<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1994 or
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _____________
Commission file no. 1-5354
SWANK, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 04-1886990
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6 Hazel Street, Attleboro, Massachusetts 02703
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 222-3400
---------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10
par value
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 the 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/
The aggregate market value of the Common Stock of the Registrant held by
non-affiliates of the Registrant on February 21, 1995 was $5,655,697. Such
aggregate market value is computed by reference to the last sale price of the
Common Stock on such date.
The number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date: 16,470,636 shares of
Common Stock as of the close of business on February 21, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the fiscal
year ended December 31, 1994 - Incorporated by reference into Part II of
this Form 10-K.
Portions of the Registrant's Proxy Statement relating to the Registrant's
1995 Annual Meeting of Stockholders - Incorporated by reference into
Part III of this Form 10-K.
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PART I
Item 1. Business.
--------
Swank, Inc. (the "Company") was incorporated on April 17, 1936. The
Company is engaged in the manufacture, sale and distribution of men's and
women's fashion accessories under the names "Swank", "L'Aiglon", "Pierre
Cardin", "Anne Klein", "Anne Klein II", "Guess?" and "Colours by Alexander
Julian", among others.
Products
--------
The Company's principal product categories are described below:
Men's jewelry consists principally of cuff links, tie klips, chains and
tacs, bracelets, neck chains, vest chains, collar pins, key rings, money klips
and watches distributed under the names "Swank", "Guess?", "Pierre Cardin",
"Colours by Alexander Julian" and "L'Aiglon". Women's jewelry consists
principally of necklaces, earrings, pendants, chokers, bracelets, hair
ornaments and scarf clips distributed under the names "Pierre Cardin", "Anne
Klein" and "Anne Klein II", and "Guess?". The Company also manufactures
women's jewelry (principally necklaces, brooches, hair accessories and
earrings) for private label distribution.
Leather accessories consist primarily of belts, billfolds, wallets, key
cases, card holders and suspenders distributed under the names "Swank",
"Guess?", "L'Aiglon", "Pierre Cardin" and "Colours by Alexander Julian". The
Company also manufactures leather items for private label distribution.
Gifts, which consist of other accessories manufactured or distributed
by the Company, include such items as mugs, tie racks, sunglasses, travel kits
and clothes and hair brushes distributed under the names "Swank" and
"Pierre Cardin".
As is customary in the fashion accessories industry, substantial
percentages of the Company's sales and earnings occur in the months of
September, October and November, during which the Company makes significant
shipments of its products to retailers for sale during the holiday season. The
Company's short-term bank borrowings are at a peak during the months of August,
September, October and November to enable the Company to (a) carry significant
amounts of inventory and (b) provide more favorable payment terms to its
customers during this season.
The relative contributions to total net sales and gross profit from the
Company's principal product categories for the last three fiscal years and the
relative year-to-year changes in such contributions during such period are
shown in the following table:
<TABLE>
<CAPTION>
Percentage of Total
Fiscal Year Percentage Year-
Ended December 31 to-Year Changes
----------------- ---------------
1994- 1993-
1994 1993 1992 1993 1992
---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C>
CONTRIBUTION TO TOTAL
NET SALES
44% 45% 42% Men's & Women's Jewelry 12% 5%
0% 0%* 2%* Fragrances 0% (100%)*
8% 10% 10% Gifts (11%) 3%
48% 45% 46% Men's Leather Accessories 20% 1%
---- --- ---- --- ---
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
100% 100% 100% Total Net Sales 13% **
==== ==== ==== ==== ===
CONTRIBUTION TO GROSS
PROFIT
49% 50% 50% Men's and Women's Jewelry 9% **
0% 0% 3%* Fragrances 0% (100%)
7% 9% 8% Gifts (11%) 4%
44% 41% 39% Men's Leather Accessories 20% 3%
----- ---- ---- ---- -----
100% 100% 100% Total Gross Profit 11% (1%)
==== ==== ==== ==== =====
_________________________
<FN>
* The Company's Royal Copenhagen fragrance division was sold during the
second quarter of 1992.
** Decreased less than 1%.
</TABLE>
Sales and Distribution
----------------------
The Company's products are sold to approximately 2,000 retailers who
sell these products over more than 32,000 retail counters in the United States
and approximately 50 foreign countries. The Company does not believe it is
dependent upon any single customer. Sales to the Company's largest customer
amounted to 10.6%, 10.8% and 12.2% of consolidated net sales during 1994, 1993
and 1992, respectively. No other single customer accounted for more than 10% of
consolidated net sales during 1994. Exports to foreign countries accounted for
5% of consolidated net sales in each of the Company's fiscal years ended
December 31, 1994, 1993 and 1992.
Approximately 120 salesmen and district managers are engaged in the sale
of products of the Company, working out of sales offices located in five major
cities throughout the United States. The Company has established separate sales
forces to handle the distribution to retailers of (a) women's jewelry sold under
the names "Anne Klein" and "Anne Klein II", (b) women's jewelry sold under the
name "Guess?" and (c) the remaining products of the Company. In certain foreign
countries, the Company has licensed or sub-licensed the production and sale of
certain of its lines under royalty arrangements.
In addition to the sale of the Company's products through wholesale
channels, the Company sells certain of its products at retail in 43
Company-operated factory outlet stores and 3 kiosks located in 26 states.
Manufacturing
-------------
Items manufactured by the Company accounted for approximately 73% of
total sales in 1994.
Substantially all jewelry products are manufactured and/or assembled at
the Company's plant in Attleboro, Massachusetts. Leather goods are manufactured
at the Company's plant in Norwalk, Connecticut. Raw materials are purchased in
the open market from a number of suppliers and are readily available.
Items not manufactured by the Company include certain jewelry and
leather items, watches, tie racks, travel kits, wallets, clothes, hair brushes,
mugs, banks, and other accessories which are purchased domestically or imported
from countries in Europe and the Far East.
Advertising Media and Promotion
-------------------------------
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Substantial expenditures on advertising and promotions are an integral
part of the Company's business. Approximately 7% of net sales was expended on
promotions in 1994, of which approximately 2% was for advertising media,
principally in national consumer magazines, trade publications, newspapers,
radio and television, and approximately 5% was for fixtures, displays,
point-of-sale materials, cooperative advertising and other in-store promotions.
Competition
-----------
The businesses in which the Company is engaged are highly competitive.
The Company competes with, among others, Christian Dior and David Donahue in
men's jewelry; Rolfs, St. Thomas, Salant and retail private label programs in
small leather goods; Star Case and retail private label programs in
accessories; Salant, Humphrey and Textan in men's belts; and Crystal Brands and
Victoria Creations in women's jewelry. The ability of the Company to continue
to compete will depend largely upon its ability to create new designs and
products, to make improvements on its present products and to offer the public
high quality merchandise at popular prices.
Patents, Trademarks and Licenses
--------------------------------
The Company owns the rights to various patents, trademarks, trade names
and copyrights and has exclusive licenses in the United States for, among other
things, (i) men's and women's leather accessories and costume jewelry under
the name "Pierre Cardin", (ii) leather accessories under the name "L'Aiglon",
(iii) women's jewelry under the names "Anne Klein" and "Anne Klein II" and
(iv) men's jewelry and leather accessories under the name "Colours by Alexander
Julian". The Company's "Pierre Cardin", "Anne Klein", "Anne Klein II" and
"Guess?" licenses may be considered material to the Company's business. The
"Pierre Cardin" and "Anne Klein" licenses provide for royalty payments not
exceeding 5% of sales. The "Anne Klein II" license provides for royalty
payments not exceeding 6% of sales. The "Guess?" license provides for royalty
payments not exceeding 7% of sales. The Company's licenses to distribute
"Pierre Cardin" jewelry and leather accessories expire December 31, 1995.
The Company is currently negotiating an extension to the "Pierre Cardin"
license and presently expects to continue its 27-year relationship beyond
December 31, 1995. The Company's "Anne Klein" and "Anne Klein II" licenses
expire December 31, 1996. The Company's "Guess?" license expires June 30, 2000.
Employees
---------
The Company has approximately 1,600 employees, of whom approximately
1,000 are production employees. None of the Company's employees are
represented by labor unions and management believes its relationship with
its employees to be satisfactory.
Recent Developments
-------------------
In early 1995 the Company chose to discontinue the sale and
distribution of men's accessories under various National Football League team
logos and the names and logos of several college and university teams. The
applicable license arrangements for these names and logos required the
maintenance of significant inventory levels unrelated to projected sales volume
that management determined was not in the Company's continuing best interests.
Accordingly, the Company is discontinuing the sale and distribution of
these items.
Item 2. Properties.
----------
The Company's main administrative office is located in a
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three-story building, containing approximately 193,000 square feet, on a
seven-acre site owned by the Company in Attleboro, Massachusetts. The
Company's jewelry products are manufactured and/or assembled at this facility.
The Company's executive, national and international sales offices are
located in leased premises at 90 Park Avenue, New York City. The leases of
such premises expire in 2000. Branch offices are also located in leased
premises in New York, Los Angeles, Chicago, Atlanta and Dallas; the leases for
such premises expire from 1995 to 2000.
The Company leases a warehouse in Taunton, Massachusetts which is used
for the distribution of men's and women's jewelry, leather goods and other
accessories and consists of 242,000 square feet. The lease for these premises
expires in 1996.
Men's belts and other leather accessories are manufactured in premises
consisting of a manufacturing plant and office space in a 126,500 square foot
building, located on approximately seven and one-half acres, owned by the
Company in Norwalk, Connecticut.
The Company's manufacturing and distribution facilities are equipped
with modern machinery and equipment, substantially all of which is owned by the
Company. In management's opinion, the Company's properties, machinery and
equipment are adequate for the conduct of the respective businesses to
which they relate.
During 1994, the Company operated 43 factory outlet stores and 3 kiosks
at locations other than those described above. These stores have leases with
terms not in excess of five years and contain in the aggregate approximately
102,000 square feet.
Item 3. Legal Proceedings.
-----------------
(a) On June 7, 1990, the Company received notice from the United
States Environmental Protection Agency ("EPA") that it, along with fifteen
others, had been identified as a Potentially Responsible Party ("PRP") in
connection with the release of hazardous substances at a Superfund site located
in Massachusetts. The Company, together with six others, has entered into an
Administrative Order on Consent pursuant to which, inter alia, they have
undertaken to conduct a remedial investigation/feasibility study (the "RI/FS")
with respect to the alleged contamination at the site. This notice does not
constitute the commencement of a proceeding against the Company nor necessarily
indicate that a proceeding against the Company is contemplated.
It is the position of the PRPs who have undertaken to perform the RI/FS
at the Massachusetts Superfund site that the remedial investigation has been
substantially completed. Based upon available information, it is estimated
that the feasibility study may be completed in approximately one year; the
most recent estimate of costs for completion of the feasibility study is
approximately $250,000. The estimates are subject to change since the scope of
work is within the discretion of the EPA. The PRP group's accountant's records
reflect group expenses, independent of legal fees, in the amount of $1,891,224
as of February 28, 1995. The Company's share of costs for the RI/FS is being
allocated on an interim basis at 11.67%.
The Massachusetts Superfund site is adjacent to a municipal landfill
that is in the process of being closed under Massachusetts law. Due to the
proximity of the municipal landfill to the site and the composition of waste at
this site, the issues are under discussion regarding the site among state and
federal agencies and the United States Department of Energy.
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In September 1988, the Company received notice from the Department of
Pollution Control and Ecology of the State of Arkansas that the Company,
together with numerous other companies, had been identified as a PRP in
connection with the release or threatened release of hazardous substances from
the Diaz Refinery, Incorporated site in Diaz, Arkansas. The Company has
advised the State of Arkansas that it intends to participate in negotiations
with the Department of Pollution Control and Ecology through the committees
formed by the PRPs. The Company has not received further communications
regarding the Diaz site.
In September 1991, the Company entered into a judicial consent decree
relating to the Western Sand and Gravel site located in Burrillville and North
Smithfield, Rhode Island. The consent decree was entered on August 28, 1992 by
the United States District Court for the District of Rhode Island. Cost
estimates for remediation of the ground water at the site range from
approximately $2.8 million to approximately $7.8 million. Based on current
participation, the Company's share is 7.98% of approximately 75% of the costs.
It is anticipated that litigation will be brought against non-settling PRPs to
obtain reimbursement for their respective shares of the remediation costs.
(b) No material pending legal proceedings were terminated during
the three-month period ended December 31, 1994.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Not applicable.
Executive Officers of the Registrant
------------------------------------
<TABLE>
<CAPTION>
Name Age Title
----------------------- --- ----------------------------------------
<S> <C> <C>
Marshall Tulin 77 President and Director
John Tulin 48 Executive Vice President and Director
Richard S. Blum 58 Senior Vice President
Andrew C. Corsini 59 Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
Melvin Goldfeder 58 Senior Vice President
Bruce Shopoff 54 Senior Vice President
James E. Tulin 44 Senior Vice President and Director
Lewis Valenti 55 Senior Vice President
Eric Luft 39 Senior Vice President
Paul Duckett 54 Senior Vice President
Michael Wolfson 53 Senior Vice President
William F. Rubin 69 Senior Vice President
Arthur T. Gately, Jr. 67 Senior Vice President
</TABLE>
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<TABLE>
<CAPTION>
Name Age Title
----------------------- --- -----------------------------------
<S> <C> <C>
Charles Gordon 58 Senior Vice President
Thomas O'Connor 42 Vice President
Frederick Moehle 38 Vice President
Kimberly Renk 38 Vice President
Richard Byrnes, Jr. 35 Vice President
William Heuser 47 Vice President
</TABLE>
There are no family relationships among any of the persons listed above
or among such persons and the directors of the Company except that John Tulin
and James Tulin are the sons of Marshall Tulin.
Each officer is to serve at the pleasure of the Board of Directors until
the organizational meeting of the Board of Directors following the next Annual
Meeting of Stockholders (which is currently scheduled to be held on April 20,
1995) and until his successor is elected and qualified. Each of the persons
listed above has served as an executive officer in his current office of
the Company for the past five years except for:
Bruce Shopoff, who was first elected a Vice President in April 1988 and
was promoted to Senior Vice President in April 1989. Mr. Shopoff joined the
Company in 1977 and has been a Vice President of the Swank Division since
1982.
Paul Duckett, who was first elected a Vice President in September 1986
and was promoted to Senior Vice President in April 1990. Mr. Duckett joined the
Company in 1959 and has been a Vice President of the Swank Division since
1980.
Charles Gordon, who joined the Company and was elected a Vice President
in December 1990 and was promoted to Senior Vice President in February 1993.
Mr. Gordon was a manufacturing executive with Andin International, a jewelry
manufacturer, from October 1989 to June 1990, after serving as Director of
Manufacturing of the Monet Jewelry Division of Crystal Brands from May 1987 to
October 1989. Prior to May 1987, he was a plant manager for Monet Jewelry.
Monet Jewelry is considered to be the world's leading brand of
classically-styled costume jewelry.
Michael Wolfson, who was first elected a Vice President in June 1991 and
was promoted to Senior Vice President in January 1993. Mr. Wolfson joined the
Company in December 1965 and has been Divisional Vice President of the Men's
Products Division since 1986.
Arthur T. Gately, Jr., who was first elected a Vice President in April
1986 and was promoted to Senior Vice President in February 1991. Mr. Gately
joined the Company in 1949 and has been a Vice President of the Swank Division
since 1976.
Thomas O'Connor, who was first elected a Vice President in April 1989.
Mr. O'Connor joined the Company in 1975 and has been a Vice President of
the Crestline Division since 1988.
Eric Luft, who was first elected a Senior Vice President in January
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1993. Mr. Luft joined the Company in October 1977 and has been a Divisional
Vice President of the Men's Products Division since June 1989. Prior to being
named Divisional Vice President of the Men's Products Division, Mr. Luft served
as an account representative in that division.
William Rubin, who was first elected a Vice President in March 1987 and
was promoted to Senior Vice President in June 1991. Mr. Rubin joined the
Company in August 1946 and has been a Vice President of the Swank Division
since August 1978.
Frederick Moehle, who was first elected a Vice President in April 1994.
Mr. Moehle joined the Company in December 1980 and has been a Divisional Vice
President of the Women's Division since August 1987. Prior to being named
Divisional Vice President of the Women's Division, Mr. Moehle served as a
designer in the Women's Jewelry Division.
Kimberly Renk, who was first elected a Vice President in April 1994.
Ms. Renk joined the Company in January 1985 and has been a Divisional Vice
President of the Women's Division since August 1987. Prior to being named
Divisional Vice President of the Women's Division, Ms. Renk served as a
salesperson in the Women's Jewelry Division.
Richard Byrnes, Jr., who was first elected a Vice President in April
1994. Mr. Byrnes joined the Company in December 1991 as a Divisional Vice
President of the Crestline Division. Prior to joining the Company, Mr. Byrnes
was a consultant with the accounting firm of Coopers & Lybrand L.L.P.
William Heuser, who was first elected a Vice President in April 1994.
Mr. Heuser joined the Company in May 1993 as a Divisional Vice President of the
Crestline Division. Mr. Heuser was a merchandising manager of the Manhattan
Accessories division of Manhattan Industries, a belt manufacturer, prior to
joining the Company.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
-----------------------------------------------------
The information called for by this Item 5 with respect to market
information and the number of holders of the Registrant's Common Stock is
incorporated herein by reference to the caption "Market for the Company's
Common Stock and Related Stockholder Matters" on page 12 of the Company's
Annual Report to Stockholders for the fiscal year ended December 31, 1994 (the
"1994 Annual Report"), which is Exhibit 13 to this Annual Report on Form
10-K.
The Company's credit agreement with its bank lenders (the "Credit
Agreement") permits the Company to pay dividends equal to not more than 50% of
the prior fiscal year's Excess Cash Flow (as defined in the Credit Agreement).
The Company has not paid any cash dividends upon its Common Stock in more than
eight years and, notwithstanding the provisions of the Credit Agreement, has no
current expectation that cash dividends will be paid in the foreseeable
future.
Item 6. Selected Financial Data.
-----------------------
The information called for by this Item 6 is incorporated herein by
reference to the information under the caption "Financial Highlights" on
page 1 of the 1994 Annual Report.
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Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
------------------------------------------------------------
The information called for by this Item 7 is incorporated herein by
reference to the information under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 2-4 of
the 1994 Annual Report.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The information called for by this Item 8 is incorporated herein by
reference to the information under the following captions on pages 4-12 of the
1994 Annual Report:
- Report of Independent Accountants.
- Consolidated Balance Sheets as of December 31, 1994 and 1993.
- Consolidated Statements of Operations for each of the three
years ended December 31, 1994, 1993 and 1992.
- Consolidated Statements of Changes in Stockholders' Equity for
each of the three years ended December 31, 1994, 1993 and 1992.
- Consolidated Statements of Cash Flows for each of the three years
ended December 31, 1994, 1993 and 1992.
- Notes to Consolidated Financial Statements.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
----------------------------------------------------------------------
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
--------------------------------------------------
The information called for by this Item 10 (except for information as
to the Company's executive officers, which information appears following Part I
in this Annual Report on Form 10-K under the caption "Executive Officers of the
Registrant") is incorporated herein by reference to the Company's definitive
proxy statement relating to the Company's 1995 Annual Meeting of Stockholders
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "1995 Proxy Statement").
Item 11. Executive Compensation.
----------------------
The information called for by this Item 11 is incorporated herein by
reference to the 1995 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
The information called for by this Item 12 is incorporated herein
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by reference to the 1995 Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
The information called for by this Item 13 is incorporated herein
by reference to the 1995 Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
----------------------------------------------------------------
(a) Documents filed as a part of this Report:
(1) Financial Statements filed as part of this Report:
The financial statements of the Company included on
pages 4-12 of the 1994 Annual Report are incorporated
herein by reference to Item 8 of this Annual Report
on Form 10-K.
(2) Financial Statement Schedules filed as part of this Report:
The following financial statement schedule is submitted
herewith in response to Item 14(d) of Part IV of this
Annual Report on Form 10-K and is contained on the
indicated page of this Annual Report on Form 10-K:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants on Financial Statement Schedule 20
Financial Statement Schedule for years ended December 31, 1994, 1993 and 1992:
II. Valuation and Qualifying Accounts 21
All other schedules are omitted as they are either not required or not
applicable, or the information is otherwise provided.
</TABLE>
(3) Exhibits filed as part of this Report:
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
3.01 Restated Certificate of Incorporation of the
Company dated May 1, 1987. (Exhibit 3.01 to
the Company's S-4 Registration Statement, File
No. 33-19501, filed on January 4, 1988, is
incorporated herein by reference).
3.01.1 Amendments to the Restated Certificate of
Incorporation of the Company. (Exhibit 3.02
to the
</TABLE>
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<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, File No. 1-5354, is
incorporated herein by reference).
3.02 By-Laws of the Company, as amended to date.*
4.01 Form of Certificate of Designation of the Series A
Participating Preferred Stock and Series B
Participating Preferred Stock. (Exhibit A to
Annex 1 to the Proxy Statement/Prospectus contained
in the Company's Registration Statement, File
No. 33-19501, filed on January 4, 1988, is
incorporated herein by reference).
4.02 Rights Agreement dated as of October 23, 1987,
between the Company and The Chase Manhattan Bank,
N.A. as Rights Agent, including, as Exhibit A of
such Rights Agreement, the Certificate of
Designation relating to the Company's Series C
Participating Preferred Stock. (Exhibit 4(b) to
the Company's current Report on Form 8-K for
October 23, 1987, File No. 1-5354, is incorporated
herein by reference).
4.03 Credit Agreement dated as of December 22, 1992
("Credit Agreement") between the Company, each of
the banks which is a signatory thereto and The
Chase Manhattan Bank (National Associations), as
Agent (in such capacity, the "Agent"). (Exhibit
4.03 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, File
No. 1-5354, is incorporated herein by reference).
4.03.1 Amendment No. 1 dated March 30, 1993 to the
Credit Agreement.*
4.03.2 Amendment No. 2 dated May 10, 1993 to the
Credit Agreement.*
4.03.3 Amendment No.3 dated August 31, 1993 to the
Credit Agreement.*
4.03.4 Amendment No.4 dated March 9,1994
</TABLE>
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<PAGE> 12
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
to the Credit Agreement. (The first exhibit to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, File No. 1-5354,
is incorporated herein by reference).
4.03.5 Amendment No.5 dated April 1, 1994 to the Credit
Agreement. (The second exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1994, File No. 1-5354, is
incorporated herein by reference).
4.03.6 Amendment No.6 dated September 13, 1994 to the
Credit Agreement. (The third exhibit to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, File No. 1-5354,
is incorporated herein by reference).
4.04 Security Agreement dated as of December 22, 1992
("Swank Security Agreement") between the Company
and the Agent. (Exhibit 4.04 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-5354, is incorporated
herein by reference).
4.04.1 Amendment No.1 dated September 13, 1994 to the Swank
Security Agreement. (The fourth exhibit to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, File No. 1-5354,
is incorporated herein by reference).
4.05 Security Agreement dated as of December 22, 1992
("FSC Security Agreement") between Swank Sales
International (V.I.), Inc. and the Agent. (Exhibit
4.05 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, File
No. 1-5354, is incorporated herein by reference).
4.05.1 Amendment No.1 dated September 13, 1994 to the
FSC Security Agreement. (The fifth exhibit to
the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, File No. 1-5354,
is incorporated herein by reference).
</TABLE>
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<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
4.06 Open End Indenture of Mortgage, Assignment of Rents,
Security Agreement and Fixture Filing (Connecticut)
dated as of December 22, 1992 between the Company
and the Agent. (Exhibit 4.06 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-5354,
is incorporated herein by reference).
4.07 Open End Indenture of Mortgage, Assignment of Rents,
Security Agreement and Fixture Filing (Massachusetts)
dated as of December 22, 1992 between the Company and
the Agent. (Exhibit 4.07 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-5354, is incorporated
herein by reference).
4.08 Warrant Agreement dated as of April 29, 1991 between
the Company, the banks that were signatories to the
Company's Credit Agreement dated as of May 11, 1990
(as amended prior to March 30, 1992) and The Chase
Manhattan Bank (National Association), as Agent.
(Exhibit 4.03(tt) to Amendment No. 1 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-5354, is incorporated
herein by reference).
4.08.1 Form of Warrant. (Annex 1 to the Warrant Agreement
filed as Exhibit 4.03(tt) to Amendment No. 1 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990, File No. 1-5354.)
(Exhibit 4.03(uu) to Amendment No. 1 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-5354, is incorporated
herein by reference).
10.01 Employment Agreement dated June 20, 1991 between the
Company and Marshall Tulin. (Exhibit 10.01 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991, File No. 1-5354, is
incorporated herein by
</TABLE>
-13-
<PAGE> 14
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
reference).+
10.01.1 Amendment dated as of September 1, 1993 to Employment
Agreement between the Company and Marshall Tulin.
(Exhibit 10.01.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993,
File No. 1-5354, is incorporated herein by
reference).+
10.02 Employment Agreement dated as of January 1, 1990
between the Company and John Tulin. (Exhibit 10-03 to
the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, File No. 1-5354,
is incorporated herein by reference).+
10.02.1 Amendments dated as of September 1, 1993 and
September 2, 1993, respectively, between the Company
and John Tulin. (Exhibit 10.02.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-5354, is incorporated
herein by reference).+
10.03 Employment Agreement dated as of March 1, 1989 between
the Company and James Tulin. (Exhibit 10.05 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1988, File No. 1-5354, is
incorporated herein by reference).+
10.03.1 Amendment dated as of January 4, 1990 to Employment
Agreement between the Company and James Tulin.
