or resolutions from time to time adopted providing for
the issuance thereof the following:
(a) whether or not the class or series is to have
voting rights, special or conditional, full or limited, or is to be without
voting rights;
(b) the number of shares to constitute the class or
series and the designations thereof;
(c) the preferences and relative, participating,
optional or other special rights, if any, and the qualifications, limitations or
restrictions thereof, if any, with respect to any class or series;
(d) whether or not the shares of any class or series
shall be redeemable and if redeemable the redemption price or prices, and the
time or times at which and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(e) whether or not the shares of a class or series
shall be subject to the operation of retirement or sinking funds to be applied
to the purchase or redemption of such shares for retirement, and if such
retirement or sinking fund or funds be established, the periodic amount thereof
and the terms and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable
in cash, stock or other property of the Corporation, the conditions upon which
and the times when such dividends are payable, the preference to or the relation
to the payment of the dividends payable, on any other class or classes or series
of stock, whether or not such dividend shall be cumulative or noncumulative, and
if cumulative, the date or dates from which such dividends shall accumulate;
(g) the preferences, if any, and the amounts thereof
that the holders of any class or series thereof shall be entitled to receive
upon the voluntary or involuntary dissolution of, or upon any distribution of
the assets of, the Corporation;
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(h) whether or not the shares of any class or series
shall be convertible into, or exchangeable for, the shares of any other class or
classes or of any other series of the same or any other class or classes of the
Corporation and the conversion price or prices or ratio or ratios or the rate or
rates at which such conversion or exchange may be made, with such adjustments,
if any, as shall be stated and expressed or provided for in such resolution or
resolutions; and
(i) such other special rights and protective
provisions with respect to any class or series as the Board of Directors may
deem advisable.
The shares of each class or series of the Preferred Stock may vary from
the shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of Preferred
Stock designated for any existing class or series by a resolution adding to such
class or series authorized and unissued shares of the Preferred Stock not
designated for any other class or series. The Board of Directors may decrease
the member of shares of the Preferred Stock designated for any existing class or
series by a resolution, subtracting from such series unissued shares of the
Preferred Stock designated for such class, or series, and the shares so
subtracted shall become authorized, unissued and undesignated shares of the
Preferred Stock.
C. GENERAL PROVISIONS
1. Except as may be provided by the resolutions of the Board
of Directors authorizing the issuance of ANY CLASS or SERIES of Preferred Stock,
as hereinabove provided, cumulative voting by any shareholder is hereby
expressly denied.
2. No shareholder of this Corporation shall have, by reason of
its holding shares of any class or series of stock of the Corporation, any
preemptive or preferential rights to purchase or subscribe for any other shares
of any class or series of this Corporation now or hereafter authorized, and any
other equity securities, or any notes, debentures, warrants, bonds, or other
securities convertible into or carrying options or warrants to purchase shares
of any class, nor or hereafter authorized, whether or not the issuance of any
such shares, or such notes, debentures, bonds or other securities, would
adversely affect the dividend or voting rights of such shareholder.
ARTICLE IV
For business not specified in a notice of meeting to be properly
introduced by a shareholder at a meeting of shareholders, such shareholder must
have given timely notice thereof in writing to the Secretary of the Corporation.
A shareholder's notice must be delivered to or mailed as received by the
Secretary of the Corporation, either by personal delivery or by United States
mail, postage prepaid. With respect to an annual meeting of shareholders, to be
timely,
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notice must be received not less than 60, no more than 90 days prior to such
meeting. With respect to meetings of shareholders for which less than 70 days
notice of the date of the meeting is given, to be timely, notice must be
received no later than the close of business on the tenth day following the
earlier of the day notice of the meeting was mailed, or the day public
disclosure of the meeting was made. A shareholder's notice must set forth as to
each matter the shareholder proposes to bring before the meeting (i) a brief
description of the business' desire to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and record
address of the shareholder proposing such business, (iii) the class, series and
number of shares of stock which are beneficially owned by the shareholder, and
(iv) any material interest of the shareholder in such business. The chairman of
the meeting may refuse to acknowledge any shareholder who attempts to introduce
business without compliance with the foregoing procedure.
