SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-K/A
AMENDMENT NO. 1 TO
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1994
Commission File No. 0-4465
SIRCO INTERNATIONAL CORP.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
New York 13-2511270
- --------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
24 Richmond Hill Avenue, Stamford, Connecticut 06901
- ----------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (203) 359-4100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
Common Stock, par value $.10 None
<PAGE>
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
As of March 1, 1995, the aggregate market value of the voting stock
held by non-affiliates of the Registrant was $1,189,575.
As of March 1, 1995, there were 1,209,700 shares outstanding of the
Registrant's Common Stock.
<PAGE>
SIRCO INTERNATIONAL CORP.
AMENDMENT NO. 1
TO THE ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1994
Sirco International Corp. (the "Registrant or the "Company") hereby
amends the following items, financial statements, exhibits or other portions of
its Annual Report on Form 10-K for the fiscal year ended November 30, 1994, as
set forth below:
1. Item 1 is hereby amended by adding the following paragraph after the
paragraph set forth under the caption "Suppliers":
During the three fiscal years ended November 30, 1994, 1993 and 1992,
substantial purchases were made from affiliates of the Registrant. During those
years, the Registrant purchased in the aggregate approximately $9,000, $221,000
and $1,328,000 of handbags and accessories from Yashiro Co. Ltd. and Yashiro
Co., Inc. (collectively, the "Yashiro Companies"), representing approximately
.06%, 1.6% and 9.6%, respectively, of the Registrant's total purchases during
those years. Yutaka Yamaguchi, the former Chairman of the Board of Directors of
the Registrant, is the President and a Director of each of the Yashiro
Companies. The Registrant purchased the handbags and accessories from Yashiro
under the terms of a long-term Product Supply Agreement with Yashiro (the
"Product Supply Agreement"), which agreement was terminated on March 20, 1995.
The terms of the Product Supply Agreement permitted the Registrant to purchase
goods from other suppliers. In addition, in fiscal years ended November 30,
1994, 1993 and 1992, the Registrant purchased approximately $3,489,000,
$2,858,000 and $2,910,000, respectively, of handbags and accessories from Lucci
Creations, Ltd., a Hong Kong manufacturer of handbags ("Lucci"), representing
approximately 24%, 21% and 21%, respectively, of the Registrant's total
purchases during those years. Forty five percent of Lucci is owned by the same
individuals who own the Yashiro Companies. See Item 13. - Certain Relationships
and Related Transactions.
The Company sold its handbag division on March 20, 1995 (see "Recent
Events"). As a result, the Company does not anticipate making any significant
purchases in the future from either of the Yashiro Companies or Lucci. Other
than the Product Supply Agreement (which agreement was terminated on March 20,
1995), the Registrant does not have any contractual arrangements with its
suppliers. Substantially all of the Registrant's purchasing is conducted through
the use of standard purchase orders, a substantial portion of which are
supported by trade letters of credit.
<PAGE>
For the fiscal years ended November 30, 1994, 1993 and 1992, the
Registrant's products were manufactured in the following countries:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
<S> <C> <C> <C>
Thailand 5.71% 4.50% 0.10%
China 79.57% 83.72% 80.70%
Taiwan 14.66% 10.18% 9.60%
Japan 0.06% 1.60% 9.60%
------- ------- ------
Total 100.00% 100.00% 100.00%
======= ======= =======
</TABLE>
2. Item 1 is hereby further amended by deleting the paragraphs
following the first paragraph set forth under the caption "Markets and
Customers" and replacing them with the following paragraphs:
During the fiscal years ended November 30, 1994, 1993 and 1992, sales
to Target Stores represented approximately 22%, 20% and 13%, respectively, of
net sales. No other customer accounted for more than 10% of net sales in any of
the three fiscal years. The Registrant fills orders on the terms and conditions
of standard purchase orders it receives from customers.
The Registrant currently maintains showrooms in New York City and
Toronto. The Registrant solicits business directly from its customers, using the
services of both full-time sales persons and independent sales representatives.
The independent sales representatives represent a number of manufacturers other
than the Registrant, and are compensated on a commission basis, typically
pursuant to the terms of a non-exclusive sales representative contract.
The Registrant's sales are seasonal and are governed by the peak retail
seasons of Christmas, "back-to-school"/fall and spring. As a result of
retailers' shipping deadlines designed to meet these peak seasons, the
Registrant's sales are higher in the third and fourth quarters than in the first
and second quarters of the Registrant's fiscal year.
<PAGE>
The Registrant's percentage of sales by quarter for the fiscal years
ended November 30, 1994, 1993 and 1992 by fiscal quarter are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
First fiscal quarter 17.1% 18.0% 22.0%
Second fiscal quarter 22.4% 25.1% 24.8%
Third fiscal quarter 33.0% 26.6% 25.6%
Fourth fiscal quarter 27.5% 30.3% 27.3%
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
</TABLE>
3. Item 1 is hereby further amended by deleting the paragraph set forth
under the caption "Employees" and replacing it with the following paragraph:
At November 30, 1994, the Registrant employed 140 employees and had
approximately 40 independent sales representatives. Primarily as a result of the
disposition of Registrant's handbag division (see "Recent Events"), at September
15, 1995, the Registrant employed 90 employees and had approximately 28
independent sales representatives.
Recent Events
During the fiscal year ended November 30, 1994, The Registrant
experienced significant continued operating losses and reduced cash flow
resulting primarily from the operation of its handbag division. See Item 7. -
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Fiscal Year 1994 Compared to Fiscal Year 1993.
On March 20, 1995, pursuant to a Stock Purchase Agreement, dated as of
March 20, 1995, among Joel Dupre, Pacific Million Enterprise, Ltd., a Hong Kong
corporation, Cheng-Sen Wang, Albert H. Cheng (collectively, the "Buyers") and
the Yashiro Companies, the Buyers acquired from the Yashiro Companies an
aggregate of 681,000 shares (the "Shares") of Common Stock (constituting at the
time of such purchase approximately 56.04% of the outstanding shares of Common
Stock of the Registrant) for a purchase price of $1,532,230. Concurrently with
such change-of-control, the Registrant entered into an Asset Purchase Agreement
with Bueno of California, Inc., a Delaware corporation ("Bueno") and an
affiliate of the Yashiro Companies, pursuant to which the Registrant sold to
Bueno all of the assets relating to the Registrant's handbag division for an
aggregate purchase price of $1,785,665.55. For a more detailed description of
these transactions, see the Registrant's Current Report on Form 8-K filed with
respect to events occurring on March 20, 1995, which Report is incorporated
herein by reference.
<PAGE>
4. Item 7 is hereby amended by deleting the first paragraph set forth
under the caption "Fiscal Year 1994 Compared to Fiscal Year 1993" and replacing
it with the following paragraphs:
The reduction in gross profit was primarily attributable to the
operations of the Registrant's handbag division. As a result of a decline in
sales volume of the handbag division, the Registrant reduced the selling prices
of its handbag products in order to reduce inventory, which resulted in reduced
gross profit margins. In addition, the significant decline in net sales
experienced by the Registrant's handbag division adversely impacted the
Registrant's operating cash flow. In order to generate sufficient cash flow for
operations, the Registrant reduced the selling prices of certain products in its
luggage division, which resulted in lower gross profit margins.
Other factors, to a lesser extent, also contributed to the decline in
gross profit margins. During the fiscal year ended November 30, 1994, Lucci, one
of the principal suppliers to the handbag division, experienced production
problems, which delayed the Registrant's receipt of goods. As a result of the
delay, the Registrant was unable timely to fill customer orders. In order to
satisfy its customers, the Registrant substantially reduced the selling price of
goods that were delivered late. Competitive pressures faced by the Registrant
also resulted in the Registrant's reduction of its selling prices in an attempt
to maintain market share and sales volume. Gross profit margins were also
affected by additional reserves (approximately $440,000, largely for customer
chargebacks and sales credits) established in the fourth quarter of the fiscal
year ended November 30, 1994.