(Exhibit 10.05 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1989, File
No. 1-5354, is incorporated herein by reference).+
10.03.2 Amendment dated as of September 1, 1993 to Employment
Agreement between the Company and James Tulin.
(Exhibit 10.03.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993,
File No. 1-5354, is incorporated herein by
reference).+
10.04 Amended and Restated 1981 Incentive
</TABLE>
-14-
<PAGE> 15
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
Stock Option Plan of the Company. (Exhibit 10.08 to
the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987, File No. 1-5354,
is incorporated herein by reference).+
10.05 1987 Incentive Stock Option Plan of the Company.
(Annex 3 to the Proxy Statement/ Prospectus contained
in the Company's Registration Statement, File No. 33-
19501, filed on January 4, 1988, is incorporated
herein by reference).+
10.06 1987 Incentive Share Plan of the Company. (Annex 2
to the Proxy Statement/Prospectus contained in the
Company's Registration Statement, File No. 33-19501,
filed on January 4, 1988, is incorporated herein by
reference).+
10.07 Form of Termination Agreement dated as of May 1, 1987
between the Company and certain of the Company's
executive officers listed on the Schedule thereto.
(Exhibit 10.11 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1987, File
No. 1-5354, is incorporated herein by reference).+
10.07.1 Form of First Amendment and Extension effective as of
May 1, 1990 to the Termination Agreements effective
as of May 1, 1987 between the Company and each of the
Company's officers listed on Schedule A thereto.
(Exhibit 19.1 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30,
1990, File No. 1-5354, is incorporated herein by
reference).+
10.08 Form of Termination Agreement effective as of May 1,
1990 between the Company and each of the Company's
officers listed on Schedule A thereto. (Exhibit 19.2
to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1990, File
No. 1-5354, is incorporated herein by reference).+
</TABLE>
-15-
<PAGE> 16
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
10.08.1 Form of Termination Agreement effective January 1,
1993, April 23, 1993 or May 1, 1993, as the case may
be, between the Company and each of the Company's
officers listed on Schedule A thereto.*+
10.09 Deferred Compensation Plan of the Company dated as of
January 1, 1987. (Exhibit 10.12 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1988, File No. 1-5354, is incorporated
herein by reference).+
10.10 Employment Agreement dated as of January 15, 1992,
as amended, between the Company and Richard Byrnes.*+
10.11 Agreement dated as of July 14, 1981 between the
Company and Marshall Tulin, John Tulin and Raymond
Vise as investment managers of the Company's pension
plans. (Exhibit 10.12(b) to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1981, File No. 1-5354, is incorporated
herein by reference).
10.12 The New Swank, Inc. Retirement Plan Trust Agreement
dated as of January 1, 1994 among the Company and
Marshall Tulin, John Tulin and Raymond Vise, as co-
trustees.*
10.13 Plan of Recapitalization of the Company dated as of
September 28, 1987, as amended (Exhibit 2.01 to
Post-Effective Amendment No. 1 to the Company's S-4
Registration Statement, File No. 33-19501, filed on
February 9, 1988, is incorporated herein by
reference).
10.14 Key Employee Deferred Compensation Plan. (Exhibit
10.17 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, File No.
1-5354, is incorporated herein by reference).+
10.15 1994 Non-Employee Director Stock Option Plan.*
10.15.1 Stock Option Contracts dated as of
</TABLE>
-16-
<PAGE> 17
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
December 31, 1994 between the Company and each of
Mark Abramowitz, William B. MacLeod and Raymond
Vise.*+
11.01 Statement Re Computation of Earnings Per Share.*
13.01 Annual Report to Stockholders for the fiscal year
ended December 31, 1994.*
21.01 Subsidiaries of the Company. (Exhibit 22.01 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992, File No. 1-5354, is
incorporated herein by reference).
23.01 Consent of independent accountants.*
27 Financial Data Schedule.
___________________________
<FN>
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during
the last fiscal quarter of the period covered by
this Report.
-17-
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Stockholders of Swank, Inc.
Attleboro, Massachusetts
Our report on the consolidated financial statements of Swank, Inc. has
been incorporated by reference in this Form 10-K from page 4 of the 1994 Annual
Report to Stockholders of Swank, Inc. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the index on page 12 of this Form 10-K.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 24, 1995, except as to the
information presented in Note E,
for which the date is March 9, 1995
-18-
<PAGE> 19
SWANK, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COMUMN D COLUMN E
-------- -------- -------- -------- --------
BALANCE AT ADDITIONS BALANCE AT
BEGINNING CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSE DEDUCTIONS PERIOD
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1994
ALLOWANCE FOR DOUBTFUL ACCOUNTS 900,000 213,000 (G) 13,000 (A) 1,100,000
ALLOWANCE FOR CASH DISCOUNTS 470,000 1,409,000 (H) 1,379,000 (B) 500,000
ALLOWANCE FOR CUSTOMER RETURNS 4,959,000 7,436,000 (F) 7,734,000 (C) 4,661,000
ALLOWANCE FOR COOPERATIVE ADVERTISING 505,000 1,314,000 (G) 1,116,000 (D) 703,000
ALLOWANCE FOR IN-STORE MARKDOWNS 1,785,000 5,741,000 (G) 5,006,000 (E) 2,520,000
--------- ---------- --- ---------- --- ---------
8,619,000 16,113,000 15,248,000 9,484,000
FOR THE YEAR ENDED DECEMBER 31, 1993
ALLOWANCE FOR DOUBTFUL ACCOUNTS 850,000 510,000 (G) 460,000 (A) 900,000
ALLOWANCE FOR CASH DISCOUNTS 410,000 1,563,000 (H) 1,503,000 (B) 470,000
ALLOWANCE FOR CUSTOMER RETURNS 5,885,000 9,165,000 (F) 10,091,000 (C) 4,959,000
ALLOWANCE FOR COOPERATIVE ADVERTISING 700,000 1,002,000 (G) 1,197,000 (D) 505,000
ALLOWANCE FOR IN-STORE MARKDOWNS 3,046,000 3,361,000 (G) 4,622,000 (E) 1,785,000
---------- ---------- --- ---------- --- ---------
10,891,000 15,601,000 17,873,000 8,619,000
FOR THE YEAR ENDED DECEMBER 31, 1992
ALLOWANCE FOR DOUBTFUL ACCOUNTS 934,000 701,000 (G) 785,000 (A) 850,000
ALLOWANCE FOR CASH DISCOUNTS 470,000 1,409,000 (H) 1,469,000 (B) 410,000
ALLOWANCE FOR CUSTOMER RETURNS 5,915,000 8,224,000 (F) 8,254,000 (C) 5,885,000
ALLOWANCE FOR COOPERATIVE ADVERTISING 899,000 1,230,000 (G) 1,429,000 (D) 700,000
ALLOWANCE FOR IN-STORE MARKDOWNS 1,652,000 4,471,000 (G) 3,077,000 (E) 3,046,000
--------- ---------- --- ---------- --- ------------
9,870,000 16,035,000 15,014,000 10,891,000
</TABLE>
(A) BAD DEBTS CHARGED OFF AS UNCOLLECTIBLE, NET OF
RECOVERIES
(B) CASH DISCOUNTS TAKEN BY CUSTOMERS
(C) CUSTOMER RETURNS
(D) CREDITS ISSUED TO CUSTOMERS FOR COOPERATIVE
ADVERTISING
(E) CREDITS ISSUED TO CUSTOMERS FOR IN STORE
MARKDOWNS
(F) NET REDUCTION OF SALES AND COST OF SALES
(G) LOCATED IN SELLING AND ADMINISTRATIVE
(H) LOCATED IN NET SALES
-19-
<PAGE> 20
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.
Date: March 28, 1995 SWANK, INC.
(Registrant)
By: /s/ Andrew C. Corsini
-----------------------
Andrew C. Corsini,
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
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.
<TABLE>
<CAPTION>
Signature Title Date
--------------------- ------------------------ --------------
<S> <C> <C>
/s/ Marshall Tulin President and Director March 28, 1995
--------------------- (principal executive
Marshall Tulin officer)
/s/ Andrew C. Corsini Senior Vice President, March 28, 1995
--------------------- Chief Financial Officer,
Andrew C. Corsini Treasurer and Secretary
(principal financial and
accounting officer)
/s/ Mark Abramowitz Director March 28, 1995
---------------------
Mark Abramowitz
/s/ William MacLeod Director March 28, 1995
---------------------
William B. MacLeod
/s/ James Tulin Director March 28, 1995
---------------------
James Tulin
/s/ John Tulin Director March 28, 1995
---------------------
John Tulin
/s/ Raymond Vise Director March 28, 1995
---------------------
Raymond Vise
</TABLE>
-20-
<PAGE> 21
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________
EXHIBITS
to
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1994
_____________________________________
SWANK, INC.
<PAGE> 22
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
-------- ----------- ----
<C> <S>
3.01 Restated Certificate of Incorporation of
the Company dated May 1, 1987.
(Exhibit 3.01 to the Company's S-4
Registration Statement, File No. 33-19501,
filed on January 4, 1988, is incorporated
herein by reference).
3.01.1 Amendments to the Restated Certificate of
Incorporation of the Company. (Exhibit
3.02 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1987, File No. 1-5354, is
incorporated herein by reference).
3.02 By-Laws of the Company, as amended to
date.*
4.01 Form of Certificate of Designation of the
Series A Participating Preferred Stock and
Series B Participating Preferred Stock.
(Exhibit A to Annex 1 to the Proxy
Statement/Prospectus contained in the
Company's Registration Statement, File
No. 33-19501, filed on January 4, 1988, is
incorporated herein by reference).
4.02 Rights Agreement dated as of October 23,
1987, between the Company and The Chase
Manhattan Bank, N.A. as Rights Agent,
including, as Exhibit A of such Rights
Agreement, the Certificate of Designation
relating to the Company's Series C Parti-
cipating Preferred Stock. (Exhibit 4(b) to
the Company's current Report on Form 8-K
for October 23, 1987, File No. 1-5354, is
incorporated herein by reference).
4.03 Credit Agreement dated as of December 22,
1992 ("Credit Agreement") between the
Company, each of the banks which is a
signatory thereto and The Chase Manhattan
Bank (National Associations), as Agent (in
such capacity, the "Agent"). (Exhibit
4.03 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-5354, in
incorporated herein by reference).
4.03.1 Amendment No. 1 dated March 30, 1993
to the Credit Agreement.*
4.03.2 Amendment No. 2 dated May 10, 1993
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
-------- ----------- ----
<C> <S>
to the Credit Agreement.*
4.03.3 Amendment No. 3 dated August 31, 1993
to the Credit Agreement.*
4.03.4 Amendment No. 4 dated March 9, 1994
to the Credit Agreement. (The first
exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter
ended September 30, 1994, File No.
1-5354, is incorporated herein by
reference).
4.03.5 Amendment No. 5 dated April 1, 1994
to the Credit Agreement. (The second
exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter
ended September 30, 1994, File No.
1-5354, is incorporated herein by
reference).
4.03.6 Amendment No. 6 dated September 13,
1994 to the Credit Agreement. (The
third exhibit to the Company's
Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994,
File No. 1-5354, is incorporated
herein by reference).
4.04 Security Agreement dated as of December 22,
1992 ("Swank Security Agreement") between
the Company and the Agent. (Exhibit 4.04
to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1992, File No. 1-5354, in incorporated
herein by reference).
4.04.1 Amendment No. 1 dated September 13, 1994 to
the Swank Security Agreement. (The fourth
exhibit to the Company's Quarterly Report
on Form 10-Q for the quarter ended September
30, 1994, File No. 1-5354, is incorporated
herein by reference).
4.05 Security Agreement dated as of December 22,
1992 ("FSC Security Agreement") between
Swank Sales International (V.I.), Inc. and
the Agent. (Exhibit 4.05 to the Company's
Annual Report on Form 10-K for the fiscal
year ended December 31, 1992, File No. 1-
5354, in incorporated herein by reference).
4.05.1 Amendment No. 1 dated September 13, 1994
to the FSC Security Agreement. (The fifth
exhibit to the Company's Quarterly Report
on Form 10-Q for the quarter ended September
30, 1994, File No. 1-5354, is incorporated
herein by reference).
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
------- ----------- ----
<S> <C>
4.06 Open End Indenture of Mortgage, Assignment
of Rents, Security Agreement and Fixture
Filing (Connecticut) dated as of December
22, 1992 between the Company and the Agent.
(Exhibit 4.06 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-5354,
in incorporated herein by reference).
4.07 Open End Indenture of Mortgage, Assignment
of Rents, Security Agreement and Fixture
Filing (Massachusetts) dated as of December
22, 1992 between the Company and the Agent.
(Exhibit 4.07 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-5354,
in incorporated herein by reference).
4.08 Warrant Agreement dated as of April 29,
1991 between the Company, the banks that
were signatories to the Company's Credit
Agreement dated as of May 11, 1990 (as
amended prior to March 30, 1992) and The
Chase Manhattan Bank (National
Association), as Agent. (Exhibit 4.03(tt)
to Amendment No. 1 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-5354,
is incorporated herein by reference).
4.08.1 Form of Warrant. (Annex 1 to the Warrant
Agreement filed as Exhibit 4.03(tt) to
Amendment No. 1 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-5354.)
(Exhibit 4.03(uu) to Amendment No. 1 to the
Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990,
File No. 1-5354, is incorporated herein by
reference).
10.01 Employment Agreement dated June 20, 1991
between the Company and Marshall Tulin.
(Exhibit 10.01 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1991, File No. 1-5354,
is incorporated herein by reference).
10.01.1 Amendment dated as of September 1, 1993 to
Employment Agreement between the Company
and Marshall Tulin. (Exhibit 10.01.1 to the
Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993,
File No. 1-5354, is incorporated herein by
reference).
10.02 Employment Agreement dated as of January 1,
1990 between the Company and John Tulin.
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
------- ----------- ----
<S> <C>
(Exhibit 10.03 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1989, File No. 1-5354,
is incorporated herein by reference).
10.02.1 Amendments dated September 1, 1993 and Sep-
tember 2, 1993, respectively, between the
Company and John Tulin. (Exhibit 10.01.1
to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1993, File No. 1-5354, is incorporated
herein by reference).
10.03 Employment Agreement dated as of March 1,
1989 between the Company and James Tulin.
(Exhibit 10.05 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1988, File No. 1-5354,
is incorporated herein by reference).
10.03.1 Amendment dated as of January 4, 1990 to
Employment Agreement between the Company
and James Tulin. (Exhibit 10.05 to the
Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989,
File No. 1-5354, is incorporated herein by
reference).
10.03.2 Amendment dated as of September 1, 1993 to
Employment Agreement between the Company
and James Tulin. (Exhibit 10.01.1 to the
Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993,
File No. 1-5354, is incorporated herein by
reference).
10.04 Amended and Restated 1981 Incentive Stock
Option Plan of the Company. (Exhibit 10.08
to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1987, File No. 1-5354, is incorporated
herein by reference).
10.05 1987 Incentive Stock Option Plan of the
Company. (Annex 3 to the Proxy
Statement/Prospectus contained in the
Company's Registration Statement, File
No. 33-19501, filed on January 4, 1988, is
incorporated herein by reference).
10.06 1987 Incentive Share Plan of the Company.
(Annex 2 to the Proxy Statement/Prospectus
contained in the Company's Registration
Statement, File No. 33-19501, filed on
January 4, 1988, is incorporated herein by
reference).
10.07 Form of Termination Agreement dated as of
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
-------- ----------- ----
<S> <C>
May 1, 1987 between the Company and certain
of the Company's executive officers listed
on the Schedule thereto. (Exhibit 10.11 to
the Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1987, File No. 1-5354, is incorporated
herein by reference).
10.07.1 Form of First Amendment and Extension
effective as of May 1, 1990 to the
Termination Agreements effective as of May
1, 1987 between the Company and each of the
Company's officers listed on Schedule A
thereto. (Exhibit 19.1 to the Company's
Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1990,
File No. 1-5354, is incorporated herein by
reference).
10.08 Form of Termination Agreement effective as
of May 1, 1990 between the Company and each
of the Company's officers listed on
Schedule A thereto. (Exhibit 19.2 to the
Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30,
1990, File No. 1-5354, is incorporated
herein by reference).
10.08.1 Form of Termination Agreement
effective January 1, 1993, April 23,
1993 or May 1, 1993, as the case may
be, between the Company and each of
the Company's officers listed on
Schedule A thereto.*+
10.09 Deferred Compensation Plan of the Company
dated as of January 1, 1987. (Exhibit
10.12 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1988, File No. 1-5354, is
incorporated herein by reference).
10.10 Employment Agreement dated as of
January 15,1992, as amended, between
the Company and Richard Byrnes.*+
10.11 Agreement dated as of July 14, 1981 between
the Company and Marshall Tulin, John Tulin
and Raymond Vise as investment managers of
the Company's pension plans. (Exhibit
10.12(b) to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1981, File No. 1-5354, is
incorporated herein by reference).
10.12 The New Swank, Inc. Retirement Plan Trust
Agreement dated as of January 1, 1994 among
the Company and Marshall Tulin, John Tulin
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
-------- ----------- ----
<S> <C>
and Raymond Vise, as co-trustees.*
10.13 Plan of Recapitalization of the Company
dated as of September 28, 1987, as amended
(Exhibit 2.01 to Post-Effective Amendment
No. 1 to the Company's S-4 Registration
Statement, File No. 33-19501, filed on
February 9, 1988, is incorporated herein by
reference).
10.14 Key Employee Deferred Compensation Plan.
(Exhibit 10.17 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1993, File No. 1-5354,
is incorporated herein by reference).
10.15 1994 Non-Employee Director Stock Option
Plan.*
10.15.1 Stock Option Contracts dated as of
December 31, 1994 between the Company and
each of Mark Abramowitz, William B. MacLeod
and Raymond Vise.*
11.01 Statement Re Computation of Earnings Per
Share.*
13.01 Annual Report to Stockholders for the
fiscal year ended December 31, 1994.*
22.01 Subsidiaries of the Company. (Exhibit
22.01 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-5354, is
incorporated herein by reference).
23.01 Consent of independent accountants.*
27 Financial Data Schedule.
<FN>
------------------------
* Filed herewith.
</TABLE>
<PAGE> 1
EXHIBIT 3.02
As of 3/21/95
BY-LAWS
OF
SWANK, INC.
-----------
ARTICLE I
---------
OFFICES
-------
1. The principal office shall be in the City of Dover, County of
Kent, State of Delaware, and the name of the resident agent in charge thereof
is The Prentice-Hall Corporation System, Inc.
2. The corporation may also have an office or offices at such
other place or places, within or without the State of Delaware, as the Board of
Directors may from time to time designate or the business of the corporation
may require.
ARTICLE II
----------
Stockholders' Meetings
----------------------
1. The annual meeting of the stockholders of the corporation
shall be held at such place within or without the State of Delaware and at such
time and date as may be determined by the Board of Directors and shall be
designated in the notice of said meeting, for the purpose of electing directors
and for the transaction of such other business as may be properly be brought
before the meeting.
If the election of directors shall not be held on the day designated
herein for any annual meeting, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as conveniently may be. At such meeting the
stockholders may elect the directors and transact other business with the same
force and effect as at an annual meeting duly called and held.
2. Special meetings of the stockholders shall be held at the
principal office of the Corporation in the state of Delaware, or at such other
place within or without the State of Delaware as may be designated in the
notice of
-1-
<PAGE> 2
said meeting, upon call of the Board of Directors, and shall be called by the
President or Secretary at the request in writing of stockholders owning of
record at lease twenty-five per cent of the issued and outstanding capital
stock of the corporation entitled to vote thereat.
3. Notice of the purpose or purposes and of the time and place
within or without the State of Delaware of every meeting of stockholders shall
be given by the President or a Vice President or the Secretary or an Assistant
Secretary either personally or by mail or by telegraph or by any other lawful
means of communication not less than ten days before the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be directed to each stockholder at his address as it appears on the stock
book unless he shall have filed with the Secretary of the corporation a written
request that notices intended for him be mailed to some other address, in which
case it shall be mailed or transmitted to the address designated in such
request. Such further notice shall be given as may be required by law. Except
as otherwise expressly provided by statute, no publication of any notice of a
meeting of stockholders shall be required to be given to any stockholder who
shall attend such meeting in person or by proxy, or who shall, in person or by
attorney thereunto authorized, waive such notice in writing or by telegraph,
cable, radio, or wireless either before or after such meeting. Except where
otherwise required by law, notice of any adjourned meeting of the stockholders
of the corporation shall not be required to be given.
4. A quorum at all meetings of stockholders shall consist of the
holders of record of a majority of the shares of stock of the corporation,
issued and outstanding, entitled to vote at the meeting, present in person or
by proxy, except as otherwise provided by statute or the Certificate of
Incorporation. In the absence of a quorum at any meeting or any adjournment
thereof, a majority of those present in person or by proxy and entitled to vote
may adjourn such meeting from time to time. At any such adjourned meeting at
which a quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
5. Meetings of the stockholders shall be presided over by the
President, or if he is not present, by the Chairman of the Board, if any, nor
if neither the President nor the Chairman of the Board, if any, is present, by
a chairman to be chosen by a majority of the stockholders entitled to vote who
are present in person or by proxy at the meeting. The Secretary of the
corporation, or in his absence, an Assistant Secretary, shall act as secretary
of every meeting, but if neither the Secretary nor an Assistant Secretary is
present, the meeting shall choose any person present to act as secretary of the
meeting.
6. Except as otherwise provided in the By-Laws, the Certificate
of Incorporation, or in the laws of the State of Delaware, at every meeting of
the stockholders, each stockholder of the Corporation entitled to vote at such
meeting shall have one vote in person or by proxy for each share of stock
having voting rights held by him and registered in his name on the
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<PAGE> 3
books of the corporation at the time of such meeting. Any vote on shares of
stock of the corporation may be given by the stockholder entitled thereto in
person or by his proxy appointed by an instrument in writing, subscribed by
such stockholder or by his attorney thereunto authorized and delivered to the
secretary of the meeting. Except as otherwise required by statute, by the
Certificate of Incorporation or these By-Laws, all matters coming before any
meeting of the stockholders shall be decided by a plurality vote of the
stockholders of the Corporation present in person or by proxy at such meeting
and entitled to vote thereat, a quorum being present. At all elections of
directors the voting may but need not be by ballot and a plurality of the votes
cast thereat shall elect.
7. A complete list of the stockholders entitled to vote at the
ensuing election of directors, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder shall be prepared by the Secretary or other officer of the
Corporation having charge of the stock ledger. Such list shall be open to the
examination of any stockholder during ordinary business hours, for a period of
at least ten days prior to the election, either at a place within the city,
town or village where the election is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where said meeting is to be held, and the list shall be produced and kept at
the time and place of election during the whole time thereof, and subject to
the inspection of any stockholder who may be present.
8. At all elections of directors, or in any other case in which
inspectors may act, two inspectors of election shall be appointed by the
chairman of the meeting, except as otherwise provided by law. The inspectors
of election shall take and subscribe an oath faithfully to execute the duties
of inspectors at such meeting with strict impartiality, and according to the
best of their ability, and shall take charge of the polls and after the vote
shall have been taken shall make a certificate of the result thereof. If there
be a failure to appoint inspectors or if any inspector appointed be absent or
refuse to act, or if his office becomes vacant, the stockholders present at the
meeting, by a per capita vote, may choose temporary inspectors of the number
required.
ARTICLE III
-----------
Directors
---------
1. The property, affairs and business of the corporation shall be
managed by its Board of Directors consisting of not less than three (3) nor
more than twenty-one (21) persons. The exact number of directors within the
maximum limitations specified shall be fixed from time to time by resolution of
the Board of Directors. Except as hereinafter provided, directors shall be
elected at the annual meeting of the stockholders by plurality vote and each
director shall be elected to serve for one year and until his successor shall
be elected and shall qualify. Directors need not be stockholders.
2. Meetings of the Board of Directors shall be held at such place
within or outside the State of Delaware as may from time to time be fixes by
resolution of the Board of Directors, or as may be specified in the notice of
the meeting. Regular meetings of the Board of Directors shall be held at such
times as may from time to time be fixed by resolution of the Board of
Directors, and special meetings may be held at any time upon the call of the
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<PAGE> 4
President, Secretary, or a majority of the directors by oral, telegraphic or
written notice duly served on or sent or mailed to each director not less than
three days before such meeting. A meeting of the Board of Directors may be
held without notice immediately after the annual meetings of stockholders.
Notice need not be given of regular meetings of the Board of Directors.
Meetings may be held at any time without notice if all the directors are
present, or if at any time before or after the meeting those not present waive
notice of the meeting in writing.
3. A majority of the members of the Board of Directors then
acting, but in no event less than one-third nor less than two of the number of
directors authorized, acting at a meeting duly assembled, shall constitute a
quorum for the transaction of business, but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those
present may adjourn the meeting, without further notice, from time to time
until a quorum shall have been obtained.
4. In case one or more vacancies shall occur in the Board of
Directors by reason of death, resignation, increase in the number of directors
or otherwise except in so far as otherwise provided in these By-Laws, the
remaining directors, although less than a quorum, may, by a majority vote,
elect a successor or successors for the unexpired term or terms.
5. An Executive Committee of two (2) or more directors may be
designated by resolution passed by a majority of the whole Board of Directors.
