<PAGE> 1
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Swank, Inc.
(Name of Registrant as Specified in Its Charter)
Jeffrey Messier, Assistant Controller
(Name of Persons(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: 1
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[X] Fee paid with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
5. Amount Previously Paid:
6. Form, Schedule or Registration Statement No.:
7. Filing Party:
8. Date Filed:
--------------------------------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
SWANK, INC. 6 Hazel Street, Attleboro, Massachusetts 02703
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1995 Annual Meeting of Stockholders of SWANK, INC. (the "Company")
will be held at the Company's offices at 6 Hazel Street, Attleboro,
Massachusetts, on April 20, 1995 at 11:00 o'clock A.M. local time, for the
purpose of considering and acting upon the following:
1. The approval of amendments to the By-Laws of the Company to provide
for a classified Board of Directors and to make certain conforming changes;
2. The election of six (6) directors to serve as the Company's Board of
Directors;
3. The approval of an amendment to the Restated Certificate of
Incorporation of the Company to reduce the number of authorized shares of Common
Stock from 66,000,000 to 43,000,000;
4. The approval of the Company's 1994 Non-Employee Director Stock
Option Plan;
5. The approval of the appointment of Coopers & Lybrand, L.L.P. as the
independent accountants of the Company for the year 1995; and
6. The transaction of such other business as may properly come before
the meeting.
Only holders of record of Common Stock at the close of business on
February 28, 1995 will be entitled to notice of, and to vote at, the meeting
or any adjournment thereof.
By Order of the Board of Directors
Andrew C. Corsini,
Secretary
Dated: March 16, 1995
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
EXPECT TO BE PRESENT, PLEASE DATE AND SIGN THE ENCLOSED FORM OF PROXY AND
RETURN IT PROMPTLY TO THE COMPANY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED.
<PAGE> 3
SWANK, INC. 6 Hazel Street, Attleboro, Massachusetts 02703
PROXY STATEMENT
1995 ANNUAL MEETING OF STOCKHOLDERS
APRIL 20, 1995
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of SWANK, INC. (the "Company") of proxies in the form
enclosed for use at the Company's 1995 Annual Meeting of Stockholders (the
"Meeting") which will be held on the date, at the time and place and for the
purposes set forth in the foregoing notice, and at any adjournment or
postponement thereof. Any stockholder giving a proxy has the power to revoke
the same at any time before it is voted. All expenses in connection with the
solicitation of proxies will be borne by the Company. Proxies may be solicited
by certain officers and employees of the Company by mail, telephone,
telecopier, telegraph or personal interview.
The outstanding voting securities of the Company at the close of
business on February 28, 1995, the record date for the determination of
stockholders entitled to notice of and to vote at the Meeting, consisted of
16,470,636 shares of Common Stock, $.10 par value per share ("Common Stock"),
each of which is entitled to one vote. A majority of the outstanding shares
entitled to vote, present in person or by proxy, constitutes a quorum for the
purposes of the Meeting. This Proxy Statement and the accompanying form of
proxy will be mailed or otherwise furnished on or about March 16, 1995 to all
stockholders of record at the close of business on February 28, 1995.
OWNERSHIP OF VOTING SECURITIES
<TABLE>
The following table sets forth information as of February 28, 1995 with
respect to each person (including any "group" of persons as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who is
known to the Company to be the beneficial owner of more than 5% of the Common
Stock:
<CAPTION>
--------------------------------------------------------------------------------
NAME AND AMOUNT AND
ADDRESS OF NATURE OF PERCENT
TITLE OF BENEFICIAL BENEFICIAL OF
CLASS OWNER OWNERSHIP CLASS
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock The New Swank, Inc. 11,232,563(1)(2) 68.2%
Retirement Plan
90 Park Avenue
New York, NY 10016
Common Stock Marshall Tulin 5,377,500(3)(4)(5) 32.2%
90 Park Avenue
New York, NY 10016
Common Stock John Tulin 4,921,231(3)(5)(6) 29.5%
90 Park Avenue
New York, NY 10016
Common Stock Raymond Vise 4,515,905(3) 27.4%
8 El Paseo
Irvine, CA 92715
</TABLE>
(1) The Company has merged its Employee Stock Ownership Plan No. 1 ("ESOP I"),
Employee Stock Ownership Plan No. 2 ("ESOP II") and Savings Plan into one
plan, The New Swank, Inc. Retirement Plan (the "Retirement Plan"). This
amount includes (a) 6,723,056 shares of Common Stock allocated to
participants' ESOP I accounts in the Retirement Plan and as to which such
participants may direct the trustees of the Retirement Plan as to voting on
all matters, (b) an additional 239,147 shares of Common Stock allocated to
participants' ESOP I accounts in the Retirement Plan as to which such
participants may direct the trustees as to voting on certain significant
corporate events such as mergers, consolidations, recapitalizations,
reclassifications, liquidations, dissolutions or sales of substantially all of
a trade or business of the Company (collectively, "Significant Corporate
Events") and (c) an additional 123,148 of such shares allocated to the accounts
of former employees, subject to forfeiture, and only able to be voted by the
trustees for all matters on which stockholders may vote.
(2) This amount also includes 3,357,984 shares of Common Stock allocated to
participants' ESOP II accounts in the Retirement Plan as to which participants
<PAGE> 4
may direct the trustees as to voting only on Significant Corporate Events and
as to which the trustees may vote, on all other matters, in their discretion.
Shares allocated to ESOP II accounts as to which no voting instructions are
received are required to be voted in the same proportion as shares allocated
to ESOP II accounts as to which voting instructions are received. This amount
also includes 789,718 shares held in the 401(k) accounts under the Retirement
Plan, as to which participants may direct the trustees as to voting on all
matters and may be disposed of in the discretion of the trustees.
(3) The trustees of the Retirement Plan are Marshall Tulin, President and a
director of the Company, John A. Tulin, Executive Vice President and a
director of the Company and Raymond Vise, a director of the Company. This
amount includes (a) 239,147 allocated shares held in ESOP I accounts as to
which the trustees have sole voting power (see footnote 1 above), (b)
3,357,984 shares held in ESOP II accounts as to which the trustees have sole
voting power (see footnote 2 above), (c) the 123,148 shares of Common Stock
allocated to the accounts of former employees but voted by the trustees and
(d) 789,718 shares held in the 401(k) accounts (see footnote 2 above).
(4) This amount includes 343,022 shares owned by Mr. Tulin's wife. Mr. Tulin
disclaims beneficial ownership of these shares.