5. Item 7 is hereby further amended by adding the following paragraph
after the second paragraph set forth under the caption "Fiscal Year 1994
Compared to Fiscal Year 1993":
During the fiscal year ended November 30, 1992, the Registrant sold to
an unrelated third party certain real property for $1,300,000 in cash. The
Registrant had retained certain rights under an easement relating to the real
property (the "Easement") which it later sold to another unrelated third party.
During the fourth quarter of the fiscal year ended November 30, 1994, the
Registrant determined that substantial doubt existed as to its ability to
collect a portion of the remaining amounts due from the sale of the Easement
and, accordingly, established a reserve of $125,000 to provide for potential
uncollectible amounts.
6. Item 7 is hereby further amended by adding the following paragraph
after the last paragraph set forth under the caption "Fiscal Year 1994 Compared
to Fiscal Year 1993":
<PAGE>
During the fourth quarter of the fiscal year ended November 30, 1994,
the Registrant incurred a net loss of $2,060,396, comprised as follows:
Net sales $7,578,831
Cost of goods sold 6,298,000
Gross profit 1,280,831
Selling, warehouse, general
and administrative expenses 3,395,286
Interest expense 236,081
Interest income 58,586
Miscellaneous income 231,554
Net loss 2,060,396
The gross profit and the related gross profit percentage of net sales
were substantially lower in the fourth quarter than in the first three quarters
of the fiscal year ended November 30, 1994, primarily due to the establishment
of a $440,000 reserve for customer chargebacks and sales credits, as well as
increases in mark-downs and advertising allowances of approximately $160,000.
The mark-downs and advertising allowances principally related to the handbag
division.
Selling, warehouse, general and administrative expenses of the
Registrant were substantially higher in the fourth quarter. Approximately
$936,000 of non-recurring expenses in the fourth quarter resulted from: (1) the
$125,000 reserve established for the Easement (see Note 10 of the Notes to the
Financial Statements); (2) a $275,000 allowance to provide for potential
uncollectible amounts due from the sale of a former subsidiary (see Note 12 of
the Notes to the Consolidated Financial Statements); (3) write offs of
approximately $170,000 related to the Hong Kong Subsidiary (see Note 11 of the
Notes to the Consolidated Financial Statements); (4) a write off in the amount
of $129,000 of receivables arising out of damage claims against suppliers deemed
uncollectible (see Note 11 ($33,000) and Note 8 ($96,000) of the Notes to the
Consolidated Financial Statements); (5) a write off of approximately $103,000
due from Messrs. Takeshi Yamaguchi and Yutaka Yamaguchi relating to indebtedness
that was deemed uncollectible in the fourth quarter; and (6) $98,000 in other
write offs.
7. Item 7 is hereby further amended by deleting the paragraphs
following the caption "Liquidity and Capital Resources" and adding the following
paragraphs:
During the fiscal year ended November 30, 1994, the Registrant's
operating activities used approximately $441,000 of cash, as compared to fiscal
1993 when operating activities provided positive cash flow of approximately
$1,129,000 and fiscal 1992 when operating activities provided positive cash flow
of approximately $3,667,000. During the last three fiscal years, there has been
a substantial negative trend in the Registrant's cash flow from operating
activities, primarily resulting from net losses that were significantly higher
in 1994 than in prior years. While cash and cash equivalents actually increased
during fiscal 1994, principally as a result of financing activities, working
capital of the Registrant declined by approximately $2,669,000 during fiscal
1994, leaving remaining working capital at approximately $1,362,000 at November
30, 1994.
The Registrant believes that the reduction in its cash flow and its
liquidity problems are attributable to the losses experienced by the
Registrant's handbag division. The losses of the handbag division placed
additional pressure on the Registrant's luggage division to generate cash flow,
which required the luggage division to lower its prices, which resulted in lower
profit margins.
In March 1995, the Registrant sold all of the assets of its handbag
division to Bueno. See Item 1. Business -- Recent Events. The Registrant
believes that the disposition of the handbag division will enable the Registrant
over time to regain profitability and restore positive operating cash flow. As a
result of the disposition, the Registrant will no longer be required to maintain
the large inventory positions required by the operations of the handbag
division.
As described in Note 2 of Notes to Consolidated Financial Statements,
at November 30, 1994, the Registrant had a bank credit agreement, which by its
terms terminated on July 31, 1995, that provided a revolving line of credit of
up to $2,000,000. The agreement provided for the issuance of letters of credit
in favor of the Registrant's foreign suppliers for the purchase of inventory,
with interest payable monthly at prime plus 1%. This facility was secured by a
certificate of deposit in the amount of approximately $540,000, and the personal
guaranty of the Registrant's former Chairman. The facility was fully utilized at
November 30, 1994.
In connection with the change of control of the Registrant in March
1995, Yashiro and the Registrant entered into a Letter of Credit Agreement
pursuant to which Yashiro has agreed to issue or cause to be issued, until March
20, 1997, unsecured trade letters of credit in an aggregate amount of up to the
lesser of $1,200,000 or 35% of the book value of all of the inventory owned by
the Registrant.
At November 30, 1994, the Registrant's Canadian subsidiary had a line
of credit agreement with a bank in the amount of approximately $395,000 (which
amount was increased in June 1995 to $525,000). Under this agreement, the bank
provides a revolving loan to the Canadian subsidiary for purposes of purchasing
inventory, with interest payable monthly at the Canadian prime rate.
Substantially all the assets of the Canadian subsidiary have been pledged as
security for this line of credit and a term loan. There was no borrowing under
this facility at November 30, 1994. However, at such date, the Canadian
subsidiary had outstanding letters of credit totalling approximately $50,000.
The Registrant has an agreement with a factor pursuant to which the
Registrant sells substantially all of its accounts receivable on a pre-approved
non-recourse basis. Under the terms of the agreement, the factor advances funds
to the Registrant based on invoice amounts. Interest on such advances is payable
at 2.5% per annum above the prime rate. The Registrant also pays a factoring
commission of 1% of each invoice amount, subject to a minimum of $96,000 per
annum.
The Registrant is seeking a relationship with a commercial bank or
factor to provide a new line of credit to replace the Registrant's line of
credit that terminated on July 31, 1995. Although management believes the
Registrant will be successful in obtaining financing, there can be no assurance
that such financing will be available on commercially reasonable terms if at
all. Failure to obtain such financing on commercially reasonable terms could
have a material adverse effect on the long-term prospects of the Registrant.
Based on the Registrant's current operations, however, management believes that
the Registrant's cash and cash equivalents, factoring of accounts receivable and
cash flows generated from operations will be sufficient to meet the Registrant's
liquidity and capital requirements for the fiscal year ended November 30, 1995.
<PAGE>
8. Item 10 is hereby amended by deleting it in its entirety and
replacing it with the following:
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT
The following table contains certain information regarding Directors
and Executive Officers of the Registrant now serving, all of whom were elected
at the Annual Meeting of Shareholders of the Company held on August 17, 1995.
Except for Mr. Hellige and Mr. Riss, all such Directors and Executive Officers
served at all times during fiscal year 1994.