The act of a majority of the members of said Committee shall be the act of the
Committee, and said Committee may meet at stated times or on notice. Whenever
the Board of Directors is not in session or whenever a quorum of the Board of
Directors fails to attend any regular or special meeting of the Board, said
Committee shall advise with and aid the officers of the corporation in all
matters concerning its interests and the management of its business and
affairs, and generally perform such duties and exercise such powers as may be
performed and exercised by the Board of Directors from time to time, and the
Executive Committee shall have the power to authorize the seal of the
Corporation to be affixed to all papers which may require it and, in so far as
may be permitted by law, exercise the powers and perform the obligations of the
Board of Directors. The Board of Directors may also designate one or more
committees in addition to the Executive Committee by resolution or resolutions
passed by a majority of the whole Board of Directors; such committee or
committees to consist of two (2) or more directors of the corporation and, to
the extent provided in the resolution or resolutions designating them, shall
have or may exercise the specific powers of the Board of Directors in the
management of the business and affairs of the corporation. such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors.
6. At any special meeting of stockholders, duly called as
provided in these By-Laws, any directors or directors may by the affirmative
vote of the holders of a majority of all the shares of stock outstanding and
entitled to vote for the election of directors be removed from office, either
with or without cause, and his successor or their successors may be elected at
such meeting; or the remaining directors may, to the extent vacancies are not
filled by such election, fill any vacancy or vacancies created by such removal.
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<PAGE> 5
7. Each director and officer now or hereafter in office and his
heirs, executors and administrators, and each director and officer and his
heirs, executors and administrators, who now acts, or shall hereafter act, at
the request of the corporation as a director or officer of another corporation
controlled by the corporation shall be indemnified by the corporation against
all costs, expenses and amounts or liability therefor, including counsel fees,
reasonably incurred by or imposed upon him in connection with or resulting from
any suit, action, proceeding or claim to which he may be made a party, or in
which he may be or become involved by reason of his being or having been such
director or officer or, subject to the provisions hereof, any settlement
thereof, whether or not he continues to be such director or officer at the time
of incurring such costs, expenses or amounts, provided that such
indemnification shall not apply with respect to any matter as to which such
director or officer shall be finally adjudged in such action, suit or
proceeding to have been individually guilty of wilful misfeasance or
malfeasance in the performance of his duty as such director or officer, and
provided, further, that the indemnification herein provided shall, with respect
to any settlement of any such suit, action, proceeding or claim, include
reimbursement of any amounts paid and expenses reasonably incurred in settling
any such suit action, proceeding or claim, when, in the judgment of the Board
of Directors of the corporation, such settlement and reimbursement appear to be
for the best interests of the corporation. The foregoing right of
indemnification shall be in addition to and not exclusive of any and all other
rights to which any such director or officer may be entitled by statute or
under any By-Law, agreement, vote of stockholders or otherwise.
8. Any action required or permitted to be taken at any meeting of
the Board of Directors or any committee thereof may be taken without a meeting
if prior to such action a written consent thereto is signed by all members of
the Board of Directors or of the committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board of
Directors or the committee.
9. Directors may, by resolution of the Board of Directors, be
allowed a fixed sum and expenses of attendance for attendance at regular or
special meetings of the Board of Directors; provided that noting herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees, and others who attend pursuant to direction,
may, by vote of the Board of Directors, be allowed a like fixed sum and
expenses of attendance for attending committee meetings.
ARTICLE IV
----------
OFFICERS
--------
1. The officers of the corporation shall be chosen by the Board
of Directors and shall be a President, who shall be a director, one or more
Vice Presidents, a Secretary and a Treasurer. The Board of Directors may also
appoint such Assistant Secretaries, Assistant Treasurers and such other
officers as it may deem proper. The Board of Directors may elect from its
members a Chairman of the Board, who shall be an officer of the Corporation.
The Board of Directors may also designate one of the Vice Presidents to be
Executive Vice President. Any two or more officers may be held by the same
person.
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<PAGE> 6
2. The terms of office of all officers shall be one year and
until their respective successors are elected an qualify, but any officer may
be removed from office, either with or without cause, at any time by the
affirmative vote of a majority of the members of the Board of Directors then in
office. A vacancy in any office arising from any cause may be filled for the
unexpired portion of the term by the Board of Directors.
3. Unless otherwise ordered by the Board of Directors, the
President shall have full power and authority on behalf of the Corporation to
attend and to act and to vote at any meetings of security holders of the
corporations in which the corporation may hold securities, and at such meeting
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities, and which as the owner thereof the Corporation
might have possessed and exercised, if present. The Board of Directors by
resolution from time to time may confer like powers upon any other person or
persons.
ARTICLE V
---------
Duties of Officers
------------------
1. The President shall preside at all meetings of stockholders
and if there be no Chairman of the Board or in the absence of the Chairman of
the Board, he shall preside at all meetings of the Board of Directors. He
shall be the principal executive officer of the corporation and as such shall
have general and active direction of the business of the corporation. He shall
have such other duties and powers as may be assigned to him from time to time
by the Board of Directors.
2. The Chairman of the Board, if one be elected, shall preside at
all meetings of the Board of Directors and in the absence of the President
shall preside at all meeting of stockholders. He shall do and perform such
other duties as may be assigned to him from time to time by the Board of
Directors.
3. Except as provided above, during the absence or disability of
the President, the Executive Vice President, if one be elected, shall exercise
all the functions of the President. Each Vice President shall have such powers
and discharge such duties as may be assigned to him from time to time by the
Board of Directors.
4. The Treasurer shall have the custody of all the funds and
securities of the corporation. When necessary or proper he shall endorse on
behalf of the corporation, for collection, checks, notes and other obligations
and shall deposit the same to the credit of the corporation in such bank, or
banks, or depositories as may be designated by the Board of Directors, or by
any officer acting under authority conferred by the Board of Directors. He
shall enter regularly in books to be kept for the purpose, a full and accurate
account of all moneys received and paid by him on account of the corporation.
Whenever required by the Board of Directors, he shall render an account of all
his transactions as Treasurer and of the financial condition of the
corporation. He shall at all reasonable times exhibit his books and accounts
to any director of the corporation upon application at the office of the
corporation during business hours and he shall perform all
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<PAGE> 7
things incident to the position of Treasurer, subject to the control of the
Board of Directors. He shall give bond for the faithful discharge of his
duties if the Board of Directors so require. He shall do and perform such
other duties as may be assigned to him from time to time by the Board of
Directors.
5. The Assistant Treasurers, in the order of their seniority,
shall, in the absence of or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties as the
Board of Directors shall prescribe.
6. The Secretary shall attend all meetings of the stockholders
and all meetings of the Board of Directors, and record all votes and the
minutes of all proceedings in a book to be kept for that purpose; and shall
perform like duties for other committees when so required. He shall give, or
cause to be given, notice of all meetings of stockholders and of the Board of
Directors and of committees and shall perform such other duties as may be
prescribed by the Board of Directors. He shall keep in safe custody the seal
of the corporation and affix the same to any instrument whose execution has
been authorized. He shall be sworn to the faithful discharge of his duties.
He shall do and perform such other duties as by be assigned to him from time to
time by the Board of Directors.
7. The Assistant Secretaries, in the order of their seniority,
shall in the absence of or disability of the Secretary, perform the duties and
exercise the powers of the Secretary and shall perform such other duties as the
Board of Directors shall prescribe.
8. In the case of absence or inability to act of any officer of
the corporation and of any person herein authorized to act in his place, the
Board of Directors may from time to time delegate the powers and duties of such
officer to any other officer or any director or any other person whom it may
select.
9. Unless the Board of Directors shall otherwise direct, the
salary of the President and of the Chairman of the Board, if one be elected,
shall be fixed by the Board of Directors and the salaries of all other officers
and employees be fixed by the President.
ARTICLE VI
----------
Certificate of Stock
--------------------
1. The interest of each stockholder of the corporation shall be
evidenced by certificates for shares of stock, certifying the number of shares
represented thereby and in such form not inconsistent with the Certificate of
Incorporation as the Board of Directors may from time to time prescribe.
Transfers of shares of stock of the corporation shall be made on the
books of the corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the corporation, or with a transfer clerk or a transfer agent
appointed as in these By-Laws provided, and on surrender of the certificate or
certificates for such shares properly endorsed and the payment of all
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<PAGE> 8
taxes thereon. The person in whose name shares of stock stand on the books of
the corporation shall be deemed the owner thereof for purposes as regards the
corporation. The Board may, from time to time, make such additional rules and
regulations as it may deem expedient, not inconsistent with these By-Laws,
concerning the issue, transfer, and registration of certificates for shares of
the capital stock of the corporation.
The certificates of stock shall be signed by the Chairman or
Vice-Chairman of the Board of Directors, or the President or any Vice-President
and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and sealed with the seal of the Corporation. Such seal may be a
facsimile, engraved or printed. If any such certificate is countersigned by a
transfer agent or a registrar other than the Corporation, any other signatures
on the certificate may be facsimile, engraved or printed. In case any such
officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
2. The Board of Directors may, in its discretion, fix in advance
a date, not exceeding sixty (60) days preceding the date of any meeting of
stockholders or the date for the payment of any dividend or the date for the
allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting, and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent, and in such case such
stockholder, and only such stockholders as shall be stockholders of record on
the date so fixed, shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give
such consent, as the case may be, notwithstanding any transfer of any shares of
stock on the books of the corporation after any such record date fixed as
aforesaid.
3. No certificate for shares of stock of the corporation shall be
issued in place of any certificate alleged to have been lost, destroyed or
stolen, except on production of such evidence of such loss, destruction or
theft and on delivery to the Corporation, if the Board of Directors shall so
require, of a bond of indemnity in such amount, upon such terms and secured by
such surety as the Board of Directors may in its discretion require.
4. The Board of Directors may appoint one or more transfer clerks
or one or more transfer agents and one or more registrars, and may require all
certificates for shares of stock to bear the signature or signatures of any of
them.
5. The books, accounts and records of the corporation, except as
may otherwise be required by statue, may be kept outside the State of Delaware,
at such place or places as the Board of Directors may from time to time
appoint. The Board of Directors shall determine whether and to what extent the
books,
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<PAGE> 9
accounts and records of the corporation, or any of them, other than the stock
ledger, shall be open to the inspection of stockholders, and no stockholder
shall have any right to inspect any book, account or record the Corporation
except as conferred by statue or by resolution of the Board of Directors.
ARTICLE VII
-----------
Corporate Seal
--------------
The corporate seal of the corporation shall consist of two concentric
circles between which shall be the name of the Corporation and the words
"Corporate Seal" and in the center shall be inscribed the words "Delaware
1936".
ARTICLE VIII
------------
Amendments
----------
The By-Laws of the corporation shall be subject to alteration,
amendment or repeal, and new By-Laws not inconsistent with any provision of the
Certificate of Incorporation or statute, may be made, either by the affirmative
vote of the holders of a majority in interest of the stock of the corporation
present in person or by proxy at any annual or special meeting of the
stockholders and entitled to vote thereat a quorum being present, provided that
notice of such proposed action shall have been given in the call for the
meeting, or by the affirmative vote of a majority of the whole Board, given at
any regular or special meeting of the Board of Directors.
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<PAGE> 1
EXHIBIT 4.03.1
EXECUTION COPY
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of March 30, 1993 among SWANK, INC.,
the undersigned banks and The Chase Manhattan Bank (National Association), as
agent for such banks.
The parties hereto are all parties to a CREDIT AGREEMENT (the
"Credit Agreement") dated as of December 22, 1992, and wish to amend the Credit
Agreement in certain respects. Accordingly, the parties hereto agree to as
follows:
Section 1. DEFINITIONS. Unless otherwise noted, capitalized
terms used herein and defined in the Credit Agreement shall have the respective
meanings ascribed thereto in the Credit Agreement.
Section 2. AMENDMENTS. The Credit Agreement is amended as
follows:
(a) Paragraph (f) of Section 2.02 of the Credit Agreement is
amended and restated in its entirety to read as follows:
"(f) Swank agrees to pay to Chase (i) in respect of each
commercial Letter of Credit, a letter of credit fee (but not less than
$100) equal to 3/4 of 1% of the face amount thereof (PROVIDED that,
for any period during which the Applicable Margin is reduced as
provided in the definition of such term in Section 1.01 hereof, such
Letter of Credit fee shall be reduced to a rate equal to 1/2 of 1%),
for the period from and including the date of issuance of such Letter
of Credit to and including the date of expiration or termination
thereof such letter of credit fee on the Revolving Credit Termination
Date; and (ii) in respect of each standby Letter of Credit, an
issuance fee in an amount equal to 2% per annum of the daily average
of the undrawn face amount of such Letter of Credit for the period
from and including the date of issuance of such Letter of Credit to
and including the date such letter of Credit is drawn in full, expires
or is terminated (such fee to be non-refundable, to be paid in arrears
on each Quarterly Date and on the Revolving Credit Commitment
Termination Date and to be calculated, for any day, after giving
effect to any payments made under such Letter of Credit on such day).
Chase agrees to pay to each Bank, from time to time at
<PAGE> 2
reasonable intervals (but in any event at least quarterly), but only
to the extent actually received, an amount equal to such Bank's
Commitment Percentage of all such letter of credit fees in respect of
each Letter of Credit including any such fee in respect of any period
of any renewal or extension thereof."
(b) Paragraph (g) of Section 2.02 of the Credit Agreement is
amended and restated in its entirety to read as follows:
"(g) Swank agrees to pay to Chase for its own account, in
respect of each commercial Letter of Credit, a letter of credit
issuance fee in an amount equal to 1/2 of 1% of the face amount of any
draft drawn under such Letter of Credit (but not less than $100) as
well as Chase's standard opening and amendment fees in place at the
time of issuance, such fee to be non-refundable and payable at the
time of Letter of Credit draft presentation/payment.
Section 3. MISCELLANEOUS. Except as expressly amended
hereby, the Credit Agreement shall remain unmodified and in full force and
effect. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of
the parties hereto may execute this Amendment by signing any such counterpart.
This Amendment shall be governed by and construed in accordance with the law of
the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed as of the date and year first above
written.
SWANK, INC.
By /s/ John Tulin
-----------------------
Title: Executive V.P.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ Elizabeth Feuerman
---------------------------
Title: Second V.P.
<PAGE> 3
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FLEET NATIONAL BANK
By /s/ Robert T.P. Storer
---------------------------
Title: Vice President
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ Elizabeth Feuerman
---------------------------
Title: Second V.P.
<PAGE> 1
EXHIBIT 4.03.2
EXECUTION COPY
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of May 10, 1993 among SWANK, INC.,
the undersigned banks and The Chase Manhattan Bank (National Association), as
agent for such banks.
The parties hereto are all parties to a Credit Agreement (as
heretofore modified, the "CREDIT AGREEMENT") dated as of December 22, 1992, and
wish to amend the Credit Agreement in certain respects. Accordingly, the
parties hereto agree to as follows:
Section 1. DEFINITIONS. Unless otherwise noted, capitalized
terms used herein and defined in the Credit Agreement shall have the respective
meanings ascribed thereto in the Credit Agreement.
Section 2. AMENDMENTS. The definition of "Borrowing Base" in
Section 1.01 of the Credit Agreement is amended in its entirety to read as
follows:
"BORROWING BASE" shall mean, as at any day of determination
thereof, the sum of (i) 75% of the aggregate amount of Eligible
Receivables at said date, PLUS (ii) the lesser of (w) 50% of the
aggregate amount of Eligible Inventory at said date or (x) during the
months of January through April in any year, $6,000,000, during the
months of May through August in any year, $11,000,000, during the
month of September in any year, $12,000,000, during the month of
October in any year, $11,000,000 and during the months of November and
December in any year, $0, PLUS (iii) as to any real estate, machinery
or equipment of Swank as to which Swank shall have delivered to the
Banks an appraisal (which appraisal shall be updated annually) in form
and substance, and by an appraisal firm having a level of experience
and reputation, satisfactory to the Majority Banks, during the
following respective years the following respective percentages of (y)
the appraised value of any machinery and equipment covered by such
appraisal: during 1993, 50%; during 1994, 37.50%; and during 1995, 0%;
and (z) the appraised value of any real estate covered by such
appraisal: during 1993, 75%; during 1994, 56.25%; and during 1995, 0%
(the value of all such machinery and equipment being agreed on the
date hereof to be $2,100,000, the value of all such real estate being
agreed on the date hereof to
<PAGE> 2
be $2,250,000 as to Attleboro, Massachusetts and $4,800,000 as to
Norwalk, Connecticut) PLUS (iv) the cost of any machinery or equipment
acquired by Swank since the date of delivery of the most recent
appraisal required hereby, MINUS the appraised value of any machinery
or equipment retired during such fiscal year or exchanged therefor,
PROVIDED, that if the cost of such machinery or equipment acquired by
Swank exceeds $1,000,000, Swank shall, at the request of the
Majority Banks, deliver to the Banks an updated appraisal.
Section 3. MISCELLANEOUS. Except as expressly amended
hereby, the Credit Agreement shall remain unmodified and in full force and
effect. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of
the parties hereto may execute this Amendment by signing any such counterpart.
This Amendment shall be governed by and construed in accordance with the law of
the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be duly executed as of the date and year first above
written.
SWANK, INC.
By /s/ John Tulin
---------------------------
Title: Executive V.P.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ Elizabeth Feuerman
---------------------------
Title: Second V.P.
FLEET NATIONAL BANK
By /s/ Robert T. P. Storer
----------------------------
Title: Vice President
<PAGE> 3
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THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ Elizabeth Feuerman
--------------------------
Title: Second V.P.
<PAGE> 1
EXHIBIT 4.03.3
EXECUTION COPY
AMENDMENT NO. 3
AMENDMENT NO. 3 dated as of August 31, 1993 among SWANK, INC.,
the undersigned banks and The Chase Manhattan Bank (National Association), as
agent for such banks.
The parties hereto are all parties to a Credit Agreement (as
heretofore modified, the "CREDIT AGREEMENT") dated as of December 22, 1992, and
wish to amend the Credit Agreement in certain respects. Accordingly, the
parties hereto agree to as follows:
Section 1. DEFINITIONS. Unless otherwise noted, capitalized
terms used herein and defined in the Credit Agreement shall have the respective
meanings ascribed thereto in the Credit Agreement.
Section 2. AMENDMENTS. The Credit Agreement is to be amended
as follows:
(a) The definition of "1993-1995 Plan" in Section 1.01 of the
Credit Agreement is amended in its entirety to read as follows:
"1993-1995 PLAN" shall mean the "1993-1995 Operating
Plan" of Swank and its Subsidiaries dated November 16, 1992
attached as Schedule IV hereto as supplemented by the "Revised
1993 Cumulative Forecast by Month" dated September 28, 1993,
attached as Schedule I to Amendment No. 3, in each case
including the footnotes contained therein, as the same may be
supplemented, modified, amended, or restated from time to time
by Swank with the consent of the Majority Banks.
(b) Section 9.12 of the Credit Agreement is amended so that
the reference in the schedule to "225%," appearing in such schedule
opposite the date 12/31/93, is deleted and "200%" substituted
therefor.
Section 3. WAIVER. The Banks hereby waive compliance by
Swank, for the month of August, 1993, with the requirements of paragraph (a) of
Section 9.21 of the Credit Agreement.
Section 4. MISCELLANEOUS. Except as expressly amended
hereby, the Credit Agreement shall remain unmodified and in full force and
effect. The Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one
<PAGE> 2
and the same instrument and any of the parties hereto may execute this
Amendment by signing any such counterpart. This Amendment shall be governed and
construed in accordance with the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 3 to be duly executed as of the date and year first above
written.
SWANK, INC.
By /s/ John Tulin
-----------------------
Title: Executive V.P.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ Elizabeth Feuerman
-------------------------
Title: Second V.P.
FLEET NATIONAL BANK
By /s/ Robert T. P. Storer
---------------------------
Title: Vice President
<PAGE> 1
AGREEMENT
---------
AGREEMENT effective as of January 1, 1993 between SWANK, INC., A Delaware
corporation having its principal office at 90 Park Avenue, New York, New York
(the "Company"), and _______________________ ("Employee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, in consideration of the contribution that has been, and can
continue to be, made by Employee toward the success of the business of the
Company, the Company desires to enter into this Agreement;
NOW, THEREFORE, it is agreed as follows:
1. TERM AND OPERATION OF AGREEMENT. This Agreement shall be effective
for a term (the "Term") commencing as of the date hereof and ending on the
earlier of December 31, 1995 or the termination of Employee's employment prior
to a Change in Control of the Company (as hereafter defined); provided,
however, that if there is a Change in Control subsequent to April 30, 1993 but
prior to the termination of the Agreement in accordance with the foregoing,
then the Term shall be automatically extended for a period ending on the second
anniversary of the date of such Change in Control.
For purposes of this Agreement, Employee's employment by the Company shall
be deemed to be continuing (i) for any period during which, in accordance with
any contract between him and the Company ("Employment Agreement"), provision
shall be made for Employee to perform services as an employee of the Company
and Employee shall be entitled to compensation from the Company for same, or
(ii) if there is no Employment Agreement, for any period during which Employee
is in fact
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<PAGE> 2
performing services as an employee of the Company and receiving compensation
from the Company for same.
Anything in this Agreement to the contrary notwithstanding, neither this
Agreement nor any provision hereof shall be operative until a Change in Control
has occurred, at which time this agreement and all of its provisions shall
become operative immediately.
2. CHANGE IN CONTROL-TERMINATION OF EMPLOYMENT AND
COMPENSATION IN EVENT OF TERMINATION.
(a) After a Change in Control has occurred, Employee may terminate
his employment within two years after he has obtained actual knowledge of the
occurrence of any of the following events:
(i) Failure to elect or appoint, or re-elect or re-appoint,
Employee to, or removal of Employee from, his office and/or position with the
Company as constituted prior to the Change in Control, Except in connection
with the termination of Employee's employment pursuant to subparagraph 3(a)
hereof.
(ii) A reduction in Employee's overall compensation (including
any reduction in pension or other benefit programs or perquisites) or a
significant change in the nature or scope of the authorities, powers, functions
or duties normally attached to Employee's position with the Company as referred
to in clause (i) of subparagraph 2(a) hereof.
(iii) A determination by Employee made in good faith that, as a
result of a Change in Control, he is unable effectively to carry out the
authorities, powers, functions or duties attached to his position with the
Company as referred to in clause (i) of subparagraph 2(a) hereof, and the
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<PAGE> 3
situation is not remedied within thirty (30) calendar days after receipt by the
Company of written notice from Employee of such determination.
(iv) A breach by the Company of any provision of this Agreement
not covered by clauses (i), (ii) or (iii) of this subparagraph 2(a), which is
not remedied within thirty (30) calendar days after receipt by the Company of
written notice from Employee of such breach.
(v) A change in the location at which substantially all of
Employee's duties with the Company are to be performed to a location which is
not within a 20-mile radius of the address of the place where Employee is
performing services on the date of the Change in Control.
(vi) A failure by the Company to obtain the assumption of, and
the agreement to perform, this Agreement by any successor (within the meaning
of paragraph 8).
An election by Employee to terminate his employment under the provisions
of this subparagraph 2(a) shall not be deemed a voluntary termination of
employment by Employee for the purpose of interpreting the provisions of any of
the Company's employee benefit plans, programs or policies. Employee's right
to terminate his employment for good reason shall not be affected by his
illness or incapacity, whether physical or mental, unless the Company shall at
the time be entitled to terminate his employment under paragraph 3(a)(ii) of
this Agreement. Employee's continued employment with the Company for any
period of time less than two years after a Change in Control shall not be
considered a waiver of any right he may have to terminate his employment
pursuant to this paragraph 2(a).
(b) After a Change in Control has occurred, if Employee
terminates his employment with the Company pursuant to subparagraph 2(a) hereof
or if Employee's employment is terminated by the Company for any reason other
than pursuant to paragraph 3(a) hereof, Employee (i) shall be entitled to his
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<PAGE> 4
salary, bonuses, awards, perquisites and benefits, including, without
limitation, benefits and awards under the Company's stock option plans and the
Company's pension and retirement plans and programs, through the Termination
Date (as hereafter defined) and, in addition thereto, (ii) shall be entitled to
be paid in a lump-sum, on the Termination Date, an amount of cash (to be
computed, at the expense of the Company, by the partners of Coopers & Lybrand,
independent certified public accountants to the Company or such other
independent certified accountants regularly employed by the Company (the
"Accountants"), in charge of the Company's account immediately prior to the
Change in Control, whose computation shall be conclusive and binding upon
Employees and the Company) equal to 2.99 times Employee's "base amount" as
defined in Section 280G (b) (3) of the Internal Revenue Code of 1986, as
amended (the "Code"). Such lump-sum payment is hereinafter referred to as the
"Termination Compensation." Upon payment of the Termination Compensation, any
Employment Agreement between Employee and the Company shall terminate and be of
no further force or effect; provided, however that (x) if Employee shall, in
terminating his employment with the Company pursuant to paragraph 2(a), include
in his Notice of Termination (as hereafter defined) his election to enforce his
rights under the provisions of his Employment Agreement and not under the
provisions of this Agreement or (y) if Employee shall, within thirty calendar
days after he has obtained actual knowledge of the termination of his
employment by the Company other than pursuant to paragraph 3(a) of this
Agreement, notify the Company that he intends to enforce his rights under the
Employment Agreement, then, in each such case, any Employment Agreement between
Employee and the Company shall remain in full
-4-
<PAGE> 5
force effect and the provisions of this Agreement shall terminate and be of no
further force or effect and Employee shall hold, for the benefit of the
Company, any payment on account of the Termination Compensation theretofore
received by him hereunder, pending the satisfaction of the Company's
obligations to Employee under the provisions of any Employment Agreement
between Employee and the Company (whereupon Employee shall return any such
Termination Compensation to the Company).