ARTICLE V
Except as otherwise required by law, the Corporation shall not be
required to hold a special meeting of shareholders of the Corporation unless (in
addition to any other requirements of law) (i) requested in writing by the
holders of not less than 50 percent of all the votes entitled to be cast on any
issue proposed or to be considered at the proposed special meeting; (ii) called
by the Board of Directors pursuant to a resolution approved by a majority of the
entire Board of Directors; or (iii) called by the Chairman of the board or
President of the Corporation or the Corporation's Chief Executive Officer.
ARTICLE VI
A. NUMBER OF DIRECTORS. The number of directors constituting the
Corporation's Board of Directors shall not be less than three (3) nor more than
fifteen (15), and the exact number of Directors shall be fixed from time to time
in the manner provided in the Bylaws of the Corporation.
B. TERM OF OFFICE. The Board of Directors shall be divided into three
classes, designated as Class I, Class II and Class III. The number of directors
in each class shall be determined by the Board of Directors and shall consist of
as nearly equal a number of directors as practicable. The term of the Class I
directors initially shall expire at the first annual meeting of shareholders
ensuing after the 1998 Annual Meeting of Shareholders; the term of Class II
directors initially shall expire at the second Annual Meeting of Shareholders
ensuing after the 1998 Annual Meeting of Shareholders; and the term of Class III
directors initially shall expire at the third Annual Meeting of Stockholders
ensuing after the 1998 Annual Meeting of Shareholders. In the case of each
class, the directors shall serve until their respective successors are duly
elected and qualified. At each Annual Meeting of Shareholders, directors of the
respective class whose term expires shall be elected, and the directors chosen
to succeed those whose terms shall have expired shall be elected to hold office
for a term to expire at the third ensuing Annual Meeting of Stockholders after
their election, and until their respective successors are elected and qualified.
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C. VACANCIES. A director may resign at any time by giving written
notice to the Corporation, the Board of Directors or the Chairman of the Board
of Directors. Such resignation shall take effect when the notice is delivered
unless the notice specifies a later effective date, in which event the Board of
Directors may fill the pending vacancy before the effective date if they provide
that the successor does not take office until the effective date. Any vacancy
occurring in the Board of Directors and any directorship to be filled by reason
of an increase in the size of the Board of Directors shall be filled by the
affirmative vote of a majority of the current directors though less than a
quorum of the Board of Directors, or may be filled by an election at an annual
or special meeting of the shareholders called for that purpose, unless otherwise
provided by law. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, or until the next election of one
or more directors by shareholders if the vacancy is caused by an increase in the
number of directors.
ARTICLE VII
Nominations for the election of directors may be made by the Board of
Directors or by any shareholder entitled to vote for the election of directors.
Any shareholder entitled to vote for the election of directors at a meeting may
nominate persons for election as directors only if written notice of such
shareholder's intent to make such nomination is given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than (i) with respect to the election to be held at an
annual meeting of shareholders, 90 days in advance of such meeting; and (ii)
with respect to an election to be held at a special meeting of shareholders for
the election of directors, the close of business on the seventh day following
the date on which notice of such meeting is first given to shareholders. Each
such notice shall set forth: (i) the name and address of the shareholder who
intends to make the nomination of the person or persons to be nominated; (ii) a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (iii) a description of all arrangements and understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholders; (iv) such other information regarding each nominee proposed by
such shareholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
each nominee been nominated, or intended to be nominated, by the Board of
Directors; (v) the consent of each nominee to serve as a director of the
Corporation if so elected. The Chairman of the meeting may refuse to acknowledge
the nomination of any person not being in compliance with the foregoing
procedure.
ARTICLE VIII
Directors of the Corporation shall not be personally liable for
monetary damages to the Corporation to the fullest extend permitted by Florida
law.
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ARTICLE IX
This Corporation may insure and shall indemnify and shall advance
expenses on behalf of its officers and directors and any persons serving at the
request of the Corporation as an officer, director, member, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise to
the fullest extent not prohibited by law in existence either now or hereafter.