<TABLE>
<CAPTION>
Principal Occupation for Past 5
Name and Position Years and Current Public
with the Company Age Directorships or Trusteeships
- ----------------- --- ------------------------------
<S> <C> <C>
Joel Dupre 42 Director since 1990; Chairman of the Board and Chief
Executive Officer of the Registrant since March 1995;
Executive Vice President from November 1992 to March 1995
and a Vice President from 1989 to 1992
Ian Mitchell 57 Director since 1988; President and Managing Director of
Sirco Leatherwares Ltd., a former subsidiary of the
Registrant since 1981
Eric Smith 50 Director since 1988; Vice President-General Manager of West
Coast Distribution Center since 1983
Eric M. Hellige 40 Director; Partner for more than five years of Pryor,
Cashman, Sherman & Flynn, counsel to the Company
Paul Riss 39 Director; Chief Financial Officer of Sequins International
Inc., a manufacturer of sequined fabrics and trimmings,
since June 1992; Chief financial Officer, Treasurer and
Secretary of ComponentGuard Inc, an administrator of
extended warranty contracts, from August 1990 to June 1992
Douglas Turner 56 Director since 1978; President of Sirco International
(Canada), Ltd., a subsidiary of the Registrant, for more
than five years
</TABLE>
<PAGE>
The following table contains certain information regarding former Directors
and Executive Officers of the Registrant who served at all times during the
fiscal year ended November 30, 1994, and, except as otherwise indicated through
March 20, 1995:
<TABLE>
<CAPTION>
Principal Occupation for Past 5
Name and Position Years and Current Public
with the Company Age Directorships or Trusteeships
- ----------------- --- ------------------------------
<S> <C> <C>
Takeshi Yamaguchi 33 President of the Registrant from January 1995 to March 1995,
Executive Vice President/Chief Financial Officer from March
1992 to March 1995 and a Director of the Registrant from
1988 to January 1, 1995; Supervisor of the administrative
section of the export division of Yashiro Co., Osaka, Japan,
a manufacturer of handbags and one of the Registrant's
primary suppliers for more than five years (Mr. Takeshi
Yamaguchi is the son of Mr. Yutaka Yamaguchi)
Yutaka Yamaguchi 61 Chief Executive Officer and President from November 1992,
Chairman from 1990, and a Director from 1972; President from
1988 to 1990; For more than the past five years, President
and Director of Yashiro Companies, Osaka, Japan,
manufacturers of handbags and one of the Registrant's
suppliers (Mr. Yutaka Yamaguchi is the father of
Mr. Takeshi Yamaguchi)
Neil Grundman 61 Director since 1972; member of the law firm of Olshan
Grundman Frome & Rosenzweig, counsel to the Registrant, for
more than five years
Tsuguya Saeki 35 Director, Executive Vice President and Chief Financial
Officer of the Registrant from January 1995 to March 1995;
Vice President for operations from 1993 to January 1995;
Import Manager 1989.
</TABLE>
The term of office of the Directors is one year, expiring on
the date of the next annual meeting and thereafter until their respective
successors shall have been elected and shall qualify, or until their death,
resignation or removal.
9. Item 11 is hereby amended by deleting the paragraphs set forth under
the caption "Board of Directors Interlocks and Insider Participation in
Compensation Decisions" and adding the following paragraph:
The following former and present members of the Board of Directors were
officers of the Registrant or a subsidiary of the Registrant during the fiscal
year ended November 30, 1994: Joel Dupre, Eric Smith, Douglas Turner, Takeshi
Yamaguchi, and Yutaka Yamaguchi. Such members participated in deliberations of
the Registrant's Board of Directors concerning executive officer compensation
during fiscal 1994.
10. Item 13 is hereby amended by deleting it in its entirety and adding
the following paragraphs:
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Joseph Takada, the beneficial owner of approximately 10.97% of the
outstanding shares of Common Stock, is the Managing Director of Ideal Pacific
Ltd, the Registrant's manufacturing agent in Hong Kong ("Ideal"). During the
fiscal year ended November 30, 1994, the Registrant paid aggregate commissions
of approximately $245,000 to Ideal. Mr. Wang, the beneficial owner of
approximately 7.31% of the outstanding shares of Common Stock, is the Managing
Director of Kao-Lien Industrial Co., Ltd., the Registrant's manufacturing agent
in Taiwan ("Kao-Lien"). During the fiscal year ended November 30, 1994, the
Registrant paid aggregate commissions of approximately $146,000 to Kao-Lien.
Eric M. Hellige, a director of the Registrant, is a member of Pryor,
Cashman, Sherman & Flynn, counsel to the Registrant ("Pryor, Cashman"). Pryor,
Cashman did not render services to or receive any fees from the Registrant
during the fiscal year ended November 30, 1994.
Neil Grundman, a former director of the Registrant, is a member of
Olshan, Grundman, Frome & Rosenzweig, former counsel to the Registrant
("Olshan"). Fees paid by the Registrant to Olshan during the fiscal year ended
November 30, 1994 did not exceed 5% of Olshan's or the Registrant's revenues.
For the year ended November 30, 1994, the Registrant purchased in the
ordinary course of business approximately $9,000 of handbags and accessories
from Yashiro Co., Inc. ("Yashiro"), Osaka, Japan, a manufacturer of handbags and
accessories. Such purchases amounted to approximately .06% of purchases for the
fiscal year ended November 30, 1994. Yutaka Yamaguchi, the former Chairman of
the Board of Directors of the Registrant, is the President and a Director of
Yashiro. The terms of the aforementioned purchase transactions were
substantially equivalent to the terms of purchases by the Registrant from its
other suppliers, and the price paid to Yashiro were not more than the prices
paid by the Registrant to other suppliers providing equivalent goods. On August
18, 1988, the Registrant entered into a five-year (automatically renewable on a
year-to-year basis) Product Supply Agreement with Yashiro that memorialized this
ongoing relationship of Yashiro and the Registrant. The Product Supply Agreement
provided that Yashiro would sell to the Registrant all of its requirements for
merchandise at Yashiro's standard prices and permitted the Registrant to
purchase merchandise from other sources if more favorable terms were offered or
if necessary to meet the Registrant's requirements. The Product Supply Agreement
terminated on March 20, 1995.
Yashiro has made available to the Registrant a line of credit for
financing trade letters of credit. See Item 7. - Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources. At November 30, 1994, the Registrant owed Yashiro
approximately $1,743,000, which amount related to letter-of-credit financings of
approximately $1,664,000 bearing interest at 7% per annum. Amounts borrowed
under the line of credit with Yashiro were repayable within 100 days after the
delivery of the related goods. The Registrant paid Yashiro interest of
approximately $55,000 during the fiscal year ended November 30, 1994. In
addition to interest, Yashiro is paid a handling fee of 3% of the cost of the
goods. Such handling fees amounted to approximately $255,000 during the fiscal
year ended November 30, 1994. The Registrant is current in its obligations to
Yashiro.
The 7% interest rate paid to Yashiro is lower than the Registrant's
borrowing rate of prime plus 1% at November 30, 1994 on borrowings under the
former Shinhan Facility (as defined below). The handling fees paid to Yashiro of
3% are in excess of the .25% fee previously paid to Shinhan Bank for similar
services, and the Registrant believes that other banks and unaffiliated third
parties may provide handling fees and related services at amounts lower than 3%.
The Registrant currently is seeking new financing arrangements. See Item 7. -
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.
During the fourth quarter of fiscal year 1994, the Registrant wrote off
as uncollectible approximately $96,000 of indebtedness due from Yashiro. See
Item 7 - Management's Discussion and Analysis of Financial Conditions and
Results of Operations -- Fiscal Year 1994 Compared to Fiscal Year 1993.
In 1993, the Registrant entered into a revolving bank credit agreement
for up to $2,000,000 with Shinhan Bank (the "Shinhan Facility"). The Shinhan
Facility expired on July 31, 1995, at which time all amounts became due and
payable and were paid in full. The Shinhan Facility provided for the issuance of
letters of credit in favor of the Registrant's foreign suppliers for the
purchase of inventory, with interest payable monthly at prime plus 1%.
Borrowings under the facility were repayable to Shinhan Bank within 180 days of
shipment of the goods. Repayment of amounts due under the facility were secured
by the personal guaranty of the Registrant's former Chairman, Mr. Yutaka
Yamaguchi, and the Registrant's $500,000 certificate of deposit held by the bank
as collateral. Mr. Yutaka Yamaguchi did not directly receive any compensation
from the Registrant during the fiscal year ended November 30, 1994; however,
Yashiro was paid a fee of $100,000 for all services provided to the Registrant
by Mr. Yutaka Yamaguchi.