(c) For purposes hereof, a Change in Control shall be deemed to have
occurred if there has occurred a change in control as the term "control" is
defined in Rule 12b-2 promulgated under the act; (ii) when any "person" (as
such term is defined in Sections 3(a)(9) and 13(d)(3) of the Act), except for
an employee stock ownership trust (or any of the trustees thereof), becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five (25%) percent or more of the Company's then
outstanding securities having the right to vote on the election of directors;
(iii) during any period of not more than two consecutive years (not including
any period prior to the execution of this agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clauses (i), (ii), (iv), (v), (vi)
or (vii) of this subparagraph 2(c)) whose election by the Board or nomination
for executive by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were either
directors at the beginning of the period or whose election or nomination for
election was previously approved, cease for any reason to constitute at least
75% of the
-5-
<PAGE> 6
entire Board of Directors; (iv) when a majority of the directors elected at any
annual or special meeting of stockholders (or by written consent in lieu of a
meeting) are not individuals nominated by the Company's incumbent Board of
Directors; (v) if the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the holders of voting securities of the
Company outstanding immediately prior thereto being the holders of at least 80%
of the voting securities of the surviving entity outstanding immediately after
such merger or consolidation; (vi) if the shareholders of the Company approve a
plan of complete liquidation of the Company; or (vii) if the shareholders of
the Company approve an agreement for the sale or disposition of all or
substantially all of the Company's assets. However, the foregoing
notwithstanding, no Change in Control shall be deemed to have occurred as a
result of any event specified in clauses (i)-(vii) of this paragraph 2(c) if
Marshall Tulin or John Tulin remains the chief executive officer of the Company
following such event.
(d) Notwithstanding anything in this Agreement to the contrary,
Employee shall have the right, prior to the receipt by him of any amounts due
thereunder, to waive the receipt thereof or, subsequent to the receipt by him
of any amounts due hereunder, to treat some or all of such amounts as a loan
from the Company which Employee shall repay to the Company, within 90 days from
the date of receipt, with interest at the rate provided in Section 7872 of the
Code. Notice of any such waiver or treatment of amounts received as a loan
shall be given by Employee to the Company in writing and shall be binding upon
the Company.
-6-
<PAGE> 7
(e) It is intended that the "present value" of the payments and
benefits to Employee, whether under this Agreement or otherwise, which are
includable in the computation of "parachute payments" shall not, in the
aggregate, exceed 2.99 times the "base amount" (the terms "present value",
"parachute payments" and "base amount" being determined in accordance with
Section 280G of the Code). Accordingly, if Employee receives payments or
benefits from the Company prior to payment of the Termination Compensation
which, when added to the Termination Compensation, would, in the opinion of the
Accountants, subject any of the payments or benefits to Employee to the excise
tax imposed by Section 4999 of the Code, the Termination Compensation shall be
reduced by the smallest amount necessary, in the opinion of the Accountants, to
avoid such tax. In addition, the Company shall have no obligation to make any
payment or provide any benefit to Employee subsequent to payment of the
Termination Compensation which, in the opinion of the Accountants, would
subject any of the payments or benefits to Employee to the excise tax imposed
by Section 4999 of the Code. No reduction in Termination Compensation or
release of the Company from any payment or benefit obligation in reliance upon
any aforesaid opinion of the Accountants shall be permitted unless the Company
shall have provided to Employee a copy of any such opinion, specifically
entitling Employee to rely thereon, no later than the date otherwise required
for payment. Of the Termination Compensation or any such later payment or
benefit.
(f) Promptly after a Change in Control occurs, or before a Change in
Control occurs if there is a high degree of probability that a Change in
Control will occur in the immediate future, as determined by the Chief
Executive Officer of the Company, the Company shall deliver to the bank, or
other institution
-7-
<PAGE> 8
approved by Employee, as escrow agent, an amount of cash funds or short term
investments necessary to fund the Termination Compensation and instruct such
escrow agent to make the payments of such employee benefits due Employee in the
amounts and at the time provided in paragraph 2(b). The amount to be delivered
to such escrow agent hereunder shall be sufficient to fund such payments from
principal and all income on the escrowed funds shall be paid by the Company at
the time the principal is paid to the Employee; provided however, that any
interest earned after the Termination Date on principal not paid to Employee at
the time provided in paragraph 2(b) shall be paid to Employee at reasonable
intervals.
3. TERMINATION BY THE COMPANY.
(a) Employee's employment may be terminated by the Company without any
further liability under this Agreement if Employee shall (i) die; (ii) be
totally unable to perform the duties and services attached to his position with
the Company for a period of not less than 365 consecutive days due to illness
or incapacity, whether physical or mental; (iii) violate any written
contractual covenant of Employee, then in effect in favor of the Company,
prohibiting Employee from competing with the Company in any manner materially
detrimental to the Company; or (iv) be convicted of a felony involving an act
against the Company, and said conviction shall not have been reserved or be
subject to further appeal, it being expressly understood, however, that
conviction for violation of a criminal statue by reason of actions taken in the
course of performance of Employee's duties as an executive of the Company shall
not be deemed to involve an act against the Company for purposes hereof unless
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<PAGE> 9
involving a theft, embezzlement or other fraud against the Company or any of
its officers, directors or employees, or unless involving an act of physical
harm to any of such persons.
(b) After a Change in Control has occurred, if Employee's
employment is terminated by the Company pursuant to subparagraph 3(a) hereof,
Employee (or his widow, or if she shall not survive him, any party designated
by Employee by notice to the Company, or Employee's estate, in the absence of
such notice) shall receive the sums (if any) Employee would otherwise have
received if a Change in Control had not occurred.
4. NOTICE OF TERMINATION AND TERMINATION DATE.
(a) Any termination of Employee's employment by the Company or by
Employee shall be communicated by a Notice of Termination to the other party
hereto. For purposes hereof, a "Notice of Termination" shall mean a notice
which shall state the "Termination Date" (as hereafter defined) and the
specific reasons, and shall set forth in reasonable detail the facts and
circumstances, for such determination and, in the case of Employee's
termination of employment pursuant to paragraph 2(a)(iii) hereof, shall state
the Employee has made the good faith termination required by that subparagraph.
(b) "Termination Date" shall mean the date specified in the Notice
of Termination as the last day of Employee's employment by the Company, which
date shall not be sooner than the date on which the Notice of Termination is
given.
(c) If, within thirty (30) calendar days after any Notice of
Termination is given, or, if later, prior to the Termination Date (as
determined without regard to this paragraph 4(c)), the party hereto receiving
such notice
-9-
<PAGE> 10
of Termination notifies the other party hereto that a dispute exists concerning
the termination, the Termination Date shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties hereto,
by a binding arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Termination Date shall be extended by a
notice of dispute only if such notice is given in good faith and the party
hereto giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of such dispute, the
Company will continue to pay to Employee his full compensation (including
perquisites and other benefits) in effect when the notice of dispute was given
and continue Employee as a participant in all employee benefit plans and
programs in which he was participating when the notice of dispute was given,
until the dispute is finally resolved as hereinabove provided.
5. MITIGATION. Employee shall not be required to use his best
efforts to mitigate the payment of the Termination compensation by seeking
other employment. To the extent that Employee shall, during or after the Term,
receive compensation from any other employment, the payment of Termination
compensation shall not be adjusted.
6. ARBITRATION. In the event any dispute arises between the
parties hereto, Employee and the Company shall each have the right to seek
arbitration
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<PAGE> 11
in New York, New York under the rules of the American Arbitration Association
by giving written notice of intention to arbitrate to the other party. Any
award rendered in any such arbitration proceeding shall be non-appealable and
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction. If Employee prevails in any litigation
or arbitration proceeding brought in accordance herewith, or if any such
litigation or arbitration proceeding is settled, Employee shall be entitled, to
the extend not prohibited by applicable law, to reimburse from the Company for
his reasonable attorneys' fees and expenses incurred in connection with such
litigation or arbitration proceeding.
7. INDEMNIFICATION.
(a) The Company agrees that all rights to indemnification
existing immediately prior to a Change in Control and all rights to
indemnification existing immediately prior to the Termination Date in favor of
Employee as provided in the respective corporate charters and by-laws of the
Company and its subsidiaries shall survive the Termination Date and shall
continue in full force and effect for a period of not less than ten years after
the Termination Date. Until the expiration of such period, the Company shall
also indemnify Employee to the fullest extent permitted by the Delaware General
Corporation Law; provided that, in the event that any claim shall be asserted
or made within such ten-year period, all rights to indemnification in respect
of any such claim shall continue until disposition of such claim. Without
limitation of the foregoing, in the event that Employee becomes involved in any
capacity in any action, proceeding or investigation in connection with any
activities involving the Company occurring prior to, and including the
Termination Date, the Company will, subject to paragraph 7(b), advance to
Employee his legal and other
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<PAGE> 12
expenses (including the cost of any investigation and preparation) incurred in
connection therewith.
(b) Employee shall give prompt written notice to the Company of
the commencement of any action, suit or proceeding for which indemnification
may be sought under this paragraph 7, and the Company, through counsel
reasonably satisfactory to Employee, may assume the defense thereof; provided,
however, that Employee shall be entitled to participate in any such action,
suit or proceeding with counsel of his own choice but at his own expense; and
provided further, the Employee shall be entitled to participate in any such
action, suit or proceeding with counsel of his own choice at the expense of the
Company if, in the good faith judgment of Employee's counsel, representation by
the Company's counsel may present a conflict of interest or there may be
defenses available to Employee which are different from or in addition to those
available to the Company. In any event, if the Company fails to assume the
defense within a reasonable time, Employee may assume such defense and the
reasonable fees and expenses of his attorneys shall be borne by the Company.
No action, suit or proceeding for which indemnification may be sought shall be
compromised or settled in any manner which might adversely affect the interest
of the Company without the prior written consent of the Company.
Notwithstanding anything in this Agreement to the contrary, the Company shall
not, without the written consent of Employee, (i) settle or compromise any
action, suit or proceeding or consent to the entry of any judgment which does
not include as an unconditional term thereof the delivery by the claimant or
plaintiff to Employee of a written release from all liability in respect of
such action, suit or proceeding or (ii) settle or compromise any action, suit
or proceeding in any manner that may materially and adversely affect Employee
other than as a result of money damages or other money payments for which the
Company fully pays.
-12-
<PAGE> 13
(c) The Company shall cause to be maintained in effect, for not
less than two years after the Termination Date, the then current policies of
the directors' and officers' liability insurance maintained by the Company and
the Company's subsidiaries provided that the Company may substitute therefor
policies of at least the same coverage containing terms and conditions which
are no less advantageous so long as no lapse in coverage occurs as a result of
such substitution, and shall use its best efforts to provide such insurance for
an additional three years after the expiration of such two-year period, the
availability of such insurance at commercially reasonable rates (or, if not
available at reasonable rates, then the Company shall purchase similar
insurance but with such lower limits of liability, without change in retention
amounts, as may be available for a premium comparable to that paid the Company
for the last year of such two-year period), with respect to all matters
occurring prior to and including the Termination Date; provided that, in the
event that any claim shall be asserted or made within such period during which
insurance has been or is to be provided, such insurance shall be continued in
respect of any such claim until final disposition of any and all such claims.
The Company shall pay all expenses, including reasonable attorneys' fees, that
may be incurred by Employee in enforcing the indemnity and other obligations
provided for in this paragraph 7. The covenant in this paragraph 7 shall
survive the Termination Date and shall continue without time limit (except as
expressly provided in this paragraph 7).
8. ASSIGNABILITY. This Agreement may not be assigned by
Employee and all of its terms and conditions shall be binding upon and enure to
the benefit of Employee and his heirs and legal representatives and the Company
and its successors and assignees. Successors of the Company shall include,
without
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<PAGE> 14
limitation, any corporation or corporations acquiring directly or indirectly
all or substantially all of the assets of the Company, whether by merger,
consolidation, purchase or otherwise, and such successor shall thereafter be
deemed the "Company" for purposes hereof.
9. NOTICES. All notices, requests, demands and other
communications provided for hereby shall be in writing and shall be deemed to
have been duly given when delivered personally or sent by registered or
certified mail, return receipt requested, to the party entitled thereto at the
address first above written (in the case of the Company) or to such address as
contained in the Company's records (in the case of Employee).
10. MODIFICATION. This Agreement may be modified or amended
only by an instrument in writing signed by Employee and the Company and any
provision hereof may be waived only by an instrument in writing signed by the
party hereto against whom any such waiver is sought to be enforced.
11. SEVERABILITY. The invalidity or uneforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision contained herein.
12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
13. CAPTIONS. The captioned headings herein are for
convenience of reference only and are not intended and shall not be construed
to have any substantive effect.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
------------------------------
SWANK, INC.
By:
------------------------------
Andrew C. Corsini
Senior Vice President
Treasurer
<PAGE> 16
SCEHDULE A
----------
Marshall Tulin
John Tulin
Richard Blum
Andrew Corsini
Paul Duckett
Arthur Gately
Mel Goldfeder
Charles Gordon *
Eric Luft **
William Rubin
Bruce Shopoff
James Tulin
Lewis Valenti
Michael Wolfson *
Stephen Goldman *
Jerome Kaye *
Thomas O'Connor
Kimberly Renk *
Federick Moehle *
* Agreement dated 1/1/93
** Agreement dated 4/23/93
All others dated 5/1/93
<PAGE> 1
EXHIBIT 10.12
SWANK, INC.
----------
THE NEW SWANK, INC. RETIREMENT PLAN TRUST AGREEMENT
---------------------------------------------------
THIS TRUST AGREEMENT made as of the 1st day of January, 1994, by and
between SWANK, INC., a Delaware corporation (hereinafter called the "Company"),
and MARSHALL TULIN, JOHN TULIN AND RAYMOND VISE (hereinafter collectively
called the "Trustee"; each, an "Individual Trustee").
W I T N E S S E T H:
-------------------
WHEREAS, the Company adopted the Swank, Inc. Employee Stock Ownership
Plan amended and restated effective January 1, 1985 ("Prior ESOP No. 1"); the
Swank, Inc. Employee Stock Ownership Plan No. 2 amended and restated effective
January 1, 1985 ("Prior ESOP No. 2"; "Prior ESOP No. 1" and "Prior ESOP No. 2"
are hereinafter collectively referred to as the "Prior ESOPs") and the Swank,
Inc. Savings Plan, amended and restated effective January 1, 1985 ("Prior
401(k) Plan"); and
WHEREAS, in connection with Prior ESOP No. 1, the Company entered into
a trust agreement known as the Swank, Inc. Employees' Stock Ownership Trust
(the "Prior ESOP No. 1 Trust"); in connection with Prior ESOP No. 2, the
Company entered into a trust agreement known as the Swank, Inc. Employees'
Stock Ownership Trust No. 2 (the "Prior ESOP No. 2 Trust"); and in connection
with the Prior 401(k) Plan, the Company entered into a trust agreement known as
the Swank, Inc. Savings Trust (the
<PAGE> 2
"Prior 401(k) Trust"); and
WHEREAS, the Company has deemed it advisable to merge the Prior ESOPs
with the Prior 401(k) Plan (the "Merger") and restate the Prior ESOPs and the
Prior 401(k) Plan as one plan to be known as the New Swank, Inc. Retirement
Plan (the "Plan"); and
WHEREAS, the right is expressly reserved to the Company under the Prior
ESOP No. 1 Trust, the Prior ESOP No. 2 Trust and the Prior 401(k) Trust, to
amend each trust agreement at any time; and
WHEREAS, in light of the Merger, the Company desires to amend and
restate in their entirety the Prior ESOP No. 1 Trust, the Prior ESOP No. 2
Trust, and Prior 401(k) Trust as one trust to be known as the New Swank, Inc.
Retirement Plan Trust; and
WHEREAS, the Company desires the Trustee to continue to serve as
Trustee under the terms of this trust agreement (hereinafter called the "Trust
Agreement"), and the Trustee is willing to do so, under the terms herein
provided.
NOW, THEREFORE, the Company does hereby amend and restate each of the
Prior ESOP No. 1 Trust, the Prior ESOP No. 2 Trust, and the Prior 401(k) Trust
as one trust to be known as the New Swank, Inc. Retirement Plan Trust to read
and provide as follows:
ARTICLE I
---------
ESTABLISHMENT OF THE TRUST
--------------------------
<PAGE> 3
A. The Company hereby establishes with the Trustee a trust fund
consisting of (i) amounts held in the Prior ESOP No. 1 Accounts under the ESOP
No. 1 Trust Agreement determined as of December 31, 1993; (ii) amounts held in
the Prior ESOP No. 2 Accounts under the Prior ESOP No. 2 Trust determined as of
December 31, 1993; (iii) amounts held in the Prior 401(k) Plan Accounts
determined as of December 31, 1993 under the Prior 401(k) Trust, (iv) such sums
of money and property as shall from time to time be paid to the Trustee under
the Plan as 401(k) Contributions, Matching Contributions, ESOP No. 1
Contributions, ESOP No. 2 Contributions and Additional Contributions, and such
earnings, profits, increments, additions and appreciation thereto and thereon
as may accrue from time to time. All such sums of money and property, all
investments made therewith or proceeds thereof, and all earnings, profits,
increments, appreciation and additions thereto and thereon, less the payments
which shall have been made by the Trustee, as authorized herein to carry out
the Plan, are referred to herein as the "Fund".
B. The Trustee shall not be responsible for the collection of any
contributions required by the Plan to be paid by any Employer to the Trustee.
C. It shall be the duty of the Trustee hereunder:
(1) To hold, to invest, to reinvest, to manage, and to
administer the Fund in accordance with the provisions of the Plan and this Trust
Agreement, and
(2) From time to time, on the written direction of the
Committee, to make payments out of the Fund to such per-
<PAGE> 4
sons, in such manner, in such amounts, and for such purposes as may be
specified in such written direction.
D. Except as may be otherwise provided in the Plan or Article
VIII hereof, under no circumstance shall any Employer have any right, title,
interest, claim or demand whatsoever in or to the Fund held by the Trustee,
other than the right to a proper application thereof and accounting therefor by
the Trustee as provided herein.
ARTICLE II
----------
INVESTMENT OF THE FUND
----------------------
A. The Trustee shall invest and reinvest the principal and income
of the Fund and keep the same invested without distinction between principal
and income. Except if directed by the Committee to purchase Qualifying
Employer Securities or to establish separate investment funds pursuant to
Sections 6.2, 6.3 or 6.4 of the Plan and except as provided in Article II B.
below, the selection and retention or disposition of any investment shall be
determined by the Trustee.
B. The Trustee or the Company, through its Board of Directors, or
the Committee may appoint an Investment Manager (as defined in the Plan) which
Investment Manager, in its sole discretion, shall have authority with respect
to the investment of that portion of the Fund over which the Trustee, the
Company or the Committee shall grant the Investment Manager investment control.
The Trustee shall be under no obligation to invest or otherwise manage any
asset of the Fund which is subject to the
<PAGE> 5
management of an Investment Manager.
(1) If an Investment Manager is appointed, the Company or the
Trustee, as the case may be, may delegate to such Investment Manager those
powers of the Trustee as may be specified in any agreement between the Trustee
or the Company and the Investment Manager.
(2) If an Investment Manager is appointed, the Trustee shall not be
liable for the acts or omissions of the Investment Manager unless the Trustee
participates knowingly in, or knowingly undertakes to conceal, an act or
omission of the Investment Manager which is a breach of fiduciary
responsibility.
(3) If an Investment Manager is appointed, the Investment Manager
shall be directed to act in accordance with the Plan's funding policy and
solely in the interest of the Plan Participants and their beneficiaries and for
the exclusive purpose of providing benefits to such individuals and to defray
reasonable expenses of administering the Plan, and to act with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
C. Except to the extent set forth in Sections 6.2, 6.3, 6.4 and 6.5 of
Plan and except as may be otherwise provided in the Plan or in this Trust
Agreement with respect to Qualifying Employer Securities, the Trustee shall
have the following powers in addition to the powers customarily vested in
trustees
<PAGE> 6
by law and in no way in derogation thereof:
(1) With any cash at any time held by the Trustee, to purchase or
subscribe for any Authorized Investment (as defined in Article II D below), and
to retain such Authorized Investment in trust.
(2) To sell for cash or on credit, convert, redeem, exchange for
another Authorized Investment, or otherwise dispose of, any Authorized
Investment at any time held by the Trustee.
(3) To retain uninvested all or part of the Fund and to deposit the
same in any banking or savings institution.
(4) To exercise any options appurtenant to any Authorized
Investment in which the Fund is invested for conversion thereof into another
Authorized Investment, or to exercise any rights to subscribe for additional
Authorized Investments, and to make all necessary payments therefor.
(5) To join in, consent to, dissent from, oppose, or deposit in
connection with, the reorganization, recapitalization, consolidation, sale,
merger, foreclosure, or readjustment of the finances of any corporations or
properties in which the Fund may be invested, or the sale, mortgage, pledge or
lease of any such property or the property of any such corporation upon such
terms and conditions as the Trustee may deem wise, to do any act (including the
exercise of options, making of agreements or subscriptions, and payment of
expenses, assessments, or subscriptions) which may be deemed necessary or
advisable in connection therewith; and to accept any Authorized
<PAGE> 7
Investment which may be issued in or as a result of any such proceeding, and
thereafter to hold the same.
(6) To vote, in person or by general or limited proxy, at any
election of any corporation in which the Fund is invested, and similarly to
exercise, personally or by a general or limited power of attorney, any right
appurtenant to any Authorized Investment held in the Fund.
(7) To sell, either at public or private sale, option to sell,
mortgage, lease for a term of years less than or continuing beyond the possible
date of the termination of the trust created hereunder, partition or exchange
any real property which may from time to time or at any time constitute a
portion of the Fund, for such prices and upon such terms as the Trustee may
deem best, and to make, execute and deliver to the purchasers thereof good and
sufficient deeds of conveyance therefor and all assignments, transfers and
other legal instruments, either necessary or convenient for passing the title
and ownership thereof to the purchaser, free and discharged of all trusts and
without liability on the part of such purchasers to see to the proper
application of the purchase price.
(8) To repair, alter or improve any buildings which may be on any
real estate forming part of the Fund, or to erect entirely new structures
thereon.
(9) To renew or extend or participate in the renewal or extension
of any mortgage, upon such terms as the Trustee may deem advisable, and to
agree to a reduction in the rate of interest on any mortgage or to any other
modification or
<PAGE> 8
change in the terms of any mortgage or of any guarantee pertaining thereto, in
any manner and to any extent that the Trustee may deem advisable for the
protection of the Fund or the preservation of the value of the investment; to
waive any default, whether in the performance of any covenant or condition of
any mortgage or in the performance of any guarantee, or to enforce any such
default in such manner and to such extent as the Trustee may deem advisable; to
exercise and enforce any and all rights to foreclosure, to bid in property on
foreclosure, to take a deed in lieu of foreclosure with or without paying a
consideration therefor, and in connection therewith to release the obligation
on the bond secured by such mortgage; and to exercise and enforce in any
action, suit or proceeding at law or in equity any rights or remedies in
respect to any mortgage or guarantee.
(10) To purchase Authorized Investments at a premium or discount.
(11) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation.
(12) To borrow or raise moneys, for the purposes of the Fund, in
such amount and upon such terms and conditions as the Trustee may deem
advisable, and for any sum so borrowed to issue the Trustee's promissory note
as trustee and to secure the repayment thereof by pledging or mortgaging all or
any part of the Fund. No person lending money to the Trustee shall be bound to
see to the application of the money lent or to inquire into the validity,
expediency or propriety of any such
<PAGE> 9
borrowing.
(13) To cause any investment in the Fund to be registered in, or
transferred into, the Trustee's name as trustee or the name of a nominee or
nominees or to retain them unregistered or in form permitting transfer by
delivery, but the books and records of the Trustee shall at all times show that
all such investments are part of the Fund, and the Trustee shall be fully
responsible for any misappropriation or defalcation in respect of any
investment held by a nominee or held in unregistered form.
(14) To apply for, purchase, hold, transfer, pay premiums on,
surrender and exercise all incidents of ownership of any insurance, investment
or annuity contract which the Trustee is directed to purchase from an insurance
company by the Committee.
(15) To do all acts which the Trustee may deem necessary or proper
and to exercise any and all powers of the Trustee under this Trust Agreement
upon such terms and conditions which the Trustee may deem are for the best
interests of the Fund.
D. "Authorized Investment" as used in this Article II shall mean
bonds, debentures, notes, or other evidences of indebtedness; stocks
(regardless of class), or other evidences of ownership, in any corporation,
mutual investment fund, investment company, association, real estate investment
trust or business trust; options to acquire securities of any kind; general or
limited partnership interests; precious jewels
<PAGE> 10
or metals; works of art of any kind; insurance, investment or annuity contracts
issued by an insurance company; and real and personal property of all kinds,
including leaseholds on improved and unimproved real estate. "Authorized
Investment" shall not be limited to that class of investments which are defined
as legal investments for trust funds under the laws of any state.
E. Notwithstanding any provision herein to the contrary, the Trustee
shall acquire or dispose of (i) Qualifying Employer Securities held in ESOP No.
1 Accounts, and shall vote or exercise voting or other rights appurtenant
thereto solely in accordance with the provisions of Section 6.3 of the Plan;
(ii) Qualifying Employer Securities held in ESOP No. 2 Accounts and vote or
exercise voting or other rights appurtenant thereto solely in accordance with
the provisions of Section 6.4 of the Plan, and (iii) Qualifying Employer
Securities held in a Participant's Prior 401(k) Plan "A" Accounts and
Additional Contribution Securities Account and vote or exercise voting or other
rights appurtenant thereto solely in accordance with the provisions of Section
6.5 of the Plan.