ARTICLE X
The Corporation shall exist perpetually unless sooner dissolved
according to law.
IN WITNESS WHEREOF, the undersigned, for the purpose of amending and
restating the Corporation's Article of Incorporation pursuant to laws of the
State of Florida, has executed these Amended and Restated Articles of
Incorporation as of __________________, 1998.
SUPREME INERNATIONAL CORPORATION
By:_____________________________________
George Feldenkreis, Chairman and Chief
Executive Officer
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EXHIBIT B
---------------------------------
SUPREME INTERNATIONAL CORPORATION
1993 STOCK OPTION PLAN
(as amended)
---------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of
SUPREME INTERNATIONAL CORPORATION, a Florida corporation (the "Company"), by
providing an additional incentive to attract and retain qualified and competent
persons as directors, officers, employees, consultants or agents who provide
management services or upon whose efforts and judgment the success of the
Company is largely dependent, through the encouragement of stock ownership in
the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the stock option committee
appointed by the Board pursuant to Section 13 hereof or, if not appointed, the
Board.
(c) "Common Stock" shall mean the Company's Common Stock, par
value $.01 per share.
(d) "Director" shall mean a member of the Board.
(e) "Disinterested Person" shall mean a Director who is not,
during the one year prior to his or her service as an administrator of this
Plan, or during such service, granted or awarded equity securities pursuant to
this Plan or any other plan of the Company or any of its affiliates, except
that:
(i) participation in a formula plan meeting the
conditions in paragraph (c)(2)(ii) of Rule 16b-3 promulgated under the
Securities Exchange Act shall not disqualify a director from being a
Disinterested Person;
(ii) participation in an ongoing securities
acquisition plan meeting the conditions in paragraph (d)(2)(i) of Rule 16b-3
promulgated under the Securities Exchange Act shall not disqualify a director
from being a Disinterested Person; and
(iii) an election to receive an annual retainer fee
in either cash or an equivalent amount of securities, or partly in cash and
partly in securities, shall not disqualify a Director from being a Disinterested
Person.
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(f) "Fair Market Value" of a Share on any date of reference
shall be the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding such date, unless the Common Stock is not
publicly traded, in which case, the "Fair Market Value" shall be the average of
the price of sales of Common Stock by the Company during the 90 days prior to
the date of grant or, if no sales have occurred during that period, "Fair Market
Value" shall be determined by the Committee in its sole discretion in a fair and
uniform manner. For the purpose of determining Fair Market Value, the "Closing
Price" of the Common Stock on any business day shall be (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a consolidated
transaction reporting system, the last reported sale price of Common Stock on
such exchange or reporting system, as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ"), or any similar system
of automated dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day of
Common Stock on such systems, or (iii) if neither clause (i) or (ii) is
applicable, the mean between the high bid and low asked quotations for the
Common Stock is reported by the National Quotation Bureau, Incorporated if at
least two securities dealers have inserted both bid and asked quotations for
Common Stock on at least five of the ten preceding days.
(g) "Incentive Stock Option" shall mean an incentive stock
option as defined in Section 422 of the Internal Revenue Code.
(h) "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
(i) "Non-Statutory Stock Option" shall mean an Option which is
not an Incentive Stock Option.
(j) "Officer" shal1 mean the Company's president, principal
financial officer, principal accounting officer and any other person who the
Company identifies as an "executive officer" for purposes of reports or proxy
materials filed by the Company pursuant to the Securities Exchange Act.
(k) "Option" (when capitalized) shall mean any option granted
under this Plan.
(1) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(m) "Plan" shall mean this Stock Option Plan for the Company.
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(n) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(o) "Share(s)" shall mean a share or shares of the Common
Stock.
3. SHARES AND OPTIONS. The Company may grant to all Optionees from time
to time Options to purchase a total of nine hundred thousand (900,000) Shares
from Shares held in the Company's treasury or from authorized and unissued
Shares. If any Option granted under the Plan shall terminate, expire, or be
cancelled or surrendered as to any Shares, new Options may thereafter be granted
covering such Shares. An Option granted hereunder shall be either an Incentive
Stock Option or a Non-Statutory Stock Option as determined by the Committee at
the time of grant of such Option and shall clearly state whether it is an
Incentive Stock Option or Non-Statutory Stock Option. All Incentive Stock
Options shall be granted within 10 years from the effective date of this Plan.