For the fiscal year ended November 30, 1994, the Registrant also
purchased in the ordinary course of business, $3,489,000 of handbags and
accessories (representing approximately 24% of total purchases by the Registrant
for such year) from Lucci. Forty-five percent of Lucci is owned by the same
individuals who own Yashiro Co. Ltd. and Yashiro, including Yutaka Yamaguchi.
The Registrant believes that all purchases from affiliated parties were
on terms and at prices substantially similar to those available from
unaffiliated third parties.
11. Item 14 is hereby amended by adding the following items:
(3.1) Certificate of Amendment to the Certificate of Incorporation of the
Company filed with the Secretary of State of the State of New York on
October 6, 1995.
(10.1) Employment Agreement, dated as of December 1, 1992, between the Company
and Joel Dupre.
(10.2) Employment Agreement, dated as of September 1, 1992, between the Company
and Gandolfo Verra.
(10.3) Sirco International Corp. 1995 Stock Option Plan.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 13th day of
December 1995.
SIRCO INTERNATIONAL CORP.
(Registrant)
By: /s/ Joel Dupre
------------------------
Joel Dupre, Chairman of
the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/Joel Dupre
- ------------------
Joel Dupre Chairman of the Board December 13, 1995
and Chief Executive Officer
(Principal Executive Officer)
/s/Gandolfo Verra
- ------------------
Gandolfo Verra Controller and Assistant December 13, 1995
Secretary (Principal
Financial Officer)
/s/Eric M. Hellige
- ------------------ Director December 13, 1995
Eric M. Hellige
/s/Paul Riss
- ------------------ Director December 13, 1995
Paul Riss
- ------------------ Director December , 1995
Ian Mitchell
/s/ Eric Smith
- ------------------ Director December 13, 1995
Eric Smith
Director December , 1995
- --------------------
Douglas Turner
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
THE CERTIFICATE OF INCORPORATION
OF
SIRCO INTERNATIONAL CORP.
Under Section 805 of the Business Corporation Law
FIRST: The name of the corporation is Sirco International Corp.
The name under which the corporation was formed is Sirco Products Co. Inc.
SECOND: The certificate of incorporation of the corporation was filed by
the Department of State on July 22, 1964.
THIRD: The amendments of the certificate of incorporation effected by this
certificate of amendment are as follows:
To increase the number of authorized shares of the corporation's Common
Stock, par value $.10 per share, from 3,000,000 to 10,000,000 shares and to
authorize the issuance of 1,000,000 shares of Preferred Stock, par value
$.10 per share, from time to time on terms to be determined by the Board of
Directors.
To limit the personal liability of directors to the corporation and its
shareholders.
FOURTH: To accomplish the foregoing amendments.
Article FOURTH of the certificate of incorporation is hereby amended and
restated as follows:
Fourth: A. Authorized Shares. The total number of shares of all classes of
stock which the corporation shall have the authority to issue is Eleven
Million (11,000,000), of which Ten Million (10,000,000) shall be common
stock, par value $.10 per share, and One Million (1,000,000) shall be
preferred stock, par value $.10 per share.
B. Common Stock. Each holder of shares of common stock shall be entitled to
one vote for each share of common stock held by such holder. There shall be
no cumulative voting rights in the election of directors. Subject to any
preferential rights of preferred stock, the holders of shares of common
stock shall be entitled to receive, when and if declared by the Board of
Directors, out of the assets of the corporation which are by law available
therefor, dividends payable either in cash, in property, or in shares of
common stock.
C. Preferred Stock. The preferred stock may be issued from time to time in
one or more series. The Board of Directors is hereby expressly vested with
the authority to fix by resolution or resolutions the designations and the
powers, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, including,
without limitation, the voting powers, if any, the dividend rate, the
conversion rights, the redemption price, or the liquidation preference, of
any series of preferred stock, and to fix the number of shares constituting
any such series, and to increase or decrease the number of shares of any
such series (but not below the number of shares thereof then outstanding).
In case the number of shares of any such series shall be so decreased, the
shares constituting such decrease shall resume the status which they had
prior to the adoption of the resolution or resolutions originally fixing
the number of shares of such series. The number or authorized shares of any
class or classes of stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the stock of the corporation entitled to vote.
A new Article Sixth is hereby added as follows:
SIXTH: No director of the corporation shall be liable to the corporation or
its shareholders for damages for any breach of duty in such capacity except
as provided in Section 402(b)(1) and (2) of the New York Business
Corporation Law.
FIFTH: The manner in which the foregoing amendment of the certificate of
incorporation was authorized is as follows:
The Board of Directors duly authorized the foregoing amendments at a Board
of Directors Meeting held on June 8, 1995. The shareholders of the corporation
subsequently authorized the amendment at an Annual Meeting of Shareholders held
on August 17, 1995.
IN WITNESS WHEREOF, we have subscribed this document on August 28, 1995 and
do hereby affirm under the penalties of perjury, that the statements contained
therein have been examined by us and are true and correct.
/s/ Joel Dupre
--------------------------
Joel Dupre
Chairman of the Board
/s/ Eric M. Hellige, Esq.
--------------------------
Eric M. Hellige, Esq.
Secretary
Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of December, 1992, by and between SIRCO
INTERNATIONAL CORP., a New York corporation with its principal place of business
at 10 West 33rd Street, Suite 606, New York, New York 10001 (hereinafter called
the "Corporation") and JOEL DUPRE, residing at 37 Fieldcrest Drive, Ridgefield,
Connecticut 06877 (hereinafter called "Executive").
W I T N E S S E T H
WHEREAS, the Corporation desires to employ Executive and Executive is
willing to undertake such employment on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth; the parties hereto agree as follows:
1. The Corporation hereby employs Executive to perform such supervisory or
executive duties on behalf of the Corporation as an executive officer or the
Board of Directors of the Corporation may from time to time determine. Executive
shall be elected to the office of Executive Vice President and thereafter to
such other offices of the Corporation as the Board of Directors may from time to
time determine.
2. Executive hereby accepts such employment and agrees that throughout the
period of his employment hereunder, he will devote his full time, attention,
knowledge and skills, faithfully, diligently and to the best of his ability, in
furtherance of the business of the Corporation, will perform the duties assigned
to him pursuant to Paragraph 2 hereof, subject, at all times, to the direction
and control of the Chief Executive Officer and the Board of Directors of the
Corporation, and will do such traveling as may be reasonably required of him in
the performance thereof. Executive shall at all times be subject to, observe and
carry out such rules, regulations, policies, directions and restrictions as the
Corporation shall from time to time establish. During the period of his
employment hereunder, Executive shall not, without the written approval of the
Board of Directors first had and obtained in each instance, directly or
indirectly accept employment or compensation from or perform services of any
nature for, any business enterprise other that the Corporation and its
subsidiaries. During the period of Executive's employment hereunder, Executive
shall not be entitled to additional compensation for serving in any office of
the Corporation or any of its subsidiaries to which he is elected.
3. Executive shall be employed for a term of three years commencing as of
the 1st day of December, 1992, and ending on the 30th day of November, l995,
unless his employment is terminated prior to the expiration of such three year
term pursuant to the provisions hereof.
4. As full compensation for his services hereunder, the Corporation will
pay to Executive
4.1 a base salary of $170,000 per annum, payable in equal installments
no less frequently than monthly; and
4.2 incentive compensation for each fiscal year of the Corporation
during the term hereof in an amount equal to 10% of the net income of the
Luggage Division of the Corporation for such fiscal year.