(5) This amount includes 211,209 shares which Mr. Tulin has the right to
acquire within 60 days through the exercise of stock options granted under the
Company's 1981 Stock Option Plan (the "1981 Plan") and its 1987 Incentive
Stock Option Plan (the "1987 Plan") (collectively, the "Plans").
(6) This amount includes 3,180 shares owned by Mr. Tulin's wife. Mr. Tulin
disclaims beneficial ownership of these shares.
<TABLE>
The following table sets forth information at February 28, 1995 with
respect to the beneficial ownership of the Company's Common Stock by (a) each
director and each nominee for election as a director of the Company, (b) each
executive officer named in the Summary Compensation Table and (c) all directors
and executive officers of the Company as a group (22 persons). Unless otherwise
indicated, each person named below and each person in the group named below has
sole voting and investment power with respect to the shares of Common Stock
indicated as beneficially owned by such person or such group.
<CAPTION>
--------------------------------------------------------------------------------
Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
--------------------------------------------------------------------------------
<S> <C> <C>
Mark Abramowitz 2,600 Less than 1%
William B. MacLeod 100 Less than 1%
James Tulin 244,169 (1) 1.5%
John Tulin 4,921,231 (2) 29.5%
Marshall Tulin 5,377,500 (3) 32.2%
Raymond Vise 4,515,905 (4) 27.4%
Andrew C. Corsini 318,723 (5) 1.9%
Lewis Valenti 224,579 (6) 1.3%
All directors and executive
officers as a group(22 persons) 7,810,315 (7) 43.2%
</TABLE>
(1) Includes 184,325 shares which Mr. Tulin has the right to acquire within 60
days through the exercise of stock options and 59,844 shares of Common Stock
allocated to his ESOP I account and 401(k) accounts under the Retirement Plan.
(2) This amount includes the shares referred to in footnotes 3, 5 and 6 above
under "Ownership of Voting Securities."
(3) This amount includes the shares referred to in footnotes 3, 4 and 5 above
under "Ownership of Voting Securities."
(4) This amount includes the shares referred to in footnote 3 above under
"Ownership of Voting Securities."
(5) This amount includes 184,325 shares which Mr. Corsini has the right to
acquire within 60 days through the exercise of stock options and 54,050 shares
of Common Stock allocated to his ESOP I account and 401(k) accounts under the
Retirement Plan.
(6) This amount includes 171,825 shares which Mr. Valenti has the right to
acquire within 60 days through the exercise of stock options and 52,754 shares
of Common Stock allocated to his ESOP I account and 401(k) accounts under the
Retirement Plan.
(7) This amount includes the shares referred to in footnote 3 above under
"Ownership of Voting Securities." This amount also includes 1,624,419 shares
of Common Stock which directors and executive officers as a group have the
right to acquire within 60 days through the exercise of stock options granted
under the Plans and 624,997 shares of Common Stock allocated to accounts of
executive officers under ESOP I as to which they have the right to direct the
vote.
Pursuant to Section 16 of the Securities Exchange Act of 1934, as
amended, officers, directors and holders of more than 10% of the outstanding
shares of Common Stock are required to file periodic reports of their ownership
of, and transactions involving, the Common Stock with the Securities and
Exchange Commission. Based solely on its review of copies of such reports
received by the Company or written representations from certain reporting
persons that no Form 5 was required for those persons, the Company believes that
its reporting persons have complied with all Section 16 filing requirements
applicable to them with respect to the Company's fiscal year ended December 31,
1994. The Company is not aware of any filing delinquencies from prior fiscal
years.
I. APPROVAL OF AMENDMENTS TO BY-LAWS
On February 23, 1995, the Board of Directors adopted, subject to
approval by stockholders at the Meeting, amendments to the Company's By-Laws
(the "Bylaw Amendments") that would divide the Board into three classes, and, in
connection therewith, provide that directors may be removed from office only for
cause. The Board of Directors is recommending approval by stockholders of the
Bylaw Amendments in order to further continuity and stability in the leadership
2
<PAGE> 5
and policies of the Company and to discourage certain actions involving actual
or threatened changes of control of the Company that may not be in the best
interests of stockholders. As more fully described below, the Board of
Directors believes that the Bylaw Amendments would, if adopted, effectively
reduce the possibility that a third party could cause a sudden or surprise
change in control of the Board.
A copy of the Bylaw Amendments is set forth as Exhibit "B" to this Proxy
Statement. The summary and discussion of the Bylaw Amendments contained in this
Proxy Statement do not purport to be complete and are qualified in their
entirety by reference to Exhibit "B."
CLASSIFICATION OF THE BOARD OF DIRECTORS
The Company's By-Laws currently provide that all directors shall be
elected at the annual meeting of stockholders to hold office for one year and
until the election and qualification of their respective successors. If the
Bylaw Amendments are approved by stockholders, the Board of Directors will be
divided into three separate classes of directors, designated as Class I, Class
II and Class III, with staggered three-year terms. Initially, William B.
MacLeod and James Tulin have been nominated to serve as Class I directors for a
term expiring at the annual meeting of stockholders to be held in 1996, Mark
Abramowitz and John Tulin have been nominated to serve as Class II directors
for a term expiring at the annual meeting of stockholders to be held in 1997,
and Marshall Tulin and Raymond Vise have been nominated to serve as Class III
directors for a term expiring at the annual meeting of stockholders to be held
in 1998, with each such director to hold office until his successor shall be
elected and shall qualify. Information concerning the nominees for election as
directors at the Meeting is contained under the caption "II. Nominees for
Election as Directors." If the Bylaw Amendments are not approved by
stockholders, all such nominees, if elected, would serve for one year and until
their respective successors are duly elected and qualify.
If at any time the size of the Board of Directors is changed, the
increase or decrease in the number of directors would be apportioned among the
three classes to make all classes as nearly equal in number as possible. The
Board of Directors has no present plans, arrangements, commitments or
understandings with respect to increasing or decreasing the size of the Board of
Directors or of any class of Directors.
REMOVAL OF DIRECTORS
Pursuant to the Delaware General Corporation Law ("Delaware Law") and
the current By-laws of the Company, members of the Board of Directors may be
removed, with or without cause, at any time during their term of office by the
holders of a majority of the shares of the Company's stock entitled to vote in
the election of directors. Delaware Law, however, provides that directors
serving on a classified board of directors may be removed prior to the
expiration of their terms by the holders of a majority of the shares of a
company's voting stock only for cause, unless otherwise provided in that
company's certificate of incorporation. Since the Company's Restated
Certificate of Incorporation (as amended to date, the "Certificate of
Incorporation") does not contain a contrary provision, directors serving on the
Company's classified Board could be removed only for cause.