F. The Trustee may enter into an agreement with any bank or trust
company or any other party to act as custodian with respect to the assets of
the Fund.
<PAGE> 11
ARTICLE III
-----------
ACCOUNTS TO BE KEPT AND
RENDERED BY THE TRUSTEE
-----------------------
A. The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder,
accounting separately for 401(k) Contributions, Matching Contributions, ESOP
No. 1 Contributions, ESOP No. 2 Contributions, and Additional Contributions,
including such specific records as shall be agreed upon in writing between the
Committee and the Trustee. All accounts, books and records relating thereto
shall be open to inspection and audit by any person or persons designated by
the Committee or the Company, at all reasonable times.
B. Within 90 days following the close of each Plan Year and
within 90 days after the effective date of the removal or resignation of the
Trustee, the Trustee shall file with the Committee and the Company a written
account, setting forth all investments, receipts and disbursements, and other
transactions effected by the Trustee during such Plan Year or during the period
from the close of the last preceding Plan Year to the date of such removal or
resignation, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales,
and showing all cash, securities and other property held at the end of such
Plan Year or as of the date of removal or resignation, as the case may be. The
Trustee shall include in such report a valuation of the Fund in accordance with
Article III D below. Neither the Company nor the Committee nor any other
person shall have the
<PAGE> 12
right to demand or to be entitled to any further or different accounting by the
Trustee.
C. If so requested by the Committee, the Trustee shall maintain a
separate bookkeeping account or accounts for each Participant and shall
allocate to such Participant's accounts the Employer contributions, the net
income of the Fund and any forfeitures as provided in the Plan.
D. The Trustee shall determine the market value of the Fund as of the
last business day of each Plan Year in accordance with the terms of the Plan
and at such other times as may be necessary under the Plan.
ARTICLE IV
----------
THE TRUSTEE
-----------
A. The Trustee accepts the trust hereby created and agrees to perform
the duties of the Trustee hereunder, subject, however, to the following
conditions:
(1) Any action taken pursuant to a direction, request or approval
given by the Committee under the powers conferred upon it under the Plan or
this Trust Agreement shall be evidenced by delivery to the Trustee of a
statement in writing signed by the Committee or authorized member thereof.
(2) The Trustee shall receive as compensation for services such
amounts as may be agreed upon at the time of execution of this Trust Agreement,
subject to change at any time and from time to time by agreement between the
Company and the Trustee; provided, however, no Individual Trustee who is a full
<PAGE> 13
time employee of any Employer shall receive compensation for services hereunder
other than reimbursement for expenses. The Trustee's compensation and any
other proper expense of the Fund, including, but not limited to, counsel fees
payable hereunder, shall be paid out of the Fund unless paid by the Employers.
(3) As between the Trustee and persons dealing with the Trustee on any
matter regarding this Agreement or the Plan, the claims of such persons shall
be limited to the assets of the Fund, and the Trustee shall not be responsible
in an individual capacity or from individual assets for any claims in
connection therewith. Except for liability resulting from gross negligence or
willful misconduct, the Company shall, to the full extent permitted by law,
indemnify and hold harmless each Individual Trustee who is an employee or a
member of the Board of Directors of an Employer against all liability incurred
in connection with the control, management, administration and operation of the
Plan and with respect to the appointment and performance of an Investment
Manager.
(4) The Trustee need not engage in litigation unless first indemnified
against expense by the Company. The Trustee may consult with any legal
counsel, including counsel for the Company, with respect to the meaning or
construction of this Trust Agreement, its obligations or duties hereunder, or
any action or proceeding or any question of law. In any action taken or
omitted by the Trustee in good faith pursuant to the written advice of the
Company's counsel, the Company shall indemnify and hold the Trustee harmless
against litigation
<PAGE> 14
expenses and attorneys' fees occasioned by such action.
B. Upon the appointment or change of the Committee, and upon the
appointment or change by the Committee of an authorized member to deliver
written statements to the Trustee, the Company or the Committee, as the case
may be, shall advise the Trustee in writing thereof, and the Trustee shall be
fully protected in assuming that there has been no change until so advised by
the Company or the Committee.
C. The Trustee or any Individual Trustee may resign and be discharged
of the trusts hereby created upon written notice to the Company specifying the
effective date thereof, which effective date shall be at least 60 days after
the notice to the Company unless it be coincident with the appointment by the
Company of a successor Trustee or successor Individual Trustee, as hereinafter
provided. The Trustee or any Individual Trustee may at any time be removed by
action of the Board of Directors of the Company by written notice delivered to
the Trustee or an Individual Trustee specifying an effective date not earlier
than the last day of the month following the month in which such notice is
delivered. If the Trustee or an Individual Trustee should resign or be
removed, the Trustee or Individual Trustee shall be reimbursed for all proper
prior expenses and shall receive compensation for prior services in accordance
with the terms hereof and the schedule of compensation then in effect.
D. Upon the resignation or removal of the Trustee or an
Individual Trustee, a successor shall be appointed by action
<PAGE> 15
of the Board of Directors of the Company; provided, however, a successor need
not be so appointed as long as there is at least one individual Trustee
hereunder.
E. Upon the effective date fixed in accordance with Article IV C
above, the retiring Trustee or Individual Trustee shall deliver the Fund then
held hereunder, together with all records pertaining thereto, to a successor.
The retiring Trustee or Individual Trustee shall also, as of the date of
transfer of the Fund to a successor, file with the Company and the Committee an
account and statement, which shall comply with the requirements of Article III
B above.
F. The Company may, by action of its Board of Directors, from time to
time change the number of Individual Trustees hereunder and appoint additional
individual Trustees to fill the vacancies caused by any such increase. An
Individual Trustee may be a member of the Board of Directors, an officer or an
employee of an Employer.
G. The Trustee may allocate such rights, responsibilities and powers,
other than the responsibility to manage and control the Fund, between or among
the Individual Trustees as shall from time to time be deemed appropriate
provided such allocation is set forth and acknowledged in writing by all
Trustees.
H. Except to the extent specifically provided to the contrary herein,
any action of the Trustee shall be determined by majority vote of the
Individual Trustees. In lieu of a meeting of the Individual Trustees, action
by the Trustee may be
<PAGE> 16
taken pursuant to written consent of a majority of the Individual Trustees.
Any one of the Individual Trustees designated in writing by the Individual
Trustees may execute binding documents on behalf of the Trustee.
ARTICLE V
---------
CONCERNING INSURANCE COMPANIES
------------------------------
A. If, on any occasion as provided in the Plan, the Trustee shall be
directed to purchase an insurance, investment or annuity contract from an
insurance company, no such insurance company shall be deemed a party to this
Trust Agreement. It shall have no obligation to determine that any person with
respect to whom the Trustee makes an application for a contract is, in fact,
eligible for benefits or participation under the Plan, nor shall the insurance
company have any obligation to determine any fact, the determination of which
is necessary or desirable for the proper issuance of such contracts. The
insurance company shall be fully protected in acting upon any advice,
representation, or other instrument executed by the Trustee. The
responsibilities of the insurance company shall be limited to the terms of its
policies or contracts. Notice of modification, change or termination of this
Trust Agreement shall not be effective notice to the insurance company until
actual receipt thereof at its home office. The insurance company may expect
this Trust Agreement to continue in force as is, and the named Trustee to
continue as the Trustee under this Trust Agreement until notified otherwise in
writing at its home office.
<PAGE> 17
B. A certification in writing to the insurance company, by the
Trustee or the Committee as to the occurrence of any event contemplated by this
Trust Agreement or the Plan shall constitute conclusive evidence of such
occurrence, and the insurance company shall be fully protected in accepting and
relying upon such certification and shall incur no liability or responsibility
for so doing.
C. The insurance company shall not be responsible to see that any
action taken by the Trustee with respect to any contract or policy is
authorized by the terms of this Trust Agreement or the Plan. Any change made
or action taken by the insurance company under any contract or policy upon the
written direction of the Trustee shall fully discharge the insurance company
from all liability with respect thereto, and the insurance company shall not be
obligated to see to the distribution or further application of any moneys paid
by it to the Trustee or in accordance with the written direction of the
Trustee.
ARTICLE VI
----------
EXEMPT LOANS -- ESOP PROVISIONS
-------------------------------
A. If the Trustee engages in an Exempt Loan (as defined in the Plan),
the terms thereof and use of proceeds must satisfy the conditions of this
Article VI, as follows:
(1) The proceeds of an Exempt Loan must be used to acquire Qualifying
Employer Securities or to repay the Exempt Loan or a prior Exempt Loan.
(2) The Qualifying Employer Securities acquired
<PAGE> 18
with the proceeds of an Exempt Loan must not be subject to a disposition
restriction, other than a restriction imposed by federal or state securities
law or a right of first refusal in accordance with Section 7.2 of the Plan.
(3) The interest rate on the Exempt Loan must be reasonable in light
of valuation and market factors then existing.
(4) The Exempt Loan must be without recourse against the Fund. The
only Fund assets which may be given as collateral are the Qualifying Employer
Securities acquired with the Exempt Loan proceeds or Qualifying Employer
Securities which were used as collateral for a prior Exempt Loan repaid with
the current Exempt Loan. No person entitled to payment under the Exempt Loan
shall have any rights to the Fund other than in (a) the collateral given, if
any, (b) Employer contributions made to meet the obligation, other than
contributions made in Qualifying Employer Securities, and (c) earnings
attributable to the collateral referred to in clause (a) and contributions
referred to in clause (b).
(5) Repayment of the Exempt Loan in any Plan Year is limited to
Employer contributions (less contributions made in Qualifying Employer
Securities) plus earnings for all Plan Years to date less payments in prior
Plan Years. The Trustee shall keep separate records to account for
contributions and earnings until the Exempt Loan is repaid.
(6) If the Plan defaults, the value of Plan assets transferred to
satisfy the Exempt Loan may not exceed the
<PAGE> 19
amount of default. If the Exempt Loan was made by a "disqualified person"
within the meaning of Section 4975 of the Code, the Plan's transfer of assets
must be limited to the extent of the Plan's failure to meet the Exempt Loan
payment schedule.
(7) The Exempt Loan must be for a specified term and may not be
payable on demand of any person, except in the case of default.
(8) All Qualifying Employer Securities acquired with the proceeds of
an Exempt Loan initially shall be held unallocated in a suspense account. If
the Qualifying Employer Securities are not pledged as collateral for the Exempt
Loan, they shall be removed from the suspense account and be allocated to
Participants as provided in Section 6.3(d) of the Plan. If the Qualifying
Employer Securities are pledged as collateral for the Exempt Loan, the Exempt
Loan must provide that for each Plan Year during its term and the number of
shares of each class of Qualifying Employer Securities released from the
suspense account and the encumbrance of the collateral pledge must equal the
number of encumbered shares held in the suspense account immediately before the
release multiplied by a fraction, the numerator of which is Exempt Loan
principal and interest paid for the Plan Year and the denominator of which is
the sum of such payments for the current and all future Plan Years. The term
of the Exempt Loan must be definitely ascertainable and, for purposes hereof,
extensions or renewal periods shall not be considered. If the interest rate is
variable, future interest to be paid shall be determined based on the rate in
effect on
<PAGE> 20
the last day of the Plan Year. Notwithstanding the foregoing, the release from
the suspense account may be determined with reference to principal payments
only if (a) the Exempt Loan provides for annual payments of principal and
interest at a cumulative rate that is not less rapid at any time than level
annual payments of such amounts for ten years and (b) interest included in any
payment is disregarded only to the extent that it would be determined to be
interest under standard loan amortization tables; however, the alternate
permitted under this sentence is not applicable from the time that by reason of
a renewal, extension or refinancing, the sum of the expired duration of the
Exempt Loan, the renewal period, the extension period and the duration of a new
Exempt Loan exceeds ten years.
B. In addition to the foregoing, the Trustee shall not engage in any
Exempt Loan which does not satisfy the provisions of the Plan applicable
thereto.
ARTICLE VII
-----------
AMENDMENTS TO TRUST AGREEMENT -
DISCONTINUANCE OF PLAN
-------------------------------
A. The provisions of this Trust Agreement may be amended at any time
and from time to time by action of the Board of Directors of the Company
provided that:
(1) No such amendment shall be effective unless the Plan and the
Trust Agreement, as so amended, shall be for the exclusive benefit of employees
of the Employer who are Participants of the Plan, or their beneficiaries.
(2) No such amendment shall operate to deprive a
<PAGE> 21
Participant of any rights or benefits irrevocably vested in him under the Plan
or Trust Agreement prior to such amendment.
(3) No such amendment which may affect the Trustee shall be
effective without the consent of the Trustee.
(4) Each such amendment shall be effective when adopted by the
Board of Directors of the Company and filed with the Trustee, except that where
the consent of the Trustee is required, such amendment shall not become
effective until each Individual Trustee has given consent by approving the copy
of the amendment filed with the Trustee.
B. In the event of termination of this Trust Agreement, the Trustee
shall continue to hold the Fund in trust to be applied and distributed in
accordance with the Plan.
ARTICLE VIII
------------
RETURN OF CONTRIBUTIONS
-----------------------
A. Notwithstanding any provision of the Plan or the Trust Agreement,
all Employer contributions shall be conditioned upon deductibility thereof
under applicable provisions of the Code. To the extent deduction of any such
contribution determined by the Company in good faith to be deductible is
disallowed, the Trustee, at the direction of the Company, shall return to the
Employer that portion of its contribution, without increase for investment
earnings but with decrease for investment losses, if any, which has been
disallowed within one year after the disallowance of the deduction.
B. In the case of a Employer contribution made by a
<PAGE> 22
good faith mistake of fact, the Trustee shall return to such Employer the
erroneous portion of its contribution, without increase for investment
earnings, but with decrease for investment losses, if any, within one year
after payment of the contribution to the Fund.
C. No return of contribution shall be made under this Article VIII
which would cause the value of a Participant's Account Balance attributable to
Employer contributions to be less than the value of a Participant's Account
Balance had the erroneous contribution not been made.
D. No return of contribution shall be made under this Article VIII
which adversely affects the Plan's qualified status under regulations, rulings
or other published positions of the Internal Revenue Service.
E. In the event there is a determination that the Plan does not
qualify under Section 401 of the Code, all assets of the Plan then held by the
Trustee shall be returned to the Employer by the Trustee.
ARTICLE IX
----------
MISCELLANEOUS PROVISIONS
------------------------
A. Any person dealing with the Trustee may rely upon a copy of this
Trust Agreement and any amendments thereto, certified to be a true and correct
copy by the Trustee.
B. Except as provided in the Plan or Article VIII hereof, under no
circumstance, whether upon amendment or termination of this Trust Agreement, or
otherwise, shall any part of
<PAGE> 23
the Fund be used for or diverted to any purpose other than the exclusive
benefit of employees of the Employer who are Participants under the Plan,
or their beneficiaries.
C. The Plan and each provision thereof is hereby incorporated by
reference and shall, for all purposes, be deemed a part of this Trust
Agreement.
D. The term "Plan" whenever used herein shall mean the Plan as
amended, revised or changed from time to time, and the Company will cause a
copy of any amendment or a copy of the Plan as amended, revised or changed in
any way from time to time to be delivered to the Trustee for incorporation
herein by reference.
E. Any term used herein which is defined in the Plan shall be
considered to have the same meaning as in the Plan unless the contrary is
clearly indicated.
F. This Trust Agreement shall be construed, enforced and regulated
under the laws of the State of New York, except to the extent such laws are
superseded by the Employee Retirement Income Security Act of 1974, as amended.
IN WITNESS WHEREOF, the Company has caused this Trust agreement to be
executed and needed its corporate seal to be hereunto affixed and attested and
each Individual Trustee has
<PAGE> 24
hereunder set his hand and seal as of the day and year first above written.
SWANK, INC.
______________________________
Attest
(Corporate Seal)
WITNESS: TRUSTEE
______________________________ (SEAL)
Marshall Tulin
______________________________ (SEAL)
John Tulin
______________________________ (SEAL)
Raymond Vise
<PAGE> 1
EXHIBIT 10.15
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this 1994 Non-Employee Director Stock Option Plan (the
"Plan") of Swank, Inc., a Delaware corporation (the "Company"), is to make
available shares of the Common Stock, $.10 par value per share, of the Company
(the "Common Stock") for purchase by directors of the Company who are not
employees of the Company or its Subsidiaries, as such term is defined below in
this Article 1, ("Outside Directors") and thus to attract and retain the
services of experienced and knowledgeable Outside Directors for the benefit of
the Company and its stockholders and to provide additional incentive for such
Outside Directors to continue to work for the best interests of the Company and
its stockholders through continuing ownership of its Common Stock. The term
"Subsidiary" shall have the same meaning as "subsidiary corporation" in Section
424(f) of the Internal Revenue Code of 1986, as amended (collectively,
"Subsidiaries").
2. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Article 10, the total number of shares of
Common Stock for which options may be granted under the Plan shall be 150,000.
Shares issued under the Plan may be either authorized but unissued shares or
shares which shall have been purchased or acquired by the Company for this or
any other purpose. In the event any option granted under the Plan shall expire,
be cancelled or terminate for any reason without having been exercised in full
or shall cease for any reason to be exercisable in whole or in part, the
unpurchased shares subject thereto shall again be available for grant under the
Plan.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). The Board shall, subject to the express provisions of the Plan,
grant options pursuant to the terms of the Plan; have the power to interpret the
Plan; correct any defect, supply any omission and reconcile any inconsistency in
the Plan; prescribe, amend and rescind rules and regulations relating to, but
not inconsistent with, the Plan; determine the terms and provisions of the
respective option agreements (which need not be identical but which shall not be
inconsistent with the Plan); and make all determinations necessary or advisable
for the administration of the Plan. The determination of the Board on the
matters relating to or under the Plan shall be conclusive. No member of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or any options granted hereunder.
4. OPTION GRANTS
Each individual who is an Outside Director on December 31, 1994 shall,
effective as of such date, be granted an option to purchase 5,000 shares of
Common Stock. Each individual who subsequent to December 31, 1994 becomes an
Outside Director shall, on the date of his or her initial election to the Board,
be granted an option to purchase 5,000 shares of Common Stock (subject to
adjustment under Article 10). In addition, immediately following each annual
meeting of stockholders at which directors are elected, commencing with the
Company's 1995 Annual Meeting of Stockholders, each Outside Director then in
office immediately following the conclusion of such meeting (whether or not
elected at such meeting) shall, effective as of the date such meeting is held,
be granted an option to purchase 5,000 shares of Common Stock; provided that an
individual who becomes an Outside Director for the first time at such meeting
shall be granted only one option to purchase an aggregate of 5,000 shares of
Common Stock under this sentence and the preceding sentence. An employee
Director who ceases to be an employee but remains a Director shall not be deemed
to become an Outside Director unless and until he or she is serving as an
Outside Director immediately following the conclusion of the next meeting of
stockholders at which Directors are elected (whether or not such person is
elected as a Director at such meeting).
5. EXERCISE PRICE
The exercise price at which shares of the Common Stock may be purchased
pursuant to options granted under the Plan shall be 100% of the fair market
value of such shares on the date an option is granted, but not less than the par
value of such shares. The fair market value of one share of Common Stock on
any day shall be (a) if the principal market for the Common Stock is a national
securities exchange, the average of the highest and lowest sales prices of one
A-1
<PAGE> 2
share of Common Stock on such day as reported by such exchange or on a composite
tape reflecting transactions on such exchange, (b) if the principal market for
the Common Stock is not a national securities exchange and the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), and (i) if actual sales price information is available with
respect to the Common Stock, the average of the highest and lowest sales prices
of one share of Common Stock on such day on NASDAQ, or (ii) if such information
is not available, the average of the highest bid and lowest asked prices for one
share of Common Stock on such day on NASDAQ, or (c) if the principal market for
the Common Stock is not a national securities exchange and the Common Stock is
not quoted on NASDAQ, the average of the highest bid and lowest asked prices for
one share of Common Stock on such day as reported on the NASDAQ OTC Bulletin
Board Service or by National Quotation Bureau, Incorporated or a comparable
service; provided, however, that if clauses (a), (b) and (c) of this Paragraph
are all inapplicable, or if no trades have been made or no quotes are available
for such day, the fair market value of the Common Stock shall be determined by
the Board by any method consistent with applicable regulations adopted by the
Treasury Department relating to stock options. The determination of the Board
shall be conclusive in determining the fair market value of the Common Stock.
6. TERM OF EACH OPTION
The term of each option shall be five years, subject to earlier
termination as provided in the Plan.
7. VESTING AND EXERCISE OF OPTIONS
Each option granted under the Plan shall be immediately exercisable.
An option (or any part thereof) may be exercised by giving written
notice to the Company at its principal office (Attention: Treasurer), specifying
the number of shares of Common Stock as to which such option is being exercised
and accompanied by payment in full of the aggregate exercise price therefor.
The option shall not be exercisable at any time in an amount less than
100 shares (or the remaining shares then covered by and purchasable under the
option if less than 100 shares). In no case may a fraction of a share be
exercised, purchased or issued under the Plan.
The exercise purchase price of the shares as to which an option shall be
exercised shall be paid in full in cash or by check at the time of exercise of
the option. In addition, the Outside Director shall pay to the Company in cash
or by check, upon demand, the amount, if any, which the Company determines is
necessary to satisfy its obligation to withhold federal, state and local income
and other taxes or other amounts incurred by reason of the grant or exercise of
the option or disposition of the underlying shares. The Company shall not be
required to deliver certificates for such shares until a reasonable time after
all payments have been made.
An Outside Director entitled to receive shares of Common Stock upon the
exercise of an option shall not have the rights of a stockholder with respect to
such shares of Common Stock until the date of issuance of a stock certificate to
him or her for such shares.
Nothing in the Plan or in any option granted under the Plan shall confer
on any Outside Director any right to continue as a director of the Company.
8. NON-TRANSFERABILITY OF OPTIONS
No option granted under the Plan shall be transferable other than by
will or the laws of descent and distribution by the Outside Director and may be
exercised during the Outside Director's lifetime only by him or her or his or
her legal representatives. Except to such extent, options may not be assigned,
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise) and shall not be subject toexecution, attachment
or similar process.
9. TERMINATION OF SERVICES ON THE BOARD OF DIRECTORS
In the event that an Outside Director to whom an option has been granted
under the Plan shall cease to serve on the Board (including as a result of not
being re-elected to the Board), other than by reason of death or disability (as
the term "disability" is defined in paragraph (d) of this Article 9), such
Outside Director may exercise his or her option at any time within three months
after such cessation of service but not thereafter, and in no event after the
date on which, except for such cessation of service, the option would otherwise
expire. Notwithstanding the foregoing, if an Outside Director's service on the
Board shall have been terminated for cause, his or her option shall terminate
immediately.
In the event that an Outside Director to whom an option has been granted
A-2
<PAGE> 3
under the Plan shall cease to serve on the Board by reason of disability, the
option may be exercised in whole or in part by the Outside Director at any time
within one year after such cessation of service but not thereafter, and in no
event after the date on which, except for such disability, the option would
otherwise expire.
If an Outside Director to whom an option has been granted under the Plan
shall die (i) while he is serving on the Board, (ii) within three months after
cessation of service on the Board other than by reason of disability or for
cause, or (iii) within one year after cessation of service on the Board by
reason of disability, such option may be exercised in whole or in part by the
legatee or legatees of such option under the Outside Director's last will, or by
his legal representatives or distributees, at any time within one year after the
Outside Director's death, but in no event after the date on which, except for
such death, the option would otherwise expire.
For the purpose of this Article 9, "disability" shall mean permanent
mental or physical disability within the meaning of Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended. The Outside Director as to whom such
determination is being made shall not participate in the Board's deliberation or
vote in making such determination.
10. ADJUSTMENT OF AND CHANGES IN COMMON STOCK
In the event of any change in the outstanding Common Stock by reason of
a stock dividend, stock split, stock combination, recapitalization, merger,
reorganization or the like, (i) the aggregate number and kind of shares subject
to the Plan and (ii) the exercise price and number and kind of shares subject to
each outstanding option shall be adjusted by the Board, whose determination
shall be conclusive.
11. COMPLIANCE WITH SECURITIES LAWS
It is a condition to the exercise of any option granted under the Plan
that either (i) a Registration Statement under the Securities Act of 1933, as
amended, or any succeeding act (collectively, the "Securities Act"), with
respect to its underlying shares shall be effective and current at the time of
exercise of the option or (ii) in the opinion of counsel to the Company, there
shall be an exemption from registration under the Securities Act for the
issuance of shares of Common Stock upon such exercise. Nothing herein shall be
construed as requiring the Company to register shares subject to the Plan for
issuance or for resale.
In connection with fulfilling the condition set forth in paragraph
(a)(ii) of this Article 11, the Company may require an Outside Director, as a
condition to the exercise of an option, to execute and deliver to the Company
representations and warranties, in form and substance satisfactory to counsel to
the Company, that, among other things, (i) the shares of Common Stock to be
issued upon the exercise of the option are being acquired by the Outside
Director for his or her own account, for investment only and not with a view to
the resale or distribution thereof, all within the meaning of the Securities
Act, and (ii) any subsequent resale or distribution of shares of Common Stock by
such Outside Director will be made only pursuant to (x) a Registration Statement
under the Securities Act which is effective and current with respect to the
shares of Common Stock being sold at the time of sale or (y) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption, the Outside Director shall, prior to any offer or sale
or distribution of such shares of Common Stock, provide the Company with a
favorable written opinion of counsel, in form and substance satisfactory to
counsel to the Company, as to the applicability of such exemption to the
proposed sale or distribution. The Company may endorse such legend or legends
upon the certificates for shares of Common Stock issued upon exercise of an
option under the Plan, and may issue such "stop transfer" instructions to its
transfer agent in respect of such shares, as it determines, in its discretion,
to be necessary or appropriate to prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act.