For purposes of this Paragraph 4, "net income of the Luggage Division"
shall mean net income of the Luggage Division as reflected in its divisional
financial statements (A) before deduction of or allowance for the incentive
compensation payable pursuant to Subparagraph 4.2 hereof, and (B) exclusive of
extraordinary gain or loss. Any incentive compensation to which Executive may be
entitled hereunder shall be payable within 120 days after the end of the fiscal
year to which such incentive compensation relates. With respect to any fiscal
year of the Corporation during which Executive's employment hereunder
terminates, Executive shall be entitled to a pro rata share of incentive
compensation, based upon net income of the Luggage Division, and the number of
days in such fiscal year during which Executive was employed by the Corporation.
5. In addition to such base salary and incentive compensation, Executive
shall be entitled to participate, to the extent he is eligible under the terms
and conditions thereof, in any pension, profit-sharing, retirement,
hospitalization, insurance, medical service, or other employee benefit plan
generally available to the executives of the Corporation that may be in effect
from time to time during the period of his employment hereunder. The Corporation
shall be under no obligation to institute or continues the existence of any such
employee benefit plan.
6. The Corporation shall reimburse Executive for all expenses reasonably
incurred by him in connection with the performance of his duties hereunder and
the business of the Corporation, upon the submission to the Corporation of
appropriate vouchers therefor and approval thereof by the Chief Financial
Officer of the Corporation.
7. Executive shall be entitled to two weeks' paid vacation during the first
year and three weeks paid vacation during each succeeding year of his employment
hereunder. All such vacations shall be taken at times mutually agreeable to
executive and the Chief Executive Office of the Corporation. For purposes of
this Paragraph 7, the term "year" shall mean the 12-month period beginning
December 1st in each fiscal year. Vacation time shall be cumulative from year to
year to the extent of one week thereof.
8. In consideration of the Corporation's entering into this Agreement,
Executive agrees that during the period of his employment hereunder, and for a
further period of six months thereafter, he will not (I) directly or indirectly
own, manage, operate, join, control, participate in, invest in, or otherwise be
connected with, in any manner, whether as an officer, director, employee,
partner, investor or otherwise, any business entity which is engaged in the
design, importation, manufacture and/or sale at wholesale of handbags,
children's bags, tote bags or soft luggage in the State of New York, New Jersey,
Connecticut, Massachusetts, Rhode Island, Pennsylvania, Maryland, Delaware or
the District of Columbia (the "Restricted Territory") or is engaged in any other
business in which the Corporation or any of its subsidiaries is currently
engaged or is engaged at the time of termination of Executive's employment
hereunder, or (ii) for himself or on behalf of any other person, firm,
corporation or entity, call on any customer of the Corporation for the purpose
of soliciting, diverting or taking away any customer from the Corporation.
Nothing herein contained shall be deemed to prohibit Executive from investing
his funds in securities of a company if the securities of such company are
listed for trading on a national stock exchange or traded in the
over-the-counter market and Executive's holdings therein represent less than one
percent of the total number of shares or principal amount of other securities of
such company outstanding.
Executive acknowledges that the provisions of this Paragraph 8 are
reasonable and necessary for the protection of the Corporation, and that each
provision, and the period or periods of time, geographic areas and types and
scope of restrictions on the activities specified herein are, and are intended
to be divisible. In the event that any provision of the Paragraph 8, including
any sentence, clause or part hereof, shall be deemed contrary to law or invalid
or unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall not be affected, but shall, subject to the discretion
of such court, remain in full force and effect and any invalid and unenforceable
provisions shall be deemed, without further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.
9. Executive shall hold in a fiduciary capacity for the benefit of the
Corporation all information, knowledge and data relating to or concerned with
its operations, sales, business and affairs, and he shall not, at any time
hereafter, use, disclose or divulge any such information, knowledge or data to
any person, firm or corporation other than to the Corporation or its designees
or except as may otherwise be required in connection with the business and
affairs of the Corporation.
10. Any invention, improvement, design, development or discovery conceived,
developed, created or made by Executive alone or with others, during the period
of his employment hereunder and applicable to the business of the Corporation,
whether or not patentable, registrable or copyrightable, shall become the sole
and exclusive property of the Corporation. Executive shall disclose the same
promptly and completely to the Corporation and shall, during the period of his
employment hereunder and at any time and from time to time hereafter (I) execute
all documents requested by the Corporation for vesting in the Corporation the
entire right, title and interest in and to the same, (ii) execute all documents
requested by the Corporation for filing and prosecuting such applications for
patents, trademarks and/or copyrights as the Corporation, in its sole
discretion, may desire to prosecute, and (iii) give the Corporation all
assistance it reasonably requires, including the giving of testimony in any
action, suit or proceeding, in order to obtain, maintain and protect the
Corporation's rights therein and thereto.
11. The parties hereto acknowledge that Executive's services are unique and
that, in the event of a breach or a threatened breach by Executive of any of his
obligations under this Agreement, the Corporation will not have an adequate
remedy at law. Accordingly, the event of any such breach or threatened breach by
Executive, the Corporation shall be entitled to such equitable and injunctive
relief as may be available to restrain Executive and any person, firm,
corporation or entity participating in such breach or threatened breach from the
violation of the provisions hereof. Nothing herein shall be construed as
prohibiting the Corporation from pursuing any other remedies available at law or
in equity for such breach or threatened breach, including the recovery of
damages and immediate termination of the employment of Executive hereunder.
12. In the event that Executive is incapacitated or disabled from
performing his duties hereunder for a period of three consecutive months or for
an aggregate of 90 days in any consecutive six month period, the Corporation may
terminate this Agreement and Executive's employment hereunder. In the event of
Executive's death while employed hereunder, his employment shall terminate upon
the date of his death. In either such event, the Corporation shall have no
further liability to Executive hereunder except for compensation due Executive
in respect of the periods ending on or prior to the date of termination.
13. In the event of Executive's death during the term of his employment
hereunder, a death benefit shall be paid to such person or persons as he shall
designate from time to time by written instrument delivered to the Corporation.
Executive initially designates Cynthia LG Dupre as the recipient of such death
benefit. Any subsequent designation received shall revoke all prior
designations. The death benefit shall be an amount equal to one-half of the
annual base salary being paid to Executive on the date of death, less the amount
of any life insurance proceeds payable upon Executive's death under any group
life insurance policy or policies maintained by the Corporation for the benefit
of employees of the Corporation. Any death benefit payable hereunder shall be
paid in a single lump sum payment not later than 120 days after the death of
Executive. In any such event, the Corporation shall also provide Executive's
spouse and children for a period of six months after the date of Executive's
death, at the Corporation's sole cost and expense, medical, major medical and
hospitalization insurance coverage identical or substantially equivalent to that
in effect at the date of Executive's death.
14. In addition to any other rights and remedies provided by law or in this
Agreement, the Corporation may terminate this Agreement upon 10 days' prior
written notice to Executive in the event that Executive shall act, whether with
respect to his employment or otherwise, in a manner that is in violation of the
laws of the United States of American or of any State or locality thereof, or
which, in the opinion of the Board of Directors of the Corporation, subjects the
Corporation to public opprobrium, disrespect, scandal or ridicule.
15. This Agreement constitutes the entire agreement of the parties hereto
and no amendment or modification hereof shall be valid or binding unless made in
writing and signed by the party against whom enforcement thereof is sought.
16. Any notice required, permitted or desired to be given pursuant to any
of the provisions of this Agreement shall be deemed to have been sufficiently
given or served for all purposes if delivered in person or by responsible
overnight carrier or sent by certified mail, return receipt requested, postage
and fees prepaid to the parties at their addresses set forth above. Either of
the parties hereto may at any time and from time to time change the address to
which notice shall be sent hereunder by notice to the other party given under
this Paragraph 16. The date of the giving of any notice by delivery in person or
by responsible overnight carrier shall be the date of its receipt, and by mail
shall be the date three days after the posting of the mail.
17. Neither this Agreement nor the right to receive any payments hereunder
may be assigned by Executive. This Agreement shall be binding upon Executive,
his heirs, executors and administrators and upon the Corporation, its successors
and assigns.