REASONS FOR AND EFFECTS OF THE BYLAW AMENDMENTS
The Board of Directors believes that a classified Board will benefit the
Company by encouraging continuity of management and stability of leadership and
policies. New directors will be given an opportunity to become familiar with
corporate affairs and will be able to benefit from the experience of other
members of the Board who have served for longer than one-year terms. The Board
of Directors further believes that such continuity and stability would
facilitate long-term strategic planning and direction for the Company's
business. Although no problems have been experienced by the Company in the past
with respect to the continuity and stability of leadership and policy, the Board
of Directors believes that a classified Board would decrease the likelihood of
such problems arising in the future. With a classified Board of Directors, it
would generally require at least two annual meetings of stockholders instead of
one to effect a change in a majority of the Board. In addition, since directors
on a classified Board may only be removed for cause, it would be more difficult
for stockholders to remove a director or change a majority of the members of the
Board even if the only reason for the removal or change was motivated by the
performance or the nonperformance of a director or directors.
The Bylaw Amendments are also intended to discourage certain types of
actions in connection with an actual or threatened change of control of the
Company. In many cases, substantial stock positions have been accumulated in
public companies by third parties as a prelude to proposing a takeover,
restructuring or other extraordinary corporate transaction. Such actions are
often undertaken by the third party without advance notice to or consultation
with the directors of the target company. In some cases, the potential acquiror
may seek representation on the target's board in order to increase the
likelihood that its proposal or proposals will be implemented. If the target
company resists such efforts, the potential acquiror may commence a proxy
contest to have its nominees elected to the board in place of certain directors
or to replace the entire board. In some cases, the potential acquiror may not
be as interested in acquiring control as in using the threat of a proxy fight
and/or a takeover bid to obtain a special benefit which might not be available
to all stockholders, such as a repurchase of the potential acquiror's equity
position at a premium over the market price.
The Bylaw Amendments are not intended to prevent a purchase of the
equity securities of the Company, or to deter bids for such securities. Rather,
3
<PAGE> 6
the Board of Directors believes that the Bylaw Amendments will discourage the
types of actions described above and encourage persons who may seek to acquire
control of the Company to initiate such an acquisition through negotiations with
the Board of Directors. In addition, while the Board has no knowledge of any
present effort to gain control of the Company or to organize a proxy contest,
the Board believes that it is prudent and in the best interests of stockholders
generally to provide greater assurance of continuity of the Board's composition
and policies. The Board believes such advantages outweigh any disadvantages
relating to preserving incumbent management in office or possibly discouraging
potential acquirors from making an effort to obtain control of the Company.
ADVANTAGES AND DISADVANTAGES
As stated above, the Bylaw Amendments have both advantages and disadvantages
to stockholders. The primary advantages are that they will enable the Company
to further continuity and stability in the leadership and policies of the
Company and discourage certain types of actions in connection with actual or
threatened changes of control of the Company that may not be in the best
interests of stockholders. The Board of Directors believes that such
advantages are desirable because they will facilitate the Company's long-term
strategy and direction. The Bylaw Amendments are not intended to prevent a
purchase of all or a majority of the equity securities of the Company or to
deter bids for such securities. Rather, the Board of Directors believes that
the Amendments will encourage persons who may seek to acquire control of the
Company to initiate such an acquisition through negotiations with the Board of
Directors. The Board of Directors believes that it will therefore be in a
better position to protect the interests of all stockholders.
Although the Bylaw Amendments are intended to encourage persons seeking
to acquire control of the Company to initiate such an acquisition through
negotiations with the Board of Directors, their overall effect may be to
discourage a third party from making a tender offer for the Company's Common
Stock or otherwise attempting to obtain a substantial position in the equity
securities of the Company in order to commence a proxy contest or engage in
other takeover-related action, even though some or even a majority of the
Company's stockholders might believe such actions to be beneficial.
Furthermore, to the extent any potential acquirors are deterred by the
Bylaw Amendments, the Bylaw Amendments may have the effect of preserving in
office the incumbent management of the Company. The Bylaw Amendments may also
serve to benefit incumbent management by making it more difficult to remove
management even when the only reason for the proposed change of control or
stockholder action may be the unsatisfactory performance of the present
directors.
Takeovers or changes in the Board of Directors of a company that are
proposed and effected without prior consultation and negotiation with the
Company are not necessarily detrimental to the Company and its stockholders.
However, the Board of Directors believes that the benefits of seeking to protect
the ability of the Company to negotiate effectively, through directors who have
previously been elected by the stockholders as a whole and are familiar with the
Company, outweigh any disadvantage of discouraging such unsolicited proposals.
EXISTING ANTI-TAKEOVER PROVISIONS IN THE CERTIFICATE OF INCORPORATION AND IN
DELAWARE LAW
The Company's Certificate of Incorporation currently contains
provisions which may have the effect of discouraging or deterring a third party
from attempting to obtain control of the Company. The Certificate of
Incorporation presently authorizes the issuance of 66,000,000 shares of Common
Stock (43,000,000 shares if Proposal III is approved by stockholders) and
1,000,000 shares of Preferred Stock, $1.00 par value per share ("Preferred
Stock"), without further action or authorization by stockholders (unless
required by applicable law). At the close of business on February 28, 1995,
the record date for determining stockholders entitled to notice of and to vote
at the Meeting, 16,470,636 shares of Common Stock were issued and outstanding.
No shares of Preferred Stock were issued and outstanding at the close of
business on that date. Accordingly, the Board of Directors could (although it
has no present intention of doing so) issue Preferred Stock having preferential
voting, dividend, conversion or liquidation rights or issue a substantial
amount of Common Stock to persons opposed to a change of control of the Company,
and thereby discourage third parties from seeking to acquire control of the
Company.
Section 203 of the Delaware Law contains certain restrictions on
"interested stockholders" (defined generally as a person owning 15% or more of
the outstanding voting stock of a company). Generally, Section 203 requires
that a person that desires to merge or consolidate, or enter into certain other
types of transactions, with a company incorporated under the laws of the State
of Delaware, secure the approval of the board of directors of that company for
such plans before becoming an interested stockholder. If an interested
stockholder fails to secure such approval, subject to certain exceptions set
forth in Section 203, the interested stockholder will be precluded, for a period
of three years from the date such person became an interested stockholder, from
merging or consolidating, or entering into certain other types of transactions,
with such company. The three-year prohibition does not apply to an interested
stockholder who owned at least 85% or more at the time such person became an
interested stockholder or to an interested stockholder that fails to get board
approval before becoming an interested stockholder, but subsequently obtains
both the approval of the board of directors and two- thirds of the other
stockholders.