4. DOLLAR LIMITATION. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options to the extent
that the aggregate fair market value (determined at the time the Option is
granted) of the Shares, with respect to which Options meeting the requirements
of Internal Revenue Code Section 422 are exercisable for the first time by any
individual during any calendar year (under al1 plans of the Company), exceeds
$100,000.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee, provided
such terms are not inconsistent with this Plan or any applicable law. Optionees
shal1 be those persons selected by the Committee from the class of all regular
employees of the Company, all Directors, consultants and/or agents, whether or
not employees; PROVIDED, HOWEVER, that no Incentive Stock Option shall be
granted to a Director, consultant and/or agent who is not also an employee of
the Company or a Subsidiary. Any person who files with the Committee, in a form
satisfactory to the Committee, a written waiver of eligibility to receive any
Option under this Plan shall not be eligible to receive any Option under this
Plan for the duration of such waiver.
(b) In granting Options, the Committee may take into
consideration the contribution the person has made to the success of the Company
and such other factors as the Committee shall determine. The Committee shall
also have the authority to consult with and receive recommendations from
officers and other personnel of the Company with regard to these matters. The
Committee may from time to time in granting Options under the Plan prescribe
such other terms and conditions concerning such Options as it deems appropriate,
including, without limitation, (i) prescribing the date or dates on which the
Option becomes exercisable, (ii) providing that the Option rights accrue or
become exercisable in installments over a period of years, or upon the
attainment of stated goals or both, or (iii) relating an Option to the continued
employment of the Optionee for a
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specified period of time, provided that such terms and conditions are not more
favorable to an Optionee than those expressly permitted herein.
(c) The Options granted to employees under this Plan shall be
in addition to regular salaries, pension, life insurance or other benefits
related to their employment with the Company. Neither the Plan nor any Option
granted under the Plan shall confer upon any person any right to employment or
continuance of employment by the Company.
(d) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, Options may not be granted to a
Director or Officer unless the grant of such Options is authorized by, and all
of the terms, of such Options are determined by, a Committee that is appointed
in accordance with Section 13 of this Plan and all of whose members are
Disinterested Persons.
6 OPTION PRICE. The option price per Share of any Option shall be any
price determined by the Committee but shall not be less than the par value per
Share; provided, however, that in no event shal1 the option price per Share of
any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such Option is granted.
7. EXERCISE OF OPTIONS. An Option shal1 be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of the amount that is necessary for the
Company employing the Optionee to withhold in accordance with applicable Federal
or state tax withholding requirements. Unless further limited by the Committee
in any Option, the option price of any Shares purchased shall be paid in cash,
by certified or official bank check, by money order, with Shares or by a
combination of the above; provided further, however, that the Committee in its
sole discretion may accept a personal check in full or partial payment of any
Shares. If the exercise price is paid in whole or in part with Shares, the value
of the Shares surrendered shall be their Fair Market Value on the date the
Option is exercised. The Company in its sole discretion may, on an individual
basis or pursuant to a general program established by the Committee in
connection with this Plan, lend money to an Optionee to exercise all or a
portion of an Option granted hereunder. If the exercise price is paid in whole
or part with Optionee's promissory note, such note shall (i) provide for full
recourse to the maker, (ii) be collateralized by the pledge of the Shares that
the Optionee purchases upon exercise of such Option, (iii) bear interest at a
rate no less than the rate of interest payable by the Company to its principal
lender, and (iv) contain such other terms as the Committee in its sole
discretion shall require. No Optionee shall be deemed to be a holder of any
Shares subject to an Option unless and until a stock certificate or certificates
for such Shares are issued to such person(s) under the terms of this Plan. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or
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distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as expressly provided in Section 10
hereof.
8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in this Section 8.
(a) The expiration date of an Option shall be determined by
the Committee at the time of grant, but in no event shal1 an Option be
exercisable after the expiration of 10 years from the date of grant of the
Option.