18. No course of dealing nor any delay on the part of the Corporation in
exercising any rights herunder shall operate as a waiver of any such rights. No
waiver of any default or breach of this Agreement shall be deemed a continuing
waiver or a waiver of any other breach or default.
19. This Agreement shall be governed, interpreted and construed in
accordance with the laws of the State of New York expect that body of law
relating to choice of law.
20. If any clause, paragraph, section or part of this Agreement shall be
held or declared to be void, invalid or illegal, for any reason, by any court of
competent jurisdiction, such provision shall be ineffective but shall not in any
way invalidate or affect any other clause, paragraph, section or part of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of this day and year first above written.
SIRCO INTERNATIONAL CORP.
BY: /s/Takeshi Yamaguci
---------------------------------
Takeshi Yamaguchi
Executive Vice President
/s/ Joel Dupre
--------------------------------
JOEL DUPRE
Exhibit 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of September, 1992, by and between SIRCO
INTERNATIONAL CORP., a New York Corporation (the "Company"), having an office at
10 West 33rd Street, New York, New York 10001, and Gandolfo Verra, residing at
326 Oscawana Lake Road, Putnam Valley, New York 10579 ("Verra").
W I T N E S S E T H
WHEREAS, the Company desires to employ Verra as Controller, and the Company
desires to memorialize its relationship with Verra, and Verra desires to be
employed by the Company upon the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the mutual promises set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Verra as its Controller, and
Verra hereby accepts such employment commencing as of September 1, 1992, subject
to the terms and conditions hereinafter set forth.
2. Duties. Verra agrees that he will render his services to the Company as
Comptroller of the Company, and shall perform the duties and services incident
to his position as Comptroller, Verra agrees that he will not, during the term
of this Agreement, engage in any other business activity which competes,
directly or indirectly, with the Company, or otherwise materially interferes
with the performance of his obligations under this Agreement, except for
services, from time to time, to the subsidiaries and divisions of the Company.
However, assuming that the provisions of the preceding sentence are complied
with, Verra may help prepare the tax returns of individuals and corporations
which are not directly or indirectly competing with the Company.
3. Compensation.
3.01. Salary. In consideration of the services to be rendered by Verra
hereunder, the Company agrees to pay Verra the base salary of $75,000 per annum,
payable in monthly installments of $6,250. The base salary may be increased from
time to time by the Board of Directors of the Company. Terra shall also be
entitled to bonuses as determined from time to time by the Board of Directors of
the Company.
3.02. Benefits. Verra shall also be entitled to vacations, sick leave
and fringe benefits, including, but not limited to, group health and term life
insurance and pension plans and the grant of stock options and similar rights,
in accordance with the Company's policies and plans from time to time in effect
for executive officers of the Company as may be referenced in the Company's
employee manual, and shall receive such additional benefits and compensation as
the Board of Directors may determine from time to time. The foregoing shall not
in any way limit the Company's ability, in its discretion, to modify or
discontinue any such plans which are from time to time in effect.
4. Term. Unless otherwise terminated by the Company or Verra upon sixty
days' prior written notice, this Agreement shall expire on March 30, 1995. This
Agreement will be extended automatically thereafter for successive one year
terms unless either the Company or Verra gives the other written notice ninety
(90) days prior to December 31, 1994, or any subsequent anniversary date, that
the Agreement is terminated on the applicable anniversary of that date.
5. Company. For purposes of the Agreement, the term "Company" shall mean
and include any and all subsidiaries, parents and affiliated corporations of the
Company in existence from time to time.
6. Notices. All notices, requests, demands or other communications
hereunder shall be deemed to have been given if delivered in writing, by
certified mail, return receipt requested, to each party at the address set forth
below, or at such other address as any party may hereafter designate in writing
to the other:
If to the Company:
Sirco International Corp.
10 West 33rd Street
New York, New York 10001
If to Verra:
Gandolfo Verra
326 Oscawana Lake Road
Putnam Valley, New York 10579
7. Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof, supersedes any prior
agreement between the parties and may not be changed or terminated orally. No
change, termination or attempted waiver of any of the provisions hereof shall be
binding unless in writing and signed by the party against whom the same is
sought to be enforced; provided, however, that Verra's compensation may be
increased at any time by the Company without in any way affecting any of the
other terms and conditions of this Agreement, which in all other respects shall
remain in full force and effect.
8. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the respective heirs, legal representative, successors
and assigns of the parties hereto.
9. Governing Law. All matters concerning the validity and interpretation of
and performance under this agreement shall be governed by the laws of the State
of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SIRCO INTERNATIONAL CORP.
BY: /s/ Takeshi Yamaguchi
-----------------------------------
Takeshi Yamaguchi, Vice President
/s/ Gandolfo Verra
----------------------------
Gandolfo Verra
EXHIBIT 10.3
SIRCO INTERNATIONAL CORP.
1995 STOCK OPTION PLAN
1. Purpose of Plan
The purpose of this Plan is to enable Sirco International Corp. to compete
successfully in attracting, motivating and retaining key employees with
outstanding abilities by making it possible for them to purchase shares of the
Company's Common Stock on terms which will give them a more direct and
continuing interest in the future success of the Company's business.
2. Definitions
"Board" means the Board of Directors of the Company.
"Company" means Sirco International Corp., a New York corporation.
"Directors" means those persons duly elected and serving on the Board who
are not Employees.
"Employees" means employees, including officers, regularly employed on a
salary basis by the Company or any Subsidiary.
"Fair Market Value" means, as of any day, the last sale price on such day
on the New York Stock Exchange, or, if the Shares are not then listed or
admitted to trading on the New York Stock Exchange, on the American Stock
Exchange, or, if the Shares are not then listed or admitted to trading on the
American Stock Exchange, on such other principal stock exchange on which such
stock is then listed or admitted to trading or, if no sale takes place on such
day on any such exchange, the average of the closing bid and asked prices on
such day as officially quoted on any such exchange, or, if the Shares are not
then listed or admitted to trading on any stock exchange, the market price for
each such business day shall be the last sale price on such day as reported in
the National Association of Securities Dealers, Inc., Automated Quotations
System, or if the Shares are not reported on the National Market List, the
average of the closing reported bid and asked prices on such day in the over-the
counter market, as furnished by the National Quotation Bureau, Inc., or, if such
firm at the time is not engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business and selected by the
Company or, if there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc., selected by the Company, or if the
Shares are not so reported, as determined by the Board of Directors.
"Incentive Stock Option" means an option granted under this Plan which the
Board intends, at the time it is granted, to be an ISO within the meaning of
Section 422 of the Internal Revenue Code; and any provisions elsewhere in this
Plan or in any Incentive Stock Option which would prevent such option from being
an incentive stock option under such Section of the Internal Revenue Code may be
deleted or voided retroactively to the date of grant of the option by action of
the Board.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Optionee" means a person to whom an option and/or Stock Appreciation
Right has been granted under this Plan which has not expired or been fully
exercised or surrendered.
"Shares" means shares of Common Stock, par value $.10 per share, of the
Company.
"Stock Appreciation Right" means the right of an Optionee, which may be
granted to him at or subsequent to the date of grant as part of the terms of his
option, to receive a number of Shares or, at the election of the Board, cash, or
Shares and cash, based on the increase of the market value of the Shares subject
to his option, as more particularly set forth in paragraph (g) of Section 5.
"Subsidiary" means any corporation that qualifies as a subsidiary of the
Company under the definition of "subsidiary corporation" in Section 424(f) of
the Internal Revenue Code, or any similar provision hereinafter enacted.