4
<PAGE> 7
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Meeting is necessary for approval
of the Bylaw Amendments. The Board of Directors recommends that stockholders
vote FOR approval of the Bylaw Amendments.
II. NOMINEES FOR ELECTION AS DIRECTORS
If the Bylaw Amendments (see Proposal I) are approved by stockholders,
three separate classes of directors will be elected at the Meeting, each of
which will consist of two directors, designated as Class I, Class II and Class
III. William B. MacLeod and James Tulin have been nominated to serve as Class I
directors for a term expiring at the annual meeting of stockholders to be held
in 1996, Mark Abramowitz and John Tulin have been nominated to serve as Class II
directors for a term expiring at the annual meeting of stockholders to be held
in 1997, and Marshall Tulin and Raymond Vise have been nominated to serve as
Class III directors for a term expiring at the annual meeting of stockholders to
be held in 1998, with each such director to hold office until his successor
shall be elected and shall qualify.
If the Bylaw Amendments are not approved by stockholders, six directors,
all of one class, will be elected at the Meeting. In such event, each of the
six nominees named above, if elected, would serve for a term of one year and
until their respective successors shall be elected and shall qualify.
The following sets forth certain information about each nominee for
election as a director of the Company, including his principal occupation or
employment. Unless otherwise indicated thereon, all proxies received will be
voted in favor of the election of said nominees as directors. Should any of the
nominees not remain a candidate at the time of the annual meeting (a situation
which is not now anticipated), proxies solicited hereunder will be voted in
favor of those nominees who do remain as candidates and may be voted for any
substitute nominees. The affirmative vote of a plurality of votes cast at the
Meeting is required to elect directors.
WILLIAM B. MACLEOD (2) (3) - CLASS I
Mr. MacLeod, who is 81 years old, served as Executive Vice President and
Chief Financial Officer or as a Senior Vice President of the Company prior to
his retirement in 1982. He became a director in 1967.
JAMES TULIN (1) - CLASS I
Mr. Tulin, who is 44 years old, is a Senior Vice President of the
Company. He joined the Company in 1974, became a Regional Sales Manager in 1978
and was elected a Vice President in 1985 and a Senior Vice President in 1986.
Mr. Tulin became a director in 1985.
MARK ABRAMOWITZ (2) (3) - CLASS II
Mr. Abramowitz, who is 59 years old, has been a partner in the law firm
of Parker Chapin Flattau & Klimpl, LLP of New York City for more than the past
five years. The firm is general counsel to the Company. Mr. Abramowitz became
a director of the Company in 1987.
JOHN TULIN (1) - CLASS II
Mr. Tulin, who is 48 years old, is Executive Vice President of the
Company. He joined the Company in 1971. He was elected a Vice President in
1974, a Senior Vice President in 1979 and Executive Vice President in 1982. Mr.
Tulin became a director in 1975.
MARSHALL TULIN (1) - CLASS III
Mr. Tulin, who is 77 years old, is the President of the Company. He
joined the Company in 1940, was elected a Vice President in 1954 and President
in 1957. Mr. Tulin became a director in 1956.
RAYMOND VISE (1) (3) - CLASS III
Mr. Vise, who is 73 years old, served as Senior Vice President of the
Company for more than five years prior to his retirement in 1987. He became a
director in 1963.
(1) Member of the Executive Committee of the Board.
(2) Member of the Audit Committee of the Board. There were 2 meetings of this
committee during the last fiscal year. This committee reviews the Company's
financial statements with the independent accountants prior to their
submission to the Board, recommends to the Board the appointment of the
independent accountants, reviews the performance and scope of services to be
provided by the independent accountants and reviews the adequacy of internal
accounting procedures and controls.
(3) Member of the Executive Compensation Committee of the Board. There were 2
meetings of this committee during the last fiscal year. This committee
recommends the annual compensation, including bonuses, for the 3 executive
officers of the Company who are also directors. Each of these officers has an
employment agreement with the Company (see "Renumeration and Related Matters").
There were 5 meetings of the Board during the last fiscal year. Each of the
directors attended at least 75% of the aggregate of all such Board meetings
and all meetings held by the committees of the Company on which he served.
The Company does not have any nominating or similar committee.
There are no family relationships among any of the persons listed above or
among any of such persons and any of the other executive officers of the
5
<PAGE> 8
Company, except that James Tulin and John Tulin are sons of Marshall Tulin.
REMUNERATION AND RELATED MATTERS
<TABLE>
The following table sets forth certain summary information concerning
compensation with respect to the Chief Executive Officer and each of the other 4
most highly compensated executive officers of the Company:
<CAPTION>
--------------------------------------------------------------------------------
I. SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
--------------------------------------------------------------------------------
ALL
NAME AND OTHER
PRINCIPAL COMPEN-
POSITION YEAR SALARY BONUS(1) SATION (6)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marshall Tulin (2) 1994 $360,000 $250,000 $18,489
President 1993 360,000 243,000 18,908
1992 355,000 243,000 9,289
John Tulin (3) 1994 220,000 185,000 18,189
Executive Vice 1993 215,000 150,000 18,408
President 1992 215,000 150,000 10,939
Andrew Corsini 1994 180,000 130,000 16,189
Senior Vice 1993 180,500 106,000 14,908
President and 1992 175,000 106,000 10,136
Chief Financial
Officer
James Tulin (4) 1994 190,000 165,000 15,989
Senior Vice 1993 190,000 130,000 15,908
President 1992 185,000 130,000 10,939
Lewis Valenti (5) 1994 80,000 294,110 17,789
Senior Vice 1993 80,000 263,479 16,908
President 1992 71,250 249,135 10,939
</TABLE>
(1) Bonuses are accrued by the Company under an incentive compensation program
for management employees. A program for incentive compensation has been in
effect since 1956.
(2) Marshall Tulin has an employment agreement with the Company which terminates
on June 30, 1998 providing for a salary at the rate of $360,000 per annum.
(3) John Tulin has an employment agreement with the Company which terminates
on December 31, 1998 providing for a salary at the rate of $220,000 per annum.
(4) James Tulin has an employment agreement with the Company which terminates
on February 28, 1998 providing for a salary at the rate of $190,000 per annum.
(5) The bonus amounts shown for Lewis Valenti include sales commissions in the
amounts of $234,110, $213,479 and $199,135 for the years 1994, 1993 and 1992
respectively.