The Company may also require, as a further condition to the exercise of
an option, in whole or in part, that the shares of Common Stock underlying such
option or the Plan be specifically listed on the securities markets on which the
Company's Common Stock is traded and be registered or qualified under any
applicable state securities laws, and that the consent or approval of any
governmental regulatory body which the Company deems necessary or desirable as a
condition to the exercise of such option or the issue of shares thereunder shall
have been effected or obtained free of any conditions requiring the Company to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction wherein it has not already done so and free of any
other conditions not customarily imposed by a securities exchange, law or
governmental regulatory body in connection with such listing, qualification,
consent or approval.
12. AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the Plan or any portion
thereof at any time except that, to the extent required by Rule 16b-3 or
applicable law: (a) no provision of the Plan relating to the amount or exercise
A-3
<PAGE> 4
price of shares of Common Stock subject to options to be granted under the Plan
or the timing of grants may be amended more than once every six months other
than to comport with changes in the Internal Revenue Code of 1986, as amended,
the Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations under either statute (including successor statutes and rules and
regulations thereunder) and (b) the Board may not, without the approval of the
Company's stockholders within 12 months after the date of adoption of any such
amendment or amendments, make any alteration or amendment thereof which (i)
makes any change in the class of eligible participants under the Plan; (ii)
increases the total number of shares of Common Stock for which options may be
granted under the Plan except as provided in Article 10 hereof; or (iii)
materially increases the benefits accruing to participants under the Plan within
the meaning of Rule 16b-3. No amendment shall adversely affect the rights under
any then outstanding option without the consent of the holder thereof.
13. STOCK OPTION CONTRACTS
Each option shall be evidenced by an appropriate contract (which may
vary from others entered into) which shall be duly executed by the Company and
the Outside Director, and shall contain such terms and conditions not
inconsistent with the Plan as may be determined by the Board.
14. DUTIES OF THE COMPANY
The Company shall, at all times during the term of each option, reserve
and keep available for issuance or delivery such number of shares of Common
Stock as will be sufficient to satisfy the requirements of all options at the
time outstanding, and shall pay all original issue taxes with respect to the
issuance or delivery of shares pursuant to the exercise of such options and all
other fees and expenses necessarily incurred by the Company in connection
therewith.
15. EFFECTIVE PERIOD
The Plan shall become effective on December 8, 1994, the date of its
adoption by the Board of Directors; provided, however that if the Plan is not
approved by stockholders within 12 months thereof by the favorable vote then
required for such action under the Delaware General Business Corporation Law at
a meeting to be held to consider such approval, the Plan and any options granted
under the Plan shall be null and void and of no further effect. No options may
be granted under the Plan after December 7, 2004. Options outstanding on or
prior to such date shall, however, in all respects continue subject to the Plan.
A-4
<PAGE> 1
EXHIBIT 10.15.1
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
-----------------------------------
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of the 31st
day of December 1994, between Swank, Inc., a Delaware corporation (the
"COMPANY"), and MARK ABRAMOWITZ (the "OPTIONEE").
W I T N E S S E T H
- - - - - - - - - -
1. The Company, in accordance with the terms and conditions of
the 1994 Non-Employee Director Stock Option Plan of the Company (the "PLAN"),
grants as of December 31, 1994 to the Optionee an option to purchase an
aggregate of 5,000 shares of the Common Stock, $.10 par value per share, of the
Company ("COMMON STOCK"), at $ 1.15625 per share, being 100% of the fair market
value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from December 31,
1994, subject to earlier termination as provided in this Contract and in the
Plan. This option shall become exercisable as to 100% of the total number of
shares of Common Stock subject hereto upon approval of the Plan by stockholders
of the Company as contemplated by paragraph 15 of the Plan and paragraph 10 of
this Contract.
3. This option shall be exercised by giving written notice to the
Company at its principal office, presently 6 Hazel Street, Attleboro,
Massachusetts 02703-0962, Attention: Treasurer, stating that the Optionee is
exercising this stock option, specifying the number of shares being purchased
and accompanied by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of Common Stock be
purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be exercisable by
the Optionee unless (a) a registration statement under the Securities Act of
1933, as amended (the "SECURITIES ACT") with respect to the shares of Common
stock to be received upon the exercise of the option shall be effective and
current at the time of exercise or (b) there is an exemption from registration
under the Securities Act for the issuance of the shares of Common Stock upon
exercise. At the request of the Board of Directors, the Optionee shall execute
and deliver to the Company his representation and warranty, in form and
substance satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being acquired by the
Optionee for his own account, for investment only and not with a view to the
resale or distribution thereof without the meaning of the Securities Act.
Nothing herein shall be construed so as to obligate the Company to register the
shares subject to the option under the Securities Act.
-1-
<PAGE> 2
5. Notwithstanding anything herein to the contrary, if at any
time the Board of Directors shall determine, in its discretion, that the
listing or qualification of the shares of Common Stock subject to this option
on any securities exchange or under any applicable law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option, or the issue of
shares of Common Stock thereunder, this option may not be exercised in whole or
in part unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the Optionee
any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends upon the
certificates for shares of Common Stock issued upon exercise of this option and
may issue such "stop transfer" instructions to its transfer agent in respect of
such shares as it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from, the
registration requirement of the Securities Act, or (b) implement the provisions
of the Plan or any agreement between the Company and the Optionee with respect
to such shares of Common Stock.
8. The Company and the Optionee agree that they will both be
subject to and bound by all of the terms and conditions of the Plan, a copy of
which is attached hereto and made part hereof. In the event the Optionee is no
longer a director of the Company or in the event of his death or disability (as
defined in the Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict between the terms of
this Contract and the terms of the Plan, the terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply with
all applicable laws relating to the Plan and the grant and exercise of the
option and the disposition of the shares of Common Stock acquired upon exercise
of the option, including without limitation, federal state securities and "blue
sky" laws.
10. This option has been granted pursuant to the Plan, which is
subject to approval by the stockholders of the Company at the next meeting of
stockholders. Accordingly, and notwithstanding anything contained in this
Contract or the Plan to the contrary, in the event that the Plan is not
approved by stockholders at such meeting, the Plan and this Option shall
immediately terminate and shall be of no further force or effect.
11. This option is not transferrable otherwise than by will or the
laws of descent and distribution and may be exercised, during the lifetime of
the Optionee, only by him or his legal representatives.
-2-
<PAGE> 3
12. This Contract shall be binding upon and inure to the benefit
of any successor or assign of the Company and to any heir, distributee,
executor, administrator or legal representative entitled under the Plan and by
law to the Optionee's rights hereunder.
13. This Contract shall be governed by and construed in accordance
with the laws of the State of Delaware.
14. The invalidity or illegality of any provision herein shall not
affect the validity of any other provision.
15. The Optionee agrees that the Company may amend the Plan and
the options granted to the Optionee under the Plan, subject to the limitations
contained in the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this contract as
of the day and year first above written.
SWANK, INC.
By: /s/ Marshall Tulin
----------------------------
Its: President
---------------------------
/s/ Mark Abramowitz
-------------------------------
Optionee
Parker Chapin Flattau & Klimpl
-------------------------------
Address
1211 Avenue of the Americas
New York, NY 10036
-------------------------------
-3-
<PAGE> 4
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
-----------------------------------
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of the 31st
day of December 1994, between Swank, Inc., a Delaware corporation (the
"COMPANY"), and WILLIAM B. MACLEOD (the "OPTIONEE").
W I T N E S S E T H
- - - - - - - - - -
1. The Company, in accordance with the terms and conditions of
the 1994 Non-Employee Director Stock Option Plan of the Company (the "Plan"),
grants as of December 31, 1994 to the Optionee an option to purchase an
aggregate of 5,000 shares of the Common Stock, $.10 par value per share, of the
Company ("COMMON STOCK"), at $_____ per share, being 100% of the fair market
value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from December 31,
1994, subject to earlier termination as provided in this Contract and in the
Plan. This option shall become exercisable as to 100% of the total number of
shares of Common Stock subject hereto upon approval of the Plan by stockholders
of the Company as contemplated by paragraph 15 of the Plan and paragraph 10 of
this Contract.
3. This option shall be exercised by giving written notice to the
Company at its principal office, presently 6 Hazel Street, Attleboro,
Massachusetts 02703-0962, Attention: Treasurer, stating that the Optionee is
exercising this stock option, specifying the number of shares being purchased
and accompanied by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of Common Stock be
purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be exercisable by
the Optionee unless (a) a registration statement under the Securities Act of
1933, as amended (the "SECURITIES ACT") with respect to the shares of Common
stock to be received upon the exercise of the option shall be effective and
current at the time of exercise or (b) there is an exemption from registration
under the Securities Act for the issuance of the shares of Common Stock upon
exercise. At the request of the Board of Directors, the Optionee shall execute
and deliver to the Company his representation and warranty, in form and
substance satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being acquired by the
Optionee for his own account, for investment only and not with a view to the
resale or distribution thereof without the meaning of the Securities Act.
Nothing herein shall be construed so as to obligate the Company to register the
shares subject to the option under the Securities Act.
-1-
<PAGE> 5
5. Notwithstanding anything herein to the contrary, if at any
time the Board of Directors shall determine, in its discretion, that the
listing or qualification of the shares of Common Stock subject to this option
on any securities exchange or under any applicable law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option, or the issue of
shares of Common Stock thereunder, this option may not be exercised in whole or
in part unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the Optionee
any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends upon the
certificates for shares of Common Stock issued upon exercise of this option and
may issue such "stop transfer" instructions to its transfer agent in respect of
such shares as it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from, the
registration requirement of the Securities Act, or (b) implement the provisions
of the Plan or any agreement between the Company and the Optionee with respect
to such shares of Common Stock.
8. The Company and the Optionee agree that they will both be
subject to and bound by all of the terms and conditions of the Plan, a copy of
which is attached hereto and made part hereof. In the event the Optionee is no
longer a director of the Company or in the event of his death or disability (as
defined in the Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict between the terms of
this Contract and the terms of the Plan, the terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply with
all applicable laws relating to the Plan and the grant and exercise of the
option and the disposition of the shares of Common Stock acquired upon exercise
of the option, including without limitation, federal state securities and "blue
sky" laws.
10. This option has been granted pursuant to the Plan, which is
subject to approval by the stockholders of the Company at the next meeting of
stockholders. Accordingly, and notwithstanding anything contained in this
Contract or the Plan to the contrary, in the event that the Plan is not
approved by stockholders at such meeting, the Plan and this Option shall
immediately terminate and shall be of no further force or effect.
11. This option is not transferrable otherwise than by will or the
laws of descent and distribution and may be exercised, during the lifetime of
the Optionee, only by him or his legal representatives.
-2-
<PAGE> 6
12. This Contract shall be binding upon and inure to the benefit
of any successor or assign of the Company and to any heir, distributee,
executor, administrator or legal representative entitled under the Plan and by
law to the Optionee's rights hereunder.
13. This Contract shall be governed by and construed in accordance
with the laws of the State of Delaware.
14. The invalidity or illegality of any provision herein shall not
affect the validity of any other provision.
15. The Optionee agrees that the Company may amend the Plan and
the options granted to the Optionee under the Plan, subject to the limitations
contained in the Plan
IN WITNESS WHEREOF, the parties hereto have executed this contract as
of the day and year first above written.
SWANK, INC.
By: /s/ Marshall Tulin
----------------------
Its: President
---------------------
/s/ William B. MacLeod
----------------------
Optionee
2000 S. Ocean Blvd. #605
------------------------
Address
Delray Beach, FL 33483
------------------------
-3-
<PAGE> 7
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of the 31st
day of December 1994, between Swank, Inc., a Delaware corporation (the
"COMPANY"), and RAYMOND VISE (the "OPTIONEE").
W I T N E S S E T H
- - - - - - - - - -
1. The Company, in accordance with the terms and conditions of
the 1994 Non-Employee Director Stock Option Plan of the Company (the "PLAN"),
grants as of December 31, 1994 to the Optionee an option to purchase an
aggregate of 5,000 shares of the Common Stock, $.10 par value per share, of the
Company ("COMMON STOCK"), at $1.15625 per share, being 100% of the fair market
value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from December 31,
1994, subject to earlier termination as provided in this Contract and in the
Plan. This option shall become exercisable as to 100% of the total number of
shares of Common Stock subject hereto upon approval of the Plan by stockholders
of the Company as contemplated by paragraph 15 of the Plan and paragraph 10 of
this Contract.
3. This option shall be exercised by giving written notice to the
Company at its principal office, presently 6 Hazel Street, Attleboro,
Massachusetts 02703-0962, Attention: Treasurer, stating that the Optionee is
exercising this stock option, specifying the number of shares being purchased
and accompanied by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of Common Stock be
purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be exercisable by
the Optionee unless (a) a registration statement under the Securities Act of
1933, as amended (the "SECURITIES ACT") with respect to the shares of Common
stock to be received upon the exercise of the option shall be effective and
current at the time of exercise or (b) there is an exemption from registration
under the Securities Act for the issuance of the shares of Common Stock upon
exercise. At the request of the Board of Directors, the Optionee shall execute
and deliver to the Company his representation and warranty, in form and
substance satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being acquired by the
Optionee for his own account, for investment only and not with a view to the
resale or distribution thereof without the meaning of the Securities Act.
Nothing herein shall be construed so as to obligate the Company to register the
shares subject to the option under the Securities Act.
-1-
<PAGE> 8
5. Notwithstanding anything herein to the contrary, if at any
time the Board of Directors shall determine, in its discretion, that the
listing or qualification of the shares of Common Stock subject to this option
on any securities exchange or under any applicable law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option, or the issue of
shares of Common Stock thereunder, this option may not be exercised in whole or
in part unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the Optionee
any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends upon the
certificates for shares of Common Stock issued upon exercise of this option and
may issue such "stop transfer" instructions to its transfer agent in respect of
such shares as it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from, the
registration requirement of the Securities Act, or (b) implement the provisions
of the Plan or any agreement between the Company and the Optionee with respect
to such shares of Common Stock.
8. The Company and the Optionee agree that they will both be
subject to and bound by all of the terms and conditions of the Plan, a copy of
which is attached hereto and made part hereof. In the event the Optionee is no
longer a director of the Company or in the event of his death or disability (as
defined in the Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict between the terms of
this Contract and the terms of the Plan, the terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply with
all applicable laws relating to the Plan and the grant and exercise of the
option and the disposition of the shares of Common Stock acquired upon exercise
of the option, including without limitation, federal state securities and "blue
sky" laws.
10. This option has been granted pursuant to the Plan, which is
subject to approval by the stockholders of the Company at the next meeting of
stockholders. Accordingly, and notwithstanding anything contained in this
Contract or the Plan to the contrary, in the event that the Plan is not
approved by stockholders at such meeting, the Plan and this Option shall
immediately terminate and shall be of no further force or effect.
11. This option is not transferrable otherwise than by will or the
laws of descent and distribution and may be exercised, during the lifetime of
the Optionee, only by him or his legal representatives.
-2-
<PAGE> 9
12. This Contract shall be binding upon and inure to the benefit
of any successor or assign of the Company and to any heir, distributee,
executor, administrator or legal representative entitled under the Plan and by
law to the Optionee's rights hereunder.
13. This Contract shall be governed by and construed in accordance
with the laws of the State of Delaware.
14. The invalidity or illegality of any provision herein shall not
affect the validity of any other provision.
15. The Optionee agrees that the Company may amend the Plan and
the options granted to the Optionee under the Plan, subject to the limitations
contained in the Plan
IN WITNESS WHEREOF, the parties hereto have executed this contract as
of the day and year first above written.
SWANK, INC.
By: /s/ Marshall Tulin
------------------------
Its: President
-----------------------
/s/ Raymond Vise
---------------------------
Optionee
8 El Paseo
---------------------------
Address
Irvine, CA 92715
---------------------------
-3-
<PAGE> 1
EXHIBIT 11.01
SWANK,INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(dollars in thousands except share and per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Income before cumulative effect of a
change in accounting for income taxes $5,572 $2,793 $4,126
Cumulative effect of a change in
accounting for income taxes 477
Net income 5,572 3,270 4,126
Primary
-------
Weighted average common shares
outstanding 16,470,636 16,435,636 16,378,028
Effect of excluding unallocated
shares held in ESOP (538,127)
Common shares issuable in respect
to common equivalents with a
dilutive effect 274,174 823,292 496,454
---------- ---------- ----------
Total common and common
equivalent shares 16,206,683 17,258,928 16,874,482
========== ========== ==========
Primary income per share before
cumulative effect of a change
in accounting for income taxes $.34 $0.16 $0.24
Cumulative effect of a change in
accounting for income taxes per
share 0.00 0.03 0.00
----- ------- -----
Primary net income per share (1) $.34 $0.19 $0.24
====== ====== ======
Fully Diluted
-------------
Weighted average common shares
outstanding 16,470,636 16,435,636 16,378,028
Effect of excluding unallocated
shares held in ESOP (538,127)
Common shares issuable in respect
to common stock equivalents
with a dilutive effect. 274,174 1,045,349 548,971
---------- ----------- ----------
Total common and common
equivalent shares 16,206,683 17,480,985 16,926,999
========== =========== ==========
Fully diluted income per
share before cumulative effect of a
change in accounting for income taxes $.34 $0.16 $0.24
Cumulative effect of a change in accounting
for income taxes per share 0.00 0.03 0.00
------ ------ ------
Fully diluted net income per share (1) $.34 $0.19 $0.24
===== ====== ======
_________________________________
<FN>
(1) Net income per common share is computed by dividing net income by total common and common
equivalent shares.
</TABLE>
<PAGE> 1
SWANK
ANNUAL REPORT
1994
<PAGE> 2
TO OUR SHAREHOLDERS AND FRIENDS
I am delighted to report the outstanding results your Company achieved
in both net sales and net income for 1994. Tradition would dictate that the
President's message should be directed toward the Company's future plans and
ambitions; however, before we address those intentions, I feel it is equally
important to acknowledge the sacrifices and hard work that have led us to our
current level of success. Together, you the shareholders, our employees and my
fellow Directors have met the challenges of the past several years. We have
overcome a fiercely competitive retail environment during a lingering
recessionary climate while managing to pay down the largest long term debt in
your Company's history. This is no small accomplishment and I applaud you all.
I am extremely pleased to report that net sales for the year ended
December 31, 1994 increased to $143,496,000 verses net sales of $126,770,000
for the year ended December 31, 1993.
[NET SALES CHART]
I am most pleased to report that our sales increase was achieved across
most of our major product lines. Increases of 21%, 15% and 17% were achieved
in belts and suspenders, women's jewelry and leather goods, respectively, while
men's jewelry remained unchanged and gifts decreased by 11%.
Net income improved to $5,572,000, or $.34 per share as compared to
$3,270,000 or $.19 per share in 1993.
[NET INCOME CHART]
During 1994 long-term debt was reduced by $3,080,000. The remaining
$2,920,000 of our debt is scheduled for payment during 1995.
In the fourth quarter of 1994 we began to ship products marketed under
the very popular name GUESS?. These products included men's and women's
costume jewelry and men's leather goods. Reception of this new line was better
than anticipated and we are extremely optimistic for continued success in 1995.
As always, I would like to thank my fellow directors, officers and
employees for their help and support. A special thanks should also go to our
many loyal customers and vendors who, with their support and understanding have
contributed greatly to making Swank, Inc. a successful company.
Sincerely yours,
Marshall Tulin,
President
March 16, 1995
<PAGE> 3
FINANCIAL HIGHLIGHTS
For each of the Five Years Ended
December 31
<TABLE>
<CAPTION>
(In thousands, except share data) 1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
-------------------------------------------------------------------------------------------------------------------------
Net sales ......................................... $ 143,496 $ 126,770 $ 127,062 $126,421 $136,333
Cost of goods sold ................................ 79,122 69,002 68,469 69,997 76,682
-------------------------------------------------------------------------------------------------------------------------
Gross profit ...................................... 64,374 57,768 58,593 56,424 59,651
Selling and administrative expenses ............... 58,127 53,120 52,015 51,188 57,363
Restructuring costs .............................. 2,461
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations ..................... 6,247 4,648 6,578 5,236 (173)
-------------------------------------------------------------------------------------------------------------------------
Gain on sale of product line ..................... 1,775
Interest charges .................................. 1,717 1,599 2,387 3,190 4,331
-------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes and cumulative
effect of a change in accounting for income taxes 4,530 3,049 5,966 2,046 (4,504)
(Benefit) provision for income taxes ............. (1,042) 256 1,840 820 40
-------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of a change in
accounting for income taxes ..................... 5,572 2,793 4,126 1,226 (4,544)
Cumulative effect of a change in accounting
for income taxes ................................ 477
-------------------------------------------------------------------------------------------------------------------------
Net income (loss) ................................ $ 5,572 $ 3,270 $ 4,126 $ 1,226 $ (4,544)
-------------------------------------------------------------------------------------------------------------------------
Share and per share information:
Weighted average common shares
and common share equivalents
outstanding .................................. 16,206,683 17,258,928 16,874,482 16,327,374 16,268,650
Income (loss) before cumulative effect of a
change in accounting for income taxes ........ $ .34 $ .16 $ .24 $.08 $(.28)
Cumulative effect of a change in accounting
for income taxes ............................ .03
-------------------------------------------------------------------------------------------------------------------------
Net income (loss) ............................... $ .34 $ .19 $ .24 $.08 $(.28)
-------------------------------------------------------------------------------------------------------------------------
Additions to property, plant and
equipment, net ............................... $ 1,000 $1,439 $669 $673 $1,473
Depreciation ...................................... $ 1,108 $ 955 $876 $922 $ 999
-------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION (In thousands, except share data)
-------------------------------------------------------------------------------------------------------------------------
Current assets ................................... $47,258 $43,273 $36,464 $37,281 $45,205
Current liabilities .............................. 22,933 20,737 14,772 17,952 21,546
Net working capital .............................. 24,325 22,536 21,692 19,329 23,659
Property, plant and equipment, net ................ 6,587 6,695 6,211 6,418 6,893
Total assets ..................................... 57,458 52,123 45,010 46,836 55,255
Long-term obligations ............................. 4,308 6,774 8,952 11,724 17,844
Stockholders' equity ............................. 30,217 24,612 21,286 17,160 15,865
Per share $ 1.86 $ 1.43 $ 1.26 $ 1.05 $ .97
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
Management's Discussion and Analysis
of Results of Operations and Financial Condition
<TABLE>
<CAPTION>
EXPRESSED AS A PERCENTAGE
OF THE TOTAL PERCENTAGE CHANGES
------------------------------------------------------------------------------
1994 1993 1992 1994-93 1993-92
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONTRIBUTION TO NET SALES
44% 45% 42% Men's and Women's Jewelry 12% 5%
0% 0% 2% Fragrances -(sold in 1992) 0% (100%)
8% 10% 10% Gifts (11%) (3%)
48% 45% 46% Men's Leather Accessories 20% (1%)
------------------------------------------------------------------------------
100% 100% 100% Total Net Sales 13% unchanged
------------------------------------------------------------------------------
CONTRIBUTION TO GROSS PROFIT
49% 50% 50% Men's and Women's Jewelry 9% 0%
0% 0% 3% Fragrances -(sold in 1992) 0% (100%)
7% 9% 8% Gifts (11%) 4%
44% 41% 39% Men's Leather Accessories 20% 3%
------------------------------------------------------------------------------
100% 100% 100% Total Gross Profit 11% (1%)
------------------------------------------------------------------------------
</TABLE>
The table above indicates the contribution to total net sales and total gross
profit by major product categories for each of the three years ended December
31. The components of net sales are gross sales and royalty income less cash
discounts and customer returns.
RESULTS OF OPERATIONS
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's consolidated results of operations and financial condition. The
discussion should be read in conjunction with the consolidated financial
statements and notes thereto.
1994 VS. 1993
The Company's net sales increased $16,726,000 or 13% in 1994 compared
to the prior year.
Net sales increased primarily from the Company's Men's Leather
Accessories lines, $11,558,000 or 20%, and Men's and Women's Jewelry lines,
$6,590,000 or 12%. These increases are attributable to overall growth in the
Company's established product lines and the successful introduction of the
Guess? label in the fall of 1994. Belt sales increased $8,411,000 or 22% due
primarily to expanding the Company's lines to incorporate the growing trend
towards more "corporate casual wear" while maintaining traditional lines and
aggressively servicing the marketplace. Leather goods contributed sales gains
of $2,534,000 or 17% due primarily to the improved quality and consistency of
the product coupled with our ability to ship goods in a more timely fashion.
The Company's Anne Klein and Anne Klein II lines for women's jewelry continue
to be successful with increased sales of approximately $2,570,000 or 6%. These
increases were offset in part, by sales declines in the Company's gift lines
of $1,422,000 or 11%. This decrease resulted from the Company taking a more
conservative approach towards this business and placing more emphasis on
inventory management.
Included in the net sales figures noted above were sales from the
Company's factory outlets which declined 13% from 1993. Sales declines of 13%
and 7% were experienced in same store sales and closed store sales, offset in
part by a 7% increase in new store sales. The Company continues to monitor
this declining trend and is assessing the profitability of each store location
as its lease term expires. Management continues to believe, however, that the
factory outlets play a significant role in the Company's overall cash and
inventory management strategies.