3. Limits on Options
(a) The total number of Shares with respect to which options and Stock
Appreciation Rights may be granted under this Plan shall not exceed in the
aggregate 200,000 Shares. This number shall be appropriately adjusted if the
number of issued Shares shall be increased or reduced by change in par value,
recapitalization, combination, split-up, reclassification, distribution of a
dividend payable in stock, or the like after July 1, 1995. The number of Shares
previously optioned or subject to Stock Appreciation Rights and not theretofore
delivered and the option prices therefor shall likewise be appropriately
adjusted whenever the number of issued Shares shall be increased or reduced by
any such procedure after the date or dates on which such Shares were optioned or
Stock Appreciation Rights were granted with respect thereto. Shares covered by
options which have expired or which have been surrendered or forfeited otherwise
than pursuant to the first paragraph of subsection (g)(ii) of Section 5 may
again be optioned under this Plan. Shares covered by options which have been
surrendered pursuant to the first paragraph of subsection (g)(ii) of Section 5
in connection with the exercise of a tandem Stock Appreciation Right, whether or
not the Company elects to settle all or part of its obligation in cash, may not
be optioned again under this Plan. Shares received by the Company in payment of
all or a portion of the purchase price of Shares issued pursuant to the exercise
of any option granted hereunder may again be optioned under this Plan.
(b) No Incentive Stock Option shall be granted to a Director.
(c) No Incentive Stock Option shall be granted to any Employee who
immediately after such option is granted, owns capital stock of the Company or a
Subsidiary possessing more than 10% of the total combined voting power or value
of all classes of capital stock of the Company or a Subsidiary unless the option
price at the time such Incentive Stock Option is granted is at least 110% of the
Fair Market Value of the Shares subject to the Incentive Stock Option and such
Incentive Stock Option is not exercisable by its terms after the expiration of
five years from the date of grant.
(d) The aggregate Fair Market Value of Shares (determined as of the date
of grant) with respect to which Incentive Stock Options which are exercisable
for the first time by an Optionee during any calendar year shall not exceed
$100,000.
4. Granting Of Options
The Board is authorized to grant options (which may be nonqualified
options or Incentive Stock Options as the Board specifies) and Stock
Appreciation Rights to selected Employees and is authorized to grant options
(other than Incentive Stock Options) and Stock Appreciation Rights to Directors
pursuant to this Plan beginning July 1, 1995 and in any calendar year thereafter
to July 1, 2005, but not thereafter. The number of Shares, if any, optioned in
each year or with respect to which Stock Appreciation Rights are granted, the
Directors or Employees to whom options and Stock Appreciation Rights are
granted, and the number of Shares optioned and Stock Appreciation Rights
granted, to each Director or Employee selected shall be wholly within the
discretion of the Board, subject only to the limitations prescribed in Section
3.
5. Terms of Stock Options
Subject to Section 3 hereof, the terms of stock options granted under this
Plan shall be as follows:
(a) The option exercise price shall be fixed by the Board but, in the case
of Incentive Stock Options, shall in no event be less than 100% of the Fair
Market Value of the Shares subject to the option on the date the option is
granted.
(b) Options shall not be transferable otherwise than by will or by the
laws of descent and distribution. No option shall be subject, in whole or in
part, to attachment, execution or levy of any kind.
(c) Each option shall expire and all rights thereunder shall end at the
expiration of such period (which shall not be more than ten years) after the
date on which it was granted as shall be fixed by the Board, subject in all
cases to earlier expiration as provided in subsections (d), (e) and (g) of this
Section 5 in the event of termination of employment, death or the exercise of
Stock Appreciation Rights granted in tandem with an option.
(d) During the lifetime of an optionee, his option shall be exercisable
only by him and only while continuously employed by the Company or a Subsidiary,
within three months after he ceases to be employed or if disabled (within the
meaning of Section 22(e)(3) of the Code), within one year of such disability
(but not later than the end of the period fixed by this Board in accordance with
the provisions of subsection (c) of this Section 5) if and to the extent the
option was exercisable by him on the last day of such employment.
Notwithstanding the foregoing, in the event that an optionee shall be terminated
for cause, all rights as to any outstanding unexercised and unexpired options or
portions thereof shall immediately terminate.
(e) If an Optionee dies within a period during which his option could have
been exercised by him, his option may be exercised within 12 months after his
death (but not later than the end of the period fixed by the Board in accordance
with the provisions of subsection (c) of this Section 5) by his executors,
administrators, legatees or distributees under the laws of descent and
distribution, but only if and to the extent the option was exercisable by him
immediately prior to his death.
(f) Subject to the foregoing terms and to such additional or different
terms regarding the exercise of the options as the Board may fix at the time of
grant, options may be exercised in whole at one time or in part from time to
time.
(g) The Board may include, but shall not be obligated to do so, a Stock
Appreciation Right with any option (other than an Incentive Stock Option)
granted under this Plan. The terms of each such Stock Appreciation Right shall
be as follows:
(i) The Stock Appreciation Right shall be exercisable during
the period and to the extent, and only during the period and to the
extent, the option is exercisable. The Stock Appreciation Right shall
expire and all rights thereunder shall end if not exercised upon the
exercise of the option.
(ii) The Stock Appreciation Right may be granted in conjunction
with and in addition to an option or may be granted in tandem with an
option. If the Stock Appreciation Right is granted in tandem with an
option, it shall entitle the Optionee to surrender to the Company,
prior to its exercise, the option or any portion of the option with
which the Stock Appreciation Right was included and to receive from
the Company in exchange therefor that number of Shares, the cash
value thereof or a combination of cash and Shares having an aggregate
market value in an amount equal to that determined by multiplying the
excess of the Fair Market Value of one Share over the option price
per Share fixed by the Board pursuant to subsection (a) of this
Section 5 by the number of Shares subject to the option, or portion
thereof, which is to be delivered to the Company. Notwithstanding the
provisions of the immediately preceding sentence, the Company may
settle all or part of its obligation arising out of the exercise of a
Stock Appreciation Right by the payment of cash, Shares or a
combination thereof to the Optionee in an amount equal to the
aggregate Fair Market Value of the cash and/or Shares it would
otherwise have been obligated to so deliver.
If the Stock Appreciation Right is granted in conjunction with
and in addition to an option, the Optionee shall, in addition to the
exercise of the option, be entitled to receive an amount in cash,
Shares or any combination thereof calculated in the same manner as
applicable to a Stock Appreciation Right granted in tandem with an
option. In such event, the manner of payment of the Stock
Appreciation Right shall be within the sole discretion of the Board.
(iii) The Board may also reserve the right to terminate any
Stock Appreciation Right at any time prior to its exercise and may
include or reserve the right to include in any Stock Appreciation
Right terms in addition to, but not inconsistent with, the foregoing.
(h) Unless otherwise provided at the time of grant, no option or Stock
Appreciation Right granted hereunder may be exercised prior to the expiration of
one year from the date of grant.
6. Reorganization of the Company
In the event that the Company is succeeded by another corporation in a
reorganization, merger, consolidation, acquisition of property or stock,
separation or liquidation, the successor corporation shall assume the
obligations regarding the outstanding options and Stock Appreciation Rights
granted under this Plan or shall substitute new options and Stock Appreciation
Rights for them, with only such modification in the case of Incentive Stock
Options by the successor corporation as may be necessary to continue their
status or the status of the substituted options as Incentive Stock Options for
purposes of the Internal Revenue Code.
7. Delivery and Payment for Shares
No Shares shall be delivered upon the exercise of an option until the
option price has been paid in full, and if required by the Board, no Shares will
be delivered upon the exercise of an option or a Stock Appreciation Right until
the optionee has given the Company (a) a satisfactory written statement that he
is purchasing the shares for investment and not with a view to the sale or
distribution of any of such Shares, and (b) a written agreement not to sell any
Shares received upon the exercise of the option or the Stock Appreciation Right
or any other Shares of the Company that he may then own or thereafter acquire
except either (i) through a broker which is a member of the New York Stock
Exchange, another national securities exchange or the National Association of
Securities Dealers or (ii) with the prior written approval of the Company.