(b) Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable:
(i) if there occurs any transaction (which shall
include a series of transactions occurring within 60 days or occurring pursuant
to a plan), that has the result that shareholders of the Company immediately
before such transaction cease to own at least 51 percent of the voting stock of
the Company or of any entity that results from the participation of the Company
in a reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
(ii) if the shareholders of the Company shall approve
a plan of merger, consolidation, reorganization, liquidation or dissolution in
which the Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) if the shareholders of the Company shall
approve a plan for the sale, lease, exchange or other disposition of al1 or
substantially al1 the property and assets of the Company (unless such plan is
subsequently abandoned).
(c) The Committee may in its sole discretion accelerate the
date on which any Option may be exercised and may accelerate the vesting of any
Shares subject to any Option or previously acquired by the exercise of any
Option.
(d) Options granted to Officers and Directors shall not be
exercisable until the expiration of a period of at least six months following
the date of grant.
9. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option shall automatically
and without notice terminate and become null and void at the time of the
earliest to occur of the following:
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(i) three months after the date on which the
Optionee's employment is terminated (or, in the case of a non-employee, the date
on which the Optionee ceases his or her relationship with the Company or, in the
case of a Non-Statutory Stock Option, and unless the Committee shall otherwise
determine in writing in its sole discretion, the date on which the Optionee's
employment is terminated, in either case for any reason other than by reason of
(A) Cause, which, solely for purposes of this Plan, shal1 mean the termination
of the Optionee's employment (or in the case of a non-employee, the removal of
the Optionee as a Director, consultant or agent) by reason of the Optionee's
wilful misconduct or gross negligence, (B) a mental or physical disability as
determined by a medical doctor satisfactory to the Committee, or (C) death;
(ii) immediately upon the termination of the
Optionee's employment for (or, in the case of a non-employee, the removal of the
Optionee as a Director, consultant or agent) Cause;
(iii) one year after the date on which the Optionee's
employment is terminated by reason of a mental or physica1 disability (within
the meaning of Internal Revenue Code Section 22(e)) as determined by a "medical
doctor satisfactory to the Committee; or
(iv) (A) twelve months after the date of termination
of the Optionee's employment (or, in the case of a non-employee, the date the
Optionee is removed as a Director, consultant or agent) by reason of death of
the employee, or (B) three months after the date on which the Optionee shall die
if such death shall occur during the one year period specified in Subsection
9(a)(iii) hereof.
Prior to becoming null and void as provided above, an Option held at the date of
termination (but only to the extent exercisable at the date of such termination
in accordance herewith) may be exercised in whole or in part.
(b) The Committee in its sole discretion may by giving written
notice ("cancellation notice") cancel, effective upon the date of the
consummation of any corporate transaction described in Subsections 8(b)(ii) or
(iii) hereof, any Option that remains unexercised on such date. Such
cancel1ation notice shall be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
approval of such corporate transaction.
10. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
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<PAGE>
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan, so that the same
percentage of the Company's issued and outstanding Shares shall continue to be
subject to being so optioned; and
(ii) appropriate adjustment shall be made in the
number of Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's issued and
outstanding Shares shall remain subject to purchase at the same aggregate
exercise price.
(b) Subject to the specific terms of any Option, the Committee
may change the terms of Options outstanding, under this Plan, with respect to
the option price or the number of Shares subject to the Options, or both, when,
in the Committee's sole discretion, such adjustments become appropriate by
reason of a corporate transaction described in Subsections 8(b)(ii) or (iii)
hereof.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its Capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of or
exercise price of "Shares then subject to outstanding Options granted under the
Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company, or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. TRANSFERABILITY OF OPTIONS. Each Option shall provide that such
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
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<PAGE>
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities law deemed by the
Committee to be applicable to the issuance of the Shares and are endorsed upon
the Share certificates.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, which
shall consist of not less than two Directors, each of whom shall be
Disinterested Persons to the extent required by Section 5(d) hereof. The
Committee shall have all of the powers of the Board with respect to the Plan.