(6) The amounts set forth for 1994, 1993 and 1992, represent allocations under
certain benefit plans of the Company as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
RETIREMENT PLAN DEFERRED
--------------- COMPEN-
ESOP I ESOP II 401(k) SATION
ACCOUNTS ACCOUNTS ACCOUNTS PLAN TOTAL
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
----
Marshall Tulin $4,836 $ 153 $13,500 $18,489
John Tulin 4,836 153 13,200 18,189
Andrew Corsini 4,836 153 1,800 9,400 18,189
James Tulin 4,836 153 11,000 15,989
Lewis Valenti 4,836 153 1,800 11,000 17,789
1993
----
Marshall Tulin 3,865 258 1,285 13,500 18,908
John Tulin 3,865 258 1,285 13,000 18,408
Andrew Corsini 3,865 258 1,285 9,500 14,908
James Tulin 3,865 258 1,285 10,500 15,908
Lewis Valenti 3,865 258 1,285 11,500 16,908
1992
----
Marshall Tulin 9,089 200 9,289
John Tulin 9,089 1,650 200 10,939
Andrew Corsini 8,409 1,527 200 10,136
James Tulin 9,089 1,650 200 10,939
Lewis Valenti 9,089 1,650 200 10,939
</TABLE>
Each director who is not also receiving remuneration from the Company as
an employee, consultant or counsel received a fee of $2,000 per meeting attended
of the Board and of the committees thereof. In addition, pursuant to the terms
of the 1994 Non-Employee Stock Option Plan of the Company (the "1994 Plan"), on
December 31, 1994, each director of the Company who was not an employee of the
Company or any subsidiary of the Company (each, an "Outside Director") was
automatically granted an option to purchase 5,000 shares of Common Stock at an
exercise price of $1.15625 per share, the fair market value per share subject to
the option on the date of grant. The 1994 Plan also provides that an option to
purchase 5,000 shares will automatically be granted to an Outside Director on
the date such person is first elected a director, and to each Outside Director
in office immediately following each annual meeting of stockholders at which
directors are elected, commencing with the Meeting. If stockholders do not
approve the 1994 Plan, the options granted on December 31, 1994 will terminate
and will be of no further force or effect. See "Approval of the 1994
Non-Employee Director Stock Option Plan."
Robert Tulin (who is the brother of Marshall Tulin and uncle of John
Tulin and James Tulin) was employed by the Company during 1994. Robert Tulin is
the director of advertising and is responsible for coordinating the production
of the Company's merchandise catalogs. Aggregate compensation paid Robert Tulin
by the Company for services rendered during 1994 amounted to $100,500.
The Company has entered into termination agreements with Messrs.
Marshall Tulin, John Tulin, Andrew Corsini, James Tulin and Lewis Valenti, which
expire on December 31, 1995. In the event of a change in control (as defined in
such agreements) of the Company during the term of such agreements followed by a
6
<PAGE> 9
significant change in the duties, powers or conditions of employment of any such
officer, the officer may within 2 years thereafter terminate his employment and
receive a lump sum payment equal to 2.99 times such officer's "base amount" (as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(the "Code")).
In 1983 the Company terminated its pension plans covering salaried
employees and salesmen and purchased annuities from the assets of those plans to
provide for the payment (commencing at age 62) of accrued benefits of those
employees who were not entitled to or did not elect to receive lump sum
payments. The accrued annual benefits for Messrs. John Tulin, Andrew Corsini,
James Tulin and Lewis Valenti are $13,116, $14,176, $10,407 and $12,731,
respectively.
The 1981 Plan and 1987 Plan each provide for the grant to key employees
of the Company of options (which are intended to qualify as incentive stock
options under the Code) to purchase shares of the Company's Common Stock. The
1981 Plan expired by its terms in 1991. No further options may be granted
thereunder, although certain stock options remain outstanding.
During the Company's fiscal year ended December 31, 1994, no stock
options were granted to any executive officer of the Company. During such
period options were exercised by executive officers as a group with respect to
20,000 shares. The price paid upon exercise of such options was $18,750; the
market value of the shares acquired at the time of exercise was $25,000. No
options were exercised by any of the persons named in the Summary Compensation
Table during such period.
<TABLE>
As at December 31, 1994 the aggregated fiscal year end option values
were as follows (as at December 31, 1994, there were no unexercisable stock
options for the persons named below):
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END
(#) ($)
NAME EXERCISABLE EXERCISABLE
----
<S> <C> <C>
Marshall Tulin 211,209 $8,812
John Tulin 211,209 8,812
Andrew Corsini 184,325 7,703
James Tulin 184,325 7,703
Lewis Valenti 171,825 7,703
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Executive Compensation Committee consists of William B.
MacLeod, a former Executive Vice President and Chief Financial Officer of the
Company, Raymond Vise, a former Senior Vice President of the Company, and Mark
Abramowitz. The members of the Company's Stock Option Committee and the
Company's Incentive Share Committee are Mr. MacLeod and Mr. Vise. Ronald Vise
(who is the son of Raymond Vise) was employed by the Company during 1994 as a
commissioned salesman. Aggregate compensation paid to Ronald Vise for services
rendered during 1994 amounted to $149,704. Mark Abramowitz is a partner in the
law firm of Parker Chapin Flattau & Klimpl, LLP, which is retained by the
Company to provide legal services.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Performance Graph shall not be incorporated by reference into any
such filings.
REPORT OF BOARD AND COMPENSATION COMMITTEES
The Executive Compensation Committee of the Board of Directors, which is
comprised of the three non-employee directors of the Company, determines, to the
extent not fixed pursuant to the terms of applicable employment agreements, the
compensation (other than through the grant of stock options) of the Chief
Executive Officer, other employee members of the Board of Directors, and the
Company's Chief Financial Officer. The entire Board of Directors is responsible
for developing executive compensation policies for the Company's other executive
officers. The Stock Option Committee, which is comprised of two non-employee
directors, administers the Company's 1981 Plan and 1987 Plan. The Incentive
Share Committee, which is comprised of two non-employee directors, administers
the Company's Incentive Share Plan (the "Incentive Plan").
The main objectives of the Company's executive compensation structure
include rewarding individuals for their respective contributions to the
Company's performance, providing executive officers with a stake in the
long-term success of the Company and providing compensation programs and
7
<PAGE> 10
policies that will attract and retain qualified executive personnel.