Payment for Shares received pursuant to the exercise of an option may be made
either in cash, Shares, or any combination thereof at the election of the
Optionee. If payment is made (either in whole or in part) in Shares, the value
of the Shares received by the Company shall be the Fair Market Value of such
Shares as of the date received by the Company.
8. Continuation of Employment
Neither this Plan nor any option or Stock Appreciation Right granted
hereunder shall confer upon any Employee any right to continue in the employ of
the Company or any Subsidiary, confer upon any member of the Board any right to
continue on the Board or limit in any respect the right of the Company or any
Subsidiary to terminate the employment of any Employee or the service of any
member of the Board at any time.
9. Administration
The Board may make such rules and regulations and establish such
procedures as it deems appropriate for the administration of this Plan. The
Board may delegate responsibility for administration of this Plan to a committee
of the Board (the "Committee") meeting, and acting in accordance with, the
requirements of Rule 16b-3 promulgated pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended ("Rule 16b-3"). The Board or the
Committee may interpret the Plan, prescribe, amend or rescind any rules and
regulations necessary or appropriate for the administration of the Plan, and
make such other determinations and take such other action as it deems necessary
or advisable, except, in the case of the Committee, as such action may be
otherwise expressly reserved in the Plan to the Board. Without limiting the
generality of the foregoing, the Committee may, in its sole discretion, treat
all or any portion of any period during which an Optionee is on military leave
or on an approved leave of absence from the Company or a Subsidiary as a period
of employment of such Optionee by the Company or such Subsidiary, as the case
may be, for the purpose of accrual of his rights under his option or Stock
Appreciations Rights. Any interpretation, determination or other action made or
taken by the Board or the Committee shall be final, binding and conclusive, and
the decision of the Board or the Committee shall be final and binding upon all
parties in interest, including the Company and its shareholders. Any decision or
determination reduced to writing and signed by all members of the Committee
shall be fully as effective as if made by unanimous vote at a meeting duly
called and held.
The Board or the Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent.
No member or former member of the Committee or of the Board shall be
liable for any action or determination made in good faith with respect to this
Plan or any option or Stock Appreciation Right awarded under it. To the maximum
extent permitted by applicable law, each member or former member of the
Committee or of the Board shall be indemnified and held harmless by the Company
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the Company) arising out
of any action or omission to act in connection with this Plan unless arising out
of such member's or former member's own fraud or bad faith. Such indemnification
shall be in addition to any rights of indemnification the members or former
members may have as directors or under the By-Laws of the Company.
10. Reservation of Shares
Shares delivered upon the exercise of an option or a Stock Appreciation
Right shall, in the discretion of the Board, be either Shares heretofore or
hereafter authorized and then unissued, or previously issued Shares heretofore
or hereafter acquired through purchase in the open market or otherwise, or some
of each. The Company shall be under no obligation to reserve or to retain in its
treasury any particular number of Shares at any time, and no particular Shares,
whether unissued or held as treasury Shares, shall be identified as those
optioned under this Plan.
11. Amendment of Plan
The Board without further action by the shareholders may amend this Plan
from time to time as it deems desirable and shall make any amendments which may
be required so that options intended to be Incentive Stock Options shall at all
times continue to be Incentive Stock Options for purposes of the Internal
Revenue Code; provided that no such amendment shall increase the maximum number
of Shares for which options may be granted, reduce the minimum option price,
extend the option period with respect to any option or Stock Appreciation Right,
permit the granting of options after July 1, 2005, increase the amount the
holder of a Stock Appreciation Right may receive upon its exercise, permit the
granting of options or Stock Appreciation Rights to anyone other than as
provided in the Plan, or allow administration of the Plan in a manner violative
of Rule 16b-3. The Board may include in the terms of any option otherwise
qualifying as an incentive stock option (within the meaning of Section 422 of
the Code) a provision that it shall not be an Incentive Stock Option, and, with
the consent of the Optionee and to the extent permitted by law, may amend a
previously issued option to so provide.
12. Termination of the Plan
The Board may, in its discretion, terminate this Plan at any terminate
prior to July 1, 2005, but such termination shall not deprive Optionees or the
holders of Stock Appreciation Rights of their rights under their options or
Stock Appreciation Rights.
13. Effective Date
This Plan shall become effective on July 1, 1995, and options hereunder
may be granted at any time on or after that date. However, no option or Stock
Appreciation Right may be exercised unless this Plan is approved by a vote of
the holders of a majority of the outstanding Shares represented at a meeting of
shareholders of the Company held on or within twelve months after the effective
date.
14. Compliance With Other Laws and Regulations.
This Plan, the grant and exercise of options and Stock Appreciation Rights
thereunder, and the obligation of the Company to sell and deliver Shares under
such options and Stock Appreciation Rights shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. If at any time the Board or
the Committee shall determine in its discretion that the listing, registration
or qualification of the Shares covered by this Plan upon any national securities
exchange or under any Federal or state law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the sale or purchase of Shares under this Plan, no Shares will
be delivered unless and until such listing, registration, qualification, consent
or approval shall have been affected or obtained, or otherwise provided for,
free of any conditions not acceptable to the Board or the Committee. If Shares
are not required to be registered, upon exercising all or any portion of an
option or Stock Appreciation Right, the Company may require each Optionee as a
condition of such exercise, to represent that the Shares are being acquired for
investment only and not with a view to their sale or distribution, and shall
make such other representations deemed appropriate by counsel to the Company.
Stock certificates evidencing unregistered Shares acquired upon exercise of an
option or Stock Appreciation Right shall bear any legend required by applicable
state securities laws and a restrictive legend substantially as follows:
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended (the "Act"), and
may not be transferred in the absence of such registration or
an opinion of counsel acceptable to the Company that such
transfer will not require registration under the Act."
15. Withholding.
Where an optionee or other person is entitled to receive Shares pursuant
to the exercise of an option, the Company shall have the right to require the
Optionee or such other person to pay to the Company the amount of any taxes
which the Company may be required to withhold with respect to such Shares before
delivery to such Optionee or other person of a certificate or certificates
representing such Shares.
Upon the disposition of Shares acquired pursuant to the exercise of an
Incentive Stock Option, the Company shall have the right to require the payment
of the amount of any taxes which are required by law to be withheld with respect
to such disposition.
Federal, state or local law may require the withholding of taxes
(including income and social security taxes) applicable to gains resulting from
the exercise by an Optionee of an option other than an Incentive Stock Option (a
"Nonstatutory Option") granted under the Plan. Unless otherwise prohibited by
the Stock Option Committee or by applicable law, an Optionee who holds a
Nonstatutory Option may satisfy any such withholding tax obligation by any of
the following methods, or by a combination of such methods: (a) tendering a cash
payment; (b) authorizing the Company to withhold from the Shares otherwise
issuable to such Optionee as a result of the exercise of such Nonstatutory
Option one or more of such Shares having an aggregate Fair Market Value,
determined as of the date the withholding tax obligation arises, less than or
equal to the amount of the total withholding tax obligation; or (c) delivering
to the Company previously acquired Shares (none of which Shares may be subject
to any claim, lien, security interest, community property right or other right
of spouses or present or former family members, pledge, option, voting agreement
or other restriction or encumbrance of any nature whatsoever) having an
aggregate Fair Market Value, determined as of the date the withholding tax
obligation arises, less than or equal to the amount of the total withholding tax
obligation. An Optionee's election to pay his or her withholding tax obligation
(in whole or in part) by the method described in (b) above is irrevocable once
it is made, may be disapproved by the Stock Option Committee and, if made by any
director, officer or other person who is subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended, must be made (x) only during the
period beginning on the third business day following the date of release of the
Company's quarterly or annual summary statement of sales and earnings and ending
on the twelfth business date following the date of such release or (y) not less
than six months prior to the date such Optionee's withholding tax obligation
arises in connection with the exercise of the Nonstatutory Option.
16. Name.
This Plan shall be known as the "Sirco International Corp. 1995 Stock
Option Plan."