Any member of the Committee may be removed at any time, with or without cause,
by resolution of the Board and any vacancy occurring in the membership of the
Committee may be filled by appointment by the Board.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The Committee's
determinations and its interpretation and construction of any provision of the
Plan shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
14. INCENTIVE OPTIONS FOR 10% SHAREHOLDERS. Notwithstanding any other
provisions of the Plan to the contrary, an incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Internal Revenue Code) at the date of grant, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (or of any subsidiary (as defined in Section 424 of the
Internal Revenue Code) at the date of grant) unless the option price of such
Option is at least 110% of the Fair Market Value of the Shares subject to such
Option on the date the Option is granted, and such Option by its terms is not
exercisable after the expiration of five years from the date such Option is
granted.
15. INTERPRETATION
(a) The Plan shall be administered and interpreted so that al1
Incentive Stock Options granted under the Plan will qualify as Incentive Stock
Options under Section 422 of the Internal Revenue Code. If any provision of the
Plan should be held invalid for the granting of Incentive Stock Options or
illegal for any reason, such determination shall
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<PAGE>
not affect the remaining provisions hereof, but instead the Plan shall be
construed and enforced as if such provision had never been included in the Plan.
(h) This Plan shall be governed by the laws of the State of
Florida.
(c) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
16. AMENDMENT AND DISCONTINUATION OF THE PLAN. Either the Board or the
Committee may from time to time amend the Plan or any Option; provided, however,
that, except to the extent provided in Section 10, no such amendment may,
without approval by the shareholders of the Company, (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities which may be issued under the Plan, or (c) materially
modify the requirements as to eligibility for participation in the Plan; and
provided further, that, except to the extent provided in Section 9, no amendment
or suspension of the Plan or any Option issued hereunder shall substantially
impair any Option previously granted to any Optionee without the consent of such
Optionee.
17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is the date on which the Board adopts this Plan, and the Plan shall terminate on
the 10th anniversary of the effective date.
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<PAGE>
SUPREME INTERNATIONAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - JULY 31, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SUPREME INTERNATIONAL CORPORATION
The undersigned hereby appoints George Feldenkreis and Oscar Feldenkreis
as Proxies, each with full power to appoint a substitute, to represent and to
vote, with all the powers the undersigned would have if personally present, all
the shares of Common Stock $.01 par value per share of Supreme International
Corporation (the "Company") held of record by the undersigned on June 16, 1998
at the Annual Meeting of Shareholders to be held on July 31, 1998 or any
adjournment or adjournments thereof.
PROPOSAL 1. Approval to amend the Company's Articles of Incorporation to create
a classified Board of Directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PROPOSAL 2.
[ ] FOR ALL THE NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below.
(INSTRUCTIONS: To withhold authority for any individual nominee, write that
nominee's name in the space below.)
George Feldenkreis, Oscar Feldenkreis, Ronald L. Buch, Gary Dix, Salomon
Hanono, Richard W. McEwen, Leonard Miller
- --------------------------------------------------------------------------------
PROPOSAL 3. Approval of proposal to amend the Company's Articles of
Incorporation to increase the authorized shares of Common Stock from
10,000,000 to 30,000,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PROPOSAL 4. Approval of proposal to amend the Company's Articles of
Incorporation to create the Class A Common Stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PROPOSAL 5. Approval of proposal to amend the Company's 1993 Stock Option
Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PROPOSAL 6. Ratification of selection of Deloitte & Touche as independent
public accountants for the Company for the fiscal year ending January 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the Proxies are authorized to vote upon other business as
may come before the meeting.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, the Proxy will
be voted FOR Proposals 1, 2, 3, 4, 5 and 6.
Dated: , 1998
(Signature)
(Signature)
PLEASE SIGN HERE
Please date this proxy and
sign your name exactly as
it appears hereon.
Where there is more than
one owner, each should
sign. When signing as an
agent, attorney,
administrator, executor,
guardian, or trustee,
please add your title as
such. If executed by a
corporation, the proxy
should be signed by a duly
authorized officer who
should indicate his office.
PLEASE DATE, SIGN, AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