Historically, the members of the Board of Directors and the Executive
Compensation, Stock Option and Incentive Share Committees have chosen to achieve
these objectives through salary increases, bonuses under the Company's incentive
compensation program, contractual protections against changes in or loss of
employment in case of a change of control of the Company and periodic stock
option grants.
The Board of Directors and the Executive Compensation, Stock Option and
Incentive Share Committees believe that their deliberations should include,
among other things, due consideration to the performance of the Company, as well
as compensation levels in competing companies, individual contributions and the
executives' respective lengths of service with the Company. The 1994 salary of
Marshall Tulin, the Company's Chief Executive Officer, was fixed pursuant to his
employment agreement. Mr. Tulin's bonus, which was determined by the Executive
Compensation Committee under the Company's incentive compensation program,
reflects the Company's profitable operating results in fiscal 1994, especially
in light of a continuing difficult economic environment. The current level of
compensation for other executive employees, to the extent not previously fixed
pursuant to employment arrangements with the Company, was also based, in large
part, upon the Company's results in fiscal 1994.
Compensation through the periodic grant of stock options under the
Company's stock option plans is intended to coordinate executives' and
stockholders' long-term interests by creating a direct link between a portion of
executive compensation and increases in the price of Common Stock and the
long-term success of the Company. No stock options were granted to any
executive officer of the Company during fiscal 1994.
BOARD EXECUTIVE STOCK OPTION
OF COMPENSATION AND INCENTIVE
DIRECTORS COMMITTEE SHARE COMMITTEES
--------- --------- ----------------
Mark Abramowitz Mark Abramowitz William B. MacLeod
William B. MacLeod William B. MacLeod Raymond Vise
James Tulin Raymond Vise
John Tulin
Marshall Tulin
Raymond Vise
<TABLE>
PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<CAPTION>
--------------------------------------------------------------------------------
FISCAL YEAR ENDING
COMPANY 1989 1990 1991 1992 1993 1994
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SWANK, INC 100 38.24 44.12 47.06 55.88 50.00
PEER GROUP 100 40.71 52.74 80.24 106.77 60.47
BROAD MARKET 100 81.12 104.14 105.16 126.14 132.44
</TABLE>
THE BROAD MARKET INDEX CHOSEN WAS: NASDAQ MARKET INDEX
THE PEER GROUP CHOSEN WAS: Customer Selected Stock List
THE PEER GROUP IS MADE UP OF THE FOLLOWING SECURITIES:
JACLYN INC
LORI CP (THE)
SALANT CP
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
P.O. BOX 85333
RICHMOND, VA 23293
PHONE: 1-(800) 446-7922
FAX: 1-(800) 649-6097
ASSUMES $100 INVESTED ON JANUARY 1, 1990
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1994
The peer group includes companies that compete with the Company in one
or more of its product categories as well as companies in similar industries.
The peer group includes: Jaclyn, Inc., The Lori Corporation ("Lori"), and
Salant Corp. Artra Group Incorporated ("Artra") and Crystal Brands, which were
included in the proxy statement for the 1994 Annual Meeting, were omitted from
the foregoing peer group. Artra owns a majority interest in Lori which engages
in activities that compete with the Company. Market information was available
for Crystal Brands for only a portion of the period covered by the performance
graph.
Note: The stock price performance shown on the graph above is not necessarily
indicative of future price performance.
III. APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
On February 23, 1995, the Board of Directors of the Company adopted a
resolution approving an amendment to the Certificate of Incorporation of the
Company, that would reduce the number of authorized shares of Common Stock from
66,000,000 to 43,000,000. The amendment is subject to approval by stockholders
at the Meeting.
8
<PAGE> 11
REASONS FOR AND GENERAL EFFECT OF THE AMENDMENT
At the close of business on February 28, 1995, the record date for
determining stockholders entitled to notice of and to vote at the Meeting,
16,470,636 shares of Common Stock were issued and outstanding, 333,519 shares
were held in the Company's treasury and an aggregate of 5,000,282 shares of
Common Stock were reserved for issuance as follows: (i) 582,227 shares were
reserved for issuance upon the exercise of outstanding options under the 1981
Plan, (ii) 3,368,995 shares were reserved for issuance upon the exercise of
options granted and to be granted under the 1987 Plan, (iii) 500,000 shares were
reserved for issuance pursuant to awards and benefits to be granted under the
Incentive Plan, (iv) 399,060 shares were reserved for issuance upon the exercise
of outstanding warrants and (v) 150,000 shares were reserved for issuance upon
the exercise of options granted and to be granted under the 1994 Plan (assuming
approval by stockholders of the 1994 Plan at the Meeting). Accordingly, of the
66,000,000 shares of Common Stock authorized for issuance by the Certificate of
Incorporation, only 20,970,918 (excluding treasury shares) are issued and
outstanding or reserved for issuance.
The amendment to the Certificate of Incorporation would reduce the
number of shares of authorized shares of Common Stock from 66,000,000 to
43,000,000. The reduction in the number of authorized shares would result in an
annual savings of approximately $15,000 by reducing the amount of annual
franchise taxes payable to the State of Delaware, the Company's state of
incorporation. Franchise taxes in the state of Delaware are currently determined
inaccordance with a formula that is based, in part, on the amount of a
corporation's authorized shares of capital stock. The Board of Directors
believes that, even with the reduction to 43,000,000 shares, sufficient shares
of Common Stock will be available for the Company's present needs and its
presently anticipated future needs.
Approval of the amendment to the Certificate of Incorporation and the
reduction in the number of authorized shares of Common Stock would have no
effect on the powers, designations, preferences or relative, participating,
optional or other special rights, qualifications or restrictions of shares of
Common Stock or Preferred Stock of the Company.
REQUIRED VOTE
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote on this proposal is required to approve the amendment to
the Certificate of Incorporation. The Board of Directors recommends that
stockholders vote FOR approval of the amendment.
IV. APPROVAL OF 1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On December 8, 1994, the Board of Directors of the Company adopted,
subject to stockholder approval at the Meeting, the Company's 1994 Plan. The
purpose of the 1994 Plan is to attract and retain the services of experienced
and knowledgeable directors who are not employees of the Company ("Outside
Directors") and to provide additional incentive for Outside Directors to
continue to work for the best interests of the Company and its stockholders
through continuing ownership of Common Stock.
A copy of the 1994 Plan is set forth as Exhibit "A" to this Proxy
Statement, and the following discussion of the 1994 Plan is qualified in its
entirety by reference thereto.