Gross profit increased $6,606,000 or 11% primarily as a result of
increased sales volume. Gross profit expressed as a percentage of net sales
declined less than 1%, from 45.6% to 44.9%. The decrease in margins was
caused principally from an unfavorable product mix within women's jewelry and
gifts.
The increase in gross profit was attributable to Men's and Women's
Jewelry, $2,514,000 or 9%, and Men's Leather Accessories, $4,670,000 or 20%,
offset in part, by declines in the Company's Gift lines of $578,000 or 11%.
Inventory levels increased $1,132,000 or 5% primarily as a result of
adding the new Guess? lines in Men's and Women's Jewelry and Men's Leather
Accessories. This increase combined with an effort by the Company to change
the timing of production, principally in men's leather accessories, to improve
the response to our customer needs, contributed to increased working capital
needs during the year. The Company temporarily increased its revolving credit
facility by $3 million in September. Cash provided by operations enabled the
Company to repay all of its short term borrowings by January 18, 1995. The
Company continues to balance the strategy of better responding to our customer
needs while maintaining appropriate inventory levels.
Selling and administrative expenses increased $5,007,000 or 9%,
however, when expressed as a percentage of net sales the rate declined from
42% to 41%.
This was principally the result of increases in in-store markdowns and
compensation costs. Increases in in-store markdown expense of $2,380,000 or
71% reflect the intense competition being exhibited at the retail level. In
addition, 1993 benefited from favorable adjustments to customer allowances for
in-store markdowns of $700,000 as a result of actual activity being lower than
anticipated at December 31, 1992. Compensation costs and related fringe
benefits contributed an increase of $1,916,000 or 6% relating primarily to
higher commission costs associated with the growth in sales, additional
personnel required for the new Guess? lines, and general wage increases.
Interest charges increased $118,000 or 7% primarily as a result of
increased short term borrowings combined with a higher monthly average
interest rate, offset in part, by reduced long term debt.
The Company recognized a net benefit of $1,042,000 for income taxes,
principally as a result of eliminating the valuation allowance established in
1993 when adopting Statement of Financial Accounting Standards (SFAS) No. 109
"Accounting for Income Taxes". Based on the earnings exhibited in 1994 and in
recent years, management believes a valuation allowance against
<PAGE> 5
its net deferred tax asset is no longer warranted. Accordingly, the Company
has eliminated its valuation allowance and recognized the benefit against
1994's tax provision. The net effect of this was to increase net income
approximately $2,453,000 in the fourth quarter.
1993 VS. 1992
The Company's net sales remained relatively unchanged with a decrease
of $292,000.
The net sales decline can be attributable to decreases in the Company's
Fragrance line, $2,332,000 or 100%, and Gift lines, $394,000 or 3%. The decline
in the Fragrance line was the result of the Company's divestiture of its Royal
Copenhagen fragrance line in the second quarter of 1992. These declines along
with a decrease of $485,000 or 1% in Men's Leather Accessories contributed to
declines that totaled $3,211, 000 or 4%. Offsetting the declines, in part, was
the continued growth in the Company's Men's and Women's Jewelry lines of
$2,919,000 or 5%.
Included in the net sales noted above were sales from the Company's
factory outlets which were unchanged compared to 1992. This was the net effect
of increased sales from seven additional locations offset by comparable store
decreases. The decreases are primarily due to increased competition among
outlet centers as additional outlet malls are constructed. To combat the
competition, the Company is improving its point of sales information to allow
quicker response to consumer trends and continues to assess each of its
locations for profitability.
The gross profit declined $825,000 or 1%, however, gross profit
expressed as a percentage of net sales declined from 46.1% to 45.6%. The
decrease in margin was caused principally from an unfavorable product mix
within Women's jewelry.
The decrease in gross profit was primarily attributable to decreases in
the Fragrance line, $1,576,000 or 100%, and Men's and Women's jewelry, $9,000
or less than 1%. These decreases were offset in part by increases in Men's
Leather Accessories, $582,000 or 3%, and the Gift lines, $178,000 or 4%.
Inventory levels increased $3,033,000 or 14%. This increase was
primarily due to an unusually high level of season-end cancellations caused by
a change in the major retailers' buying patterns during the latter half of
1993. This timing change led to an increase in inventory commitments during the
fourth quarter and also contributed to a temporary rise in the Company's
accounts receivable and short term debt balances. Sales orders were received
much later in the season than past years as a result of conservative inventory
planning at the department store level and an increase in electronically-
generated orders. The Company believes these trends will continue and is
actively reviewing its order processing and shipping procedures to better
respond to customer needs while minimizing inventory levels.
Selling and Administrative expenses increased in 1993 by $690,000 or
1%. This change was primarily attributable to increases in advertising and
promotion of the Company's Women's Jewelry line of $771,000 or 26%, occupancy
costs associated with operating seven additional factory outlets of $334,000 or
18%, and compensation costs of $1,150,000 or 4%. These increases were offset in
part by declines in selling costs associated with the Royal Copenhagen
fragrance line of $1,053,000 or 100% and favorable adjustments of customer
allowances for in-store markdowns of $700,000, based on activity in 1993 being
lower than anticipated at December 31, 1992. Early retail market review of 1992
holiday sales resulted in concern over customer acceptance of the Company's
Gift lines. As a result, a program of in-store markdowns was offered to
customers in an attempt to minimize returns by increasing sales to consumers. A
reserve of $1,600,000 was provided for this program in 1992. Aggregate claims
ultimately processed in 1993 were $900,000.
Interest charges decreased by $788,000 or 33% as a result of reduced
long-term debt and current borrowings combined with a reduction of interest
related to deferred compensation.
The effective tax rate of 8% was below the statutory rate of 34%
principally as a result of being able to recognize a higher asset under
Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for
Income Taxes" which was adopted January 1, 1993. The Company reported a
cumulative effect of the change in the method in accounting for income taxes of
$477,000 or $.03 per share. The Company has not restated prior years' financial
statements to apply the provisions of SFAS 109.
PROMOTIONAL EXPENSES
Substantial expenditures for advertising and promotion are considered
necessary to enhance the Company's business. The table below indicates the
various promotional expenses incurred by the Company. The increase in
promotional expense primarily is the result of increases in the in-store
markdowns described above combined with the cost of starting the new Guess?
product lines.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
1994 1993 1992
------------------------------------------------------------------------------
<S> <C> <C> <C>
In-store markdowns ..................... $5,741 $3,361 $4,471
Co-op advertising ..................... 1,314 1,002 1,230
Displays .............................. 1,124 1,246 995
National advertising & other ........... 1,849 1,485 1,981
------ ----- -----
$10,028 $7,094 $8,677
Percentage of net sales ................ 7.0% 5.6% 6.8%
------------------------------------------------------------------------------
</TABLE>
INTEREST CHARGES
The average monthly amount of short-term borrowings and related
interest rates were $12,971,000, 9.43% in 1994; $6,214,000, 8.00% in 1993;
$6,793,000, 8.15% in 1992.
The increased short term borrowings were a result of building
inventory for the new Guess? lines and changing the timing of production in
Men's Leather Accessories.
CURRENT LIQUIDITY
Working capital increased by $1,789,000 in 1994.
The Company has maintained lines of credit with banks to provide
sufficient working capital during the year. On September 13,1994, the Company
temporarily increased its existing $21,000,000 revolving credit facility (see
footnote C) to $24,000,000 for the period ending December 31, 1994, at which
point the facility again became $21,000,000. The revolving credit facility,
which includes a $7,000,000 letter of credit facility, will be available to
the Company through December 31, 1995. The Company believes this facility
will be adequate to meet its seasonal working capital requirements through
1995. The Company's short-term bank borrowings are at peak during the months
of August through November.
LONG-TERM LIQUIDITY AND CAPITAL RESOURCES
As is customary in the fashion accessories industry, substantial
percentages of the Company's sales and earning occur in the months of
September, October and November, during which the Company makes significant
shipments of its products to retailers for sale during the holiday season. As
a result, receivables increase during
<PAGE> 6
the year and peak during the fourth quarter. The Company builds its inventory
during the first three quarters of the year to respond to the holiday season.
Cash required is provided by a revolving credit facility. Outstanding balances
for this credit facility are required to be paid in full for a 30 day period,
during the first six months of each year. Cash generated from operations is
used to pay down the credit facility during the months of December and January.
Cash provided by operations totalled $1,642,000 consisting primarily of
$5,572,000 of net income offset by increases in accounts receivable, inventory
and deferred taxes. Cash used in financing totalled $1,547,000, consisting
primarily from payments of long-term debt offset by increased short-term
borrowings. Cash used in investing activities was $877,000 for replacement of
used machinery and equipment.
Accounts receivable increased primarily as a result of increased sales
in the fourth quarter offset in part by increases in allowances. The increase
in allowances reflects the increase in sales volume.
In 1992 the Company refinanced all existing long-term debt with
proceeds of a $9,000,000 bank term loan (see footnote E). The loan bears
interest at the prime rate plus 2% and is collateralized by all of the
Company's assets. Cash provided from operating activities and the sale of
certain operations have provided funds for the reduction of long term debt to
$2,920,000 at February 14, 1995.
The terms of the agreement, as amended, require the Company to maintain
certain financial ratios and minimum amounts of tangible net worth. The
agreement also limits capital expenditures, prohibits additional indebtedness
over specified amounts and contains other covenants normally associated with
such agreements.
Pursuant to the Company's credit agreement, as amended, certain
financial ratios are required to be met. These include leverage and current
ratios of 1.25 to 1 and 1.85 to 1, respectively. As of December 31, 1994 the
actual leverage and current ratios were .90 to 1 and 2.06 to 1, respectively.
The Company was in compliance with these ratios at December 31, 1994.
At December 31, 1994 the Company was not in compliance with a covenant
contained in the Company's Credit Agreement dated as of December, 22, 1992, as
amended with respect to the results of operations, which was $1,206,000 below
the loss before taxes for the month of December 1994, permitted under the
agreement. The Banks have agreed to waive the aforementioned default. The
Banks have also agreed to waive monthly earnings and sales covenants for the
first quarter of 1995 in anticipation of a new revolving loan agreement to be
effective during the second quarter of 1995. The Company has not paid
dividends since 1986 and no dividends were paid during 1994. However, $400,000
of consolidated retained earnings were not restricted as to the payment of
dividends.
ENVIRONMENTAL MATTERS
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities are recorded
when environmental assessments and/or remedial efforts are probable, and the
costs can be reasonably estimated. Generally, the timing of these accruals
coincides with the completion of a feasibility study or the Company's
commitment to a formal plan of action. The liabilities for costs associated
with environmental sites (described in footnote I) recorded in Other
Liabilities at December 31, 1994 and 1993 were $991,000 and $850,000,
respectively.
CAPITAL EXPENDITURES
There are no material commitments for capital expenditures. The
Company is continuing the policy of replacing aging machinery and equipment to
obtain operating efficiencies. Internally generated working capital is
anticipated to provide the funding required.
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of Swank, Inc.
Attleboro, Massachusetts
We have audited the accompanying consolidated balance sheets of Swank,
Inc. as of December 31, 1994 and 1993, and the related consolidated statements
of operations, changes in stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Swank,
Inc. as of December 31, 1994 and 1993, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
Boston, Massachusetts
February 24, 1995, except as to the information
presented in Note E, for which the date is March 9, 1995
Coopers & Lybrand L.L.P.
<PAGE> 7
CONSOLIDATED BALANCE SHEETS OF DECEMBER 31
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C>
Current:
Cash and cash equivalents .................................... $ 2,153 $ 2,935
Accounts receivable, less allowances of $9,484 and $8,619 .... 13,874 11,931
Inventories:
Raw materials ............................................ 4,295 4,129
Work in process .......................................... 7,987 6,450
Finished goods .......................................... 13,867 14,438
------------------------------------------------------------------------------------------
26,149 25,017
Deferred income taxes ........................................ 4,105 2,048
Prepaid and other ............................................ 977 1,342
------------------------------------------------------------------------------------------
Total current assets ...................................... 47,258 43,273
Property, plant and equipment, at cost:
Land and buildings .......................................... 7,269 7,269
Machinery and equipment ..................................... 13,956 13,510
Improvements to leased premises .............................. 839 854
------------------------------------------------------------------------------------------
22,064 21,633
Less accumulated depreciation and amortization ............... 15,477 14,938
------------------------------------------------------------------------------------------
6,587 6,695
Deferred income taxes .......................................... 834
Other assets ................................................. 2,779 2,155
------------------------------------------------------------------------------------------
TOTAL ASSETS .................................................. $57,458 $52,123
------------------------------------------------------------------------------------------
LIABILITIES
------------------------------------------------------------------------------------------
Current:
Notes payable to banks ...................................... $ 5,000 $ 3,500
Current portion of long-term debt ........................... 2,920 3,000
Accounts payable ............................................ 3,665 4,717
Accrued employee compensation ............................... 3,010 2,701
Income taxes payable ......................................... 1,826 579
Other liabilities ............................................ 6,512 6,240
------------------------------------------------------------------------------------------
Total current liabilities ................................. 22,933 20,737
Long-term obligations .......................................... 4,308 6,774
------------------------------------------------------------------------------------------
TOTAL LIABILITIES .............................................. $27,241 $27,511
------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE I)
STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------
Preferred stock, par value $1.00:
Authorized 1,000,000 shares
Common stock, par value $.10:
Authorized 66,000,000 shares:
issued 16,804,155 and 16,769,155 shares ................... 1,680 1,677
Capital in excess of par value ................................. 825 795
Retained earnings ............................................. 28,421 22,849
------------------------------------------------------------------------------------------
30,926 25,321
Less:
Treasury stock at cost, 333,519 shares ...................... 709 709
------------------------------------------------------------------------------------------
Total stockholders' equity ............................... 30,217 24,612
------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................... $57,458 $52,123
------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 8
CONSOLIDATED STATEMENTS OF OPERATIONS
For Each of the Three Years Ended
December 31
<TABLE>
<CAPTION>
(In thousands, except share data) 1994 1993 1992
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales .................................................... $143,496 $126,770 $127,062
Cost of goods sold .......................................... 79,122 69,002 68,469
----------------------------------------------------------------------------------------------------------
Gross profit ................................................ 64,374 57,768 58,593
Selling and administrative expenses .......................... 58,127 53,120 52,015
----------------------------------------------------------------------------------------------------------
Income from operations ....................................... 6,247 4,648 6,578
----------------------------------------------------------------------------------------------------------
Gain on sale of product line ................................. 1,775
Interest charges ............................................. 1,717 1,599 2,387
----------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of a
change in accounting for income taxes ...................... 4,530 3,049 5,966
(Benefit) provision for income taxes ........................ (1,042) 256 1,840
----------------------------------------------------------------------------------------------------------
Income before cumulative effect of a change in
accounting for income taxes ................................ 5,572 2,793 4,126
Cumulative effect of a change in accounting
for income taxes ........................................... 477
----------------------------------------------------------------------------------------------------------
Net income ................................................... $5,572 $3,270 $4,126
----------------------------------------------------------------------------------------------------------
Income per share before cumulative effect of a change in
accounting for income taxes ............................... $.34 $.16 $.24
Cumulative effect per share of a change in accounting
for income taxes ........................................... .03
----------------------------------------------------------------------------------------------------------
Net income per share ......................................... $.34 $.19 $.24
----------------------------------------------------------------------------------------------------------
Weighted average common shares and common share
equivalents outstanding ................................. 16,206,683 17,258,928 16,874,482
----------------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
For Each of the Three Years TREASURY STOCK
Ended December 31, COMMON CAPITAL IN --------------
1994, 1993 and 1992 STOCK, PAR EXCESS OF RETAINED NUMBER
(Dollars in thousands) VALUE $.10 PAR VALUE EARNINGS OF SHARES AMOUNT
----------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
Balance, December 31, 1991 $1,671 $745 $15,453 333,519 $709
Net income 4,126
----------------------------------------------------------------------------------------------------------
Balance, December 31, 1992 1,671 745 19,579 333,519 709
Exercise of employees'
stock options 6 50
Net income 3,270
----------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 1,677 795 22,849 333,519 709
Exercise of employees'
stock options 3 30
Net income 5,572
----------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 $1,680 $825 $28,421 333,519 $709
----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 9
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For Each of the Three Years Ended December 31 (In thousands) 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income .............................................................. $5,572 $3,270 $4,126
Adjustments to reconcile net income to net cash
provided by (used in) operations:
Cumulative effect of an accounting change ........................... (477)
Gain on sale of product line ........................................ (1,775)
Depreciation ....................................................... 1,108 955 876
Loan forgiveness in lieu of contribution to employees'
stock ownership trust .......................................... 519 469 969
Increase (decrease) in accounts receivable allowances ............... 865 (2,273) 1,022
Increase in deferred taxes .......................................... (2,891) (337)
Increase in postretirement benefits ................................. 260 436
Change in assets and liabilities:
(Increase) decrease in accounts receivable ....................... (2,808) (3,217) 1,349
(Increase) in inventory .......................................... (1,132) (3,033) (2,920)
(Increase) decrease in prepaid and other ......................... (778) 192 (712)
Increase (decrease) in accounts payable and accrued other ........ 927 2,851 548
-----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operations ...................... 1,642 (1,164) 3,483
-----------------------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Net capital expenditures ............................................... (877) (1,439) (669)
Net proceeds from sale of division ..................................... 2,891
-----------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities ........... (877) (1,439) 2,222
-----------------------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowings under revolving credit agreements ........................... 34,850 25,400 29,000
Payments of revolving credit agreements ............................... (33,350) (21,900) (29,000)
Principal payments on long-term obligations ........................... (3,080) (3,000) (6,500)
Proceeds from exercise of employees' stock options .................... 33 56
-----------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities ............ (1,547) 556 (6,500)
-----------------------------------------------------------------------------------------------------------------
Net decrease in cash and equivalents ..................................... (782) (2,047) (795)
Cash and cash equivalents at beginning of year .......................... 2,935 4,982 5,777
-----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year ................................. $2,153 $2,935 $4,982
-----------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ............................................................ $1,714 $1,599 $2,659
Income taxes ....................................................... $765 $1,765 $305
Capital lease obligation incurred .................................. $123
-----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. THE COMPANY
The Company is engaged in the manufacture, sale and distribution of
men's jewelry, belts, leather accessories, gifts, suspenders and women's
jewelry. Its products are sold through department and specialty stores as
well as factory outlet stores operated by the Company.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Consolidated Financial Statements include the accounts of Swank and
a wholly owned foreign sales corporation. All significant intercompany
accounts and profits have been eliminated.
REVENUE RECOGNITION
Net sales are comprised of gross sales and royalty income less cash
discounts and customer returns. Sales are recorded upon shipment and royalty
income is accrued based on contract minimums. Cash discounts and returns are
accrued based upon experience.
ALLOWANCES FOR ACCOUNTS RECEIVABLE
The Company's allowances for receivables are comprised of cash
discounts, doubful accounts, in-store markdowns, cooperative advertising and
gross profit on returns. Cash discounts are reflected as a reduction of sales.
Provisions for doubtful accounts, in-store markdowns and cooperative
advertising are reflected in selling and administrative expenses. The reserve
for gross profit on returns results from the reversal of sales for estimated
returns. These reserve balances are at their highest level on December 31.
Reductions of these reserves occur principally in the first and second quarters
when the reserve balances are adjusted to reflect actual charges as processed.
CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid instruments purchased with a maturity of three
months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost (principally average cost
which approximates FIFO) or market.
In connection with the purchase of gold for manufacturing requirements,
the Company enters into commodity forward contracts to reduce the risk of
future price fluctuations. These contracts are accounted for as hedges and,
accordingly, gains and losses are deferred and recognized in cost of sales as
part of the product cost. At December 31, 1994, the Company had entered into
gold contracts to hedge purchases through 1995 of approximately $360,000.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. The Company provides
for depreciation of plant and equipment by charges against income which are
sufficient to write off the cost of the assets on a straight-line or double
declining-balance basis over estimated useful lives of 10-45 years for building
and improvements and 3-12 years for machinery and equipment.
Improvements to leased premises are amortized on a straight-line basis
over the shorter of the useful life of the improvement or the term of the lease.
Expenditures for maintenance and repairs and minor renewals are charged
to expense; betterments and major renewals are capitalized. Upon disposition,
cost and related accumulated depreciation are removed from the accounts with
any related gain or loss reflected in results of operations.
INCOME TAXES
The Company utilizes the liability method of accounting for income
taxes as set forth in FAS 109, Accounting for Income Taxes. Under the
liability method, deferred taxes are determined based on the difference between
the financial statement and tax basis of assets and liabilities using enacted
tax rates in effect in the years in which the differences are expected to
reverse. Deferred tax assets are recorded when it is more likely than not that
such tax benefits will be realized.
ENVIRONMENTAL COSTS
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities are recorded
when environmental assessments and/or remedial efforts are probable and the
costs can be reasonably estimated. Generally, the timing of these accruals
coincides with the completion of a feasibility study or the Company's
commitment to a formal plan of action.
CONCENTRATIONS OF CREDIT RISK
The Company sells products primarily to major retailers within the
United States. The Company performs ongoing credit evaluations of its
customers and maintains reserves for potential credit losses. Any such losses
have been within management expectations.
The Company does not believe that it is dependent upon any single
customer. Sales to the Company's largest customer amounted to approximately
10.6%, 10.8% and 12.2% of consolidated net revenues during 1994, 1993 and 1992,
respectively.
RECLASSIFICATIONS
Certain reclassifications have been made in the prior years'
consolidated financial statements to conform with the current year's
presentation. Accrued selling expenses, consisting of in-store markdowns and
cooperative advertising, have been reclassified as accounts receivable
allowances. Equal amounts related to sales returns have been reclassified
between sales and cost of goods sold.
C. SHORT - TERM BORROWINGS
Data on short-term borrowing arrangements are as follows (in
thousands):
------------------------------------------------------------------------------
<TABLE>
<CAPTION> 1994 1993 1992
<S> <C> <C> <C>
------------------------------------------------------------------------------
At December 31:
Total lines .......................... $21,000 $21,000 $21,000
Weighted average interest rate ........ 10.50% 8.00% 8.00%
For the year:
Monthly average borrowing
outstanding ........................ $12,971 $6,214 $6,793
Maximum borrowing outstanding
at any month end ................... $22,250 $12,500 $14,500
Monthly interest rate
(weighted average) ................. 9.43% 8.00% 8.15%
Balance at December 31 ................. $5,000 $3,500 $0
------------------------------------------------------------------------------
</TABLE>
The average amounts outstanding and weighted average interest rates
during each year are based on average monthly balances outstanding. The
Company has a revolving credit agreement, bearing interest at the prime rate
plus 2%, to finance seasonal working capital needs. On September 13, 1994,
the Company temporarily increased its existing $21,000,000 revolving credit
facility to $24,000,000 until December 31, 1994, at which point the facility
became $21,000,000. The revolving credit facility, which includes a
$7,000,000 letter of credit facility, will be available to the Company through
December 31, 1995. The maximum amount available is determined under a formula
based on eligible accounts receivable and inventory. The Company is required
to pay on a quarterly basis a commitment fee of one-half of one percent on the
unused portion of the revolving credit facility. Borrowings under the
agreement are collateralized by all of the Company's assets and are subject to
the covenants described in Note E.
<PAGE> 11
D. INCOME TAXES
Effective January 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." As permitted under the new rule, prior years' financial statements have
not been restated. In 1993, the Company recognized a cumulative effect from
this adoption of $477,000 and in addition, the impact in that year was an
increase of $467,000.
<TABLE>
<CAPTION>
LIABILITY LIABILITY DEFERRED
(Benefit) provision for income taxes: METHOD METHOD METHOD
--------------------------------------------------------------------------------
in thousands 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Current payable:
Federal....................................... $ 1,494 $ 457 $1,486
State......................................... 329 114 442
Foreign sales corporation..................... 26 22 29
--------------------------------------------------------------------------------
1,849 593 1,957
--------------------------------------------------------------------------------
Deferred:
Federal....................................... (2,252) (318) (82)
State......................................... (639) (19) (35)
--------------------------------------------------------------------------------
(2,891) (337) (117)
--------------------------------------------------------------------------------
$(1,042) $ 256 $1,840
--------------------------------------------------------------------------------
LIABILITY LIABILITY DEFERRED
Provision for deferred taxes: METHOD METHOD METHOD
--------------------------------------------------------------------------------
in thousands 1994 1993 1992
--------------------------------------------------------------------------------
Accounts receivable reserves.................... $ 147 $ 895 $ (128)
Inventory capitalization under Sec263A.......... (11) 46 (153)
Deferred compensation........................... 63 (116) (276)
Accrual for environmental costs................. (37) (98)
Inventory reserves.............................. 687 (687)
Capital loss.................................... 606 567
Workman's compensation.......................... (157)
Warrant interest................................ 96 (166)
State income taxes.............................. (23)
Contribution carry forwards..................... 164
Other items .................................... (46) (237) 249
Bonus........................................... 170
Postretirement benefits other................... (14) (260)
Valuation allowance............................. (3,538) (1,088)
--------------------------------------------------------------------------------
$(2,891) $ (337) $ (117)
--------------------------------------------------------------------------------
LIABILITY LIABILITY DEFERRED
Effective income tax rate: METHOD METHOD METHOD
--------------------------------------------------------------------------------
1994 1993 1992
--------------------------------------------------------------------------------
Statutory income tax rate....................... 34.0% 34.0% 34.0%
State income taxes, net of
federal tax benefit........................... 4.8 2.5 4.5
Federal tax credits............................. (5.7)
Life insurance.................................. (6.8) (14.5) (5.4)
Valuation allowance, net of
expired benefits.............................. (54.2) (16.4)
Other items, net................................ (.8) 2.8 3.4
--------------------------------------------------------------------------------
(23.0%) 8.4% 30.8%
--------------------------------------------------------------------------------
</TABLE>
The components of the net deferred tax asset at December 31, 1994,
December 31, 1993 and January 1, 1993, after adjustment for cumulative change
in accounting method, are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
DECEMBER DECEMBER JANUARY
in thousands 31, 1994 31, 1993 1, 1993
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax asset
Accounts receivable reserves.................. $2,484 $2,631 $3,525
Deferred compensation......................... 1,380 1,443 1,327
Inventory capitalization
under 263A.................................. 481 470 516
Accrual for environmental costs............... 390 353 255
Warrant interest.............................. 70 166 0
Postretirement benefits....................... 274 260 0
Inventory reserves............................ 0 0 687
Capital loss carryforward..................... 0 606 606
Workman's compensation........................ 157 0 0
Other......................................... 380 337 106
------ ------ ------
Gross deferred asset.......................... 5,616 6,266 7,022
Valuation allowance........................... 0 (3,538) (4,626)
------ ------ ------
5,616 2,728 2,396
Deferred tax liabilities
Depreciation.................................. (677) (680) (684)
------ ------ ------
Net deferred tax asset.......................... $4,939 $2,048 $1,712
--------------------------------------------------------------------------------
</TABLE>
Based on the earnings exhibited in 1994 and in recent years, management
believes that a valuation allowance is no longer warranted against its deferred
tax asset. Accordingly, the Company has recognized the reduction of this
allowance against its 1994 tax provision.