STOCK SUBJECT TO THE 1994 PLAN, ADMINISTRATION AND ELIGIBILITY
The maximum number of shares of the Company's Common Stock as to which
options may be granted under the 1994 Plan is 150,000 shares, subject to
adjustment as discussed below under the caption "Adjustment of and Changes in
Common Stock." Upon the expiration, cancellation or termination of unexercised
options, the shares subject thereto will again be available for grant under the
1994 Plan. The 1994 Plan is administered by the Board of Directors subject to
the provisions of the 1994 Plan. Participation in the 1994 Plan is limited to
Outside Directors.
GRANT OF OPTIONS
The 1994 Plan provides for the granting on December 31, 1994 of an
option to purchase 5,000 shares of Common Stock of the Company to each of the
three Outside Directors on that date and the granting of an option to purchase
5,000 shares of the Company's Common Stock to each person who thereafter becomes
an Outside Director on the date such person is first elected a director. In
addition, immediately following each annual meeting of stockholders at which
directors are elected, commencing with the Meeting, each Outside Director then
in office will be granted an option to purchase 5,000 shares of Common Stock. An
employee director who ceases to be an employee but remains a director does not
become an Outside Director unless and until such director is serving as an
Outside Director immediately following the next annual meeting of stockholders
at which directors are elected.
The following table sets forth certain information concerning the grant
of options under the 1994 Plan. Since only Outside Directors are eligible to be
granted options under the 1994 Plan, no options have been granted to (a) the
9
<PAGE> 12
persons named in the Summary Compensation Table above under the caption
"Renumeration and Related Matters", (b) executive officers of the Company or (c)
any other of the Company's employees.
<TABLE>
<CAPTION>
Number of Shares
Dollar Underlying
Group Value Options Granted
----- ----- ---------------
<S> <C> <C>
Non-Executive $17,343.75 15,000
Director Group
(3 persons) (1)
</TABLE>
(1) On December 31, 1994, Messrs. Mark Abramowitz, William B. MacLeod and
Raymond H. Vise were each granted an option to purchase 5,000 shares of the
Company's Common Stock at an exercise price of $1.15625 per share, the fair
market value of the Company's Common Stock on that date.
Each option granted on December 31, 1994 will become exercisable if
stockholders approve the 1994 Plan at the Meeting. If stockholders do not
approve the 1994 Plan, the options will terminate and will be of no further
force or effect.
EXERCISE PRICE
The exercise price of each share granted under the 1994 Plan is to be
100% of the fair market value of the Company's Common Stock subject to the
option on the date of grant. Upon exercise of the option, the exercise price
must be paid in full in cash or by check. The closing price of the Company's
Common Stock in the over-the-counter market on February 28, 1995 was $1.50 per
share.
OPTION TERM
Each option will have a term of five years, subject to earlier
termination as provided in the 1994 Plan. Each option will be exercisable
immediately as to the full number of shares subject to the option (except for
options granted on December 31, 1994, which only become exercisable upon
approval of the 1994 Plan by stockholders).
In the event that an optionee ceases to serve on the Board of Directors
for any reason (including as a result of not being re-elected to the Board)
other than by reason of death or disability (as defined in the 1994 Plan),
options held by the optionee may be exercised in whole or in part as to the
remaining unexercised portion of the option at any time within three months
after such cessation of service, but in no event after the date on which the
option would otherwise expire. However, if the Outside Director's service on the
Board is terminated for cause, the Outside Director's options will terminate
immediately.
If an optionee ceases to serve on the Board by reason of disability,
options held by such optionee may be exercised in whole or in part as to the
remaining unexercised portion of the options at any time within one year after
cessation of service on the Board, but in no event after the date on which the
option would otherwise expire.
If an optionee dies (a) while serving on the Board, (b) within three
months after cessation of service on the Board (other than by reason of
disability or for cause) or (c) within one year after cessation of service on
the Board by reason of disability, options held by such optionee may be
exercised in whole or in part by the legal representatives, beneficiaries or
legatees of the optionee within one year after the date of such optionee's death
as to the remaining unexercised portion of the options, but in no event after
the date on which the option would otherwise expire.
ADJUSTMENT OF AND CHANGES IN COMMON STOCK
In the event of any change in the Company's outstanding Common Stock by
reason of a stock dividend, stock split, stock combination, recapitalization,
merger, reorganization or the like, the aggregate number of shares available for
option under the 1994 Plan and the exercise price and number and kind of shares
subject to outstanding options will be adjusted by the Board, whose
determination will be conclusive.
MISCELLANEOUS
An option may not be transferred by an Outside Director other than by
will or by the laws of descent and distribution, and an option may be exercised
during the optionee's lifetime only by the optionee or the optionee's legal
representatives. In addition, an option may not be exercised unless either (a) a
registration statement under the Securities Act of 1933, as amended (the "Act"),
is effective and current with respect to the shares underlying the 1994 Plan at
the time of exercise of an option or (b) in the opinion of counsel to the
Company, there is an exemption from registration under the Act. As a further
condition to exercise of an option, the Company may require that the shares of
Common Stock underlying such option or the 1994 Plan are listed for trading on
any securities market on which the Company's Common Stock is traded and have
been appropriately registered or qualified under applicable state securities
laws, and that any necessary or desirable governmental approval or consent has
been obtained.
DURATION AND AMENDMENT OF THE 1994 PLAN
No options may be granted under the 1994 Plan after December 7, 2004.
Options outstanding on that date, however, shall in all respects continue
subject to the 1994 Plan. The Board may amend, suspend or terminate the 1994
Plan at any time except that, to the extent required by Rule 16b-3 under the
Exchange Act ("Rule 16b-3") or applicable law: (a) no provision of the 1994 Plan
relating to the amount or exercise price of shares of Common Stock subject to
options to be granted under the 1994 Plan or the timing of grants may be made
more than once every six months other than to comport with changes in the
10
<PAGE> 13
Internal Revenue Code of 1986, as amended (the "Code"), the Employee Retirement
Income Security Act of 1974, as amended, or the rules and regulations under
either statute, and (b) without the approval of stockholders, no alteration or
amendment may be made which would (1) change the class of eligible participants
under the 1994 Plan, (2) increase the total number of shares available for
option (except for antidilution adjustments described above), or (3) materially
increase the benefits accruing to participants under the 1994 Plan within the
meaning of Rule 16b-3.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the Federal income tax
consequences under the Code as currently in effect with respect to options under
the 1994 Plan.
The optionee will not recognize any income for Federal income tax
purposes, and the Company will not be entitled to any deduction, upon the grant
of an option.