E. LONG-TERM OBLIGATIONS
Long-term obligations, excluding current portion, at December 31, 1994
and 1993 consisted of the following (in thousands):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
1987 deferred compensation plan (1).......................... $2,777 $2,948
1993 deferred compensation plan (1).......................... 835 383
Supplemental death benefits.................................. 264 287
Postretirement benefits other than pensions (1).............. 330 156
Long term portion of capital lease........................... 102
Long-term debt payable:
1995 ................................................ 3,000
--------------------------------------------------------------------------------
$4,308 $6,774
--------------------------------------------------------------------------------
<FN>
(1) See Note F
</TABLE>
In 1992 the Company refinanced all existing long-term debt with the
proceeds of a $9,000,000 bank term loan. The loan bears interest at the prime
rate, 8.5% at December 31, 1994, plus 2% and is collateralized by all of the
Company's assets.
The Company's debt agreement limits the payment of dividends and
requires the Company to maintain certain financial ratios and minimum amounts
of tangible net worth. The agreement also limits capital expenditures,
prohibits additional indebtedness over specified amounts and contains other
covenants normally associated with such agreements. Included as part of the
required financial ratios are leverage and current ratios of 1.25 to 1 and
1.85 to 1, respectively. As of December 31, 1994 the actual leverage and
current ratios were .90 to 1 and 2.06 to 1, respectively. The Company was in
compliance with these ratios at December 31, 1994.
At December 31, 1994 the Company was not in compliance with a covenant
contained in the Company's Credit Agreement dated as of December, 22, 1992, as
amended with respect to the results of operations, which was $1,206,000 below
the loss before taxes for the month of December 1994, permitted under the
agreement. The Banks have agreed to waive the aforementioned default. The
Banks have also agreed to waive monthly earnings and sales covenants for the
first quarter of 1995 in anticipation of a new revolving loan agreement to be
effective during the second quarter of 1995. The Company has not paid
dividends since 1986 and no dividends were paid during 1994. However,
$400,000 of consolidated retained earnings were not restricted as to the
payment of dividends.
F. EMPLOYEE BENEFITS AND BONUS PLANS
Effective January 1, 1994 the Company established The New Swank Inc.
Retirement Plan (the "Plan") which consolidated the Employees' Stock Ownership
Plans and the Savings Plan. This new consolidated plan incorporates the
characteristics of the three separate plans and reflects the Company's
continued desire to provide added incentives and enable employees to acquire
shares of the Company's Common Stock. The cost of the Plan has been borne by
the Company through contributions in amounts determined by the Board of
Directors. Shares of Common Stock acquired by the Plan are allocated to each
participating employee and are vested on a prescribed schedule.
As part of The New Swank Inc. Retirement Plan, the Company will
continue to maintain a Savings (401(k)) Plan covering substantially all full
time employees that allows employer cash contributions of a discretionary
nature and employee contributions resulting from their election to reduce
taxable compensation.
<PAGE> 12
The Company has made contributions to its retirement plans as follows
(in thousands):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Plan Description 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Employee stock ownership plans................. $ 419 $1,181
Savings Plan................................... 1,008 345
The New Swank Inc.
Retirement Plan.............................. $1,463 0 0
--------------------------------------------------------------------------------
$1,463 $1,427 $1,526
--------------------------------------------------------------------------------
</TABLE>
At December 31, 1994 The Swank Inc. Retirement Plan held a total of
11,246,560 shares of the Company's outstanding stock. At December 31, 1994
the Plan had no loans outstanding. Interest bearing loans (8% per annum) from
the previous plans were $519,000 and $988,000 in 1993 and 1992, respectively.
These loans were collateralized by the unallocated shares of the plans.
The Company provides postretirement life insurance, supplemental
pension and medical benefits for certain groups of retired employees. The
post retirement medical plan is contributory, with contributions adjusted
annually; the death benefit is noncontributory. In 1993, the Company adopted
FASB Statement No. 106 "Employers' Accounting for Postretirement Benefits
Other than Pensions". FAS 106 has no effect on cash flow but changes the
method of accounting for other postretirement benefits by requiring that the
cost be accrued by the date employees become eligible for the benefits. In
accordance with the FAS 106, the Company has elected to amortize the
transaction obligation for all plan participants on a straight-line basis over
a 20 year period.
The following table sets forth the plans' funded status reconciled
with the amount shown in the Company's statement of financial position at
December 31 (in thousands):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees ($2,477) ($2,471)
Fully eligible plan participants (1,085) (296)
Other plan actives (1,223) (702)
------ ------
($4,785) ($3,469)
Plan assets at fair value 0 0
Accumulated postretirement benefit obligation
in excess of plan assets ($4,785) ($3,469)
Unrecognized net loss from past experience
different from that assumed and from
changes in assumptions 1,216 0
Prior service cost not yet recognized in net
periodic postretirement benefit cost 0 0
Unrecognized transition obligation 2,873 3,033
----- -----
Accrued postretirement benefit cost(1) ($696) ($436)
--------------------------------------------------------------------------------
<FN>
(1) Amounts totalling $366,000 and $280,000 have been included in other
current liabilities as of December 31, 1994 and 1993, respectively. The
balance has been included in long-term obligations.
</TABLE>
Net periodic postretirement benefit cost for 1994 and 1993 included the
following components (in thousands):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Service cost-benefits attributed to service
during the period $ 63 $ 63
Interest cost on accumulated postretirement
benefit obligation 342 238
Amortization of transition obligation 160 160
Amortization of actuarial loss 64 0
Net periodic postretirement benefit cost
included in selling and administrative $629 $461
--------------------------------------------------------------------------------
</TABLE>
For measurement purposes, a 9% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1994; the rate was
assumed to decrease gradually to 5.5% for 1998 and remain at that level
thereafter. The effect of increasing the assumed health care cost trend rate
by 1 percentage point in each year would not significantly increase the
accumulated postretirement benefit obligation as of December 31, 1994 or the
net periodic postretirement benefit cost for the year then ended. Life
insurance contracts have been purchased on the lives of certain employees in
order to fund the postretirement death benefits. The net cost included in
selling and administrative expenses was $103,000, $189,000 and $232,000 in
1994, 1993 and 1992, respectively. The weighted-average discount rate used in
determining the accumulated postretirement obligation was 7.5%.
In 1987 the Company adopted a deferred compensation plan for certain
key executives that provides for payments upon retirement, death or other
termination of employment. Amounts payable to participants of this plan
aggregated $3,275,000, $3,322,000 and $2,899,000 at December 31, 1994, 1993 and
1992 respectively, of which $498,000 and $374,000 have been classified in other
current liabilities in 1994 and 1993, respectively. The balance of the
liability has been included in long term obligations in 1994, 1993 and 1992,
respectively. Life insurance contracts have been purchased on the lives of the
plan participants and certain other employees in order to fund the benefits.
In 1993 the Company established an additional deferred compensation plan
for certain key executives that provides for payments upon retirement, death or
termination of employment. Amounts payable to participants of this plan
aggregated $835,000 and $383,000 at December 31, 1994 and 1993, respectively
and are included in long-term obligations. Variable annuity life insurance
contracts have been purchased on the lives of the plan participants and certain
other employees in order to fund the benefit obligations.
The net charges related to these plans are included in selling and
administrative expense and interest expense, as appropriate, and
aggregated $1,278,000, $1,205,000 and $1,573,000 in 1994, 1993 and 1992,
respectively.
The Company has corporate owned life insurance policies on current and
former salaried employees. It is expected that the net proceeds from death
benefits will provide the necessary monies to fund future payments to
participants of the deferred compensation plans and postretirement death
benefits to beneficiaries of salaried employees who reach age sixty with ten
years of service. The benefits under each plan are paid directly by the
Company and are indirectly funded by life insurance. The Company is the owner
and sole beneficiary of the policies and, as such, is able to use loans against
the policy cash values to pay part or all of the annual premiums.
Other assets include cash surrender value of insurance policies, net of
loans. The aggregate cash surrender value of these policies was $23,240,000,
$20,176,000 and $20,022,000, offset by policy loans aggregating $20,210,000,
$18,407,000 and $18,503,000 in 1994, 1993 and 1992, respectively. The Company
has no intention to repay these loans and expects that they will be liquidated
from future life insurance proceeds. Interest on policy loans amounted to
$1,621,000, $1,717,000 and $1,765,000 in 1994, 1993 and 1992, respectively and
is included in the net costs of each plan described above. The weighted average
interest rate was 9.4%, 8.6% and 9.5% at December 31, 1994, 1993 and 1992,
respectively.
G. STOCK OPTIONS
Under the Company's Stock Option Plans, options may be granted to key
employees to purchase shares of Common Stock at the market value on the date
of grant. Options to purchase shares of Common Stock were granted under these
Plans and are exercisable beginning one year after the date of grant and
continuing for an additional nine years.
During 1994 the Company established an additional Stock Option Plan.
Options may be granted to Directors
<PAGE> 13
to purchase 150,000 shares of Common Stock at market value on the date of
grant. Options to purchase 15,000 shares of Common Stock were granted under
this plan and are immediately exercisable and continuing for an additional
five years. At December 31, 1994, 1,776,615 shares of Common Stock were
reserved for future grants under these Plans.
The following table summarizes stock option activity for the years
1992 through 1994 (see Note H):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Option Shares Option Price
--------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at December 31, 1991 2,639,394 $ .94 to $1.38
Expired 10,200 .94
Outstanding at December 31, 1992 2,629,194 $ .94 to $1.38
Exercised 124,265 .94 to 1.16
Expired 168,875 .94 to 1.38
Outstanding at December 31, 1993 2,336,054 $ .94 to $1.17
Exercised 35,000 .94
Expired 26,447 .94 to 1.16
Granted 15,000 $1.16
Outstanding at December 31, 1994 2,289,607 $.94 to $1.17
--------------------------------------------------------------------------------
</TABLE>
At December 31, 1994 options for 2,289,607 shares of Common Stock are
currently exercisable under the Plans at an aggregate option price of
approximately $2,438,000. Options expire at various dates through 2002.
H. CAPITAL
The following table reconciles the total outstanding common shares
disclosed on the consolidated balance sheets with total weighted average
common shares and common share equivalents used in computing primary earnings
per share:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Year Ended December 31,
1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Common shares outstanding ............ 16,470,636 16,435,636 16,378,028
Effect of using weighted
average common and
common equivalent
shares outstanding.................. 274,174 823,292 496,454
Effect of excluding unallocated
shares held in ESOP................. (538,127)
Shares used in computing
primary earnings
per share........................... 16,206,683 17,258,928 16,874,482
--------------------------------------------------------------------------------
</TABLE>
The difference between shares for primary and fully diluted earnings
per share was not significant in any year. Effective January 1, 1994 the
Company adopted Statement of Position (SOP) 93-6 "Employers' Accounting for
Employee Stock Ownership Plans" and, accordingly, has reflected the
unallocated ESOP shares maintained in the Company's Plan (described in Note F)
as a reduction of outstanding shares for earnings per share purposes until
such shares were committed to be allocated. At December 31, 1994 the Company
has no unallocated shares remaining in its Plan.
I. COMMITMENTS AND CONTINGENCIES
Warrants to purchase shares of the Company's common stock were issued
in 1991 by the Company to its bank lenders in connection with an increase in
the aggregate amount available to the Company under its revolving credit
agreement.
Put and call rights are applicable to the warrants and the shares of
common stock issuable to the warrants and became exercisable on February 1,
1994. The warrants expire on January 31, 2001. The purchase price of the
warrants and shares issuable upon exercise of the warrants is determined in
accordance with a formula based on the market price of the Company's common
stock. However, the agreement under which the warrants were issued provides
for an aggregate minimum and maximum cost to the Company. At December 31,
1994, the formula resulted in a purchase price applicable to the put which was
below the minimum price of $.444 per warrant and $1.144 per share (taking into
account the $.70 per share exercise price). The Company may call the warrants
or, if exercised, the related shares, only upon full repayment of the bank
debt. At December 31, 1994, the maximum call price was $443,356 ($1.111 per
warrant). In the event of exercise of the warrant, the maximum call price per
share is increased by the $.70 per share exercise price. As of December 31,
1994 the calculated liability that exists is $177,000, which is included in
other liabilities. The maximum additional expense under this formula is
$266,000.
The Company leases certain of its manufacturing, warehousing and sales
facilities, automobiles and equipment under noncancelable long-term operating
leases. Certain of the leases provide renewal options ranging from one to ten
years and escalation clauses covering increases in various costs. The Company
is also contingently liable for premises leased by an unrelated third party.
This contingency totals $225,000 per year until March 31, 1998.
Future minimum lease payments under noncancelable operating leases as
of December 31, 1994 are as follows (in thousands):
<TABLE>
--------------------------------------------------------------------------------
<S> <C>
1995................................................................. $ 3,335
1996................................................................. 2,462
1997................................................................. 1,935
1998................................................................. 1,450
1999................................................................. 1,201
Thereafter........................................................... 748
--------------------------------------------------------------------------------
Total minimum payment................................................ $11,131
--------------------------------------------------------------------------------
</TABLE>
Total rental expenses amounted to $4,109,000, $3,979,000 and
$3,499,000 in 1994, 1993 and 1992, respectively.
On June 7, 1990 the Company received notice from the United States
Environmental Protection Agency ("EPA") that it, along with fifteen others,
had been identified as a Potentially Responsible Party ("PRP") in connection
with the release of hazardous substances at a Superfund Site located in
Massachusetts. The Company, along with six others, has voluntarily entered
into an Administrative Order pursuant to which, inter alia, they have
undertaken to conduct a remedial investigation/feasibility study ("RI/FS")
with respect to the alleged contamination at the site. This notice does not
constitute the commencement of a proceeding against the Company or necessarily
indicate that a proceeding against the Company is contemplated.
It is the position of the potentially responsible parties that the
remedial investigation has been completed. Based upon available information,
it is estimated that the feasibility study may be completed in approximately
one year; the most recent estimate of costs for completion of the feasibility
study is approximately $250,000. The estimates are subject to change since
the scope of work is within the discretion of the EPA. The PRP group's
accountant's records reflect group expenses, independent of legal fees, in the
amount of $1,841,045 as of December 31, 1993, and in the amount of $1,845,058
as of June 30, 1994. The Company's share of costs for the RI/FS is being
allocated on an interim basis at 11.67%.
This Superfund site is adjacent to a municipal landfill that is in the
process of being closed under Massachusetts law. Due to the proximity of the
site to the landfill and the composition of waste at the site, the issues are
under discussion regarding the site among state and federal agencies and the
United States Department of Energy.
In September 1988 the Company received notice from the Department of
Pollution Control and Ecology of the State of Arkansas that the Company,
together with numer-
<PAGE> 14
ous other companies, had been identified as a PRP in connection with the
release or threatened release of hazardous substances from the Diaz
Refinery, Incorporated site in Diaz, Arkansas. The Company has advised the
State of Arkansas that it intends to participate in negotiations with the
Department of Pollution Control and Ecology through the committees formed by
the PRPs. The Company has not received any further communications regarding
the Diaz site.
In September, 1991, the Company signed a judicial consent decree
relating to the Western Sand and Gravel site located in Burrillville and North
Smithfield, Rhode Island. The consent decree was entered on August 28, 1992
by the U.S. District Court for the District of Rhode Island. The most likely
scenario cost estimates for remediation of the ground water at the site range
from approximately $2.8 million to approximately $7.8 million. Based on
current participation, the Company's share is 7.98% of approximately 75% of
the costs. It is anticipated that litigation will be brought against non-
settling potentially responsible parties to obtain reimbursement for their
share of the remediation costs.
The liabilities for costs associated with environmental sites recorded
in Other Liabilities at December 31, 1994, 1993 and 1992 were $991,000,
$850,000 and $617,000, respectively. Management believes it has provided
adequately for the above environmental exposures.
J. QUARTERLY FINANCIAL DATA (UNAUDITED)
The Company believes that comparison of results of operations is more
meaningful on a seasonal (six months) rather than on a quarterly basis.
Within a given six-month season, the timing of shipments of the Company's
products is affected by the availability of materials and retail sales trends
and forecasts and, accordingly, the shift of sales and earnings between
quarters within season may vary from year to year. Net sales differ from
amounts previously reported in the Company's quarterly reports on Form-10Q as
a result of reclassifications of equal amounts related to sales returns
between sales and cost of goods sold. As described in Note D, the Company
recognized a reduction in its deferred tax valuation allowance resulting in a
net tax benefit of approximately $1,164,000 in the fourth quarter of 1994.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Quarters
in thousands First Second Third Fourth
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
NET SALES......................... $29,002 $28,945 $36,935 $48,614
GROSS PROFIT...................... 12,418 13,097 17,624 21,235
NET INCOME (LOSS)................. ($ 412) ($ 929) $ 1,947 $ 4,966
EARNINGS (LOSS) PER SHARE......... ($ .03) ($ .06) $ .12 $ .31
1993
Net Sales......................... $25,838 $26,193 $31,818 $42,921
Gross profit...................... 11,887 10,813 14,881 20,187
Income (loss) before
cumulative effect of
accounting change............... (234) (1,371) 1,809 2,845
Net income (loss)................. $ 243 $(1,371) $ 1,809 $ 2,589
Earnings (loss) per share
before cumulative effect
of accounting change............ $ (.01) $ (.08) $ .10 $ .15
--------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
ABOUT THE COMPANY
Swank, Inc. is a leading U.S. manufacturer and distributor of men's
jewelry, belts, leather accessories, gifts, suspenders and women's jewelry.
The Company is dedicated to maintaining style and quality leadership in the
broad diversity of products it markets.
Our base of approximately 2,000 customers generates sales across more
than 32,000 department and specialty store counters throughout the United
States and approximately 50 foreign countries. In order to appeal to a large
economic cross-section of the buying public, most of Swank's collections are
offered in a wide variety of styles and price ranges.
The Company takes great pride in the strength of its consumer
franchise and the brand name recognition of its products such as "Pierre
Cardin", "Colours by Alexander Julian", "Anne Klein", "Anne Klein II",
"Guess?" and "Swank".
Approximately 120 salespeople and regional managers are engaged in the
sale of Company products, working out of offices located in five major cities
throughout the United States. The Company employs approximately 1,600 people.
Swank operates three production and distribution facilities, two in
Massachusetts and one in Connecticut, 43 factory outlet stores and 3 kiosks in
26 states.
FORM 10-K
The Annual Report on Form 10-K will be furnished without charge to
stockholders. Written requests for this report should be forwarded to Mr.
Andrew C. Corsini, Corporate Secretary, Swank, Inc., P.O. Box 2962, Attleboro,
Massachusetts 02703-0962.
MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded in the over-the-counter market
under the NASDAQ symbol SNKI. The following table sets forth the range of
high bid prices and low bid prices of the Company's Common Stock as reported
by The National Quotation Bureau Incorporated for the fiscal quarters
indicated. These quotations represent prices between dealers without
adjustment for retail mark-ups, mark-downs, or commissions and may not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
1994 1993
--------------------------------------------------------------------------------
Quarter HIGH LOW High Low
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First................................... $1.22 $1.00 $1.50 $ .88
Second.................................. 1.06 .94 1.56 1.19
Third................................... 1.19 .94 1.75 1.19
Fourth.................................. 1.38 1.00 1.25 1.06
For the Year............................ $1.38 $ .94 $1.75 $ .88
--------------------------------------------------------------------------------
Number of Record Holders at 12/31/94 - 2,041
Estimated number of stockholders - 4,175
</TABLE>
On February 29, 1988, shareholders approved a recapitalization of the
Company. Under this plan, public stockholders received $18.10 in cash and one
share of $.10 par value Common Stock in exchange for each share held.
If you have not tendered your old Swank, Inc. ($1.00 par value) shares
for new Swank, Inc. ($.10 par value) shares and $18.10 per share, please do
so. For information, contact:
Ms. Imre Sarkas
American Stock Transfer & Trust Company
40 Wall Street
<PAGE> 15
CORPORATE INFORMATION
Board of Directors
MARK ABRAMOWITZ
Parker Chapin Flattau & Klimpl, LLP
WILLIAM B. MACLEOD
Retired Senior Vice President
JAMES E. TULIN
Senior Vice President
JOHN TULIN
Executive Vice President
MARSHALL TULIN
President
RAYMOND H. VISE
Retired Senior Vice President
CORPORATE DATA
EXECUTIVE AND
ADMINISTRATIVE OFFICE
6 Hazel Street
Attleboro, Massachusetts 02703
EXECUTIVE AND
NATIONAL SALES OFFICES
90 Park Avenue
New York, New York 10016
INTERNATIONAL DIVISION
SALES OFFICE
90 Park Avenue
New York, New York 10016
REGIONAL SALES OFFICES
Atlanta, Chicago, Dallas
Los Angeles, New York
PRODUCTION AND
DISTRIBUTION FACILITIES
Attleboro, Massachusetts
South Norwalk, Connecticut
Taunton, Massachusetts
GENERAL COUNSEL
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
TRANSFER AGENT AND
REGISTRAR
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
CORPORATE OFFICERS
MARSHALL TULIN
President
JOHN TULIN
Executive Vice President
RICHARD S. BLUM
Senior Vice President-
International Sales
National Accounts Manager
Women's Jewelry Division
ANDREW C. CORSINI
Senior Vice President-
Chief Financial Officer
PAUL DUCKETT
Senior Vice President-
Sales Service - Distribution
ARTHUR T. GATELY, JR.
Senior Vice President-
Administration
MELVIN GOLDFEDER
Senior Vice President-
President-
Special Markets Division
CHARLES A. GORDON
Senior Vice President-
Manufacturing
Jewelry Division
ERIC P. LUFT
Senior Vice President-
National Sales Manager
Men's Products
WILLIAM F. RUBIN
Senior Vice President-
Regional Sales
BRUCE SHOPOFF
Senior Vice President-
Regional Sales
JAMES E. TULIN
Senior Vice President-
Merchandising
LEWIS VALENTI
Senior Vice President-
President-
Women's Division
MICHAEL D. WOLFSON
Senior Vice President-
Special Markets Division
RICHARD V. BYRNES, JR.
Vice President-
Manufacturing
Belt Division
BARRY HEUSER
Vice President-
Merchandising
Belt Division
FREDERICK M. MOEHLE
Vice President-
Merchandising
Women's Division
THOMAS O'CONNOR
Vice President-
Manufacturing Services
Belt Division
KIMBERLY RENK
Vice President-
Merchandising
Women's Division
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of Swank, Inc.
Attleboro, Massachusetts:
We consent to the incorporation by reference in the Registration Statements
relating to the Swank, Inc. 1981 Incentive Stock Option Plan (File No. 2-83629)
and the 1987 Incentive Stock Option Plan (File No. 33-23913) on Form S-8, of
our reports dated February 24, 1995, except as to the information presented in
Note E, for which the date is March 9, 1995 on our audits of the consolidated
financial statements and financial statement schedules of Swank, Inc. as of
December 31, 1994 and 1993 and for the years ended December 31, 1994, 1993 and
1992 which reports are included in this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 28, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 2,153
<SECURITIES> 0
<RECEIVABLES> 23,358
<ALLOWANCES> 9,484
<INVENTORY> 26,149
<CURRENT-ASSETS> 47,258
<PP&E> 22,064
<DEPRECIATION> 15,477
<TOTAL-ASSETS> 57,458
<CURRENT-LIABILITIES> 22,933
<BONDS> 0
<COMMON> 1,680
0
0
<OTHER-SE> 825
<TOTAL-LIABILITY-AND-EQUITY> 57,458
<SALES> 143,496
<TOTAL-REVENUES> 143,496
<CGS> 79,122
<TOTAL-COSTS> 79,122
<OTHER-EXPENSES> 58,127
<LOSS-PROVISION> 213
<INTEREST-EXPENSE> 1,717
<INCOME-PRETAX> 4,530
<INCOME-TAX> (1,042)
<INCOME-CONTINUING> 5,572
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,572
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