Generally, an optionee recognizes ordinary taxable income at the time an
option is exercised in an amount equal to the excess, if any, of the fair market
value of the shares of Common Stock on the date of exercise over the exercise
price. The Company generally will be entitled to a compensation deduction for
Federal income tax purposes at the same time as, and in the same amount that,
the option holder recognizes such income.
When an optionee subsequently disposes of the shares of Common Stock
received upon exercise of an option, the optionee will recognize long-term or
short-term capital gain or loss (depending upon the holding period of the
shares) in an amount equal to the difference between the sale price and the fair
market value of the shares on the date of exercise of the option.
REQUIRED VOTE
The affirmative vote of a majority of shares of Common Stock present, in
person or by proxy, and entitled to vote on this proposal is required to approve
the 1994 Plan. The Board of Directors recommends that stockholders vote FOR
approval of the 1994 Plan.
V. APPROVAL OF INDEPENDENT ACCOUNTANTS
There will also be brought up for consideration at the Meeting
the approval of the appointment of accountants to perform the annual audit for
the fiscal year ending December 31, 1995. Subject to the action of the
stockholders at the Meeting, the Board has appointed the firm of Coopers
& Lybrand, L.L.P., certified public accountants, as the independent accountants
to audit the financial statements of the Company for the current fiscal year.
They have been the Company's accountants since 1952. The board recommends their
approval. A representative of Coopers & Lybrand, L.L.P. is expected to be
present at the Meeting. Such representative will have the opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
In order to be included in the proxy materials for the 1996 Annual
Meeting of Stockholders of the Company, stockholder proposals must be received
by the Company on or before November 16, 1995.
GENERAL
The accompanying proxy will be voted as specified by stockholders. If
no specification is made, it is intended that the proxy will be voted FOR the
election of directors, FOR approval of the By-Law Amendments, FOR approval of
the 1994 Plan, FOR approval of the amendment to the Certificate of Incorporation
and FOR the approval of the appointment of Coopers & Lybrand, L.L.P. as the
independent accountants of the Company.
Shares of Common Stock that are voted to abstain and broker non-votes
will be considered present at the Meeting in determining the presence of a
quorum. Shares abstaining with respect to any matter will be considered cast
with respect to that matter. Shares subject to broker non-votes with respect to
any matter will not be considered entitled to vote on, or cast with respect to,
such matter.
The Board does not know of any other matter to be brought before the
meeting. If any other matters are properly brought before the meeting, the
persons named in the enclosed proxy intend to vote such proxy in accordance with
their best judgment on such matters.
By Order of the Board of Directors
Andrew C. Corsini
Secretary
March 16, 1995
11
<PAGE> 14
EXHIBIT "A"
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> 15
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
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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
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<PAGE> 17
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.
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<PAGE> 18
EXHIBIT "B"
PROPOSED AMENDMENTS TO ARTICLE III OF THE COMPANY'S BY-LAWS
TO PROVIDE FOR A CLASSIFIED BOARD OF DIRECTORS
AND TO MAKE CERTAIN CONFORMING CHANGES
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 the Board of
Directors. The Board of Directors shall be divided into three classes, Class I,
Class II and Class III, which shall be as nearly equal in number as possible. At
the annual meeting of stockholders to be held in 1995, Class I directors shall
be elected for a term expiring at the annual meeting of stockholders to be held
in 1996, Class II directors shall be elected for a term expiring at the annual
meeting of stockholders to be held in 1997, and Class III directors shall be
elected for a term expiring at the annual meeting of stockholders to be held in
1998, with each such director to hold office until his successor shall be
elected and qualify. At each annual meeting of stockholders commencing with the
annual meeting of stockholders to be held in 1996, the successors of the class
of directors whose term expires at that annual meeting shall be elected for a
term expiring at the third successive annual meeting of stockholders and until
their respective successors shall be elected and qualify. Directors shall be
elected by plurality vote. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director. Newly
created directorships and eliminated directorships shall be so apportioned among
the classes of directors as to make all such classes as nearly equal in number
as possible.
* * * *
6. Any director may be removed only for cause and only at a special
meeting of the stockholders, duly called as provided in these By-Laws, by the
affirmative vote of the holders of a majority of the issued and outstanding
shares of the corporation's shares of capital stock entitled to vote for the
election of directors.
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<PAGE> 19
SWANK, INC.
6 HAZEL STREET, ATTLEBORO, MASSACHUSETTS 02703
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The 1995 Annual Meeting of Stockholders of SWANK, INC. (the "Company") will
be held at the Company's offices at 6 Hazel Street, Attleboro, Massachusetts,
on April 20, 1995 at 11:00 A.M. local time, for the purpose of considering and
acting upon the following:
(PLEASE SIGN AND DATE THE PROXY ON THE REVERSE SIDE)
/x/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
1. The approval of amendments to the Bylaws of the Company to provide for a
classified Board of Directors and to make certain conforming changes;
FOR AGAINST ABSTAIN
/ / / / / /
2. Election of six (6) directors to serve as the Company's Board of
Directors;
NOMINEES: Mark Abramowitz
William B. MacLeod
James Tulin
John Tulin
Marshall Tulin
Raymond Vise
FOR (except as indicated to the contrary below)
/ /
WITHHELD AUTHORITY TO VOTE FOR
/ /
FOR, EXCEPT VOTES WITHHELD FOR THE FOLLOWING NOMINEE(S)
--------------------------------------------------------
3. The approval of an amendment to the Restated Certificate of Incorporation of
the Company to reduce the number of authorized shares of Common Stock from
66,000,000 to 43,000,000;
FOR AGAINST ABSTAIN
/ / / / / /
4. The approval of the 1994 Non-Employee Director Stock Option Plan;
FOR AGAINST ABSTAIN
/ / / / / /
5. The approval of the appointment of Coopers & Lybrand, LLP as the
independent accountants of the Company for the year 1995; and
FOR AGAINST ABSTAIN
/ / / / / /
6. The transaction of such other business as may properly come before the
meeting.
UNLESS OTHERWISE INDICATED, THE PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL
OF THE NOMINEES FOR DIRECTOR, "FOR" ITEMS 1, 3, 4, 5 AND WITH DISCRETIONARY
POWERS AS TO ITEM 6.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
EXPECT TO BE PRESENT, PLEASE DATE AND SIGN THIS FORM OF PROXY AND RETURN IT
PROMPTLY TO THE COMPANY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
SIGNATURE DATE
------------------------------------------------ ----------------
SIGNATURE DATE
------------------------------------------------ ----------------
(SIGNATURE, IF HELD JOINTLY)
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee,
guardian or corporate officer, please give full title as such.
